Candidates for State Treasurer Share Their Thoughts on Missouri's Unfunded Public Pensions
One problem facing states nationwide is the issue of underfunded public pensions. This means that there’s not enough state money to fund the retirement pensions state workers were promised and are expecting. As our “Road to the Capitol” election coverage continues, KSMU’s Rebekah Clark speaks to three candidates running for state treasurer on how they, if elected, will tackle this issue.
It’s a problem that’s prominent in every state. Promised pensions to state workers have become unfunded obligations and cast a dark cloud on the horizon of state budgets. These pension liabilities often slide under the radar when state spending is tallied up, thanks to their “future payment” status.
Republican candidate Cole McNary says he’s read and heard warnings from the financial press that the next potential financial collapse in this country could be brought on by unfunded pension liabilities. He says all states have to wrestle with this issue.
“The question is, ‘what should be done?’ I would say that first you have to really dig into the actuarial data. You have to assess the risks you’ve taken on. You have to come up with some five year forecasts so we can make some appropriate plans in case the market doesn’t rebound. Anybody who pays attention to the markets today knows that eight, eight and a half percent returns on your investment is completely unrealistic if you think that pensions should be invested in relatively low risk assets. I think it’s very serious.”
McNary says current state leadership hasn’t made much of a move to shore up pensions so Missourians can feel confident that there’s money available for their retirement.
State treasurer Clint Zwiefel is a democrat running for re-election. He says Missouri leaders have kept their promises in office, and that Missouri is one of nine states in the country that has held on to its triple A credit rating.
“A pension obligation is exactly one of those promises you need to keep to taxpayers and to beneficiaries both. I walk on to my responsibility as state treasurer with an eye toward making sure that we protect taxpayers first and foremost. Because ultimately, if we don’t protect taxpayers, those beneficiaries aren’t going to get their benefits either, right? The good news is Missouri is in a strong fiscal position. During my time as treasurer, I’ve been an individual who has asked the tough questions of both the staff and the board, holding their feet to the fire, and making sure that we’re protecting taxpayer dollars, and making sure also that the benefits we promised employees are there and that they’re reasonable.”
Zwiefel says during his time in office, he led the charge to make pension benefits of elected officials and judges available online for the public to view.
Sean O’Toole is the libertarian candidate running for treasurer. Although unsure, he says he’s heard estimates that anywhere from 45 - 75 percent of pensions are underfunded in Missouri, which he says is quote—“pretty much in line with other states in our region.”
“There’s not an easy cure. We do have an obligation to those retirees who are currently in the system or near to the system. I think what’s going to have to happen is for the younger employees in the state, those involved in the public pension system, ultimately are going to have to move to some sort of a defined contribution plan versus the defined benefit plan that they enjoy today.”
O’Toole says he thinks state leadership will consider tax increases to raise some of the money. He says Missouri is one of the lowest tax-burdened states in the region.
Election Day is next Tuesday.
For KSMU News, I’m Rebekah Clark.