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A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

195 points by Element_ 8y ago

home_boi 8y ago
What's the chances of retroactively lowering pensions? 1. Progressively lower pensions. Skim off the top earners. 2. Create projects for the community and declare that the saved money will be used for those projects for better optics. This won't lower trust in government pensions by that much because this is just correcting what is seen as "unfairly high" pensions.
- vkou 8y ago
  The same chances as retroactively renegotiating on other deferred obligations. We call it 'defaulting on a loan.' Wouldn't it be a great idea if the government just stopped making payments on its loans that, in hindsight, were a bad idea?
- mythrwy 8y ago
  Here's the other option. Pay the promised pensions and inflate them away. Since this is a growing national problem, I'm guessing that solution has at least been considered.
  - jacquesc 8y ago
    Not politically feasible. Older citizens tend to both have a lot of savings, and vote. They would not allow this to happen.
    - WardenUnleashed 8y ago
      Inflation isn't something you can vote on, no?
jayess 8y ago
I guess I'm one of those .04%.
- Scoundreller 8y ago
  .04% of what?
  - mythrwy 8y ago
    The .04% of people who announce they are in the .04%. It's a very select group with an unusual hobby.
- jayess 8y ago
  Sorry, commented on the wrong article...
rootusrootus 8y ago
My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income. One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So while I think PERS made some stupid decisions, let's not all heap blame on the workers and demand they suffer now. Gov't work pays crap and part of the benefit is supposed to be a little more long-term security.
- Eridrus 8y ago
  Yes, this is an absolutely backwards way to pay people. When times are tough we end up tightening our belts on a whole host of services, but cannot adjust pensions because we have promised them. We should just pay people market rates and avoid saddling ourselves with a bunch of debt when times are good.
  - jadedhacker 8y ago
    When is the government ever not tightening its belt? It's ridiculous that we can pay for bombs but not pensions. Just tax the rich some more. The debt never matters when it comes to killing but always matters when it comes to salving.
    - scarface74 8y ago
      With the median household income being $65000, when the average voter talks about "taxing the rich", they won't have any problem going after tech workers making in the low six figures. You may come to find that you may be one of the "rich".
    - Eridrus 8y ago
      I quite agree with the comments about not spending so much on the military, but as a fraction of GDP, federal taxes have been pretty stable over the last 60 years https://fivethirtyeight.com/features/u-s-tax-rates-the-big-picture/ https://fivethirtyeight.com/features/u-s-tax-rates-the-big-p... with increases and decreases in a constrained range. This whole it or the defecit thing seems like a common talking point for progressives now that Republicans have shown their true colors, but if your goal is to actually govern a country, it does matter. At the very least you should be able to see how increasing our debt increases the payments we need to make to service that debt. 7.4% of our latest budget was just paying for the debt we've already racked up. That's tens of billions of dollars that could have been spent on something worthwhile, but instead we're just paying for the past.
dasil003 8y ago
Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.
- cma 8y ago
  The numbers I found: Oregon population: 4,000,000 Pension deficit 2017: $25,000,000,000 Per-capita share: $6,250 Assuming a large portion of the pensions will get spent on goods, services, and donations in state, it doesn't seem like a huge disaster, depending on how it grows.
  - Scoundreller 8y ago
    Assuming the pensioners stay. Why stay completely when you can spend change your domicile to a zero-tax sunshine state or WA?
    - cma 8y ago
      Family and friend networks.
  - mythrwy 8y ago
    4 million people. How many working people with enough income to pay tax? Half? Less? So maybe ~13K per tax paying person in outstanding pension obligations alone? That is a big deal.
    - cma 8y ago
      > So maybe ~13K per tax paying person in outstanding pension obligations alone? Then that would be an obligation of about $300 per tax paying worker per year over their working lifetime. The average yearly salary in Oregon is $50,000. The article makes it out through anecdote that this is why they didn't have gas to send trucks out for a road repair. In the last 20 years Oregon has had near 1% per year population growth as well. The article is focused on outlier pensions for a collegiate athletic director paid partly out of sports merchandising and a medical school head who was an eye surgeon.
megaman22 8y ago
Well, cutting the top out of this seems like the obvious solution. Pants-on-head to give an Oregon coach who's been funded by Nike to collect a multimillion pension.
- qmalzp 8y ago
  It does seem reasonable that there would be a cap, but I wonder how much cutting the pensions of a few thousand highly paid retirees will impact the budget.
  - slfnflctd 8y ago
    At the very least, someone should crunch the numbers and find out. It's anyone's guess how the ratios will skew until you measure them. How to approach this fairly is a whole other can of worms; there will almost inevitably be some unjust outcomes.
    - defen 8y ago
      The data is here: https://gov.oregonlive.com/pers/ https://gov.oregonlive.com/pers/ (you can download a CSV). There are 2,032 people making over $100,000 per year. The sum of their pensions is $252,144,041.04 per year. If each were capped at $100,000 per year that would be $203,200,000 per year, so a potential savings of $48,944,041.04
