Former Gov. Mark Sanford once described the unfunded liabilities in South Carolina’s state retirement system as a ticking time bomb. The system’s unfunded liabilities total anywhere from $13 billion to as much as $53 billion.
Whatever the number, it would appear there’s a disaster in the making because at some point, SC taxpayers are going to have to cough up the coin to cover the costs.
Earlier this week, state Treasurer Curtis Loftis attempted to delve into the retirement system’s latest actuarial report during a meeting of the state’s Budget and Control Board meeting. He didn’t get very far.
According to The Nerve (full disclosure: my employer), the report for the last fiscal year recent arrive and the news, evidently, was not good.
The report, which evaluates the system’s assets, liabilities and probable future outlays, shows that the state’s share of retirement costs increased in 2009-10 by $88 million, according to Loftis.
Loftis shared that news from the report during the Budget and Control Board meeting Tuesday in Columbia.
But the board’s other four members – Gov. Nikki Haley; Comptroller General Richard Eckstrom; Senate Finance Committee Chairman Hugh Leatherman, R-Florence; and House Ways and Means Chairman Dan Cooper, R-Anderson – did not want to get into the report, The Nerve reported.
Loftis moved to have the board receive the report as information. He said now is the right time for the board to do so because the General Assembly is in session and could address the $88 million increase to taxpayers as a budget item. If not, Loftis warned, “It’ll be more next year.”
Haley, Eckstrom and Leatherman countered that they would rather wait and take a comprehensive approach to assessing and reforming the retirement system, The Nerve added.
Can you say “kicking the can down the road?”
One South Carolina politician who does seem to comprehend the gravity of the situation is state Sen. Greg Ryberg.
Earlier this month on the Senate floor, Ryberg took occasion to inform his colleagues of the condition of the state’s pension plan: “The unfunded liabilities of the retirement system went from 30 years of unfunded liabilities to 37.6 years of unfunded liabilities.”
Citing the report, he said the amount of the shortage sits at $13.3 billion.
But, Ryberg noted, one wouldn’t know the system is in trouble from reading a letter from the actuary accompanying the report. He quoted part of the letter: “In our opinion, South Carolina’s retirement system continues to operate on an actuarially sound basis.”
Ryberg, according to The Nerve, went on to tell how he had seen billionaire investor Warren Buffett on television that morning proclaim that the most important thing state retirement systems need to do is find a friendly actuary.
“You see we’ve done that,” the senator said. “We’ve got a friendly actuary.”
Underscoring the point, Ryberg said of the report, “It doesn’t talk about fiscally sound. It says actuarially sound.”
Unstated was the fact, as Loftis and Ryberg realize, that there’s a world of difference between what’s “fiscally sound” and what’s “actuarially sound.”