Skip to main content

Here’s a Way to Shore Up State Employee Pensions: Sell Unneeded State Assets


The State of Oklahoma owns a lot of property. This includes land and buildings, but it also includes valuable assets like the state-owned electric power company, the Grand River Dam Authority (GRDA). GRDA reports nearly $1.8 billion in assets on its most recent balance sheet, with a “net position” of more than $622 million. Or the Tobacco Settlement Endowment Trust (TSET), which sits on a $1.2 billion endowment that does nothing but sit and produce investment income to fund the yearly operations of TSET. To the tune of roughly $50 million per year.

We would all most likely be better off if some (probably most) of these assets were sold or leased to private entities where they could (1) be put to more economically productive use, (2) be put on the tax rolls (they are not taxed now), and (3) relieve the state from the burden of maintenance and operations expenses.

What’s more, such an asset sale/lease (a “monetization”) would generate a large financial windfall for the state, which could be used to address long-term funding challenges like unfunded pension obligations and infrastructure needs. In the case of pensions, eventually those bills must be paid by taxpayers. And those bills are not small: Oklahoma currently faces $7.9 billion in unfunded pension obligations, roughly equal to the amount of the entire rest of the budget.

Experience from other states shows that the most likely way those debts will be paid is through a combination of heavy tax increases and sharp budget cuts from other parts of government. So, to the extent the government can find sources of funds that do not punish current taxpayers for decisions made by politicians decades ago, that is a fairer way to pay for these unfunded debts. The sale of long-held state assets fits the bill.

That is the message of my paper, released today, Leveraging State-Owned Assets to Fund Pensions and Meet Other Long-Term Funding Challenges. In it, I identify nearly $6 billion in assets the state could liquidate and dedicate the proceeds to long-term funding needs. And that’s just from the 7 state-owned assets I highlighted. There are many others that should be evaluated.

Which is the other key aspect of my proposal: a process to fully review all state-owned property and vest a final decision-maker outside of the agency controlling the property with the power to make the call on whether to keep or sell each asset. The paper lays out some basic principles that should guide such a process, such as rules to maximize transparency and competition.

The Legislature recently created an ideal vehicle for leading such a process, the Legislative Office of Fiscal Transparency (LOFT). LOFT is a committee of legislators, has a paid staff, and has the ability to tap into outside expertise. Importantly, it also has the power to compel information from sometimes recalcitrant state agencies. If anyone can get the true, comprehensive picture of state-owned property, it should be LOFT.

What will be required, ultimately, is political courage. There have been discussions in the past about shedding some of the state’s assets, but local and special interests have always managed to protect their piece of the pie and kill such efforts. To some degree, this is understandable. If one of these massive government assets is in your town, you don’t want to see it go away.

But this is exactly why this type of effort is best carried out by the Legislature. Every part of the state is represented in that body, and its members are directly accountable to the people. No blue ribbon commission or appointed executive branch bureaucrats can claim that type of legitimacy.

Maybe it is naïve to believe that legislators will take such electorally risky votes. If so, maybe we should start asking them why they wanted to be in the Legislature in the first place, if not to stand and deliver solutions to vexing state problems. And maybe we should ask ourselves why we keep sending them back to Northwest 23rd and Lincoln.

Benjamin Lepak is Legal Fellow at the 1889 Institute. He can be reached at blepak@1889institute.org.


Popular posts from this blog

Introducing a New Plan for Public Education: Put Educational Practitioners (Teachers) in Charge

The author, Kent Grusendorf, served as a member of the Texas House of Representatives for 20 years (1987-2007), all but two as a member of Public Education Committee, which he chaired for four years (2003-2007). His prior elected experience was as a member of the Texas State Board of Education for three years (1982-1984). In addition to this blog, Grusendorf is author of an 1889 Institute report also based on his forthcoming book. Saving Public Education: Setting Teachers Free to Teach is the title of my forthcoming book, which explores a potentially new professional opportunity for teachers. Most teachers are in the profession because they love to teach. However, far too many leave the profession due to lack of respect, excessive external pressures, and general frustration. Many teachers stay in the profession, but yearn for greater freedom to just do what they love: Teach. Much of that frustration comes from mandates, and a lack of professional freedom. Well Intentioned,...
Read more

Massage Therapy Licensing: Violating the Pursuit of Happiness

In a way, America at least partly owes its independence to the conviction that granting exclusive market privileges is an illegitimate function of government. In a free country, no-one has an exclusive right to a market over anyone else. Yet, two and a half centuries after the American Revolution, the old-fashioned kind of monopoly, wherein government grants exclusive privileges, is experiencing something of a revival. In Oklahoma, legally bestowed market advantages are commonplace, and take many forms such as Tax Increment Finance Districts , various special tax credits unrelated to core government functions , and occupational licensing . Today, people use the word “monopoly” to refer to a business that has achieved total domination in a market as the result of laissez-faire processes, but not so long ago, a “monopoly” was a business that was bestowed with artificial market-domination and insulated from competition by a monarch. That’s the kind of monopoly conferred on the East ...
Read more

What if Legislators Were Licensed? Well, Just to Make a Point...

1889 Institute, as a general matter, objects to occupational licensing. We have written about it more than any other subject. The scant benefits simply do not outweigh the enormous costs to consumers and entrepreneurs, and  the  burdens that disproportionately impact the poor.   It must be noted that the remainder of this post is a work of satire. This should be obvious to anyone who has read even one of our papers, but each of the proposals below has an analogous provision in Oklahoma licensing laws. To those supportive of government-created cartels, these proposals might sound almost reasonable.  A material threat to the public safety and welfare has for too long gone entirely unregulated, unrestrained and unchecked. This menace has the power to corrode not only mere industries, but to corrupt the entire state economy. It’s no overstatement to say that the practitioners of this perilous profession hold the power to destroy democracy as we know it. After a...
Read more

OKC Public Schools Elevating a Privileged Elite over Oklahoma Taxpayers

The hypocrisy of the Soviet Union’s pretense of egalitarianism was well known enough to be the subject of mockery and parody. Ronald Reagan never tired of the jokes . Soviet communism espoused equality, but the reality is that party apparatchiks and government officials enjoyed special perks that no one else had access to. This special class wasn’t officially paid much more than the average skilled worker, but enjoyed privileges like dachas on the coast or countryside, special stores with imported goods and without the endless lines that were commonplace everywhere else, and more advanced medical treatment. For all their talk about eliminating class distinctions, the Soviet nomenklatura —those “doing the people’s work”—could feather their nest with the best of ‘em. Apparently, a similar attitude reigns in our government schools. Our friends at OCPA report that Oklahoma City Public Schools (OKCPS) will not offer in-person instruction to students for the first nine weeks of school this ...
Read more