ON-Lion Letter
In December, the American Legislative Exchange Council's (ALEC's) Tax and Fiscal Policy Task Force released two documents -- its State Budget Reform Toolkit and a report on state pensions, Public Employee "Other Post Employment Benefit" Plans:  A Case for Shifting to a Defined-Contribution Approach.

The comprehensive State Budget Reform Toolkit "is designed to help legislators address the serious financial crises in the states by changing their budgetary system from the conventional input system, which is clearly a failed policy model, to one focused on outcomes.
 
"This new budgetary system," it continues, "is called priority-based budgeting.  Priority-based budgeting means state officials and citizens must first determine the core functions of government.  While this may seem like an elementary step, it is seldom taken before legislative appropriations are made."

The Toolkit's managing editors are Leonard Gilroy, director of government reform at the Reason Foundation, and Jonathan Williams, director of ALEC's Tax and Fiscal Policy Task Force.

The in-depth Public Employee "Other Post Employment Benefit" Plans report finds that, "with few exceptions, states with defined-contribution retiree health plans have the lowest levels of unfunded liabilities per capita in their plans.  Defined-benefit retiree health plans tend to have higher costs and accumulate higher levels of unfunded liabilities per capita.

"States with defined-contribution retiree health plans have more successfully constrained the cost of health insurance and have required retirees to assume a reasonable amount of the cost of insurance.  As a result, these states are better able to meet their obligations with actual contributions to the retiree health plan equal to or exceeding the required contribution."

The report was written by Barry W. Poulson and Arthur P. Hall, both of the Center for Applied Economics at the University of Kansas School of Business.

The Lynde and Harry Bradley Foundation in Milwaukee supports ALEC's Tax and Fiscal Policy Task Force.  Bradley also supports Reason Foundation projects.
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