State Pension Reforms

[StLucieBengal]

http://spectator.org/articles/64259/states-need-get-serious-about-pension-reform

Would be interested to hear the. Boards opinions on this topic. I know it's a bit different that religion, dancing, or abortion. But I think we would have some pretty interesting perspectives on this matter.

[Belsnickel]

Virginia Retirement System (VRS) started to really change things about 16 years ago. They made employees more responsible for contributing towards their pension as well as creating a defined contribution part and pushing harder for more to use it. They match 50% of your payroll contribution each check up to $20 or $40, I can't remember off the top of my head right now. My pension is definitely not as beneficial to me as the old-timers', but it is pretty good. I would say it is slightly better than what I had in the private sector (cash match for 401k at the company I was at was very nice).

The fiscal year following my hiring, they changed it up again into what they call the hybrid system, putting even more responsibility on the employee. This is the system my wife got on (she became full time only about a year ago after being an adjunct). When you compare it with what even I have, it is not very good at all. Compared to what it once was, it's crap. That being said, I have seen worse in the private sector.

Now, the only problem with all of this is that with the decreases in benefits to employees and the low wages paid to us, Virginia is (and I know I like to point this out often) the worst state for public employee compensation. Wages alone there are several states that place below the private sector in their borders, but overall compensation draws them about even. Not Virginia. Over the past 15 years, about the time our legislature started pay freezes and putting less into our benefits, the number of our full time employees that are on government assistance has increased tenfold.

I think we definitely need to reform how we handle benefits for public sector employees, but we need to take a hard look how we want to do this. For decades people took government jobs because even though the pay was low, the benefits were good. If we make the benefits not so good, then there is a huge incentive loss. It is extremely difficult to find people to do the jobs we need them to do. We have been looking for an IT person for our office since before I got here, but we can't pay someone with the qualifications we need. We hire people, hoping they will learn, but they can't do the job. I work in a department that is a part of the finance office, so accountants, right? I am the only person with a finance background in my office because most people with a background in it aren't silly enough like me to prefer to work in public or nonprofit. They know where the money is.

I know it's not like this everywhere, but this is what it has become in Virginia. We are at the bottom of the nation for this sort of thing, and the rest of the country coming down to meet us there is not the best idea. We need to find a middle ground.

[Benton]

Don't know how it is all over, but for Kentucky...

For the last few decades people had one of two options: go to work for the public and make less now, but more later in the form of a decent pension and have more security... or, go to work in the public sector, make more now, but risk not getting as good of a retirement or having any job security.

The problem when the right gets all up in arms about public pensions is they often don't factor in how much catching up on the pay scale states would have to do. Take water district superintendents. In Kentucky, they're required to have different classifications to run a water or waste water department. Outside of a handful of very large metropolitan districts, the people with those qualifications can make three or four times that working for chemical plants, coal companies and other industries. And often times have a labor industry that makes sure they're going to maintain their wage.

Pension reforms are needed in some instances and in some states. But the bigger issue is economic reform. A healthy economy should have consumers spending money which generates taxes, businesses showing profits because of sales which generates taxes and reinvestment of taxes in the form of infrastructure, which creates jobs and betters the economy.