December 11, 2014
Scenes from a nation
unwilling to face its bureaucrat-pension crisis:
New York Times found that
despite increasing its annual retirement payment “more than 12 times from the
city’s outlay in 2000,” the Big Apple’s “pension hole just keeps getting
bigger, forcing progressively more significant cutbacks in municipal programs
and services every year.”
• A Massachusetts educrat
convicted for possession of child pornography was
allowed to keep his monthly pension of $2,393.78. The Bay State’s
top court ruled that while an email address supplied by the state’s department
of education was used obtain the smut, “a teacher’s conduct that fails to reach
inside the school house doors does not satisfy the standard for forfeiture.”
Investors Service named
Illinois, hobbled by a liabilities-to-revenue share of 318 percent, as the
state with the worst total pension obligation in the nation.
• In what The Arizona
Republic called “a major victory for city labor unions,” Phoenix voters rejected a
proposal to block pension spiking and shift newly hired workers to
& Poor’s downgraded
Pennsylvania’s general-obligation debt, citing, as one cause, “growing
expenditure pressures due to inaction on pension reform.”
• A profile
of double-dipping by The Toledo Blade
exposed a “loophole in Ohio
pension law [that] allows employees … to collect a pension check from a state public
pension fund while at the same time collecting a paycheck from their public
• Wheeling, West
to hike its sales tax by a half-cent, in an effort to address ballooning pension
expenditures for police officers and firefighters.
• John L.
Smith, a columnist for the Las Vegas Review-Journal, likened
Nevada’s university system to a “Democratic Party Full Employment Act,” since
a former attorney general was already on the payroll, and a former treasurer
was inquiring “about the possibilities of a six-figure position at UNLV.”
with the Kentucky Teachers’ Retirement System asked
state legislators for a 30-year, billion-dollar bond to buttress the plan,
which has only half the funding needed to meet future obligations.
• The Virginian-Pilot denounced three fresh
examples of the “long history in Virginia
of part-time legislators bowing out of elected office and moving into full-time
positions that exponentially boost their income and pad their state pensions.”
Recession, coupled with wider awareness of out-of-control benefits for “public
servants,” should have instigated serious reforms of the costly and
unsustainable goodies given to government retirees. It’s now clear that
progress was paltry. Pension-padding and double-dipping remain commonplace. Eligibility
rules were not tightened enough. Far too few 401(k) plans have been adopted. And
politicians, unsatisfied with the benefits acquired through legislative gigs,
still feel entitled to boosted pensions through windfall sinecures.
The greatest frustration?
No savings were achieved through meaningful right-sizing of bureaucrat
payrolls. Between 2007 and 2012 (the last year for which there is U.S. Census
Bureau data), the number of state employees fell by 1.2 percent. The comparable
decline for local government was 3 percent. Cuts of 10 percent weren’t much to expect,
considering the circumstances, but gutless governors, state lawmakers, mayors,
city councilors, aldermen, and selectman didn’t dare try. They recognize the political
muscle of public-sector unions.
the actuarial firm Milliman, the unfunded
liability of the 100 largest government pension plans is $1.2 trillion -- and
aforementioned teacher system has a funded ratio of just 25.8 percent. Other
standout deadbeats include the State
Employees’ Retirement System of Illinois (34.2 percent), Teachers’ Retirement
System of the State of Illinois (40.6 percent),
Connecticut State Employees
Retirement System (41.2 percent), State
Universities Retirement System of Illinois (41.5 percent), and Indiana State Teachers’ Retirement Fund (45.7 percent).
Writing in The Wall Street Journal, the American
Enterprise Institute’s Andrew G. Biggs noted that last year, “nearly half of
state and local plan sponsors failed to make their full pension contribution.” Such
dereliction is sure to continue, as lobbyists for Medicaid, preschool, and
postsecondary education demand more from public-sector budgets.
It gets worse.
To this point, our discussion has focused on the unpaid bills for pensions. Other post-employment benefits (OPEB) --
which include healthcare coverage and life-insurance policies -- tack on
another trillion-dollar burden. Lump-sum payments for unused sick and vacation
time add to the insolvency.
market has rebounded. Gasoline is relatively cheap. There are encouraging signs
of job growth. Will the good news make citizens more or less interested in how government
spends their earnings?
Nothing to see
here, folks. Move along. Just remember to keep paying your taxes.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
# # # # #