
A $76,000 Monthly Pension: Why States and Cities Are Short on Cash - Element_
https://www.nytimes.com/2018/04/14/business/pension-finance-oregon.html
======
DoreenMichele
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.

~~~
scarface74
My problem is that the pensions give the government a way of paying employees
low and kicking the can down the road where later taxpayers bare the brunt of
obligations that they had no say in.

Just pay government employees more so taxpayers, the government, and potential
employees can all go in knowing the trade offs and let the employees manage
their own retirement like everyone else.

Of course I don't have a problem with military families being provided cheap
healthcare.

~~~
derekp7
Or pre-fund the pensions at the time the employee is working. I believe there
are laws now requiring this, which is getting the US postal service upset
because they suddenly have to pay a lot into pension funds now instead of
later.

~~~
toomuchtodo
The US postal service pension funding requirement was made purposely onerous
by Congress, and is far more conservative than necessary (by design). I would
recommend against using it as an example of proper pension governance.

[https://www.uspsoig.gov/blog/be-careful-what-you-
assume](https://www.uspsoig.gov/blog/be-careful-what-you-assume)

[https://www.govexec.com/pay-benefits/2016/12/obama-
administr...](https://www.govexec.com/pay-benefits/2016/12/obama-
administration-makes-long-desired-change-postal-service-pensions/134166/)

------
dasil003
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.

~~~
bartart
In California "More than 200,000 civil servants became eligible to retire at
55 — and in many cases collect more than half their highest salary for life.
California Highway Patrol officers could retire at 50 and receive as much as
90% of their peak pay for as long as they lived."
[http://www.latimes.com/projects/la-me-pension-crisis-
davis-d...](http://www.latimes.com/projects/la-me-pension-crisis-davis-deal/)

This seems like a pretty big budget item, especially since most CA government
pension funds haven't achieved their expected 7.5% return consistently for
years if not decades. Eventually the money to pay for these large pensions
comes from money that would have been spent on other things.

~~~
skookumchuck
I don't get this entitlement to retire at 55 or even 50. The retirement age
should be 65.

~~~
fludlight
You can't do most blue collar jobs at 50, much less 65. Shoveling asphalt,
laying track, climbing on top or under heavy machinery, or chasing criminals
is backbreaking work. The bodies of these people are permanently worn out by
the time they hit 55.

Some are promoted into management, but most org charts are naturally pyramids,
so there aren't enough of those jobs for everyone. So what to do with someone
who is now too disabled for another blue collar job and is not a "competitive
candidate" for a white collar job?

~~~
LoSboccacc
They just get thrown in the unemployed pool and their income average drops
dramatically with severe ripercussion on the final pension calculations

I know because in europe we have an unrealistic retirement age and my father
like many other lost his job in the 2008-2012 crisis. Been unemployed ever
since.

What happens is that in the 50-65 braket you’re a huge liability with severe
productivity drops and companies tries to fire you at the first chance they
get.

The european system at least has some protections against unreasonable
terminations, so we aren’t fully appreciating the maddnes it would be a free
job market, but company closing or figuring out how to fire the old employees
in masse drops huge chunks of unemployed for life into the society.

This is becoming a serious issue and it is going to peak in 20 years when all
the people like me that don’t enjoy full time national contracts and their
protection will get past their productivity prime.

~~~
zo1
>"so we aren’t fully appreciating the maddnes it would be a free job market"

Of course not, as you probably wouldn't have this weird "retirement age" thing
in the free-market absent government intervention. It's almost unheard of, and
I'm not surprised. Reading through this thread of all the little "abuses" and
"loopholes" that people are figuring out to game the Government-decreed system
of retirement is very worrying and eye-opening.

------
rootusrootus
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.

~~~
rayiner
For the most part, government work does not pay poorly.[1] For example federal
employees without advanced degrees earn a lot more in government than in the
private sector:
[https://www.google.com/amp/s/www.washingtonpost.com/amphtml/...](https://www.google.com/amp/s/www.washingtonpost.com/amphtml/news/powerpost/wp/2017/04/25/federal-
employee-pay-benefits-ahead-of-private-sector-on-average-cbo-concludes/)

[1] I’m willing to entertain the idea our economic system as a whole
undercompensates secretaries and overcompensates executives. That’s a
different issue.

~~~
ubernostrum
Mentioning federal employees in a discussion of state/local employees is an
apples-to-oranges comparison.

Please provide sources to counter the assertion that state/local employees
often get large pensions in lieu of salary.

~~~
tptacek
The median annual cash compensation for a teacher in my kid's public high
school district in Illinois is six figures.

I know that's _not_ true of teachers in other states; Oklahoma teachers look
like they're getting shafted.

But in Illinois, where we have a public pension crisis, I don't have trouble
coming up with evidence that public sector employees did _not_ make cash comp
sacrifices for their defined-benefit pensions.

~~~
ubernostrum
What were the teachers in Illinois making a couple decades ago?

~~~
tptacek
I’ll ask my mom. I’m much much more concerned with current comp than comp 2
decades ago.

------
bartart
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
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.

