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<font size="5"><center>
Why employee pensions
aren't bankrupting states</font size><font size="4">
From state legislatures to Congress to tea party rallies, a vocal backlash
is rising against what are perceived as too-generous retirement
benefits for state and local government workers. However,
that widespread perception doesn't match reality</font size></center>
McClatchy Newspapers
By Kevin G. Hall
Sunday, March 6, 2011
WASHINGTON — From state legislatures to Congress to tea party rallies, a vocal backlash is rising against what are perceived as too-generous retirement benefits for state and local government workers. However, that widespread perception doesn't match reality.
A close look at state and local pension plans across the nation, and a comparison of them to those in the private sector, reveals a more complicated story. However, the short answer is that <SPAN style="BACKGROUND-COLOR: #ffff00">there's simply no evidence that state pensions are the current burden to public finances that their critics claim</span>.
Pension contributions from state and local employers aren't blowing up budgets. They amount to just 2.9 percent of state spending, on average, according to the National Association of State Retirement Administrators. The Center for Retirement Research at Boston College puts the figure a bit higher at 3.8 percent.
Though there's no direct comparison, state and local pension contributions approximate the burden shouldered by private companies. The nonpartisan Employee Benefit Research Institute estimates that retirement funding for private employers amounts to about 3.5 percent of employee
compensation.
Nor are state and local government pension funds broke. They're underfunded, in large measure because — like the investments held in 401(k) plans by American private-sector employees — they sunk along with the entire stock market during the Great Recession of 2007-2009. And like 401(k) plans, the investments made by public-sector pension plans are increasingly on firmer footing as the rising tide on Wall Street lifts all boats.
Boston College researchers project that if the assets in state and local pension plans were frozen tomorrow and there was no more growth in investment returns, there'd still be enough money in most state plans to pay benefits for years to come.
"On average, with the assets on hand today, plans are able to pay annual benefits at their current level for another 13 years. This assumes, pessimistically, that plans make no future pension contributions and there is no growth in assets," said Jean-Pierre Aubry, a researcher specializing in state and local pensions for the nonpartisan Center for Retirement Research at Boston College.
In 2006, when the economy was humming before the financial crisis began, the value of assets in state and local pension funds covered promised benefits for a period of just over 19 years.
At the bottom of Aubry's list is Kentucky, which would have enough assets to cover 4.7 years. Other states do much better: North Carolina local government pensions are funded to cover 19 years of promised benefits; Florida's state plan could cover 17 years; and California's plans about 15 years.
"On the whole, the pension system isn't bankrupting every state in the country," Aubry said.
States having the biggest problems with pension obligations tend to be struggling with overall fiscal woes — New Jersey and Illinois in particular. Many states are now wrestling with underfunding because they didn't contribute enough during boom years.
Most state and local employees government across the nation have defined-benefit plans that promise employees either a percentage of their final salary during retirement or some fixed amount. The Bureau of Labor Statistics estimates that 91 percent of full-time state and local government workers have access to defined-benefit plans.
Several states_ including Florida, Georgia, Ohio, Colorado and Washington_ have adopted competing defined-contribution plans, or a hybrid plan that provides government employees both a partial defined benefit in retirement and a supplementary defined-contribution plan.
Defined-contribution 401(k) plans divert on a tax-deferred basis a portion of pay, generally partially matched by the employer, into an account that invests in stocks and bonds. In 1980, 84 percent of workers at medium and large companies in the U.S. had a defined-benefit plan like those still predominate in the public sector. By last year, just 30 percent of workers in these larger companies were covered under such plans.
Defenders of the public pension system say anti-government, anti-union elected officials and interest groups have exaggerated the problem to score political points, and that as the economy heals, public pension plans will gain value and prove critics wrong.
"There's a window that's closing as market conditions improve and interest rates rise, the funding of these plans is going to look better than depicted by some," insisted Keith Brainard, the director of research for the National Association of State Retirement Administrators in Georgetown, Texas.
Critics of public sector pensions paint the problem with a broad brush.
"Unionized government workers have tremendous leverage to negotiate their own wages and benefits. They funnel tens of millions of dollars to elect candidates who will sit across from them at the negotiating table," said Thomas Donohue, the chief executive of the U.S. Chamber of Commerce, in a Feb. 24 blog post. "This self-dealing has resulted in ever-increasing wage and benefit packages for unionized government workers that often far outstrip those for comparable private-sector workers."
In a Feb. 23 radio interview, Rep. Devin Nunes, R-Calif., called federal stimulus efforts to rescue the economy "essentially a federal bailout of public employee unions." Nunes described money owed to state pensioners as a crisis "about ready to happen."
Except that two out of every three public-sector workers aren't union members.
