Public Sector pensions have become the latest target of the Republican party. If one were to believe the right wing reports, the pensions of public employees are destroying the state budgets. That is a vast misstatement. The truth of the matter is this:
Pension contributions from state and local employers aren’t themselves blowing up budgets. They amount to 2.9 percent of state government spending on average, according to the National Association of State Retirement Administrators. The Center for Retirement Research at Boston College puts the figure at 3.8 percent.
The most recent Public Fund Survey by Brainard’s group showed that, on average, state and local pensions were 78.9 percent funded, with about $688 billion in unfunded promises to pensioners. The unfunded liabilities would be a problem if all state and local retirees went into retirement at once, but they won’t.
What will happen though, is if bills such as the one proposed by Florida’s TEA party governor come to pass, is that large numbers of public employees will retire on the eve of the law becoming effective. The TEA party backed governor has proposed a law that would cut retirement benefits in half for many public employees. The large numbers of employees who would retire before such a law takes effect would cause large fiscal strains on the pension funds, and would actually cause the funds to destabilize.
Of course, in making the public employees and their pensions into the scapegoat, they distract taxpayers from the real issues:
In 2010 (pdf alert), public pensions in Florida were $743 million, or 1% of the budget. Medicaid costs $20.5 billion, or 29% of the budget. Education is 52% of the budget. Free lunches for poor school kids? $800 million. The new arena that was built in Orlando for the basketball team? $480 million. With all of that, why are public pensions being blamed for breaking the budget?
Another factor that the Republicans have not considered is this: When firefighters and paramedics get too old to jump out of firetrucks and ambulances at 2 in the morning, they frequently retire, and get jobs teaching at the fire academy or in a community college as an adjunct instructor. This is where the next generation of paramedics and firefighters are made. These adjunct instructors are cheaper than hiring full time instructors, and the students benefit from the experiences and knowledge that the retired instructors bring to the classroom. Under the proposed law, retired employees would be prohibited from working in a government job once they are receiving a pension. This means that community colleges and fire academies will lose these instructors. What will THAT cost?