  - TheGeminon 8y ago
    If we assume that the average pension of those with a pension over $100,000/year is $200,000 a year, and cut those down to a cap of $100,000/year it would be $200,000,000/year in pension reduction. With a $2.5 billion/year spend on PERS [0], that is not an insignificant amount on the entire burden of the pension system, even if it is off by an order of magnitude. [0] http://www.pers.ms.gov/Content/Supplemental/persfacts_figures.pdf http://www.pers.ms.gov/Content/Supplemental/persfacts_figure...
    - dpark 8y ago
ebbv 8y ago
What a pathetic ploy to divide the working class against each other. The reason states are short on cash is the race to the bottom we’ve all been participating in since the 1980s when government policy and general economic policy moved from focusing on keeping the middle class healthy to massive tax breaks and cuts for corporations and the wealthy. For the last nearly 40 years every state has been playing the game of trying to attract corporations with massive tax breaks against the promise of jobs. Then a lot of the time the promised jobs never appear. Meanwhile the state is still out millions or billions of dollars in revenue. Corporations and the wealthy can afford to hire lobbyists to write favorable policies. Working class people cannot and have been eating the brunt of all the tax breaks the rich and powerful and connected have received. Maybe a handful of people in some states have abnormally high pensions. That’s not the source of the problem. Those pensions were solvent until they were treated like a piggy bank by corrupt and bought politicians.
- jinfiesto 8y ago
  I'm not sure why this is so heavily down-voted. Pensions are surely a problem, but they are clearly a drop in the bucket compared to the revenue that states miss out on when they let corporations pit them against each other in race to the bottom behavior.
  - bannedaccount 8y ago
    Because this is a conservative site where dissenting opinions are not tolerated.
  - DoreenMichele 8y ago
    HN tends to react negatively to inflammatory language, such as What a pathetic ploy. I sometimes have mixed feelings about that, but generally agree that inflammatory language does not foster reasoned, meaty discussion.
  - narag 8y ago
    Not sure why it was downvoted, but my bet is this that you insist in: Pensions are surely a problem, but they are clearly a drop in the bucket Pensions are NOT a drop in the bucket by any measure. Maybe for the USA they're less important. But for the rest, safety net is most of a country expenses. Then you add that population in the first world tends to shrink and the model in most countries where current workers pay for retired ones... and you have a very serious problem.
bartart 8y ago
Pensions are going to become a hot political issue as they become more and more unsustainable. Even Illinois, one of the most liberal states in the US, elected a republican governor four years ago in large part because he promised to tackle the state's pension crisis.
- toomuchtodo 8y ago
  It should be noted that Illinois’ republican govenor ran on pension reform, then to everyone’s shagrin, attempted to break unions. He made no headway on either issue, and is now running against a billionaire Democratic challenger who is expected to win.
  - hnal943 8y ago
    The only way to reform pensions is to deal with the unions. The Wisconsin model works.
  - travoc 8y ago
    It’s impossible to reform pensions without reducing government union power in states like California and Illinois.
    - MrMember 8y ago
      Illinois is also a special case in that pensions are written into the state Constitution. Pension reform requires changing the Constitution.
      - nugget 8y ago
        Changing the Constituion...or Bankruptcy.
        toomuchtodo 8y ago
        A state can’t go bankrupt. The pensions will end up being paid by the federal government.
NPMaxwell 8y ago
The PERS systems are adapting to greater longevity. As actuaries learn that people will live longer in the future, they are getting systems to dial back their pensions. In Washington State, the most expensive started working before 1972, and some state employees are now offered only a 401K. That said, there is also a challenge that when the market booms, "surpluses" are drawn out. When the market crashes, it's hard to make up for the missing investment.
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pkaye 8y ago
If you want to see pension data from California, it is available here. https://transparentcalifornia.com/pensions/all/ https://transparentcalifornia.com/pensions/all/ There is a bunch of one time payments near the top but some below that are some making quite a bit in retirement.
jaggederest 8y ago
I mean, the obvious solution is to move to purely defined-contribution plans and haircut the existing people down to actual returns on invested balance for them. But I have to imagine in a lot of cases that would lead to people being impoverished later in life, which is not especially humane.
- rayiner 8y ago
  Lots of people are in tough financial circumstances. Preserving public pensions means keeping formerly middle class people from facing hardship at the expense of the people who were always impoverished.
- jakelarkin 8y ago
  is it humane or an entitlement? most people in the private sector work their whole life never get anything remotely close to a pension secondly, its just an intergenerational wealth transfer. another excess of the selfishness of the boomer generation. Who will pay the price ... the school kids getting a crap education in 35 student classrooms in crumbling buildings in a towns who's infrastructure is going to literally fall apart in 2 decades time from zero maintenance. Ah well at least we kept the promises some corrupt politicians made in the 90s to well-off gov workers.
