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States Face A $1T Workers Pension Gap

From a suddenly concerned Associated Press:

Study: States must fill $1 trillion pension gap

By Mark Scolforo, Associated Press Writer Thu Feb 18

HARRISBURG, Pa. – States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn’t taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade’s worth of policy decisions for leaving them shortchanged.

Is this what Mr. Obama means by the “lost decade”?

The result for some states will be "high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future," the study said.

The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding

As of 2008, states had $2.4 trillion to meet $3.4 trillion in promised pension, health care and other post-retirement benefits, according to the report.

The true gap may even be wider, because the study did not account for the full impact of investment losses in late 2008, during the stock market downturn, and because many plans employ multiyear smoothing techniques to lessen the effect of a single year’s losses

Remember, “the study did not include many city, county and municipal pension plans, which are thought to have similar underfunding.”

Pew deemed 16 states solid performers in how they fund pensions, 15 needing improvement and 19 considered to be facing serious concerns…

The exploding financial burden could be a bitter pill for taxpayers, many of whom will not be collecting similar pensions or other benefits when they retire, said David Kline with the California Taxpayers’ Association. About one in five private sector workers have traditional defined benefit pensions, compared with about 90 percent of public-sector employees — including some that do not get Social Security

As we have noted, the current generation of retirees are enjoying a golden age that no other generation before or after them will ever attain again.

Illinois was rated the most troubled pension system during the study period, with a 54 percent funding level and a total liability of more than $54 billion.

Isn’t that peculiar? Wasn’t Mr. Obama a state Senator in Illinois for eight years before he was thrust upon the national stage?

How did such a champion ‘fiscal responsibility’ allow this to happen during his watch?

In Pennsylvania, a series of decisions by the Legislature and governor have shielded taxpayers from much of the pain for the past decade, but costs of less than $1 billion a year now is projected to climb to about $6 billion annually in the coming three years.

The report said policy makers have exacerbated the problem by expanding benefits, relying on overly optimistic assumptions about investment returns and failing to sufficient fund the programs.

Of course the public sector unions had nothing to do with this.

Pew calculated a $587 billion national cost for current and future retiree health care and other non-pension retirement benefits, with only about 5 percent of that amount funded as of 2008. The cost of health care and the number of retirees are both on the rise, adding to the pressure on states…

Pew said states should consider changes that have proven to be effective and politically viable. Among them: setting minimum contribution levels that are actuarially sound, sharing some of the investment risk with employees, cutting benefits, increasing the minimum retirement age, making employees pay more into the system and providing more robust oversight and investment rules.

Mitchell said many states have constitutional prohibitions against lowering employee pension benefits, but health care programs can more easily be altered.

Note that the unions have even gotten it written into some state constitutions that their benefits can’t be lowered. (Which is not unlike the ‘mandated entitlements’ in the federal budget.)

Nevertheless, it is painfully obvious that we need whatever it takes to insure that these states can continue to pay the outrageous salaries and astronomical pensions and health benefits to these clearly essential public sector union employees.

After all, can you imagine the drop off in service at your local DMV if your state should freeze salaries, or cap their benefits – or heaven forbid, reduce their workforce?

No, Mr. Obama needs to find a way to pour a trillion or so dollars (maybe $862B) into these depleted state coffers. Of course doesn’t need to spell out what the money is actually for, since the dumb masses would never understand, anyway.

He could maybe call it a ‘stimulus package.’ He could say it will save or create millions of jobs. And, since he would be talking about these millions of poor underpaid and overworked public servants, he wouldn’t even be lying.

Not technically.

This article was posted by Steve on Thursday, February 18th, 2010. Comments are currently closed.

6 Responses to “States Face A $1T Workers Pension Gap”

  1. proreason says:

    Of course I’ll do anything to protect and continue the government services that I’ve paid over a million dollars in my life to fund, and the faithful servants who have provided them.

    But I’d sure like to see a list of exactly what I got for that kind of money.

