Not to MY COLA you don't!
From John Curry, June 21, 2010
"One striking exception is Colorado, which has imposed cuts on its current workers, not just future hires, and even on those retired. The retirees have sued to block the reduction."
States’ pension cuts hardly thrifty
New York Times, June 21, 2010
By Mary Williams Walsh
By Mary Williams Walsh
Many state governments are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.
But there is a catch: Nearly all the cuts apply only to future workers. The cuts, although heralded by state officials as breakthrough reforms, phase in so slowly that they are unlikely to save the weakest pension funds. Some new rules might even hasten the demise of the funds they were meant to protect.
Lawmakers wanted to avoid legal battles or fights with unions, whose members can be influential voters, so they are allowing most public workers to keep building up pensions at the same rate. The tens of thousands of workers on Illinois’ payrolls, for instance, will still get to retire at age 60; some will as young as 55.
One striking exception is Colorado, which has imposed cuts on its current workers, not just future hires, and even on those retired. The retirees have sued to block the reduction.
Other states with shrinking pension funds and deep fiscal distress might be pushed in that direction and be tempted to follow Colorado’s example in the coming years. Although most state officials believe they are legally bound to shield current workers from pension cuts, a Colorado victory in court could embolden them to be more aggressive.
Colorado pruned a 3.5percent annual pension increase to 2 percent, concluding that was the fastest way to revive its pension fund, which was projected to run out of money by 2029. The cut might sound small, but it produces big results because it goes into effect immediately.
State plans vary widely, but many have other costly features — such as subsidized early-retirement benefits — that also could be trimmed for current workers.
Many state officials, hoping for a huge recovery in the financial markets, say that such projections are too pessimistic, and that cutting benefits for future workers must suffice, given laws and provisions in state constitutions that make membership in a state pension fund a contractual relationship that can’t be breached.
In New Jersey, the administration of Gov. Christopher J. Christie recently imposed pension cuts on future hires, but it has been quietly looking into whether it also could reduce the benefits that current employees expect to accrue in coming years.
A New Jersey assemblyman, Declan J. O’Scanlon Jr., recently introduced a bill to ratchet back a 9 percent pension increase that the state gave most workers in 2001. “I think this will pass constitutional muster,” O'Scanlon said. “Otherwise, I fear the whole system will fall apart. Nine years — we’re out of money.”
posted by Kathie Bracy at 3:55 PM
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