Unfunded Public Pension Liabilities and Local Citizen Oversight
29 Pages Posted: 6 May 2013 Last revised: 5 Aug 2014
Date Written: August 1, 2014
We examine whether unfunded public pension liabilities are associated with citizen oversight through legislative and electoral means in local governments. Our focus on municipal pension plans is timely and relevant, given the prevalence of underfunded pension plans and GASB’s recently issued statements on state and local pension reporting. Using a sample of 84 locally administered municipal defined benefit pension plans in 2009, we find evidence that the level of unfunded pension obligations is negatively associated with both provisions allowing direct citizen participation in the legislative process and electoral voter activism in the form of recent recall attempts. Overall, our empirical evidence is consistent with citizen oversight mechanisms playing an important role in the pension funding decisions of municipal governments.
Keywords: Pensions, Citizen oversight, Voter activism, Local government, Municipal accounting
JEL Classification: M38, M41
Suggested Citation: Suggested Citation