Posted In: Arizona, Kansas, Louisiana, Missouri, Oklahoma, Pennsylvania, Retired Educators, Uncategorized

Educators fight back against pension attacks across the country

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by Tim Reed

Educators, firefighters, police officers, librarians, nurses and other public employees already contribute up to ten percent of their salary towards their pensions, and many do not even get Social Security. Despite this, moneyed interests across the country are attacking public pension funds and negatively impacting for decades to come the retirement security of those who have dedicated their lives to public service.

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Wall Street, big banks, and wealthy privateers such as former Enron executive John Arnold and his Arnold Foundation are waging an all-out campaign in states to cut the modest pensions being earned by public servants and replace them with risky accounts that can lose thousands of dollars in the stock market in a single day. These same corporations fail to pay their fair share of taxes due to tax loopholes and giveaways. Yet, instead of eliminating tax breaks for the richest 1% and highly-profitable corporations, many politicians are jumping on the bandwagon and trying to scapegoat public employees for budget shortfalls.

Continue reading to find out more about the current attacks in Arizona, Louisiana, Missouri, Oklahoma and Pennsylvania and about one big win in Kansas.

Arizona

Arizona-Education-Association-logoThe Arizona Education Association has become a partner with the Arizona Retirement Security Coalition to help beat back attacks on public employee retirement benefits. Already in the 2014 legislative session more than a dozen bills have been introduced that would negatively impact the retirement of Arizona’s educators, firefighters, police officers and others who have dedicated their lives to public service.

As with many of the states on this list, Arizona’s legislators have partnered with out-of-state interests to help Wall Street profiteers dump your tax dollars into risky 401K plans. These plans do nothing to help ensure retirement security for employees, but they do help line the pockets of big banks and members of groups like former Enron executive John Arnold’s Arnold Foundation.

The profiteers may have a tough road ahead, though, as a recent report from the nonpartisan Grand Canyon Institute [ed note: pdf link] has found that the Arizona public employee pension system is recovering well following the Great Recession, undermining the common “underfunded” fallacy that is often used as an excuse for moneyed interests to get their hands on taxpayer dollars.

According to the Arizona Retirement Security Coalition:

A new study by the Grand Canyon Institute found Arizona’s public employee pension system is on the road to recovery following The Great Recession.  The study called “Arizona’s Pensions: On Track to Financial Sustainability with Retirement Security” shows reforms already in place, combined with some longstanding sound Arizona practices, have the state’s pension system on solid ground.

The study also analyzed the legislature’s efforts to replace defined-benefit pension programs with a riskier defined-contribution, or 401 (k), retirement plans, and found that switching to defined-contribution plans would actually increase costs to taxpayers.

“Arizona’s public sector pensions are financially healthy compared to many other states,” said Dr. Dave Wells, research director at the Grand Canyon Institute, one of the report’s co-authors. “Arizona lawmakers have shown great foresight, and the changes that they have already made will strengthen the plans and make them more financially sustainable for the long term.”

“Almost no public pension dollars go to high-end pensions,” Wells continued, addressing the misnomer that Arizona’s teachers, firefighters, police officers and thousands of other public workers receive lavish pension payouts. “In fact, if Sun Devil Stadium were filled to capacity with Arizona public pension recipients, 181 people in the crowd of more than 70,000 would have a pension over $100,000. By contrast, our report shows that most money in private sector 401(k) accounts is concentrated in a small number of very large accounts.”

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Kansas

Kansas KNEAKansas, like many of the states on this list, has been fighting against efforts to shift public employee retirement funds from a defined benefit plan to a risky defined contribution plan. But unlike the others on this list, Kansas has managed to beat back the attacks for the time being.

Earlier this week, the defined contribution plan, HB 2519, was heard by the House Pensions Committee and it opted not to advance the bill, meaning that it will not come up for a full vote. Thanks to the work of the Kansas National Education Association and its coalition partner Keeping the Kansas Promise, retirement security for educators is safe for at least another year.

According to the most recent KNEA Issues:

The House Pensions Committee opted not to advance a bill – HB 2519 – changing KPERS from a defined benefit pension system to a 401k-style savings plan. The bill was strongly opposed by KNEA and the other members of the Keeping the Kansas Promise Coalition.

