Senators May Seek Revisions to GAO Study on Public Pensions

December 2006

Leaders of the Senate Finance Committee, Senators Chuck Grassley (R-IA) and Max Baucus (D-MT), may send a request to the Government Accountability Office (GAO) to revise the focus of a new study on the financial condition of state and local government pension plans.

In August, the National Association of State Retirement Administrators sent a letter to Grassley requesting assurance that the study accurately portray the differences between state and local government systems.

One concern the organization had with the study is the inclusion of retiree health benefits in the overall study.

“Retiree health benefits are handled separately and independently and often are not administered or funded as part of a government’s retirement system,” the letter states. “While adequate health care is essential to overall retirement security, and health benefit commitments are placing significant and increasing pressure on government resources, fiscal and other challenges in providing healthcare benefits should not be confused with the funding of state and local government retirement plans.”

“It is crucial that retiree health care benefits are clearly distinguished from any study into the financial health of public pension plans,” it continues.

According to legislative affairs experts, the Senators have been discussing the study with Capitol Hill staffers and legislative experts, and are receptive to the possibility of separating the two issues.

Senators Grassley and Baucus originally requested the GAO study last summer in response to concerns about the many public pension plans that are poorly funded and have no back-up source, as do private pensions.

NASRA’s letter, which was signed by 28 national organizations representing over 20 million public sector employees, retirees, and their beneficiaries, asked that the senators and GAO use them as resource in developing the study, particularly in determining the distinctions between state and local plans, and the specific ways each handles retiree health benefits.