Pension Reform Newsletter: Leveraging airports to improve pension solvency, the future of reform in Pennsylvania, and more
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Pension Reform Newsletter

Pension Reform Newsletter: Leveraging airports to improve pension solvency, the future of reform in Pennsylvania, and more

Plus: Solutions to Montana’s pension challenges, comparing U.S. and Canadian public pensions, and more.

This newsletter from the Pension Integrity Project at Reason Foundation highlights articles, research, opinion, and other information related to public pension challenges and reform efforts across the nation. You can find previous editions here.

In This Issue:

Articles, Research & Spotlights 

  • Leveraging Airports to Improve Pension Solvency
  • The Future of Pension Reform in Pennsylvania
  • Solutions to Montana’s Pension Challenges
  • How to Improve North Dakota’s Retirement Plan
  • Experts: Forecast Worsening for Future Market Returns 
  • Comparing U.S. and Canadian Public Pensions 

Quotable Quotes on Pension Reform
Contact the Pension Reform Help Desk

Articles, Research & Spotlights

Reason Study Finds Leasing U.S. Airports Could Generate Revenues to Pay Down Debt, Pensions

A new study from Reason Foundation’s Robert Poole estimates the market values of 31 airports owned by U.S. cities, counties, and states and shows how they can maximize and monetize these assets for other high-priority public purposes, including paying down costly public pension debt. According to the report, Los Angeles could generate as much as $17.8 billion with its airport, before paying off the airport’s debt as would be required by federal law. Several other cities, including Dallas/Fort Worth and San Francisco, have airport assets valued at over $10 billion. While the leasing of airports into public-private partnerships seems novel in the U.S., this practice has become the norm in other parts of the world. To estimate the value airport properties could have on long-standing pension funding shortfalls, the study compares the potential airport values to each jurisdiction’s unfunded public pension obligations, identifying several cities and states that could completely eliminate their unfunded liabilities and greatly benefit from this policy proposal.

Comments on Pensions in Pennsylvania

Reason testified this month at the invitation of the Pennsylvania House State Government Committee. The Pension Integrity Project spoke at a two-day hearing convened to look at the future of Pennsylvania’s pension plans. The testimony by Reason’s Ryan Frost takes a broad look at the state’s pension challenges and identifies several areas that are in need of reform, including contributions, amortization, and risk management policies. It also examines the state’s policies on pension benefit garnishment and forfeiture in response to significant crimes or misconduct. A comparison among all U.S. states finds that Pennsylvania is one of just 13 that allows for this punitive action on all employee types, including law enforcement. 

The Future of Montana’s Underfunded Pension Plans

Reason Foundation’s Steven Gassenberger submitted public comment to the Interim State Administration and Veterans’ Affairs Committee, detailing the areas where reform is needed for Montana’s two major public pension systems, one for teachers and the other for all other state employees. These plans combined have accrued over $5 billion in unfunded retirement benefits. Through advanced forecast analysis, he finds that a reform proposed in the last legislative session could effectively address the challenges that continue to contribute to the state’s growing funding issues. This type of reform—which generally involves adjustments to contribution and amortization policies—would generate long-term savings for state taxpayers, and would better secure the retirement plan for the future.

How to Fix North Dakota’s Pension System

Over the last 20 years, the North Dakota Public Employees Retirement System (NDPERS) went from 115% funded to just 68% funded, driving up costs and threatening the solvency of the state’s public retirement. The largest contributor to NDPERS’ funding woes is the state’s chronic practice of making insufficient contributions into the plan. In this report, the Pension Integrity Project examines the history of NDPERS, identifying several key areas where reform is needed. The report outlines and analyzes several reform options that, in combination, would improve the long-term sustainability of the plan. These options include changes to contribution and amortization policies, in addition to a plan design for new hires that better manages risk.

Horizon Survey Predicts Bleak Future for Public Pension Investment Returns

The most recent Survey of Capital Market Assumptions by Horizon Actuarial Services compiles short and long-term market expectations from 39 financial advisors, painting a picture on how experts generally see the next 10 to 20 years going for pensions and their investments. According to this summary from Reason’s Truong Bui, most advisors have actually downgraded their expectations for the next few decades, despite the current rally from a tough 2020. This report supports the position that plans still need to be concerned about overly-optimistic assumptions, and that they are still very unlikely to close significant funding gaps with market returns alone.

What U.S. Pension Plans Can Learn from Canadian Pension Funds

While state and local pensions in the U.S. struggle with underfunding and growing annual costs, most public plans in Canada are fully funded and have enjoyed relatively stable year-to-year contributions. Policymakers should look to their northern neighbors to understand how Canada has been able to maintain similar retirement benefits without the challenges that almost ubiquitously hinder U.S. plans. Reason’s Swaroop Bhagavatula examines three major differences in policy between the U.S. and Canada, including much lower investment return assumptions, a lower appetite for risk, and a more equal sharing of costs between employees and employers.

Quotable Quotes on Pension Reform 

“This milestone is the result of an all-out effort to help employers understand and realize the true cost of public safety pension benefits and the taxpayer savings that can be achieved by paying off unfunded pension obligations … Although the large amount of additional contributions is great, the other impressive fact is the total number of employers that are taking action. Employers across the state are chopping down a mountain of pension debt.”

—Administrator of Arizona’s Public Safety Personnel Retirement System (PSPRS) Michael Townsend on employers contributing an extra $1.58 billion in 2021 to reduce unfunded pension liabilities, cited in “Cities pay millions toward $11.8B pension debt,” The Foothills Focus, August 4, 2021

“We happen to have had phenomenal returns … But we want to make sure that we take a long term look at it. And it’s nice to see a number that is 26%, but … we can’t plan on 26% a year by any stretch. It’s just a consistent approach (is needed) to whatever problem we’re facing.”

—Kansas Rep. and Chair of the House Insurance and Pensions Committee Steven Johnson, cited in “Kansas’ pension system had one of its best years ever in 2021. Where does it go from here?,” The Topeka Capital-Journal, August 17, 2021 

“It’s right in line with the governor’s admonition that he never wants to spend one-time money on ongoing things … A pension’s unfunded liability is something you tackle when you have unexpected windfalls. Because it frees up money elsewhere.”

—Communications Director for Vermont-NEA Darren Allen on the opportunity to reduce the state’s unfunded pension liabilities, cited in “Vermont is swimming in cash. Public sector unions say their ailing pensions should benefit”, VTDigger, August 5, 2021

Contact the Pension Reform Help Desk

Reason Foundation’s Pension Reform Help Desk provides information on Reason’s work on pension reform and resources for those wishing to pursue pension reform in their states, counties and cities. Feel free to contact the Reason Pension Reform Help Desk by e-mail at

Follow the discussion on pensions and other governmental reforms at Reason Foundation’s website and on Twitter @ReasonPensions. As we continually strive to improve the publication, please feel free to send your questions, comments and suggestions to

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Reason Foundation’s Pension Integrity Project has helped policymakers in states like Arizona, Colorado, Michigan, and Montana implement substantive pension reforms. Our monthly newsletter highlights the latest actuarial analysis and policy insights from our team.

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