In addition when you know an employee is going to cost you a lot of money in pension, the incentive to reduce the work force as much as possible is high.
You end up in a situation where your budget is used to pay for the retired employees and you have nothing left for active employees.
One of the reasons you are there is that it's pretty tempting for someone in command to offer a lot in pension. Under his command the budget remains clean and the employees are happy. That has got to ease elections!
One way to avoid that would be to change the way the yearly budget is computed so that it includes "known future expenses" clearly.
So, in other words, the bottom line in the budget should be delta (assets - liabilities). This is how individuals are encouraged to do their own budgeting; how would it hurt to require the same of the state?
Isn't there a government office that calculates that stuff? The long-term fiscal impacts of each bill? I want to say it's the GAO, but I don't think it is.... it's driving me nuts!
There are, but it's very easy to fudge the numbers. For example, New York State is supposedly one of the best-funded state pension plans around, but if you change the predicted annual rate of return for the pension plan's investment from 8% to 5 or 6% IIRC, it's suddenly deep in the red. Small looking obscure change, big difference.
"Under his command the budget remains clean and the employees are happy."
Don't any of these places have accountants? Surely, there should be some requirement to recognize the future costs being taken on, properly discounted for net present value?
I could see some definite pros to that. I'm trying to think of problematic things that might also get banned as a result, and not thinking of a lot. One thing that'd get banned along with large pension promises, if that rule were applied consistently, would be golden parachutes.
In addition when you know an employee is going to cost you a lot of money in pension, the incentive to reduce the work force as much as possible is high.
You end up in a situation where your budget is used to pay for the retired employees and you have nothing left for active employees.
One of the reasons you are there is that it's pretty tempting for someone in command to offer a lot in pension. Under his command the budget remains clean and the employees are happy. That has got to ease elections!
One way to avoid that would be to change the way the yearly budget is computed so that it includes "known future expenses" clearly.