  - jaggederest 8y ago
    I think the real answer is increased taxation and haircuts, call it a "reverse cost of living" scheme. I do know the current benefits are significantly less generous than the old system used to be, so it's primarily a problem with a certain generation rather than PERS as a whole.
  - closeparen 8y ago
    >an entitlement It's compensation earned in exchange for labor under a negotiated agreement. The fact that the check is separated from the labor by years rather than days doesn't suddenly make it "an entitlement." The time to complain about entitlement, selfishness, and intergenerational wealth transfer was when we were promising those pensions, not now that the bills are due.
sjg007 8y ago
Seems like pensions should be based on base salaries rather than overtime or clinic pay or licensing deals. I’d hope that the medical center and the university bear most of the burden. The police and fire fighters are a different issue in that the county, city or state governments bear the burden. Without raising taxes it’s difficult to solve these issues. Single payer would help though.. it would reduce the medical costs.
nodesocket 8y ago
It's seems like there should be a cap on state pensions of $20,000 a month. $20k a month should be plenty to support a family even in ridiculous California and New York.
- bannedaccount 8y ago
  I think a cap on private sector workers income would save more money, there are many more of them and many of them have unimportant jobs. If the government just capped their incomes at 100K a month we could pay off all national debt in months.
  - nodesocket 8y ago
    Ummm no, private sector should be able to pay whatever they want. The only reason I am suggesting a cap is because these pensions are taxpayer funded. Socialist Hacker News strikes again.
    - bannedaccount 8y ago
      Provide an argument about why government workers are worth less then private workers? Defense is taxpayer funded should we cap pensions at Boeing? They make much more then government workers too, why aren't you suggesting that? I think it's just simple realism, not ideologically driven.
  - randyrand 8y ago
    private sector is not paid from public tax dollars.
    - bannedaccount 8y ago
      Actually you are 100% wrong, Defense is funded with taxpayer dollars. The internet was invented and maintained with taxpayer dollars, the whole private sector is feeding off free goods created by the government. Why shouldn't the government negotiate? That only seems fair.
madengr 8y ago
CO, now a tax and spend blue state, has a $32B shortfall? First I heard of it. Now one state over in KS, a red state, has 1/100th that shortfall, and the news goes apeshit criticizing the republican tax cuts. Now tell me the media is not biased?
pstuart 8y ago
Pension spiking should be prohibited and all existing instances of same should be rolled back.
DoreenMichele 8y ago
Re the ongoing debate here about government pay (and whether it's high or low): I'm not super familiar with city and state government jobs, but I do know something about military and federal compensation. They frequently pay less in salary, but have better benefits. This makes it an apples to oranges comparison when trying to talk about what they pay in comparison to non government jobs. I was a military wife for a lot of years and I have spent a lot of time trying to figure out how to convey this. At one time, my army spouse was nominally making about half the income of someone else close to me, but take home pay for my spouse and this other person was nearly identical and I never spent a dime on doctor's visits or prescription medication. The primary difference in our quality of life was that my husband's income supported a family of four and this other individual was single and childless at the time. So it gets really confusing because sometimes the take home pay for government jobs is less, but the total compensation package can be better. This means that two people arguing about it can both be right and unable to see the other point of view.
- rebuilder 8y ago
  Is there a standard measure of disposable income after taxes and necessities like food, housing, education, healthcare? It seems comparing how much people have available for discretionary spending would be useful in many cases.
  - DoreenMichele 8y ago
    I'm not aware of one and your question touches on some of the hidden forms of compensation that can be hard to measure (and can vary over time for the same person -- for example, we were sometimes in housing on base and sometimes not). The below examples are off the top of my head from memory as a military spouse and may be very out of date. The military will cover 75% of tuition for active duty members. Most states charge military members in-state tuition. When my ex took college classes at low cost community colleges in California, his books typically cost more than tuition. His tuition was practically pocket change. When he was stationed in a designated war zone, we got a tax break for that. When we were in on base housing, we did not get a housing allowance. We also did not get a water bill or electric bill. We only had to pay for a phone. While stationed in Germany, I got free dental care on base even though spouses usually don't get free dental anymore. Similarly, we could have gotten free braces for my oldest son while stationed at a different remote location. When shopping on base at a px or bx, you pay no taxes. They may or may not also have lower prices on some items. I routinely had a Power of Attorney so I could handle my husband's affairs while he was deployed. I never paid for such. We had access to legal assistance for free for such items. Medical coverage for the family is free, including out patient doctor's visits and most prescription medication. Further, I am alive when by all rights I should be dead in part because we got stationed at