States not looking for pension bailout

August 29, 2012

In its latest siren concerning public pension plans ("Beware the next federal bailout," Aug. 22), the Maryland Public Policy Institute (MPPI) relies on confusion and unjustified fear when it asks if there is another federal bailout coming. There is a simple answer: No.

To support his conjecture, MPPI president Christopher Summers states that Maryland "does not have the money to pay for 60 percent of its actual pension liabilities." Again, wrong, as Mr. Summers calculates these liabilities using economic assumptions and financial theory that comport with neither historical experience nor recognized accounting standards. The state pension system is actually 65 percent funded. Although this funding level is not as strong as it should be, reforms enacted in 2011 will strengthen that funded ratio over the coming years.

Not one official of the 50 states is suggesting the prospect of a federal bailout of a state government. That is partly because states such as Maryland have addressed, or are in the process of addressing, their pension funding challenges through such reforms as benefit reductions and higher employee contributions. Facts, not fear and theory, should drive the discussion regarding public employee retirement benefits.

R. Dean Kenderdine, Baltimore

The writer is executive director of the Maryland State Retirement Agency.

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