This article first appeared in the St. Louis Beacon, Oct. 22, 2012 - True fiscal leadership means delivering both the good and bad news about long-term economic health so we can ensure we keep the promises we have made to the taxpayers.
Numbers don’t lie. It’s the job of the treasurer to serve as a budgetary straight shooter, someone who is willing to be honest about the fiscal challenges that face our state. Across the globe and nation, we see pension funds trending toward insolvency as the gap between assets and liabilities widens. Yet, not all leaders are courageous enough to deliver the tough news when necessary.
We have growing commitments that will pass from one generation to the next yet we don’t exactly know how we will pay the bill when it becomes due in the future. If elected treasurer, my top priority will be to cap pension fund manager’s commissions, and require greater transparency and disclosure over state investment health.
By bringing more fiscal truth to the treasurer’s office, we can provide leadership that will lead to the improvement and management of state pension funds. This will allow us to avoid potential future bankruptcy and most importantly, ensure we keep the promises we have made to retirees.
The cornerstone of my campaign centers on one very essential principle, the fiscal truth. We learned this past June from the Pew Center on the States that our largest state pension was only 77 percent funded and therefore placed on a watch list. But that alert arrived from a national organization. We received no notification from our statewide leaders.
Without proactive disclosure, as a state how can we decide what direction will lead to greater fiscal strength? How do we know whether or not our pensions are healthy? As treasurer, I will ask the tough questions and present options with clarity, honesty and practicality.
The minimum standard for pension health is a funding level at 80 percent and Missouri has dipped below that threshold. We have 126 public pensions in our state and a majority of them haven fallen below 80 percent.
We cannot continue to ignore the fact that our underfunded liabilities in Missouri have reached a troubling point. Treasurers across the country have taken the initiative to tackle these sensitive issues to ensure we fulfill our pension promises.
We have an array of assumption rates and disagreements over whether assets should be valued at market or actuarial rates. An average citizen can access the annual fund reports but without some contextual reference or an appreciation of market trends and realistic forecasts, we really have no idea of where we stand. From a basic perspective, we must wonder, how do we know where to go if we can’t even agree on where we are?
Our current treasurer has ignored this problem for four years. He has not only failed to mention we might be heading toward a pension shortfall, but he also refused to offer us any long-term meaningful solutions to lessening the gap between assets and liabilities.
When asked about pension health in June current treasurer replied, “Missouri is one of the places where we are doing things right.” He cites his criticism of a shaky investment in the portfolio at the start of his administration as evidence of his pension concern.
And when the MOSERS board voted to adjust the assumption rate so they could bring the fund more in line with realistic return rates, my opponent sent a surrogate to the meeting to cast the lone NO vote. His avoidance of the issue and his history of absenteeism at board meetings suggests that he does not see pension health as a priority.
My plan begins with a commitment to fight for greater fiscal truth and transparency. I will require fund managers to disclose data that uncovers not only the current expenses of state and local plans, but also any assumptions of rates of return, inflation, payroll growth and other economic data.
We need better standards of disclosure so that we can have confidence in the strength of our pension plans. With more accurate information, we can begin to prepare a variety of forecasts that will help us plan for a future, a future that at this moment seems very uncertain.
Cole McNary, a Republican, is running for Missouri treasurer.