One of the motivating factors in the decision was the fact that such a change would increase the state’s obligation to what would be a two public employee retirement systems. The state would still have its full obligation to current employees plus paying of the unfunded liability while at the same time supporting a new system.

The sponsor of the bill, Representative Rubin, commented that he felt it important to debate the bill in committee because he feels ultimately defined contribution needs to happen. The issue likely goes nowhere in the 2014 session, but it will probably be back in the future.

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Louisiana

Louisiana association of educators logo laePublic employee retirees across Louisiana have seen a raft of changes to their retirement system over the last several years. Many of these changes were intended to improve the financial stability of the Teachers’ Retirement System of Louisiana. Despite these changes, lawmakers are still peddling the well-worn and misleading claim that the state retirement system is in crisis.

Louisiana Association of Educators Government Relations Specialist Shane Riddle took on those claims in the most recent edition of the LAE Voice:

Over the past couple of years, Louisiana’s public pension systems have come under intense scrutiny and attack, primarily on the issue of total retirement debt, also known as unfunded accrued liability (UAL). Many reports have circulated claiming that public pension systems in Louisiana are unstable, mismanaged, and improperly funded. The fact is Louisiana’s pension systems are some of the best-managed and most stable funds in the country.

[…]

Over the past seven years (possibly more) many “real” pension reform measures have been passed by Louisiana lawmakers that are saving millions of dollars and making the TRSL pension system more cost effective and sustainable. Between 2007 and 2011, many of these pension reform measures included increasing the employee contribution rate, increasing retirement eligibility requirements, increasing retiree COLA eligibility from age 55 to 60, restructuring liability payments to reduce future payments, prioritizing excess investment earnings to debt reduction, requiring a two-thirds legislative approval of retirement provisions with an actuarial cost, and increasing the cap on salary spiking.

While it’s true that the TRSL is well-managed and stable, it’s also important to understand how vital retiree income from public pensions is to the economic stability of communities across Louisiana. A report recently released by the Louisiana Budget Project called Pensions in the Parishes highlights how important public pensions are to the economy of Louisiana. The report reveals how pensions are especially crucial to the economic health and retirement security of smaller, more rural parishes. In some parishes, pensions account for as much as 2.5 – 3 percent of all personal income.

Are public pension systems in Louisiana in a crisis? Substantial evidence and research clearly shows that Louisiana public pensions are stable, well-managed, and properly funded. So I would say no, Louisiana public pension systems are not in a crisis, and as the Louisiana Legislature begins another session on March 10, lawmakers must be reminded of these facts.

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Missouri

Missouri MNEAThe Missouri National Education Association has recently joined with retirement security advocates across the state to form the Protect Missouri Retirement coalition to help beat back the attacks on public employee retirees and their pension benefits. Out-of-state conservative activists including the Pew Charitable Trust and the Laura and John Arnold Foundation (run by former Enron executive John Arnold) have recently stepped up their attacks to try and get public employee retirement funds out of the hands of the employees, and into the hands of private businesses.

The most recent move in this attack was the introduction of HB 1682, which move retirees out of defined benefit plans, and into a “hybrid” plan that includes risky 401K investments that do nothing more than line the pockets of John Arnold’s moneyed friends.

According to Protect Missouri Retirement:

Recent legislation filed by Rep. Andrew Koenig would move new state employees and highway workers into a cash-balance style pension plan. Proponents argue that these plans strengthen retirement systems while giving public workers low-risk benefits. A closer look into the math behind the message shows that in the long run, these hybrid plans cost more to fund and produce less investment income than traditional defined benefit (DB) plans, which lead to a larger chunk of unfunded liabilities.

Evidence from other states shows that in some cases unfunded liabilities associated with closed DB plans have nearly doubled. In Alaska, this move forced actuaries to increase the contribution rate from 12.39% of salaries to 22.48%. In West Virginia, the low investment returns caused by the switch to a 401(k) prompted the state to switch back to the traditional DB structure.