  2. GetBackJack says:


    Cookie Jars

    Our pockets

  3. NoNeoCommies says:

    Just put them all on a “special” Social Security program (that will fail all of them at once).
    If that doesn’t work, give them the option to move out of their homes and into ‘Union Housing’ that will be paid with all of the dues currently going to politics.

  4. tranquil.night says:

    What Chris Christie is doing in NJ should be a chilling warning to every Union boss out there. They know the Bamster doesn’t have the cajones or political power to get them another stimulus slush fund either.

    To quote Batman, The Dark Knight: “We’re going after the mob’s life savings. Things will get ugly.”

  5. Yarddog1 says:

    The class struggle begins.

    Maybe the producer / non-producer scale has finally tipped.

    The next thing to go should be welfare and other “public assistance” to all but those who truly need it.

  6. Tater Salad says:

    Who Supports Real Budget Reform?
    Saturday, February 6, 2010
    Senator Jim DeMint (R-SC) introduced two major budget reforms today: S.2990, a one-year moratorium on earmarks and, S.J.Res. 27, a Balanced Budget Constitutional Amendment that includes a two-thirds majority requirement for raising taxes. DeMint is calling on his Republicans colleagues to lead by example and cosponsor both of these important measures.

    Here are the Republican Senators (and Republican Senate candidates) who are supporting both reforms along with a list of Republican Senators who are not.

    Candidates Who Support
    Kelly Ayotte (NH-SEN)
    Ovide Lamontagne (NH-SEN)
    Mike Lee (UT-SEN)
    Danny Tarkanian (NV-SEN)
    Rand Paul (KY-SEN)
    Curtis Coleman (AR-SEN)
    Tim Bridgewater (UT-SEN)
    Jane Norton (CO-SEN)
    Ken Buck (CO-SEN)
    Marlin Stutzman (IN-SEN)

    Republican Cosponsors
    Richard Burr (NC)
    Saxby Chambliss (GA)
    Mike Crapo (ID)
    Tom Coburn (OK)
    John Cornyn (TX)
    Jim DeMint (SC)
    John Ensign (NV)
    Lindsey Graham (SC)
    Jon Kyl (AZ)
    John McCain (AZ)
    George LeMieux (FL)
    James Risch (ID)

    Republicans Who Have NOT Cosponsored
    Lamar Alexander (TN) — (202) 224-4944 — Email
    John Barrasso (WY) — (202) 224-6441 — Email
    Bob Bennett (UT) — (202) 224-5444 — Email
    Kit Bond (MO) — (202) 224-5721 — Email
    Scott Brown (MA) — (202) 224-4543
    Sam Brownback (KS) — (202) 224-6521 — Email
    Jim Bunning (KY) — (202) 224-4343 — Email
    Thad Cochran (MS) — (202) 224-5054 — Email
    Susan Collins (ME) — (202) 224-2523 — Email
    Bob Corker (TN) — (202) 224-3344 — Email
    Mike Enzi (WY) — (202) 224-3424 — Email
    Chuck Grassley (IA) — (202) 224-3744 — Email
    Judd Gregg (NH) — (202) 224-3324 — Email
    Orrin Hatch (UT) — (202) 224-5251 — Email
    Kay Bailey Hutchison (TX) — (202) 224-5922 — Email
    James Inhofe (OK) — (202) 224-4721 — Email
    Johnny Isakson (GA) — (202) 224-3643 — Email
    Mike Johanns (NE) — (202) 224-4224 — Email
    Richard Lugar (IN) — (202) 224-4814 — Email
    Mitch McConnell (KY) — (202) 224-2541 — Email
    Lisa Murkowski (AK) — (202) 224-6665 — Email
    Pat Roberts (KS) — (202) 224-4774 — Email
    Jeff Sessions (AL) — (202) 224-4124 — Email
    Richard Shelby (AL) — (202) 224-5744 — Email
    Olympia Snowe (ME) — (202) 224-5344 — Email
    John Thune (SD) — (202) 224-2321 — Email
    David Vitter (LA) — (202) 224-4623 — Email
    George Voinovich (OH) — (202) 224-3353 — Email
    Roger Wicker (MA) — (202) 224-6253 — Email

    No Democrat has cosponsored both of these measures.

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