The Bureau of Labor Statistics reported in January that 31.1 percent of state public-sector workers were unionized in 2010, compared with 26.8 percent of federal government employees. The highest percentage of unionization, 43.3 percent, was found in local government, where police officers and firefighters work. Teachers can fall into either state systems or local government.
Ironically, in Wisconsin, where Republican Gov. Scott Walker is trying to weaken public-sector unions and reduce pension benefits, he's exempted police and firefighters, who are among the most unionized public employees. And Wisconsin's public-sector pension plan still has enough assets today to cover more than 18 years of benefits.
The most recent Public Fund Survey by the National Association of State Retirement Administrators showed that, on average, state and local pensions were 78.9 percent funded, with about $688 billion in unfunded promises to pensioners. Critics suggest that the real number is at least $1 trillion or higher, using less-optimistic market assumptions.
The unfunded liabilities would be a problem if all state and local retirees went into retirement at once, but they won't. Nor will state governments go out of business and hand underfunded pension plans over to a federal regulator, as happens in the private sector. State and local governments are ongoing enterprises.
The flow of employees into retirement matches up with population trends in states, with Northeastern states with declining populations, particularly Rhode Island, seeing more stress on their pension systems than Southern and Western states, where there's been vibrant population growth.
Another misperception tied to the pension debate is that while the private sector has shed jobs during the economic crisis, state and local government employment has grown — and pensions along with it.
Since September 2008_ when state and local government employees numbered 19,385,000 and the economic crisis turned severe — the governments' payrolls shrunk by 407,000, to 18,978,000 this January, according to Bureau of Labor Statistics data.
When calculating from December 2007_ the month that the National Bureau of Economic Research determined was the start of the Great Recession_ state and local government employment has fallen by 703,000 jobs amid a downturn that cost the nation more than 8 million jobs overall.
"The down economy has had an effect, and the loss of employment outside the public sector has created a contrast" said Brainard, of the National Association of State Retirement Administrators.
Also fueling backlash is the perception that state and local workers don't contribute to their own retirement funds the way private sector workers do.
Four states have non-contribution public pension plans_ Florida, Utah, Oregon and Connecticut. Missouri until recently had a non-contribution policy for state workers, as did Michigan until 1997. Michigan workers hired before 1997 still don't pay toward their pensions, and some teachers in Arkansas don't have to contribute toward theirs. Tennessee doesn't require contributions from most workers and employees in the state higher education system.
Those notable exceptions aside, most states require employee contributions. The midpoint for these contributions for all states and the District of Columbia is 5 percent of pay, according to academic and state-level research. That contribution rate climbs to 8 percent for the handful of states whose workers or teachers are prohibited from paying into the federal Social Security program.
By comparison, private-sector workers shoulder a bit more of the burden.
In its data for 2010, Fidelity Investments, the largest administrator of private-sector 401(k) retirement plans, showed employee contribution rates in its plans averaged 8.2 percent of pre-tax pay.
Separately, the Employee Benefits Research Institution estimates that most private-sector employers match up to 50 percent of employee contributions up to the first 6 percent of salary.
The utility or burden of either type of retirement plan depends on whether the plan is measured by what it delivers to an individual, or by how much it delivers to all workers receiving retirement benefits from their employer.
"It really comes down to what you are attempting to do," said Dallas Salisbury, the president of the nonpartisan Employee Benefit Research Institute.
Viewed through the lens of an employee, defined-benefit plans are more cost-effective at providing a pre-determined level of benefits to an employee. But the shortcoming of these plans is that they reward seniority. For workers with a shorter tenure, they're far less generous in retirement.
This fairness issue is one reason why 401(k) plans have grown steadily in prominence since the mid-1980s. From the payroll perspective of an employer, these defined-contribution plans produce at least some retirement income for the greatest number of employees, and the plans can move with employees who change jobs.
http://www.mcclatchydc.com/2011/03/06/109649/why-employee-pensions-arent-bankrupting.html








Mar 9, 8:20 PM EST
Wis. GOP strips public workers' bargaining rights
By SCOTT BAUER
Associated Press
MADISON, Wis. (AP) -- Republicans in the Wisconsin Senate voted Wednesday night to strip nearly all collective bargaining rights from public workers after discovering a way to bypass the chamber's missing Democrats.
All 14 Senate Democrats fled to Illinois nearly three weeks ago, preventing the chamber from having enough members present to consider Gov. Scott Walker's so-called "budget repair bill" - a proposal introduced to plug a $137 million budget shortfall.
The Senate requires a quorum to take up any measures that spend money. But Republicans on Wednesday split from the legislation the proposal to curtail union rights, which spends no money, and a special conference committee of state lawmakers approved the bill a short time later.