In Missouri, experts predict that switching the plan structure would drive up costs as well. The fiscal note response from the Missouri State Employee Retirement System (MOSERS) shows that under the proposed hybrid plan, the state would be forced to kick in approximately $20 million more in employer contributions (1.69% of total MOSERS payroll) over the next three years. Actuaries project that over a ten-year time horizon, contribution expenditures will increase by approximately $151 million.

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Oklahoma

OEA OklahomaOklahoma, like many of the other states on this list, is currently engaged in a fight to keep public employees on a defined benefit plan, instead of a risky defined contribution plan that leaves retirees at risk to fluctuations in market values. The Oklahoma Education Association has joined with other public employee organizations to form the Keep Oklahoma’s Promises coalition and fight back the attacks on retirement security.

According to the Oklahoma Education Association:

Under the current defined benefit plan:

  • The employee, the school district and the state contribute to the employee’s retirement account
  • The Teachers Retirement System invests that money to help fully fund retirement for everyone
  • Upon retirement, the employee is guaranteed a certain dollar amount in monthly retirement payments for life

Under Treasurer Ken Miller’s defined contribution plan:

  • The employee, the school district and the state contribute to the employee’s retirement account
  • The employee or the state will choose investments that grow or shrink, depending on the stock market
  • Upon retirement, the employee will receive only the money accumulated in the account. The monthly payments last only as long as the money

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Pennsylvania

Pennsylvania-PSEA-logo 6-2-12The latest in a raft of proposals from Pennsylvania Governor Tom Corbett on public employee pensions is his plan to reduce the amount of money that the state and school districts are required to contribute to the fund. Lowering these contributions will simply widen the gap between the full, actuarially required, contribution and the actual contribution from the states and districts, negatively impacting the long-term viability of the retirement system. By reducing the amount of money that the state and schools districts are required to pay into the plan, he is essentially putting the retirement security of Pennsylvania’s public servants on a credit card with the hope that future taxpayers will pick up the tab.

Not only does this plan ignore the fact that educators and other public service workers have already negotiated the required state and district contributions, but it will put the security of future retirees at risk. Simply reducing the amount of money going into the fund will inevitably hurt its long-term viability and create an artificial pension crisis, leaving future taxpayers with the bill. And what is Corbett’s solution to the “crisis” he himself created? Taking the state retirement fund out of the hands of the voters and giving control to his affluent friends.

As the Pennsylvania State Education Association recently pointed out:

Gov. Tom Corbett recently unveiled his proposed state budget for 2014-2015. The governor’s pension plan shrinks the state’s and school districts’ payments to PSERS, putting part of these payments on a credit card, costing taxpayers billions more in the long run, and jeopardizing YOUR retirement security.

This is the same “rob Peter to pay Paul” approach that started the pension problem in the first place, and a practice that the administration criticized just last year.

Please oppose the governor’s plan to increase the unfunded pension liability by once again kicking the can down the road.

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Reader Comments

  1. and

    I pay a quick visit everyday a few web sites and sites to read articles or reviews, except this webpage offers feature based posts.

    Reply
  2. Lesa Behrends

    Anyone that steals from teachers pensions is a thief and it is called theft. Period.

    Reply
  3. Randy Wieck

    In Kentucky, we have a union, Jefferson County Teachers’ Association, which won’t even allow a floor microphone to its members to question the lack of action by the Union. The reason: our president has been in office for 12 YEARS and is now a millionaire. He is in league with Kentucky Governor, Steve Breshear – to try and push Pension Obligation Bonds – as a solution to the yearly $400 million shortfall that the legislature is supposed to contribute to the Ky Teachers Retirement Fund. The “plan” is to pay interest on earlier bonds, and then take the interest, once the bonds are paid off, and apply those payments (about $9 million/year) to what were supposed to be annual yearly contributions which have not been paid. In short, the pension is already billions in the hole, with the minimum needed yearly -about $400 million according the KTRS actuaries -is obviously not going to be paid. It is fast becoming “too big to bail” but our current JCTA/KEA leaders are in bed with the governor, and are trying to hoodwink the members. Too bad we don’t have term limits on our leadership: it is rich and not taking any action which might rock the boat.
    WE CAN’T EVEN GET A FLOOR MICROPHONE TO ASK QUESTIONS AT THE MONTHLY MEETINGS! EVEN THE NEA ALLOWS THAT!!

