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

Oklahoma Mayors Acted Unlawfully With COVID-19 Orders

In response to COVID-19, the mayors of Oklahoma’s three largest cities subjected their citizens to draconian shelter in place orders, restricting their freedom, damaging them financially, and undermining their constitutional rights. The mayoral decrees were more restrictive than those of the Governor, and in significant ways contradicted his policy. To this day, city-mandated social distancing rules remain in place in Oklahoma City, Tulsa, and Norman that are not required by the state’s reopening plan. The mayors claim that where their rules are more restrictive than the state’s, the city rules apply. Was any of this unilateral mayoral activity legally valid? For the reasons examined in my paper published today, An Argument Oklahoma’s Mayors Acted Unlawfully During COVID-19 , the short answer is no. (A summary of the paper can be found here .) A close examination of relevant city ordinances and state laws governing the mayors’ COVID-19 decrees forces the conclusion tha...
Read more

America’s Public Schools Fail Black Children, School Choice Empowers Them to Overcome

A consistent feature of racists through history is that they have fully understood the power of education, or the lack of education, as a tool of oppression. Extraordinary efforts were taken to keep black slaves illiterate, including killing those who deigned to learn to read. After the Civil War, black schools were frequent targets of attack. It should be no surprise that the longest and hardest fight in the Jim Crow South was over public school segregation. Segregationists worked to keep African Americans from lunch counters and in the back of city buses, but they fought like hell to keep black kids out of white schools. As our nation convulses with discussions of systemic racism, nearly all of the focus has been on questions of policing and the use of force. This is appropriate, of course. But I’d like to highlight a less discussed institution for which a strong case can be made that systemic racism prevails: public education.   An accepted definition of “systemic” or “structu...
Read more

Whether in the Streets or on a Court, Chaos Results when Words Lose Their Meaning

“There’s a sign on the wall, but she wants to be sure, ‘cause you know sometimes words have two meanings.” - Robert Plant Words have meaning. This allows us to communicate with each other. Suppose you and I are having dinner. If I ask you to pass me the salt, meaning the seasoning commonly applied to food, and you have decided to redefine the word “salt” as an explosive device activated by pulling a pin and releasing a handle (or what I would call a hand grenade), it's not difficult to see why you would be very worried, and why I (having asked for a common seasoning) would be surprised by your concern. If words mean whatever the speaker decides in the moment, then we lose even the most basic ability to communicate with each other.   In light of the continued debate over whether "defund" means “end all funding for” or “reduce funding for,” and especially in light of last week’s Supreme Court ruling, I am reminded of Genesis 11's account of the Tower of Babel. The s...
Read more

About Those Roads in Texas

A s Sooner fans head south for the OU-Texas game next week, they will encounter a phenomenon most of us are familiar with: as you cruise across the Red River suddenly the road gets noticeably smoother. The painted lane stripes get a little brighter and the roadside “Welcome to Texas” visitors’ center gleams in the sunlight, a modern and well-maintained reminder of how much more money the Lonestar State spends on public infrastructure than little old Oklahoma. Or does it? Why are the roads so much, well… better in Texas? Turns out, it isn’t the amount of money spent, at least not when compared to the overall size of the state’s economy and personal income of its inhabitants. Research conducted by 1889 Institute’s Byron Schlomach reveals that Oklahoma actually spends significantly more on roads than Texas as a percentage of both state GDP and personal income . And that was data from 2016, before Oklahoma’s tax and spending increases of recent years. The gap is likely gr...
Read more