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

Eat Your Vegetables: City Council Considers A Well-Disguised Sin Tax

The Oklahoma City Council is considering a well-disguised sin tax. They call it a Healthy Neighborhood Zoning Overlay, but the effect is the same. It limits new dollar stores in the specified neighborhood. The ostensible goal is to create a welcoming environment for grocery stores selling fresh meat and produce. But it accomplishes this goal by giving existing dollar stores a monopoly, which will raise prices, and punish residents for shopping at the purveyors of (allegedly nothing but) junk food, instead of subsisting on fresh, organic kale smoothies like good little citizens. Why would the Council intentionally restrict the supply of stores where many of their residents buy basic household goods and food? Several possibilities present themselves, though none are sound.   A fundamental misunderstanding of the laws of supply and demand. Economists call the current state of the neighborhood a contestable market: dollar stores choose low prices because the mere p...
Read more

How I Learned to Stop Worrying and Love Carbon Dioxide

When I was a young child, I remember speculating with my school classmates about how close a nuclear bomb blast might occur if there were all-out nuclear war with the Soviet Union. I grew up about 25 miles from Sheppard Air Force Base , which we all assumed was a potential target of the Soviets. It was an odd, concerning feeling deep in the gut, to contemplate the possibility of suffering radiation poisoning and the end of the world. I wouldn’t wish that feeling on anyone, certainly not little kids, that gnawing deep-down fear that occasionally welled up depending on the news. That’s partly why the fear-mongering over global warming is more than just an aggravation to me. It makes me angry that propagandists like Al Gore have so frightened kids about the future that one has turned herself into an advertisement for depression treatment and anger management . I am especially angry because the truth about climate and carbon dioxide (CO 2 ) is the opposite of what the mainstream news ...
Read more

Praise and Criticism of Governor Stitt’s Plan for Reopening Schools

Governor Stitt recently held a press conference to announce his plans for opening Oklahoma’s schools in the face of fear and loathing by many regarding Covid-19. There is a great deal of paranoia surrounding this disease, which the 1889 Institute has attempted to moderate by posting accurate information , in contrast to media more interested in sensation. Despite the fear, Governor Stitt is admirably insisting that schools should open. He cannot overrule local school boards and mandate that schools reopen, and even if he could, it would be impolitic not to take steps to reassure parents, teachers, students, and administrators that schools can be opened and attended safely. So, he has taken extraordinary measures to reassure everyone. His plan includes measures like regular viral testing and provisions for personal protective equipment (PPE). Just about any public policy has unintended effects that decision makers fail to anticipate. Unfortunately, when public policy is being devised, ...
Read more

Profile in Failure: Why Can’t Oklahoma’s Kids Read Any Better?

I once met a highly decorated retired Air Force colonel only because he wanted to learn how to teach his grandson to read. This was not because the grandson was being homeschooled. The boy was attending public school in a generally decent middle-class school district in South Carolina, but he was struggling and obviously was not reading well. In researching how to teach his grandson, the colonel embarked on a journey that literally changed his life from quiet comfort in retirement to a one-man grassroots activist. It occurred to the colonel that he was not a particularly good speller himself as he discovered that he and his grandson had been taught reading in basically the same way. This was through the “whole word” method, a system that has gone by a variety of sometimes sophisticated-sounding names, including “Look-Say,” “See-Say,” “Sight,” “Psycholinguistic,” “Word,” “Whole-Word,” and a highly-modified version called “Whole Language.” This involves viewing the written English ...
Read more