    Reply
  4. Dave Mucci

    “Tenure” for public education teachers is the most misunderstood word used by people outside and some inside of “Education” !!! Because of this misunderstanding most people have a negative opinion about teachers and their salaries. Tenure – is a senior academic’s contractual right to have his or her position terminated “without just cause”. What most people do not understand is teachers with tenure can have their position terminated “with just cause”. Therefore most people do not understand that tenure does not protect nonproductive teachers and they can be fired!!!!!

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  5. F. B.

    Why don’t you folks send a reporter to Rhode Island?
    It’s pensioners have already suffered Draconian measures cutting pensions, especially public servants who decided to retire and based financial calculations on the formula given to them by the Employees Retirement System of Rhode Island. Well that changed, and we want our jobs back.
    The already retired folks will suffer a 30% loss in income over the next twenty years due to a recently passed reform that was passed with pressure form these very hedge fund operators you speak of!.

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  6. Glen Brown

    In Illinois, we have Senate Bill 1, the So-called “Pension Reform” Bill (or Attempt to Break a Constitutional Contract with Public Employees and Retirees)

    The state’s unfunded liability has increased to approximately $100 billion; nearly 50 percent of that figure is a consequence of continual legislative negligence, dishonesty and ineptitude.

    Illinois policymakers have consistently failed to make the annual required contributions to the state’s pension systems, primarily because they could pay for services and their “pet projects” without raising taxes. In 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then. Instead they have favored corporate interests rather than the interests of their citizenry and; thus, they have seriously sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility. Past state policymakers left us with this fiscal disaster.

    Instead of protecting public pension rights and benefits, which have a legal basis under Illinois State Law; instead of restructuring the state’s revenue base to pay for the state’s growth in expenditures and its recklessly-accumulated debts and obligations, current policymakers have chosen to diminish the public employees’ constitutional rights and their benefits, even though revenue restructuring and pension debt re-amortization are the best legal and moral solutions; even though there are over a dozen antedated cases that have upheld the Illinois Constitution.

    To defraud any person of his or her guaranteed rights and earned benefits violates a most significant interest in morality and ethics and in basic legal principles of both the State and U.S. Constitutions that protect every citizen. Any attempt to renege on any citizen’s rights and benefits that are earned is a costly and dangerous effrontery and precedent to set in motion. So-called “pension reform” diminishes and impairs the public employees’ contract with the state.

    Hundreds of thousands of Illinois citizens believe the Illinois Supreme Court judges will uphold the Illinois and U.S. Constitutions as they have in the past; that the Illinois Supreme Court judges are not capable of illegal and immoral thievery like the political opportunists who voted for SB 1, though Madigan/Cullerton and other committee members would have us believe Illinois Supreme Court judges are incapable of ignoring their own self-regard and, thus, had to be excluded from the bill. (According to Ann Lousin, a professor at the John Marshall Law School in Chicago who helped draft the Illinois Constitution in 1970, “Leaving the judges out of pension reform: ‘I would call this buying off the judges. It’s a very sad situation…’”).

    Hundreds of thousands of Illinois citizens believe today’s Illinois Supreme Court judges will confirm that “The plain language [of Article XIII, Section 5 of the Illinois Constitution, commonly called the Pension Clause] indicates that an employee’s pension payments and other membership entitlements are ‘contractual’ rights that may be altered [only] through mutual assent via contract principles…; [that] the [Pension] Clause’s prohibition against diminishment and impairment is cast in absolute terms.

    “The [Pension] Clause on its face does not support the claim that the legislature could utilize the pension system’s present unfunded liabilities as an [excuse] to cut the benefits of current employees participating in the system [as implied in the preamble of this bill]… [For] the Illinois Supreme Court [had previously] instructed, that ‘general language in a [judicial] opinion must not be ripped from its context to make a rule far broader than the factual circumstances which called forth the language’…

    “In 1982, the Appellate Court in Kuhlmann v. Board of Trustees of the Police Fund of Maywood, again relied on Kraus [v. Board of Trustees of the Police Pension Fund of the Village of Niles, 1979] as well as Ziebell [v. Board of Trustees of the Police Pension Fund of the Village of Forest Park, 1979] to fashion the following rule regarding the Pension Clause’s scope:

    “[A]ny alteration of the pension system amounts to a modification of the existing contract between the State (or one of its agencies) and all members of the pension system, whether employees or retirees. A member is contractually protected against a reduction in benefits. By the same token, a member cannot take advantage of a beneficial pension change without providing consideration [something of value given in return where both parties agreed] for the contractual modification…” (Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION).