The lone Democrat present on the conference committee, Rep. Peter Barca, shouted that the surprise meeting was a violation of the state's open meetings law but Republicans voted over his objections. The Senate convened within minutes and passed the measure without discussion or debate.
Before the sudden votes, Democratic Sen. Bob Jauch said if Republicans "chose to ram this bill through in this fashion, it will be to their political peril. They're changing the rules. They will inflame a very frustrated public."
Walker said after the votes that Senate Democrats had plenty of opportunities to come home.
"I applaud the Legislature's action today to stand up to the status quo and take a step in the right direction to balance the budget and reform government," the governor said in a statement.
Walker's proposal has touched off a national debate over union rights and prompted tens of thousands of demonstrators to converge on Wisconsin's capital for weeks of protests. Spectators in the gallery Wednesday night screamed "You are cowards" as the Senate voted.
"In 30 minutes, 18 state Senators undid 50 years of civil rights in Wisconsin. Their disrespect for the people of Wisconsin and their rights is an outrage that will never be forgotten," said Democratic Senate Minority Leader Mark Miller. "Tonight, 18 Senate Republicans conspired to take government away from the people. Tomorrow we will join the people of Wisconsin in taking back their government."
The drama unfolded less than four hours after Walker met with GOP senators in a closed-door meeting. He emerged from the meeting saying senators were "firm" in their support of the bill.
Democrats had been calling all day Wednesday for Walker and Republicans to compromise.
Senate Majority Leader Scott Fitzgerald said earlier that Republicans had been discussing concessions Walker's office had offered, including allowing public workers to bargain over their salaries without a wage limit. Several GOP senators facing recall efforts had publicly called for compromise.
Union leaders weren't happy with the concessions, and Democrats had not signed off on them.
While talks had been going on sporadically behind the scenes, Republicans in the Senate also had publicly tried to ratchet the pressure on Democrats to return. They had agreed earlier Wednesday to start fining Democrats $100 for each day legislative session day they miss.
Walker's stalled bill was introduced to help plug a $137 million budget shortfall projected by the end of June. He has said that without the collective bargaining bill, he may have to lay off 1,500 state workers and make other cuts to balance the budget.
On Wednesday, the nonpartisan Legislative Fiscal Bureau offered a way to salvage $165 million in debt by refinancing savings. It had said the bill could pass as late as early April if other accounting moves were done by Walker's administration to extend the debt refinancing deadline by a month.
In what way is this a good thing?
Mar 9, 8:20 PM EST
Wis. GOP strips public workers' bargaining rights
Yep, its crystal clear now: this was always a political matter; and never a budgetary one.
QueEx
The damn governor is telling you we don't have the money and the promises made by others are not sustainable. The only way you guys understand is when the people who were promised these goodies take to the streets. WTF I mean, stop relying on others for your future.
Gunner, you know this is not about school teachers, it' about breaking the unions. Karl Rove, when asked if he had mapped out the campaign (for GW Bush), he said, 'Don't expect me to answer this question' -- he is too ambitious to want only that. The real prize is creating a Republican majority that would be as solid as, say, the Democratic coalition that Franklin Roosevelt created -- a majority that would last for a generation and that, as it played itself out over time, would wind up profoundly changing the relationship between citizen and state in this country." (The New Yorker, May 12, 2003)"
The public unions in Wisconsin have made concessions and are will to make more, but they will not allow corporatist politicians to further transfer income from the middle class to the wealthy.
Yep, its crystal clear now: this was always a political matter; and never a budgetary one.
QueEx
by Gunner. How is this a good thing? How is this a thing to celebrate and will you still be
when Wisconsin voters, who have turned strongly against Walker and the Republicans, start removing them from office, either through recall or through regular elections? Short term victory is meaningless if it facilitates longer term catastrophic defeat.Yep, its crystal clear now: this was always a political matter; and never a budgetary one.
QueEx
Brilliant deduction.
I see why they pay you the big bucks.
What else could it possibly be when one political party fights another?
With extensive experience with schools in my city, it is easy to see that whites use the inner city schools as a steady paycheck. They do not give a flying crap about the education black children get, which is why the schools are so terrible.
Yet, <SPAN style="BACKGROUND-COLOR: #ffff00">they want high salaries, extensive pensions, full health care, and more</span> WITHOUT ANY ACCOUNTABILITY!
<SPAN style="BACKGROUND-COLOR: #ffff00">Teachers and police are wildly overcompensated</span> because of their unions. <SPAN style="BACKGROUND-COLOR: #ffff00">Local and state budgets are collapsing because of it, and yet they refuse to be reasonable</span>.
This is just going to get worse.

Gee, why didn't you just say so sooner, when you were pretending it was about
money/budgets . . .
![]()

I forgot he said that nonsense.
