Posted on 02/18/2010 5:18:09 AM PST by reaganaut1
State governments face a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them, according to a new report from the Pew Center on the States.
States promised current and retired workers a total of $3.35 trillion in benefits through June 30, 2008, said the report from the nonprofit research group, a division of Pew Charitable Trusts. But state governments had contributed only $2.35 trillion to their benefit plans to pay current and future bills, the report said.
The Pew report said its estimate of the funding gap would likely prove conservative, because it didn't account for the massive investment losses pension funds suffered during the second half of 2008. Although there was a slight rebound last year, it wasn't nearly enough to cover the previous losses, Pew said.
Researchers compiled the data by reviewing each state's comprehensive annual financial report for fiscal year 2008, which for most states ended June 30, 2008. They also looked at pension-plan annual reports.
The pension problems started well before the recession. Even in good times, states were skipping pension payments, leaving larger holes to fill in future years. State legislatures also increased benefit levels without setting aside extra money to pay for them.
As a result, annual pension costs for states and participating local governments more than doubled, to more than $64 billion, from fiscal 2000 to fiscal 2008, said Susan Urahn, the research group's managing director.
"We have a significant problem now, but it's a problem that can be solved," Ms. Urahn said. "If states wait, eventually they will have an unmanageable crisis on their hands."
Investment returns won't be enough to make up the shortfall, she said.
(Excerpt) Read more at online.wsj.com ...
A basic question is whether current voters have the right to impose any level of obligations on future taxpayers
How dare you question the Public Masters of us serf’s, of course they can, it is called SLAVERY .
Let’s have a discussion about the pensions for public employees. I recently read in CA where people making about $150,000/year were able to retire at half that rate.
Simply unacceptable.
I read about some of the ridiculous pension and insurance benefits of some municipal/state employees and I am amazed. Not all of the government pensions are like this. Many of us grunts worked for very average wages and are thankful to have pensions. I was gratified to see that the state I receive pension benefits from is fully funded. phew
Maybe Edwards was right. There are two Americans: Public Sector Vs. Private Sector. Gov. Christie layed out some of the specifics for various state employed retirees. It’s staggering what has been promised in pensions for so little investment. Meanwhile everyone in the private sector (who still has a job) has had their retirement plans take a hit.
the most amazing thing is...when there is a
“shortfall” ...the first thing that happens..is the criminals are released...think about that!!
The private sector has generally corrected itself to account for recession by cutting costs. The public sector has not. Hard times will continue until this government bubble bursts, and all levels of government trim costs inline recessioni-level revenues.
Union actuaries cannot be trusted!
IL has been running a Ponzi scheme for 30yrs in regards to it’s pension funding. In January, the State of IL sold $3.4B in 5yr notes, just to fund the pension plans. IL is currently $130B in the hole (90% of that is for pension funds).
It’s going to get pretty bad for those living on pensions in IL, as well as for IL taxpayers too. Check out the stats here:
http://www.illinoisisbroke.com/
Government employees (city, state, federal) should be capped at “no more than that areas industrial wage for that job,” and that should apply to their retirement benefits as well (dollar amount of benefits and when the benefits kick in).
More than that, even, this demonstrates how behind the curve the public sector is: all but a handful of private industry got rid of pension plans ages ago because they simply weren't sustainable. Eventually, the public sector will need to do this as well; the question is, will it be done now, when it won't hurt as bad, or later, when it will be much more painful.
How do you propose that the government hire white collar workers? Judges, lawyers, doctors, and scientists all expect pay above that of the industrial wage. If you think the quality of government work is bad now, cut the pay for white collar workers even further.
“Simply unacceptable.”
What is your solution for people like University Faculty that can easily double their salaries in industry and get no profit sharing, bonus plans or 401K matching funds that are common in industry? You pay me now or pay me later?
PS. I’m talking about the Sciences and Medicine not English.
The average wage of the federal government shouldn’t be twice the average wage of the nation. There’s lots of room for higher wages for judges and medical doctors in that average. Why pay $50,000 to people worth $25,000 doing the same work... and not having any risk. Do you not remember when teachers used to be paid less than the industrial wage of the area... and the students received twice the value they receive now?
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