Yesterday, I mentioned the difficulty I’m having getting the state government of Rhode Island to give me a basic number in its actuary’s pension calculations. Granted, it’s a number that doesn’t technically appear in the actuary’s formula, but my request was basically: “What happens if you add those numbers (which you’ve calculated) together before you reduce them based on investment returns, not after?”
A post on The American Interest (via Instapundit) suggests that my experience is actually part of a nationwide effort to disguise the full extent of public-sector-pension promises. The author draws attention to news that the American of Actuaries and the Society of Actuaries have buried a task force report looking into pension funding and opines:
There are powerful interests that don’t want public pensions to be governed by the same kinds of accounting principles used in the private sector because… well, because if they were, public pensions would go from seriously underfunded to catastrophically underfunded.
Union officials and state legislators (in both parties) seem to believe that it makes more sense to allow public pension funds to play “let’s pretend” with public money. To be sure, the sudden imposition of a tougher standards would cripple business as usual in many state and local governments, so there can and should be some reasonable accommodations made to allow the adjustment to take place in a less disruptive fashion. Governing by catastrophe is almost never a good idea, and a series of small and incremental changes is usually (though not always) a better way to manage public affairs.
This problem is going to come back and bite us, and people are beginning to suspect that a large number of issues suffer from the same sort of dishonesty. As The American Interest closes by musing, “Is it any wonder that Americans are fed up with experts and the institutions they manage?”