Travis AFB just as the shit was really hitting the fan. The hospital there is a teaching hospital that serves all military branches for eight western states. Most people have no idea how well developed the military medical system is and the sorts of resources that can be made available in cases of serious medical crisis. I have a genetic disorder that was diagnosed late in life. My husband's medical benefits alone were practically like a second income for us because I was in the ER all the time at zero cost. This was true even when visiting relatives who happened to live near military bases. I just went to the nearest military medical facility, even if it was a different branch of the military. Military personnel are sort of outcasts when deployed elsewhere in the US. We tend to not have a local bank account and military spouses have high unemployment rates because locals don't want to hire them. The military does what it can to make up for that, such as offering free check cashing on base at the bx or px. When in on base housing, I was able to check out a lawn mower and other items for free for purposes of maintaining the yard to the standard required by the military. I didn't have to buy any of those things. They even provided grass seed for free so we could reseed our yard when the 115 degree summer heat in the High Desert killed our grass. There are so many things you get for free in the military for just flashing your ID card that some people who leave after a single stint are shocked at how poor they are after leaving. A much higher percentage of a military check is discretionary than is the norm for most jobs. If you stay in 20 years or more, you will get retirement benefits without doing any retirement planning or savings whatsoever. As a young military spouse, 90% of my budgeting concerns was making sure we had enough food in the house. Retirement planning, stressing about medical bills and other normal issues for most Americans was simply not a part of my life.
skookumchuck 8y ago
"So, when lawmakers required government retirees to pay Oregon’s 9 percent income tax, as everybody else did, they also increased pensions by 9.89 percent, giving retirees extra money to pay the tax with." Government workers are certainly in a special privileged class.
pfarnsworth 8y ago
Defined benefits plans, ie pensions, should be outlawed, as long as they have any component that must be paid by taxpayers. For the most part, pensions are Ponzi schemes and require more and more employees to enter the system to pay for those on the pension. If you're talking about a private pension system that can collapse, then that's okay, but if it's a government pension that can keep taxing people because their benefits are too lucrative, those should definitely be outlawed, especially the ones for Congress.
sxcurry 8y ago
This article doesn't tell the whole story. Yes, PERS is a problem in Oregon. However, some of the anecdotes of counties cutting services are not related to PERS. For example, Josephine County, next door county to mine, has the lowest property tax rates in the state. Property owners in the county have repeatedly rejected tax increases to pay for basic services like the Sheriff's Department, and as a result have experienced some of the cut backs described in the article. This is not a result of PERS contributions.
- product50 8y ago
  Well if PERS was not there, that money would have been available to pay for Sherriff's department. Just saying lets tax them is not always the solution.
  - duskwuff 8y ago
    That doesn't follow. Funding for state pensions comes out of a separate "pool" from local government.
lordnacho 8y ago
At the root of this is a nexus of bad incentives, bad accounting, and bad predictions about the future. - You have politicians who are in charge of everyone's budget, wanting to show results before the next election. You don't want taxes to go up immediately, so you do a deal with the workers to pay them later. On the worker side, if you have a final salary scheme (or max salary), and you've had colleagues you've worked with for decades, well why wouldn't you promote them? - The "pay them later" will require you to pay them more, because we all discount a dollar tomorrow over a dollar today. We might not be around, money might not buy the same, and we generally find it hard to put off anything pleasurable. So we need more tomorrow if we're gonna do that deal. A lot more. - Bad predictions also come from bad incentives, not just bad accounting. It makes it a lot easier to suppose your investment will make 2% more each year, and this internet bubble is the perfect "evidence" that it might happen. Bad predictions will feed back into bad accounting. But as for the article itself, aren't football coaches the highest paid staff of any organisations that have them? Even the military? I understand the NYT wants people to read their articles, and thus has humans in the pictures instead of pie charts, but it's the pie charts that tell you there's a problem, not the people.
tshibley 8y ago
As a 20 something reading articles like these it is incredible to even imagine having enough trust in institutions to basically turn over my future. I wouldn't trust anyone but myself to control my savings and retirement. This is obviously part of a larger trend that we've seen playing out over the last 50 years, and I'll be interested to see how it continues to play out [0]. It seems difficult to imagine a society that can function cohesively when individuals can't trust the institutions we spend such a huge portion of our lives supporting (through time and tax dollars). I hope to have the chance to reverse this trend in my career, but I have no illusions that gaining this lost trust will come easily. [0] http://www.people-press.org/2017/05/03/public-trust-in-government-1958-2017/ http://www.people-press.org/2017/05/03/public-trust-in-gover...

