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A Public Employee Pension Solution

ACCE Webmaster on Wednesday, June 10, 2009 at 9:39:34 pm

In the June/July issue of the Green Bay (WI) Area Chamber's magazine, Bay Business Journal,Chamber CEO Paul Jadin called on the state to use the projected budget deficit as an opportunity to make structural changes to the public employee pension system.  Below are excerpts from his article entitled: Fix What's Broken.

The vast majority of public employers are paying 100 percent of this cost through labor agreements which, decades ago, eliminated any employee share. Trying to "take back" this benefit at the bargaining table is virtually impossible under Wisconsin’s Municipal Employment Relations Act because any attempt to do so would lead to arbitration and arbitrators have consistently argued that, when eliminating or reducing a benefit, the employer must provide a dollar-for-dollar quid pro quo. Therefore, if you want to cut a million dollars’ worth of pension costs all you have to do is create a new benefit, or supplement an existing one, at a cost of one million dollars.

That’s not the approach I am suggesting here. Indeed, as a former labor negotiator I can appreciate labor’s argument that these benefits were achieved through good faith negotiation and should not be removed, therefore, by legislative fiat. Instead, why shouldn’t the legislature mandate that all public employees hired after a date-certain, say Jan. 1, 2010, be required to invest in their own retirement?

He caps off his argument, saying:

The private sector has made extraordinary changes in the way it funds retirement over the past couple of years and it is foolish for us to treat our nearly one hundred billion dollar system as if it is off limits.

Public pension liability is a major issue, and the ongoing budget crisis that many states currently face is a golden opportunity to enact structural changes that will allow pension program sustainability.  Seize ethis moment to make recommendations in your state.

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