SELL STATE ASSETS TO SHORE UP UNDERFUNDED PENSIONS
The state unnecessarily owns enough assets to close the funding gap in public employee pensions.
OKLAHOMA CITY, OK (January 22, 2020) – The 1889 Institute has published “Leveraging State-Owned Assets to Fund Pensions and Meet Other Long-Term Funding Challenges.” It makes the case for the sale or lease of assets owned by the State of Oklahoma as a way to fund important items like underfunded pensions, infrastructure, and bonded indebtedness. The paper identifies almost $6 billion in assets the state could liquidate and lays out a process to ensure maximum returns and protection for taxpayers.
“Oklahoma can significantly strengthen public employee pensions and make progress meeting other long-term funding challenges if it properly leverages valuable assets it already owns,” said the study’s author, Ben Lepak, 1889 Institute’s Legal Fellow. “Much of this property would be put to better use in the private sector, is not currently taxed, and costs the state money in the form of maintenance expenses,” he said.
In the study, Lepak identifies seven state-owned assets as top candidates for monetization or transfer, including the Tobacco Settlement Endowment Trust (TSET), the Grand River Dam Authority, and Oklahoma’s turnpikes. The study estimates the seven assets listed are worth $5.7 billion, which the state could dedicate to long-term funding needs.
“Our largest pension system, the Teachers’ Retirement System (TRS), faces over $6.5 billion in unfunded liabilities,” Lepak noted. “Transferring the TSET endowment to TRS would do a great deal to ensure our teachers receive the pensions they’ve been promised.” In addition, Lepak notes that TSET receives annual payments typically in excess of $50 million from tobacco companies, which exceeds TSET’s annual operating expenses.
The study also emphasizes the need for strong policy guidelines in the monetization process to ensure the best result. Among the principles recommended are transparency policies to prevent favoritism and cronyism, placing final decision-making authority outside of the agency controlling the property in question, and using the newly-created Legislative Office for Fiscal Transparency.
“I am proposing to establish a process that enables the state to make regular, clear-eyed decisions about its balance sheet and the best use of limited resources,” Lepak said. “The assets noted in the study are just a starting point. The state should regularly evaluate its assets and sell items it probably shouldn’t have owned in the first place.”
About the 1889 Institute
The 1889 Institute is an Oklahoma think tank committed to independent, principled state policy fostering limited and responsible government, free enterprise and a robust civil society. The publication, “Leveraging State-Owned Assets to Fund Pensions and Meet Other Long-Term Funding Challenges” can be found on the nonprofit’s website at https://1889institute.org/fiscal-policy.
from MuskogeePolitico.com
