Jim Kimmel on public-sector pensions: Will we suffer the wrath from private-sector employees?

From Jim Kimmel, October 10, 2006

Subject: Re: Public-sector pensions -- will we suffer the wrath from private sector employees?

Did any of these people ever ask themselves where the money went that was in their pensions? It did not go to public service workers. Instead of being mad at teachers, firemen, and others they should be angry at the selfish bastards who took their pensions away. This is just an example of playing the private workers against the public workers when we should all be working together to get pension reform enacted so that everyone is treated fairly.

The money wasted at STRS is known to have gone for nonessentials, perks and bonuses and trips to Hawaii.,not to mention a $99 million building. These "angry private sector workers" who mostly made much more money than teachers anyway should be angry as hell at their employers who discontinue their pensions so as to pay for giant CEO salaries and bonuses and build new factories in China on the backs of their employees so that their jobs can be terminated in the US even before they are eligible for retirement.

Guess what -- that is not the fault of some teacher or cop in Ohio or anyplace else!! They are playing us all against each other for the final assault on the public pensions.

Vote right in November!!

Jim Kimmel

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From John Curry, October 8, 2006

Subject: Public-sector pensions-will we suffer the rath from private sector employees?

By Molly Hennessy-Fiske
© 2006, Los Angeles Times
(Original Publication: October 8, 2006)

HADDONFIELD, N.J. - Public-employee pensions, one of the last bastions of guaranteed retirement plans in America, are under assault as cash-strapped state and local governments struggle to cover rising costs and resentful taxpayers refuse to pay more to cover them.

Alaska and Colorado have made changes to state pensions, and Illinois, Oklahoma, Montana, New Jersey, Pennsylvania and the city of Providence, R.I., are contemplating similar steps.

Nationwide, about 90 percent of state and local workers have pensions, compared with about 20 percent of private-sector workers, said Keith Brainard, research director at the National Association of State Retirement Administrators.

Instead of company-paid pensions with guaranteed payments, most private-sector workers now are offered 401(k) plans, which are investment accounts that employees pay into and manage while they're working, then tap when they retire. Some employers contribute to the 401(k) accounts as well.

With state pensions, investment management is up to the state, but taxpayers are often called on to cover costs. As of last year, 84 percent of state pension plans were underfunded, meaning their assets didn't cover projected payments, according to Santa Monica, Calif.-based Wilshire Consulting. Many states have been making up the difference by raising taxes.

New Jersey battleground
The tension between public employees and taxpayers is playing out across the country, but nowhere more sharply than in New Jersey.

Setting the stage, several of New Jersey's major private employers recently eliminated pensions. Telecom giants Sprint Nextel Corp and Verizon Communications partially froze pensions last year, affecting some 18,000 workers in New Jersey. DuPont Co., which employs about 1,300 in New Jersey, this summer announced plans to "freeze" pensions, meaning the company would drastically reduce its pension fund for current employees and deny any coverage to new hires.

"More and more New Jerseyans find themselves without pensions and become resentful of the double whammy that they face: fewer benefits for themselves and higher taxes so that the public sector workers can receive generous benefits," said David Rebovich, managing director of the Institute for New Jersey Politics at Rider University in Lawrenceville.

For insurance agent Steve Adams, 51, the resentment began two years ago.

As he worried whether his stagnant 401(k) account would be adequate for retirement, New Jersey lawmakers raised his property taxes to maintain state workers' pensions. Then his wife's employer froze her pension plan, forcing her to rely on a 401(k).

Last spring Adams joined a taxpayer group called Americans for Prosperity, which is seeking limits on government pensions. In June he attended a rally in Seaside Heights where about 200 people urged state legislators to make cuts in such things as pensions rather than raise taxes again - this time, a proposal to raise the state sales tax.

"We don't get anything nearly as generous in the private sector," Adams said of public pensions.

Nancy Burwell, 52, of Morristown also has been attending and organizing meetings of Americans for Prosperity where organizers explain details of the public pension system and how it contributes to local tax hikes.

Burwell works in sales and said she and her husband, a computer programmer, are saving for retirement without a pension or 401(k) because their jobs don't offer them. "We don't expect anybody else to help us out - we take care of it ourselves," Burwell said. "I really resent these public workers. Why should I pay for their retirement?"

"In New Jersey, life is still about keeping up with Mr. and Mrs. Jones. And the Joneses have state pensions and health-care coverage," said state Rep. Paul Moriarty, who is pushing pension changes.

Retired construction contractor Charles Reveliotty, 67, of Cherry Hill complains about public pensions but doesn't talk about it with his next-door neighbor, a town engineer. "It's a little bit like talking to somebody about religion," Reveliotty said. "If you say to somebody, 'You have to give back half your pension' you can imagine what the results are going to be, so I never bring it up. It infuriates people."

Public employees counter that instead of going after their pensions, public officials and resentful workers should defend private sector benefits, which continue to erode.

"Private-sector workers, who should be angry as hell at their employers for walking away from pensions, are angry at public employees," said Jon Shure, president of New Jersey Policy Perspective, a nonpartisan Trenton think tank.

He said eliminating state pensions would feed further benefit cuts in the private sector, leaving all workers with less income for retirement. "If the people who are fomenting this have their way, public benefits will stink, too, and we'll have dumbed it down to the way it is in the private sector," Shure said. "If anything, the public sector should set an example for how benefits should be."

Beyond New Jersey, the debate over public pensions is growing into an election campaign issue.

In Massachusetts, Illinois, New York and Oregon, Republican candidates for governor proposed new 401(k)-style plans for state workers, as did Republican candidates for comptroller in Maryland and New York.

Some cities and states have already made the switch. In April, Colorado began offering state workers a defined contribution plan, such as 401(k)s. The mayor of Providence plans to switch all new hires from pensions to 401(k)s next July. In Alaska, legislators voted last year to close the public pension system to new employees in an effort to stem a $6.9 billion deficit in the retirement fund.

Alaska state Sen. Bert Stedman, a Republican who advocated changing state pensions, warns that if states such as California and New Jersey do not change public retirement benefits to reflect the private sector, they may soon face angry taxpayers.

California sponsors several state and local pension system, including the nation's two largest, California Public Employee retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS), which cover more than 2 million workers. CalPERS is 88 percent funded, CalSTRS 82 percent funded, according to their financial records, levels even researchers at the conservative Pacific Research Institute concede are high compared with states such as Illinois and New Jersey.

"When the private sector has to pay for the public-sector benefit packages they can't get themselves, you're going to have a lot of political and social unrest," Stedman said. "The average homeowner, when he gets his property tax jacked up to pay his neighbor's benefit package, he's going to get upset about it. And that's what we don't want to happen in Alaska."