195 points by Element_ 8y ago

What's the chances of retroactively lowering pensions? 1. Progressively lower pensions. Skim off the top earners. 2. Create projects for the community and declare that the saved money will be used for those projects for better optics. This won't lower trust in government pensions by that much because this is just correcting what is seen as "unfairly high" pensions.

vkou 8y ago
The same chances as retroactively renegotiating on other deferred obligations. We call it 'defaulting on a loan.' Wouldn't it be a great idea if the government just stopped making payments on its loans that, in hindsight, were a bad idea?
mythrwy 8y ago
Here's the other option. Pay the promised pensions and inflate them away. Since this is a growing national problem, I'm guessing that solution has at least been considered.
- jacquesc 8y ago
  Not politically feasible. Older citizens tend to both have a lot of savings, and vote. They would not allow this to happen.
  - WardenUnleashed 8y ago
    Inflation isn't something you can vote on, no?

jayess 8y ago

I guess I'm one of those .04%.

Scoundreller 8y ago
.04% of what?
- mythrwy 8y ago
  The .04% of people who announce they are in the .04%. It's a very select group with an unusual hobby.
jayess 8y ago
Sorry, commented on the wrong article...

rootusrootus 8y ago

My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income. One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So while I think PERS made some stupid decisions, let's not all heap blame on the workers and demand they suffer now. Gov't work pays crap and part of the benefit is supposed to be a little more long-term security.

Eridrus 8y ago
Yes, this is an absolutely backwards way to pay people. When times are tough we end up tightening our belts on a whole host of services, but cannot adjust pensions because we have promised them. We should just pay people market rates and avoid saddling ourselves with a bunch of debt when times are good.
- jadedhacker 8y ago
  When is the government ever not tightening its belt? It's ridiculous that we can pay for bombs but not pensions. Just tax the rich some more. The debt never matters when it comes to killing but always matters when it comes to salving.
  - scarface74 8y ago
    With the median household income being $65000, when the average voter talks about "taxing the rich", they won't have any problem going after tech workers making in the low six figures. You may come to find that you may be one of the "rich".
  - Eridrus 8y ago
    I quite agree with the comments about not spending so much on the military, but as a fraction of GDP, federal taxes have been pretty stable over the last 60 years https://fivethirtyeight.com/features/u-s-tax-rates-the-big-picture/ https://fivethirtyeight.com/features/u-s-tax-rates-the-big-p... with increases and decreases in a constrained range. This whole it or the defecit thing seems like a common talking point for progressives now that Republicans have shown their true colors, but if your goal is to actually govern a country, it does matter. At the very least you should be able to see how increasing our debt increases the payments we need to make to service that debt. 7.4% of our latest budget was just paying for the debt we've already racked up. That's tens of billions of dollars that could have been spent on something worthwhile, but instead we're just paying for the past.

dasil003 8y ago

Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.

cma 8y ago
The numbers I found: Oregon population: 4,000,000 Pension deficit 2017: $25,000,000,000 Per-capita share: $6,250 Assuming a large portion of the pensions will get spent on goods, services, and donations in state, it doesn't seem like a huge disaster, depending on how it grows.
- Scoundreller 8y ago
  Assuming the pensioners stay. Why stay completely when you can spend change your domicile to a zero-tax sunshine state or WA?
  - cma 8y ago
    Family and friend networks.
- mythrwy 8y ago
  4 million people. How many working people with enough income to pay tax? Half? Less? So maybe ~13K per tax paying person in outstanding pension obligations alone? That is a big deal.
  - cma 8y ago
    > So maybe ~13K per tax paying person in outstanding pension obligations alone? Then that would be an obligation of about $300 per tax paying worker per year over their working lifetime. The average yearly salary in Oregon is $50,000. The article makes it out through anecdote that this is why they didn't have gas to send trucks out for a road repair. In the last 20 years Oregon has had near 1% per year population growth as well. The article is focused on outlier pensions for a collegiate athletic director paid partly out of sports merchandising and a medical school head who was an eye surgeon.

megaman22 8y ago

Well, cutting the top out of this seems like the obvious solution. Pants-on-head to give an Oregon coach who's been funded by Nike to collect a multimillion pension.

