By Frank Keegan | State Budget Solutions
Municipal and state pensions are at least $4 trillion in the hole as the National Conference of Public Employee Retirement Systems meets next week. Funds ended 2011 with the first year-over-year decline since 2009 after failing to make up for Great Recession losses. And three studies released last month confirm that without draconian cuts, current employees and retirees in some systems will not receive full benefits.
None of these realities are listed in the NCPERS “Best Governance Practices for Public Retirement Systems” to be presented next week at the New York Hilton.
Instead, the report offers a general guideline that “seeks to drive accountability, consistency and transparency, which enables improved performance and risk oversight for the benefit of public pension fund members, taxpayers and other stakeholders.”
Taxpayers are a “stakeholder” only if they consider being impaled on the stake as holding it.
No taxpayers are among “… more than 1,000 trustees, administrators, state and local officials, investment, financial and union officers, pension staff and regulators …” attending the annual conference.
Right now taxpayers are on that stake for more than $4 trillion they must pay on top of all other government expenses and tax increases to receive absolutely no government services of any kind.
No pension reforms to date will have any significant impact on the debt, which continues to grow every day.
These trillions of dollars will put no teachers in classrooms, police on streets, food in mouths of the hungry, homeless in shelters, pavement on streets, garbage in trash trucks or pay for any of the essential services provided by state and municipal workers.
This burden will repress hiring, wages, raises and benefits for public workers for 30 to 50 years.
For decades, politicians made guaranteed pension promises they did not fund, secretly borrowing from pensions — getting rich in the process — and leaving future taxpayers to suffer. The future is now.
So, how do we pay? One idea on the program at 10 a.m. Wednesday is “Retirement Security for All” proposed as a way to drain private-sector workers and businesses of cash now on the false promise to pay later.
Why can we assume that promise is false? Just look at the record to date.
Recent studies and data compilation by the U.S. Census Bureau, Government Accountability Office, Federal Reserve Bank of Cleveland and Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School detail the continued deterioration and ultimate long-term chance of failure of public pension systems within the overall local and state government fiscal crisis:
Underfunded Public Pensions in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward
Thomas J. Healey, Harvard Kennedy School; Carl HessTowers Watson Investment; Kevin Nicholson, Harvard Kennedy School; M-RCBG Faculty Working Paper No. 2012-08
Mossavar-Rahmani Center for Business & Government
http://www.hks.harvard.edu/centers/mrcbg/publications/fwp/2012-08
State and Local Governments’ Fiscal Outlook
April 2012 Update
GAO-12-523 SP
http://www.gao.gov/products/GAO-12-523SP
Public Finances: Shining Light on a Dark Corner
Forefront, Spring 2012
The Federal Reserve Bank of Cleveland
Public Pensions Under Stress
John B. Carlson, Vice President, Research Department
http://www.clevelandfed.org/Forefront/2012/winter/ff_2012_winter_08.cfm
Monitoring the Risks of State and Local Finance
Jean Burson, Policy Advisor, Office of Policy Analysis
http://www.clevelandfed.org/Forefront/2012/winter/ff_2012_winter_09.cfm
Navigating the Legal Landscape for Public Pension Reform: Travel at Your Own Risk
Moira Kearney-Marks, Research Analyst, Research Department
http://www.clevelandfed.org/Forefront/2012/winter/ff_2012_winter_10.cfm
Quarterly Summary of the Finances of Selected State and Local Government Employee Retirement System 2011 Quarter 4:
TOTAL HOLDINGS AND INVESTMENTS OF MAJOR PUBLIC-EMPLOYEE RETIREMENT SYSTEMS HAD A YEAR-TO-YEAR DECREASE FOR THE FIRST TIME SINCE THE THIRD QUARTER OF 2009
United States Census Bureau
http://www.census.gov/govs/qpr/
These studies are not on the NCPERS program. So every American must read them and weep. Then demand that governors and legislators impose real pension reforms now.
Frank Keegan is editor of Statebudgetsolutions.org a project of sunshinereview.org. The State Budget Solutions Project is non-partisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions. The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability.
frankkeegan@statebudgetsolutions.org
Tags: Accountability, Census, Cleveland, Conference, crisis, employee, Federal, Frank, GAO, Government, Harvard, Keegan, Kennedy, Mossavar-Rahmani, municipal, National, NCPERS, Office, pension, public, Reserve, retirement, school, State, systems
