Congress Considers Law on Public Employee Pension Act - May 11, 2011

On May 5, the House Ways and Means Subcommittee on Oversight held a hearing on H.R. 567, the Public Employee Pension Transparency Act (PEPTA). PEPTA would require state and local governments that issue tax-exempt bonds to provide the U.S. Treasury Department with annual reports detailing the financial information of the issuer’s pension plans, including calculations for unfunded pension assets and liabilities. In addition, PEPTA would require state and local governments to value their assets and liabilities based on an assumption that the plans only invest in U.S. Treasury bills with a 4 percent rate of return, instead of the historical average of 7 to 8 percent, which is likely to overstate the plans’ unfunded liabilities. State and local governments that fail to make annual reports to the Treasury would be prohibited from issuing tax-exempt bonds. PEPTA was introduced by Rep. Devin Nunes (R-Calif.) in February; a companion bill was introduced in the Senate by Senators Richard Burr (R-N.C.) and John Thune (R-S.D.).