qmalzp 8y ago
It does seem reasonable that there would be a cap, but I wonder how much cutting the pensions of a few thousand highly paid retirees will impact the budget.
- slfnflctd 8y ago
  At the very least, someone should crunch the numbers and find out. It's anyone's guess how the ratios will skew until you measure them. How to approach this fairly is a whole other can of worms; there will almost inevitably be some unjust outcomes.
  - defen 8y ago
    The data is here: https://gov.oregonlive.com/pers/ https://gov.oregonlive.com/pers/ (you can download a CSV). There are 2,032 people making over $100,000 per year. The sum of their pensions is $252,144,041.04 per year. If each were capped at $100,000 per year that would be $203,200,000 per year, so a potential savings of $48,944,041.04
- TheGeminon 8y ago
  If we assume that the average pension of those with a pension over $100,000/year is $200,000 a year, and cut those down to a cap of $100,000/year it would be $200,000,000/year in pension reduction. With a $2.5 billion/year spend on PERS [0], that is not an insignificant amount on the entire burden of the pension system, even if it is off by an order of magnitude. [0] http://www.pers.ms.gov/Content/Supplemental/persfacts_figures.pdf http://www.pers.ms.gov/Content/Supplemental/persfacts_figure...
  - dpark 8y ago

ebbv 8y ago

What a pathetic ploy to divide the working class against each other. The reason states are short on cash is the race to the bottom we’ve all been participating in since the 1980s when government policy and general economic policy moved from focusing on keeping the middle class healthy to massive tax breaks and cuts for corporations and the wealthy. For the last nearly 40 years every state has been playing the game of trying to attract corporations with massive tax breaks against the promise of jobs. Then a lot of the time the promised jobs never appear. Meanwhile the state is still out millions or billions of dollars in revenue. Corporations and the wealthy can afford to hire lobbyists to write favorable policies. Working class people cannot and have been eating the brunt of all the tax breaks the rich and powerful and connected have received. Maybe a handful of people in some states have abnormally high pensions. That’s not the source of the problem. Those pensions were solvent until they were treated like a piggy bank by corrupt and bought politicians.

jinfiesto 8y ago
I'm not sure why this is so heavily down-voted. Pensions are surely a problem, but they are clearly a drop in the bucket compared to the revenue that states miss out on when they let corporations pit them against each other in race to the bottom behavior.
- bannedaccount 8y ago
  Because this is a conservative site where dissenting opinions are not tolerated.
- DoreenMichele 8y ago
  HN tends to react negatively to inflammatory language, such as What a pathetic ploy. I sometimes have mixed feelings about that, but generally agree that inflammatory language does not foster reasoned, meaty discussion.
- narag 8y ago
  Not sure why it was downvoted, but my bet is this that you insist in: Pensions are surely a problem, but they are clearly a drop in the bucket Pensions are NOT a drop in the bucket by any measure. Maybe for the USA they're less important. But for the rest, safety net is most of a country expenses. Then you add that population in the first world tends to shrink and the model in most countries where current workers pay for retired ones... and you have a very serious problem.

bartart 8y ago

Pensions are going to become a hot political issue as they become more and more unsustainable. Even Illinois, one of the most liberal states in the US, elected a republican governor four years ago in large part because he promised to tackle the state's pension crisis.

toomuchtodo 8y ago
It should be noted that Illinois’ republican govenor ran on pension reform, then to everyone’s shagrin, attempted to break unions. He made no headway on either issue, and is now running against a billionaire Democratic challenger who is expected to win.
- hnal943 8y ago
  The only way to reform pensions is to deal with the unions. The Wisconsin model works.
- travoc 8y ago
  It’s impossible to reform pensions without reducing government union power in states like California and Illinois.
  - MrMember 8y ago
    Illinois is also a special case in that pensions are written into the state Constitution. Pension reform requires changing the Constitution.
    - nugget 8y ago
      Changing the Constituion...or Bankruptcy.
      - toomuchtodo 8y ago
        A state can’t go bankrupt. The pensions will end up being paid by the federal government.

NPMaxwell 8y ago

The PERS systems are adapting to greater longevity. As actuaries learn that people will live longer in the future, they are getting systems to dial back their pensions. In Washington State, the most expensive started working before 1972, and some state employees are now offered only a 401K. That said, there is also a challenge that when the market booms, "surpluses" are drawn out. When the market crashes, it's hard to make up for the missing investment.

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pkaye 8y ago

If you want to see pension data from California, it is available here. https://transparentcalifornia.com/pensions/all/ https://transparentcalifornia.com/pensions/all/ There is a bunch of one time payments near the top but some below that are some making quite a bit in retirement.

jaggederest 8y ago

I mean, the obvious solution is to move to purely defined-contribution plans and haircut the existing people down to actual returns on invested balance for them. But I have to imagine in a lot of cases that would lead to people being impoverished later in life, which is not especially humane.

