Pensions Are an Example, Not the Whole Problem

I’m skeptical that anything substantial will come of the current push for pension reform among elected officials, but even if some positive change results, I’m concerned that elected officials and the public alike will wipe their hands together with a collective “problem solved.” This article explaining that growing pension costs promise to eat up whole increases in school budgets for the next fiscal year, for example, doesn’t offer any hint that labor costs have been doing just that for years, decades.
But let’s start with the faulty attitude under which the public sector has become corrupted:

“In some regards the state Retirement Board made its adjustments in a void without thinking about the wealth of the communities in the state or conflicts with the tax levy cap,” Peder A. Schaefer, assistant director of the [Rhode Island League of Cities and Towns], said.

The only consideration that the Retirement Board ought to make when setting payment requirements is what reasonable predictions should be applied. The fact that the promises of elected officials will be difficult to requite does not lead to the conclusion that the state ought to pretend otherwise, which is what Schaefer is ultimately suggesting.
The executive director of the Rhode Island Association of School Committees, Tim Duffy, gets a little closer to my main subject, though:

“Hopefully the pension review commission will address this major problem,” Duffy, from the school committee association, said. “Otherwise we have a situation that doesn’t even allow for critical decision-making by school committees. “They won’t even have the ability to weigh what [programs] are most important to student learning because basically they’ll have budgets that are just funding a retirement system.”

This dynamic is nothing new. Schools have been ending programs (like music) and forcing parents to pay separately for sports precisely because school budgets, which almost never actually decrease, whatever enrollment may do, are basically just funding the salaries and benefits of the adults employed within them. Pensions are unique because they were future payments that administrators didn’t have to slip into the system on an regular basis, as they have had to do with salaries and more immediate benefits, like healthcare.
Even with those, though, the game is stacked in the unions’ favor, with steps, longevity, and the arsenal of budgetary tricks that make voters believe that they have no choice but to pay up. We don’t need structural changes just for pensions. We need them for our entire school system.

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11 years ago

“But let’s start with the faulty attitude under which the public sector has become corrupted:”
I am not corrupted. The public sector is not corrupted. These generalized comments, written as fact are what prompts me to draw the proverbial line in the sand and defend the public sector without participating in any worthwhile debate due to the preconceived “fact” that my employment status and ethics are questionable, and my work and compensation tainted.

11 years ago

“they’ll have budgets that are just funding a retirement system.”
That’s right. It will very soon come down to: do we pay current employees or do we pay retired ones?
By the way, this in turn will set up a grimly interesting conundrum for the leadership of public labor unions in the state: do they advocate for their working members or their retired members? “Both” will not be a choice.

Warrington Faust
Warrington Faust
11 years ago

Am I missing something? In terms of “compensation packages”, haven’t pension plans gone the way of the buggy whip?
It seems to me that my father once had a private sector pension plan, it required 20 years service before “vesting”. He was found “surplus to needs” at 19 years, 6 months.
I think union tradesmen still get a pension.

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