DUSTIN GAWRYLOW: ND STATE PENSION DEBATE CONTINUES - REFORMS NEEDED
Over the past year, we've told you several times about the on-going issues at the state's public employee pension funds. Last week, I discussed the issue on the radio in Fargo (click here for the audio). The Herald brings up a very important piece of the debate:
Then on Sunday, Tom Dennis of the Grand Forks Herald sounded the alarm for taxpayers' just as NDTA has been doing since last March.
The second issue centers on that phrase "retirement risk." In North Dakota, the pension funds' budget gaps grew because of the market crash. The funds counted on earning an annual return of 8 percent, and that worked - until it didn't: The crash blew giant holes in the fund balances. The trouble is that the proposed solution - higher contributions from employees and their employers - still counts on those 8 percent returns.
That's too high. Getting such returns demands risky investments, and that strategy leaves the funds vulnerable to market downturns. What happens when the next crash comes?
Then the Herald asks, and answers the critical question:
With a current unfunded liability of around $1.5 billion, it is important that legislators be willing to openly and honestly look at true reforms, rather than simply pouring more money into the system as the current track seems to show.
Obviously promises have been made and need to be kept, but the overarching goal should be to come up with reforms that allow the state to incentivize current employees to leave the current system in order to reduce future liabilities.
DakotaBeacon