The Center for Economics and Public Policy presents

"The Public Pension Crisis: Causes and Consequences"
with Joshua Rauh, Stanford Graduate School of Business

Tuesday, April 8, 2014
5:30-7:00 p.m.
Social & Behavioral Sciences Gateway, Room 1517

Unfunded promises by state and local governments to pay retirement pensions to public employees have grown substantially over the past several decades. Using governmental accounting standards, the shortfall is around $1 trillion nationwide, but using valuation standards consistent with the principles of financial economics, the gap totals around $4 trillion. These shortfalls have emerged due to several factors: the systematic under-valuation of the costs of providing pensions, the assumption that risky portfolios of assets will always generate their expected returns, and a lack of funding discipline by many state and local governments. In his talk, Rauh will discuss how underfunded pension promises will place continued pressure on state and local government budgets and operations, as governments will have to engage in a combination of seeking new funding sources and renegotiating the pension obligations.

For further information, please contact Sylvia Lotito, slotito@uci.edu or 949-824-3344.