    It is a flagrant injustice when policymakers like Michael Madigan (since 1971), John Cullerton (since 1979), Bill Brady (since 1993), Jim Durkin (since 1995), Christine Radogno (since 1997) Elaine Nekritz (since 2003) and others who are responsible for the state’s fiscal morass want to challenge an existing constitutional contract and force public employees and retirees to accept a substantial diminishment of their constitutionally-guaranteed pension that was lawfully earned; moreover, it is a brazen injustice when a governor can roll back the corporate billionaire’s and millionaire’s taxes, lacerate the state’s budgets, and sign into law a diminishment of public employees’ and retirees’ only pension. None of these transgressions will address the state’s inadequate revenue system and the state’s pension debt problems.

    To possess a right to a promised deferred compensation, such as a pension, is to assert a legitimate claim with all Illinois legislators to protect that right. There are no rights without obligations. They are mutually dependent. Fulfilling a contract is a legal and moral obligation justified by trust among elected officials and their constituents.

    Senate Bill 1 is a foul, insensitive attack on public employees’ and retirees’ rights to constitutionally-guaranteed benefits. An unconscionable challenge of those rights and benefits is a serious threat, not only to current public employees and retirees and their families but, to every Illinois citizen. A pension is a contract. Breaking a contract can never be legally or morally justified.

    Reply
  7. Sharon Sanders

    We know it’s the right-wing talking points non-stop. Don’t tax the rich because they’re job creators (which they’re not); they’ll leave the state (let them go since they end up firing most of their employees anyways). We can’t afford public pensions (while they keep sneaking in more and more charter schools accountable to no one and funded with taxpayer money they say we don’t have); the unions and collective bargaining is the reason we can’t get rid of bad teachers (no talk of bad administrators and getting rid of them; it’s bunk–they just want to control this nation, privatize it for profit, with no interference from the people or their unions); they feel the public is so stupid, they will believe all their media hype (and, unfortunately, many are). No matter where you go, no matter what state ALEC has given them all the same talking points. Let’s not accept their lies. Let’s put our money into a strong public education system for all, from pre-K through college.

    Reply
  8. Nancy Meyer

    In Rhode Island, our state pensions are under attack too! In the early 90’s, we had a credit union and bank crisis and the governor and state legislature used our pension funds to bail out the state by helping the banks and credit unions. Not all of that money was ever paid back. The legislature has helped themselves to it for other things in the past as well. Teachers pay the highest % of all the state workers. I am a teacher who retired with 29 yrs in the system. State policemen contribute nothing nor do members of the judiciary so we are totally funding their retirements while the rest of the state residents don’t other than through taxes which we pay too. The judiciary receive huge retirement payments! Now our state treasurer has taken a large chunk of our pension fund and invested it in risky ventures with her friends on Wall St. She was a venture capitalist before becoming state treasurer and has the backing of Enron friends who helped her become treasurer and now she is running for governor. In 2011, she got the legislature to take away our .03% COLA. There has been a legal battle about that since then. It has now been proposed to just give us a minimal increase yearly of .02% of our first $25,000 in our pension payment. That amounts to a measly $500 a year! The treasure, Gina Raimondo says our retirement funds are badly underfunded. And why are they badly underfunded? Well, because the legislature has helped themselves to our money for years and not paid back what they owe! Now we’re being robbed some more by the same people robbing from these other states! We, the state workers in Rhode Island, need help too!!

    Reply
  9. Tim Mitchell

    If teacher pensions are so high then why are these politicians not willing to give up their pensions and get the same amount of a pension that retired teachers are given? Just a thought.

    Reply

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