Governor's Column: Stewardship Of State Pension Not Something To Reprimand
Office of Gov. Dennis Daugaard
500 E. Capitol Ave.
Pierre, S.D. 57501
FOR IMMEDIATE RELEASE: Friday, April 7, 2017
CONTACT: Tony Venhuizen or Kelsey Pritchard at 605-773-3212
EDITORS/NEWS DIRECTORS: Please consider the following column from Gov. Dennis Daugaard. For an audio recording of the Governor’s weekly column, visit news.sd.gov/media.aspx and click on “Audio” under “Governor Dennis Daugaard.”
Stewardship Of State Pension Not Something To Reprimand
A column by Gov. Dennis Daugaard:
South Dakotans are not afraid to do things differently when different means a better way. “Different” defines how we have been running our state’s retirement system.
Many other state retirement systems are struggling with large unfunded liabilities. New Jersey’s credit rating was downgraded by S&P recently due to its “large and growing unfunded pension liability.” Similarly, Illinois was downgraded by Fitch from BBB+ to BBB, partly because of ballooning pension problems.
In contrast, the South Dakota Retirement System has been solidly funded for decades, and is one reason that our state has a AAA credit rating. We do not have unfunded liabilities that need reckoned with. SDRS provides excellent benefits while operating with fixed funding at a low cost.
I was surprised when, last year, federal officials informed us of their intent to penalize South Dakota’s stewardship of public pension funds. Perhaps I should not have been shocked given the federal government’s track record on spending, but it is hard to comprehend why our state’s responsible management would be punished.
The Obama Administration’s decision to admonish South Dakota related to state employees who provide federal services. Even though SDRS is a low-cost, efficient retirement system, the Obama Administration took the position that our plan does not adhere to the rigid guidelines for pension reimbursement. Within South Dakota state government, essential services that are mandated by the federal government are provided by state employees. State workers provide these services for efficiency reasons and to save taxpayer dollars.
In reality, SDRS provides retirement benefits more efficiently, thereby reducing the cost of benefits for both state and federally-funded employees. We should be fully reimbursed for the pension costs of federally-funded employees of the state.
Ironically, South Dakota is being reprimanded for its good stewardship while poorly funded retirement plans, with much higher contributions, are not facing the same consequences. South Dakota’s pension cost, on average, is half that of other public retirement plans nationally.
We are currently working with the new administration to right this wrong, and I am hopeful they will work with us to find a common sense solution. In the case of our pension system, “different” is good and it’s not something that should be punished.