Asking the Right Questions About Pension Reform

An article last week in the Sacramento News & Review takes a closer look at public pension woes in California and begs the question -- rather than choosing between a secure retirement for public workers or a fiscally sound state budget, shouldn't we be finding a way to accomplish both?

Sacramento, as reporter Cosmo Garvin writes, is "ground zero for the pension-reform movement in California." The city is seeking ways to lower pension costs either through cutting benefits, raising the retirement age, or giving up guaranteed pensions for a 401(k) plan. Garvin writes:

A lot of attention has been paid to government workers who get sweetheart deals and big raises in their last year of employment, in order to spike their pensions. And papers like the [Sacramento] Bee regularly focus on a small (but growing) number of high-level bureaucrats who earn six-figure pensions.

"But that's the executives. That's the city managers and the fire chiefs. That's not the rank and file," says David Miller, the hazardous-substance scientist.

Miller, a public employee of the state who was interviewed for the story, agrees with many other public employees that some pension reform is needed. But the reality is that most pensioners only receive a modest retirement, and their pensions are actually helping to keep communities alive:

In fact, most pensioners receive modest benefits. Better than Social Security, to be sure. Better than a depleted 401(k). But the average public-employee benefit in California is $2,200 a month. For Sacramento city employees, the average benefit is $1,700 a month.

"All you see in the media is 'Public employees are getting too much money,'" notes Paula Weiss, with the California Retired Teachers Association.

"What we don't talk about is how much those pensions contribute to the community," Weiss says. "I would argue that it's the local pensions from the state workers that are keeping this community together right now."

Defenders of public pensions say it's not the benefits, so much as the way the pension funds have been managed, that have caused today's problem.

California's pension problems are decades in the making -- payment holidays during strong stock market years that allowed local governments to skip putting money into the pension fund, the economic crash of 2008 and Wall Street's destruction of state and local investments, and the continuous slashing of public jobs.

Whether reform in California means contributing more towards retirement funds or investing in smarter solutions like infrastructure, there's a better way to frame the problem. Instead of asking "Why should public employees get retirement?," we should really be asking "Why aren't we all earning a secure retirement?"

You can read the Sacramento News & Review article in its entirety here.