Pandemic Recovery and State and Local Pension Reform

6 Pages Posted: 25 Sep 2020

See all articles by Eileen Norcross

Eileen Norcross

George Mason University - Mercatus Center

Emily Hamilton

George Mason University - Mercatus Center

Date Written: July 2020

Abstract

In 2019, few could have predicted that state and local pension funds would be faced with a pandemic that would slash state and local tax revenues and harm investment returns. Nevertheless, fund managers should have spent the past decade preparing for an inevitable market downturn. Instead, just as when the 2008 financial crisis hit, policymakers have spent the previous decade valuing their pension liabilities and assets as if investments always go up. This policy brief explores the deep-seated problems in US state and local pension finance, including underfunding, poor investment choices, and potential avenues for reform.

Keywords: pensions, fiscal policy, state budgets, pension liabilities

JEL Classification: H55, H75, H72, H70

Suggested Citation

Norcross, Eileen and Hamilton, Emily, Pandemic Recovery and State and Local Pension Reform (July 2020). Mercatus COVID-19 Response Policy Brief Series, Available at SSRN: https://ssrn.com/abstract=3697618 or http://dx.doi.org/10.2139/ssrn.3697618

Eileen Norcross (Contact Author)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States
703-993-4930 (Phone)

HOME PAGE: http://https://www.mercatus.org/eileen-norcross

Emily Hamilton

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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