We Need to Pay More Attention to Public Pensions

We Need to Pay More Attention to Public Pensions

By Steve Hunley

Did you know that currently there is SIX TRILLION dollars in unfunded pension debt in the United States of America? That encompasses the debt owed by states and local governments for unfunded public pension liabilities. In fact, according the American Legislative Exchange Council, that debt exceeds $6 trillion. The New York Times has broken that down to what each of us owes to pay for those debts; it comes to “$18,676 for every man, woman and child in the country or $50,000 for every household in America.” As the New York Times pointed out, this isn’t especially good news for taxpayers in those situations where politicians have promised more benefits to public employees than they have tax dollars to spend. Public employees oftentimes have powerful lobbying arms and they certainly make their presence felt in the legislative halls, whether it is in state capitols or county commission and city council hearing rooms. The Constitutions of some states actually prevent legislatures from making any changes to the pensions of government employees. For instance, that would mean those same government employees would be protected from paying a penny more toward their own pensions than they did the first day they were hired. Currently, every state in the nation is at risk of defaulting on its pension liabilities. Fortunately, Tennessee has the lowest pension liability in the country. Still, even in Tennessee and the handful of other states with the lowest risk, the debt runs from $7,600 to $10,900 per person. Taxpayers in Alaska, New Mexico, Illinois, Connecticut and Ohio are not as lucky; that debt ranges from $28,100 to $45,700 per person. Some states are merely hoping that Congress and federal taxpayers will bail them out. That would mean those states that have been at least somewhat fiscally responsible would end up paying the tab for those who were not.

The Focus has editorialized on the pension plan in the past which was at the heart of the lawsuit involving Knox County Law Director Bud Armstrong, the pension board, the Knox County Commission and the Knox County Mayor. You’ll notice quite often when public issues are involved, as well as public dollars, those with less facts in their corner resort to appealing to one’s heart instead of one’s head. This issue is complicated and it’s not so simple as backing the brave men and women in blue; quite to the contrary, it is about following the law and just precisely what we can afford. One of the litigants involved in that lawsuit is hoping to retire at 101% of full salary. The Knox County Charter, Knox County’s version of our Constitution, clearly states no public employee may retire at more than 75% of full salary. Keep in mind, no other public employee in Knox County government except for Sheriff’s deputies receive a LIFETIME pension. Somewhere along the way, someone subverted the word “salary” and substituted the word “compensation.” Now that may not sound very significant to you, but it makes a world of difference. An employee’s compensation or benefits package goes well beyond one’s salary. There is a big question as to whether the pension plan for Knox County public employees is actuarially sound; I’ve been told it is because deputies only live an average of ten years after retirement. Yet did you know deputies may assign their pension benefits to their widows? How can the plan possibly be actuarially sound unless the widows die the day after their husbands? Everywhere in the world, women outlive men. It is simply a fact. According to Bertrand Desjardins, a researcher in the demography department at the University of Montreal, life expectancy for males is 73.4 years, while that for females is 80.1 years, a difference of 6.7 years. That raises a mighty big question if we’re told Knox County’s pension plan is actuarially sound based on the life expectancy of deputies. Does that take into account the life expectancy of spouses? The answer to that one question may mean more to you than you might imagine; the law requires the county’s pension plan to be actuarially sound, meaning fully funded. Who funds the county’s pension plan? You do.

Over coming weeks, The Focus will be breaking down these issues in language that all of us can understand and try to inform our readers of just what it means to you. For one thing, it could mean much higher taxes.

Nobody is more strongly in favor of our public employees earning a good, living wage and having a good retirement. I believe the Charter addressed that point and I think being able to retire at 75% of full salary is pretty generous. That combined with Social Security is a nice retirement for most employees. Should Sheriff’s deputies be considered a special class of employee? No, most certainly not. While Sheriff’s deputies perform a most valuable and necessary function, so do a great many other employees. Would it matter how many cops we have on the streets without courts? No, it would not. Fairness is essential in life and government and that should always include the people who pay the bills: the taxpayers.

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