~~~
travoc
It’s impossible to reform pensions without reducing government union power in
states like California and Illinois.

~~~
ubernostrum
It's impossible to reform pensions without paying private-sector market rate
to state and local employees.

"Unsustainable" pensions are a politician's way of punting the issue -- rather
than hit the budget _today_ by paying market rate, they promise far above
market rate later on when some _other_ sucker is in office. And everybody --
including the people whose taxes will end up paying for it -- falls for this
over and over and over.

~~~
gbacon
Compensation is a vector. Government employees are much more difficult to
terminate than their counterparts in the private sector. That is, government
employees are compensated in part in strong job security.

~~~
toomuchtodo
That's a problem with at-will employment law though, not government jobs.
Government job security should not be considered compensation.

------
lordnacho
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.

------
jaggederest
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.

~~~
jakelarkin
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.

~~~
closeparen
>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.

~~~
gedy
True, but one approach that might help is paying generous pensions come after
basic services, education, and pay for active workers. Versus them coming
first then saying "gee no money for pencils at school" is just wrong.

------
skookumchuck
"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.

------
sxcurry
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
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
That doesn't follow. Funding for state pensions comes out of a separate "pool"
from local government.

------
tshibley
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-
gover...](http://www.people-press.org/2017/05/03/public-trust-in-
government-1958-2017/)

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

------
pfarnsworth
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.

------
NPMaxwell
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.

------
sjg007
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.

------
pkaye
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.

------
home_boi
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.

~~~
mythrwy
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
Not politically feasible. Older citizens tend to both have a lot of savings,
and vote. They would not allow this to happen.

~~~
WardenUnleashed
Inflation isn't something you can vote on, no?

------
nodesocket
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
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.

~~~
colemannugent
>If the government just capped their incomes at 100K a month we could pay off
all national debt in months.

The government would be quickly replaced with one who would undo this change.
Nobody would support it. This is so ridiculous I think you're trolling.

~~~
closeparen
That may be true, but if the .1% of households making more than $1m/year can
obviously and unquestionably overthrow the government, we may as well dispense
with any pretense of democracy.

------
ebbv
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
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.

~~~
narag
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.

~~~
ams6110
That was my fault as well. Pensions are almost a form of a Ponzi scheme. They
all will eventually collapse. Corruption in pension administration is also
rampant.

~~~
ebbv
Pensions are not a pyramid scheme any more than any other form of retirement
fund is. Give me a break.

~~~
someguydave
There is one retirement fund that isn’t a pyramid scheme: the kind where the
retiree saves in his own account and faces investment risks like everyone
else. Forcing taxpayers to shelter you from risk is slimy, even if you have a
“negotiated agreement” signed by some politician.

~~~
ebbv
You realize 401k programs at most companies are treated as a pool just like
pension funds right?

The difference is politicians had domain over the pension funds and decided to
"borrow" from them and make them insolvent. The workers are not the ones to
blame, the politicians who thought using the pension funds as a piggy bank
are. Stop blaming the workers. They didn't cause this problem, and they paid
into those retirement funds.

The politicians who caused the problem are the ones who want you to blame the
workers, stop being their patsy.

~~~
someguydave
>You realize 401k programs at most companies are treated as a pool just like
pension funds right?

That's false. One of the requirements of a qualified plan under section 401 is
that the employee has a nonforfeitable right to plan benefits:
[https://www.irs.gov/retirement-plans/plan-
sponsor/401k-plan-...](https://www.irs.gov/retirement-plans/plan-
sponsor/401k-plan-qualification-requirements)

The corporations who tell workers that the corporation can take money out of
employer 401k plans without authorization are trying to scare the workers,
stop being their patsy.

>The politicians who caused the problem are the ones who want you to blame the
workers, stop being their patsy.

The workers should have known that future promises to pay which would drive
the government into insolvency were promises made in bad faith. This doesn't
absolve the politicians of their sins, but the workers are not innocent lambs
either.

~~~
ebbv
Again you keep talking like insolvency was inevitable. It wasn’t. It happened
because politicians misused the funds.

I’m bored of arguing with you though. It serves no purpose because you are
just regurgitating right wing talking points.

~~~
someguydave
Anyone who could count new hires and had access to an actuarial death table
would be able to determine the size of the problem, even 30 years ago. I
apologize if that kind of thinking is probably boring.

------
megaman22
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
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.

~~~
TheGeminon
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_figure...](http://www.pers.ms.gov/Content/Supplemental/persfacts_figures.pdf)

~~~
dpark
If you assume the average for those over $100k is $17 billion, capping it at
$100k would save the entire budget many times over!

$200k is a completely arbitrary assumption. And if your cost savings are off
by an order of magnitude, it _is_ basically insignificant, at <1% of the
budget.

If you can wave a wand and reduce benefits, targeting only the top 2000 is
probably not the most effective use of your magic.

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

~~~
Scoundreller
.04% of what?

~~~
mythrwy
The .04% of people who announce they are in the .04%. It's a very select group
with an unusual hobby.