rayiner 8y ago
Lots of people are in tough financial circumstances. Preserving public pensions means keeping formerly middle class people from facing hardship at the expense of the people who were always impoverished.
jakelarkin 8y ago
is it humane or an entitlement? most people in the private sector work their whole life never get anything remotely close to a pension secondly, its just an intergenerational wealth transfer. another excess of the selfishness of the boomer generation. Who will pay the price ... the school kids getting a crap education in 35 student classrooms in crumbling buildings in a towns who's infrastructure is going to literally fall apart in 2 decades time from zero maintenance. Ah well at least we kept the promises some corrupt politicians made in the 90s to well-off gov workers.
- jaggederest 8y ago
  I think the real answer is increased taxation and haircuts, call it a "reverse cost of living" scheme. I do know the current benefits are significantly less generous than the old system used to be, so it's primarily a problem with a certain generation rather than PERS as a whole.
- closeparen 8y ago
  >an entitlement It's compensation earned in exchange for labor under a negotiated agreement. The fact that the check is separated from the labor by years rather than days doesn't suddenly make it "an entitlement." The time to complain about entitlement, selfishness, and intergenerational wealth transfer was when we were promising those pensions, not now that the bills are due.

sjg007 8y ago

Seems like pensions should be based on base salaries rather than overtime or clinic pay or licensing deals. I’d hope that the medical center and the university bear most of the burden. The police and fire fighters are a different issue in that the county, city or state governments bear the burden. Without raising taxes it’s difficult to solve these issues. Single payer would help though.. it would reduce the medical costs.

nodesocket 8y ago

It's seems like there should be a cap on state pensions of $20,000 a month. $20k a month should be plenty to support a family even in ridiculous California and New York.

bannedaccount 8y ago
I think a cap on private sector workers income would save more money, there are many more of them and many of them have unimportant jobs. If the government just capped their incomes at 100K a month we could pay off all national debt in months.
- nodesocket 8y ago
  Ummm no, private sector should be able to pay whatever they want. The only reason I am suggesting a cap is because these pensions are taxpayer funded. Socialist Hacker News strikes again.
  - bannedaccount 8y ago
    Provide an argument about why government workers are worth less then private workers? Defense is taxpayer funded should we cap pensions at Boeing? They make much more then government workers too, why aren't you suggesting that? I think it's just simple realism, not ideologically driven.
- randyrand 8y ago
  private sector is not paid from public tax dollars.
  - bannedaccount 8y ago
    Actually you are 100% wrong, Defense is funded with taxpayer dollars. The internet was invented and maintained with taxpayer dollars, the whole private sector is feeding off free goods created by the government. Why shouldn't the government negotiate? That only seems fair.

madengr 8y ago

CO, now a tax and spend blue state, has a $32B shortfall? First I heard of it. Now one state over in KS, a red state, has 1/100th that shortfall, and the news goes apeshit criticizing the republican tax cuts. Now tell me the media is not biased?

pstuart 8y ago

Pension spiking should be prohibited and all existing instances of same should be rolled back.

DoreenMichele 8y ago

Re the ongoing debate here about government pay (and whether it's high or low): I'm not super familiar with city and state government jobs, but I do know something about military and federal compensation. They frequently pay less in salary, but have better benefits. This makes it an apples to oranges comparison when trying to talk about what they pay in comparison to non government jobs. I was a military wife for a lot of years and I have spent a lot of time trying to figure out how to convey this. At one time, my army spouse was nominally making about half the income of someone else close to me, but take home pay for my spouse and this other person was nearly identical and I never spent a dime on doctor's visits or prescription medication. The primary difference in our quality of life was that my husband's income supported a family of four and this other individual was single and childless at the time. So it gets really confusing because sometimes the take home pay for government jobs is less, but the total compensation package can be better. This means that two people arguing about it can both be right and unable to see the other point of view.