The "wildly overcompensated" teachers and police. Damn. I guess that's why so many people flock to those jobs.![]()
This year's list broke records in size (1,210 billionaires) and total net worth ($4.5 trillion). China doubled its number of 10-figure fortunes, and Moscow now has more billionaires than any other city. Mexico's Carlos Slim widened his lead at No. 1.
Gee, why didn't you just say so sooner, when you were pretending it was about
money/budgets . . .
![]()
In what way is this a good thing?

As we assumed from the beginning.
I'm questioning theby Gunner. How is this a good thing? How is this a thing to celebrate and will you still be
when Wisconsin voters, who have turned strongly against Walker and the Republicans, start removing them from office, either through recall or through regular elections? Short term victory is meaningless if it facilitates longer term catastrophic defeat.

A government budget is just a part of politics.
When one group forcibly decides how another group's resources is used, it is politics.
The public sector unions force you to pay their salaries and pensions through taxes.
If that is not politics, what is?
It's all part of living in a sociality with high living standards. Of course you can move to Mexico of Somalia and pay nothing.
If that's the case why don't use that same argument against every pro entitlement legislation you champion. Coming from you that means you're moving to the center!!!![]()
Read my reply to the previous response.
The people elected Walker to clean it up. Wisconsin is known as a democratic state. Dave you can only tax the rich so much until that burden has to roll over to the middle class. Dude why do you support entitlements so much??? Granted, I want to help people but not to the point of forever looking at them as a permanent underclass.
If that is the case, given the financial problems of California why would they continue to elect the same people? Why because as a whole many in California is hooked on getting something for nothing?
Research the history of Labor Unions. Where were these fucking unions when our forefathers couldn't get a damn job or protection because of the pigment of their skin Dave?
http://www.nytimes.com/
F.D.R. Warned Us
Updated February 19, 2011, 09:38 PM
James Sherk is the Bradley fellow in labor policy at the Center for Data Analysis at the Heritage Foundation.
“It is impossible to bargain collectively with the government.”
That wasn’t Newt Gingrich, or Ron Paul, or Ronald Reagan talking. That was George Meany -- the former president of the A.F.L.-C.I.O -- in 1955. Government unions are unremarkable today, but the labor movement once thought the idea absurd.
Union contracts make it next to impossible to reward excellent teachers or fire failing ones. Union contracts give government employees gold-plated benefits – at the cost of higher taxes and less spending on other priorities. The alternative to Walker's budget was kicking 200,000 children off Medicaid.
/QUOTE]
That's not true at all. At all. The alternative was to not give the millions of dollars in tax breaks to businesses right after he was sworn in. How can he afford that spending with his state in crisis? And since when have Republicans cared about kicking people off Medicaid? That's new.
This is why Reagan fired the air traffic controllers. A government can't hold the people hostage Dave. This is America not China.
Reagan fired the air traffic controllers because they had a no-strike rule and they broke it.
I want to have a say where my tax dollars go. All he is asking those selfish people to do is bear some of the burden that everyone else is feeling. How is this wrong?
The alternative was kicking 200,000 children off medicaid!!!!!!
They gave in on all of his demands, every single one. The point was NEVER the budget but union-busting.
You have as much say over your tax dollars whether there's collective bargaining or not, unless suddenly Wisconsin is going to referendums on every bill.
He wasn't asking top wage earners or big business to bear some of that burden, how is that right?
Stop with the medicaid story, it's not true.
http://www.nytimes.com/
F.D.R. Warned Us
Updated February 19, 2011, 09:38 PM
James Sherk is the Bradley fellow in labor policy at the Center for Data Analysis at the Heritage Foundation.
Now we come to MSNBC. Sigh, the so called liberal news network. MSNBC couldn’t be bothered to break away from their Lock Up and Dateline reruns documentary bloc to cover a landmark event that has reunified the left, and is likely to have an impact on the 2012 presidential election.
If there is one network that progressives/liberals thought understood this, it was MSNBC. However MSNBC has never really been overly interested in covering the news, much less live news events on a weekend. If I had a dollar for every time MSNBC has disappointed their viewership by being AWOL when news happens, I’d be a very wealthy man.
All three cable networks share something else in common besides their decision to ignore today’s rallies. CNN, MSNBC, and Fox News along with most other forms of media have decided that liberal protests aren’t newsworthy. They believe that the ratings and the money are in the right, not the left. The three cable networks are corporate owned and only for the purpose of profit. They don’t care about journalism or their obligation to inform the public.
This is all about dollars, and the outdated notion that the most profitable way to run a cable news outlet is to be like Fox News, which is why CNN keeps hiring more and more right wingers and has hopped into bed with the Tea Party Express.
Eight of the Democrats also face recall efforts. Senate Majority Leader Scott Fitzgerald issued a statement Saturday calling them the most shameful 14 people in the state.