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Today's Top Topics

• Ranking Each States Highway Conditions and Cost-Effectiveness: Wyoming, Nebraska and South Dakota Are Best; Hawaii, Alaska and New Jersey Are Worst

• How to Fulfill the Promise of the Endangered Species Act

• Public Pensions in San Diego

November 5, 2014

Top Story

The Transition Costs Myth

Why Defined-Benefit to Defined-Contribution Pension Reform Is Commonly Misunderstood

Anthony Randazzo

In any given year, a government managing a pension fund should pay in enough money to fund all of the benefits earned that same year. But this doesn't always happen. As a result, state and local governments across America currently face trillions of dollars of unfunded pension liabilities. One proposed solution to this problem is to move from defined-benefit pension systems, in which retired government employees receive a set annual payment for life, to defined-contribution systems, which look more like the 401(k) plans typically found in the private sector. However, when such reforms are proposed, critics often argue that the switch will cost money—that the transition costs will outweigh the benefits of the change. This brief examines that claim and finds it to be false: the transition costs argument is based on a fundamental misunderstanding of how public employee pensions are funded, and should not discourage governments from exploring defined-benefit to defined-contribution pension reform.

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Frequently Asked Questions on Endangered Species Act Reform

Brian Seasholes

The Endangered Species Act is one of the most controversial pieces of U.S. environmental legislation. Proponents claim it is a success because it has saved many species from extinction. Others question its record, noting that there is increasing evidence the Endangered Species Act is causing widespread harm to the species it is supposed to protect. A recent Reason Foundation study, How to Fulfill the Promise of the Endangered Species Act, proposed a new approach, known as the Endangered Species Reserve Program, which would eliminate counterproductive penalties that encourage landowners to make their land inhospitable to endangered species, and replace them with an entirely voluntary system in which landowners are compensated for investing in habitat and species conservation. This article answers the frequently asked questions about endangered species protection, the failures of the Endangered Species Act, and the potential benefits of a new approach.

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Poor Financial Estimates Plague Orange County, CA Retirement System

The county needs to enact reforms or risk bankruptcy

Anthony Randazzo

Here’s a piece of good news for Orange County taxpayers: Over the past decade, the county has acted fiscally responsible by paying 100 percent of the amount financial risk specialists suggested should be saved to pay for pension benefits that have been promised to employees.

But here’s the bad news: The financial experts haven’t been making good estimates, and the Orange County Employees Retirement System has $5.4 billion in debt.

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Bastiat Prize for Journalism and Reason Video Prize Finalists Announced

Reason Foundation will award $32,000 in prizes at Reason Media Awards on Nov. 10 at The University Club in New York City

Today Reason Foundation announced the finalists for $32,000 in journalism prizes that will be awarded to the winners of the 2014 Bastiat Prize for Journalism and Reason Video Prize at the Reason Media Awards on Nov. 10 in New York City.  The finalists for the Bastiat Prize for Journalism, which honors the writers who best explain the importance of freedom with originality, wit, and eloquence, are: 

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Ranking Each States Highway Conditions and Cost-Effectiveness: Wyoming, Nebraska and South Dakota Are Best; Hawaii, Alaska and New Jersey Are Worst

State highways show small progress in deficient bridges and pavement condition, but states struggle to make significant road improvements

David T. Hartgen, M. Gregory Fields, Baruch Feigenbaum

More money is going to state highways, but there has been very little progress in improving their condition according to the 21^st Annual Highway Report by Reason Foundation. 

“Many of the easiest repairs and fixes to state highway and bridge systems have already been made and the rate of progress is slowing down,” said David T. Hartgen, lead author of the Annual Highway Report since 1984. “A widening gap also seems to be emerging between states that are still making improvements and a few states that are really falling behind on highway maintenance and repairs.” 

Spending on state-owned roads totaled $132 billion in 2012, up 6 percent from 2011. Spending varied wildly from state to state according to the Annual Highway Report. South Carolina and West Virginia spent just $39,000 per mile of road in 2012 while New Jersey spent over $2 million per state-controlled mile. Rhode Island, Massachusetts, California and Florida were the next biggest spenders, outlaying more than $500,000 per state-controlled mile. 

High administrative costs in some states could be siphoning away money for road repairs. Hawaii spent $90,000 on administrative costs for every mile of state road. Connecticut had the next highest administrative costs at $77,000 per mile. Meanwhile in Texas administration costs were less than $4,000 per mile and Kentucky spent less than $1,000 per mile on office costs, best in the nation. 

From 2011 to 2012 the pavement condition on urban Interstate highways showed a very slight improvement, with 4.97 percent of urban mileage deemed to be in poor condition in 2012, down from 5.18 percent in 2011. Despite the year-to-year improvement, urban Interstate pavement condition is the same as it was in 2009. More than 10 percent of urban Interstate mileage in New York, New Jersey, Arkansas, Louisiana, California and Hawaii is in poor condition. Those six states account for nearly half of the nation’s potholed urban Interstate pavement mileage. 

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Plastic Bag Ban Hurts California's Economy

Research demonstrates enormous direct and indirect costs to consumers

Lance Christensen

California just became the first state to ban plastic shopping bags at grocery stores, convenience stores and many other businesses when Gov. Jerry Brown signed the law this week. More than 100 cities and counties in the state had already passed their own bag bans. Even if you don’t use the common, convenient, lightweight plastic grocery bag, you should be concerned about the state ban.

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How to Fulfill the Promise of the Endangered Species Act

The Case for an Endangered Species Reserve Program

Brian Seasholes

This study proposes a new approach, called the Endangered Species Reserve Program, which would be a far more successful approach for conserving endangered species. The Endangered Species Reserve Program would remove the counterproductive penalties and replace them with an entirely voluntary system in which landowners are compensated for investing in habitat and species conservation.

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California Wants to Borrow Billions for Short-term Drought Relief

Next generation will be faced with inadequate infrastructure and too much debt to do anything about it

Adrian Moore, Lance Christensen

In a relatively rare moment of bipartisanship, the California Assembly recently voted 77-2 and the Senate voted 37-0 to put a $7.5 billion water bond bill on the November ballot. Unfortunately, the bipartisan measure is a triumph of short-term thinking, pork barrel politics and buck passing at the expense of future generations.

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