rebuilder 8y ago
Is there a standard measure of disposable income after taxes and necessities like food, housing, education, healthcare? It seems comparing how much people have available for discretionary spending would be useful in many cases.
- DoreenMichele 8y ago
  I'm not aware of one and your question touches on some of the hidden forms of compensation that can be hard to measure (and can vary over time for the same person -- for example, we were sometimes in housing on base and sometimes not). The below examples are off the top of my head from memory as a military spouse and may be very out of date. The military will cover 75% of tuition for active duty members. Most states charge military members in-state tuition. When my ex took college classes at low cost community colleges in California, his books typically cost more than tuition. His tuition was practically pocket change. When he was stationed in a designated war zone, we got a tax break for that. When we were in on base housing, we did not get a housing allowance. We also did not get a water bill or electric bill. We only had to pay for a phone. While stationed in Germany, I got free dental care on base even though spouses usually don't get free dental anymore. Similarly, we could have gotten free braces for my oldest son while stationed at a different remote location. When shopping on base at a px or bx, you pay no taxes. They may or may not also have lower prices on some items. I routinely had a Power of Attorney so I could handle my husband's affairs while he was deployed. I never paid for such. We had access to legal assistance for free for such items. Medical coverage for the family is free, including out patient doctor's visits and most prescription medication. Further, I am alive when by all rights I should be dead in part because we got stationed at Travis AFB just as the shit was really hitting the fan. The hospital there is a teaching hospital that serves all military branches for eight western states. Most people have no idea how well developed the military medical system is and the sorts of resources that can be made available in cases of serious medical crisis. I have a genetic disorder that was diagnosed late in life. My husband's medical benefits alone were practically like a second income for us because I was in the ER all the time at zero cost. This was true even when visiting relatives who happened to live near military bases. I just went to the nearest military medical facility, even if it was a different branch of the military. Military personnel are sort of outcasts when deployed elsewhere in the US. We tend to not have a local bank account and military spouses have high unemployment rates because locals don't want to hire them. The military does what it can to make up for that, such as offering free check cashing on base at the bx or px. When in on base housing, I was able to check out a lawn mower and other items for free for purposes of maintaining the yard to the standard required by the military. I didn't have to buy any of those things. They even provided grass seed for free so we could reseed our yard when the 115 degree summer heat in the High Desert killed our grass. There are so many things you get for free in the military for just flashing your ID card that some people who leave after a single stint are shocked at how poor they are after leaving. A much higher percentage of a military check is discretionary than is the norm for most jobs. If you stay in 20 years or more, you will get retirement benefits without doing any retirement planning or savings whatsoever. As a young military spouse, 90% of my budgeting concerns was making sure we had enough food in the house. Retirement planning, stressing about medical bills and other normal issues for most Americans was simply not a part of my life.

skookumchuck 8y ago

"So, when lawmakers required government retirees to pay Oregon’s 9 percent income tax, as everybody else did, they also increased pensions by 9.89 percent, giving retirees extra money to pay the tax with." Government workers are certainly in a special privileged class.

pfarnsworth 8y ago

Defined benefits plans, ie pensions, should be outlawed, as long as they have any component that must be paid by taxpayers. For the most part, pensions are Ponzi schemes and require more and more employees to enter the system to pay for those on the pension. If you're talking about a private pension system that can collapse, then that's okay, but if it's a government pension that can keep taxing people because their benefits are too lucrative, those should definitely be outlawed, especially the ones for Congress.

sxcurry 8y ago

This article doesn't tell the whole story. Yes, PERS is a problem in Oregon. However, some of the anecdotes of counties cutting services are not related to PERS. For example, Josephine County, next door county to mine, has the lowest property tax rates in the state. Property owners in the county have repeatedly rejected tax increases to pay for basic services like the Sheriff's Department, and as a result have experienced some of the cut backs described in the article. This is not a result of PERS contributions.

product50 8y ago
Well if PERS was not there, that money would have been available to pay for Sherriff's department. Just saying lets tax them is not always the solution.
- duskwuff 8y ago
  That doesn't follow. Funding for state pensions comes out of a separate "pool" from local government.

lordnacho 8y ago

At the root of this is a nexus of bad incentives, bad accounting, and bad predictions about the future. - You have politicians who are in charge of everyone's budget, wanting to show results before the next election. You don't want taxes to go up immediately, so you do a deal with the workers to pay them later. On the worker side, if you have a final salary scheme (or max salary), and you've had colleagues you've worked with for decades, well why wouldn't you promote them? - The "pay them later" will require you to pay them more, because we all discount a dollar tomorrow over a dollar today. We might not be around, money might not buy the same, and we generally find it hard to put off anything pleasurable. So we need more tomorrow if we're gonna do that deal. A lot more. - Bad predictions also come from bad incentives, not just bad accounting. It makes it a lot easier to suppose your investment will make 2% more each year, and this internet bubble is the perfect "evidence" that it might happen. Bad predictions will feed back into bad accounting. But as for the article itself, aren't football coaches the highest paid staff of any organisations that have them? Even the military? I understand the NYT wants people to read their articles, and thus has humans in the pictures instead of pie charts, but it's the pie charts that tell you there's a problem, not the people.

tshibley 8y ago

As a 20 something reading articles like these it is incredible to even imagine having enough trust in institutions to basically turn over my future. I wouldn't trust anyone but myself to control my savings and retirement. This is obviously part of a larger trend that we've seen playing out over the last 50 years, and I'll be interested to see how it continues to play out [0]. It seems difficult to imagine a society that can function cohesively when individuals can't trust the institutions we spend such a huge portion of our lives supporting (through time and tax dollars). I hope to have the chance to reverse this trend in my career, but I have no illusions that gaining this lost trust will come easily. [0] http://www.people-press.org/2017/05/03/public-trust-in-government-1958-2017/ http://www.people-press.org/2017/05/03/public-trust-in-gover...