Columns

Pension Reform Is Not Partisan

By: Jonathan Williams and Fara Klein | Posted: March 22, 2013 3:55 AM
Jonathan Williams

Jonathan Williams

Opponents of pension reform often cite partisan politics and ideology as the driving forces behind efforts to repair underfunded retirement systems.

This claim, exemplified in a recent Bradenton Times editorial by Dennis Maley, criticized efforts to further reform Florida's pension system.

Unfortunately, Mr. Maley ignores the truly bipartisan nature of many successful pension reform efforts around the country.

A recent study revealed that the average public employee's pension plan in the United States is only 41 percent funded -- bringing total state and local unfunded liabilities to an estimated $4.6 trillion. Florida's total state and local unfunded liability is estimated to be about $90 billion.
Fara Klein

Fara Klein



The fact of the matter is that pension reform attempts to address one of the largest financial problems facing states today and these efforts have been supported by policymakers from both sides of the aisle.

Few would accuse Chicago Mayor Rahm Emanuel, a lifelong liberal and former White House chief of staff under President Obama, of being ideologically opposed to pensions or public-sector unions. However, Mayor Emanuel addressed the city's $20 billion pension shortfall in 2012 with a set of concrete recommendations, which included increases in the retirement age and a freeze in cost-of-living adjustments.

"If we follow along the current path," Emanuel explained in a letter to city employees, "we know we will confront two stark choices: Either the city's pension payments will squeeze its ability to offer the essential services that you provide, or each of our pension funds will go bankrupt, leaving you and your families without retirement security."

One could hardly call this an ideological proposition; rather, it seems to be an honest acknowledgement of reality and the consequences of inaction.

There are also several examples of states that have worked across the aisle to implement sound budget and pension practices. One such instance occurred in Rhode Island in 2011, when the overwhelmingly "blue" state enacted major reforms that created a 401(k)-style hybrid plan. Despite facing some opposition, Speaker Gordon Fox and state Treasurer Gina Raimondo (both Democrats) worked together to stabilize the pension system and reduce the state's unfunded liability by $3 billion.

Utah also tackled pension reform head-on in 2011 with the leadership of conservative Sen. Dan Liljenquist. Utah eliminated its old defined-benefit pension plan, creating a new system for enrollees hired after July 1, 2011. New employees now have the option of a 401(k)-style plan or a hybrid pension program. Without these reforms, the Utah retirement fund, which was the nation's best funded before the 2008 crash, would have faced a 50 percent chance of becoming insolvent by 2028.

These examples of sustainable, responsible pension reform offer a model for other states looking to proactively address this important issue. Most importantly, none of the efforts described above represent attempts to "ideologically attack the idea of a pension," as Mr. Maley's editorial misleadingly suggests.

Opponents of reform often throw around charges of partisanship, but the accusations are far from reality.



Jonathan Williams is the director of ALEC's Center for State Fiscal Reform; Fara Klein is a research analyst for ALEC’s Center for State Fiscal Reform.

Tags: News, Columns

Comments (9)

adrienne deckinger
10:23AM APR 10TH 2013
This was such a well-written article. It made the situation very understandable for people like myself who are not too knowledgeable on this subject. Good job
goodwillbeleaving
8:04AM MAR 23RD 2013
A very good article from: In Defense of Defined-Benefit Pensions says: "defined-benefit pensions held by public employees are much more
cost effective than 401(k)-style retirement plans, costing roughly half as much to provide
the same level of retirement benefit to workers such as police officers and firefighters,
librarians and teachers, and other public-sector workers. In short, the smart money
in any state pension-reform plan would go toward smaller-scale changes."...check it out: truthaboutpensios.org
Tough Love
12:12AM MAR 25TH 2013
Why bother reading a biased article published by a group the rejects any and all material pension reform ?

DC plans are not more costly.... but those who fight reform hate DC Plans because you actually have to pay for what you promise AS IT'S EARNED.

Taxpayers can't afford the current DB pensions. They continue ONLY because their true costs are well hidden from the Taxpayers.
goodwillbeleaving
7:26AM MAR 23RD 2013
Floriduh's politicians are trying to force a solution looking for a problem.
While I can appreciate Mr. Williams and Ms. Klein when they say: "average public employee's pension plan in the United States is only 41 percent funded". Florida's 87%! With the recent market rally, I can expect the funding to be in the 90+% range when tallied this year. It sends a "you are on your own" selfish message to teachers, firefighters, and cops that take care of our families everyday.
Tough Love
12:20AM MAR 25TH 2013
They sure do take care of us ..... just see how fast they'll turn on you if you stand up at a public meeting and even suggest we take a look into the generosity of their pensions.

NOTHING will ever be more important to them than preserving their grossly excess pensions and benefits .... 80-90% of which is NOT paid for by them, but by the contributions of the Taxpayers (and the investment earnings on those Taxpayer contributions ....... earnings that would have stayed in the Taxpayers' pockets to benefit THEM in the absence of the need to fund these excessive pensions).
Frank
12:48PM MAR 23RD 2013
Yes, he must be right - - "around the country" . . . Florida's state pension program is in the same shape as Illinois, isn't it . . . . except for some very questionable and very strange Florida bailouts of Enron and Lehman Brothers during and by Bush connected managers, the state pension system would be in excellant shape (rather than very good) . . . . the Republicans will screw this up like they did voting reform . . . watch and see . . .

Pathetic . . .
eatingdogfood
9:10PM MAR 22ND 2013
Isn’t It Time For The Abused Taxpayers Of Florida To Leave In Masses.
In Order To End This Unholy Conspiracy Between The Totally Corrupt.
Democrats And The Equally Corrupt Public Service Unions? It Is Really.
The Only Way To Finally End This Criminal Activity! Did Anybody Ever.
Hear Of RICO?
goodwillbeleaving
7:51AM MAR 23RD 2013
to: eatingdogfood
"Isn’t It Time For The Abused Taxpayers Of Florida To Leave In Masses"......seeya!
eatingdogfood
8:42PM MAR 22ND 2013
If The Democrats Didn’t Give ” Sweetheart Deals ” To Your Public Service Union.
Goon Employees To Get Reelected; You Would Have Plenty Of Money and The.
Taxpayer would have Some Spare Change in His Pockets! Democratic Hustler
Politicians + Corrupt Union Goons = BANKRUPTCY BABY! Time To Bring.
RICO Conspiracy Charges Against The Hustler Corrupt Democrats and the.
Criminal Unions!

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