Pension Blues
Pension Apathy and Public Sector Luxury

Pennsylvania has the second-most underfunded pension system in the country, but there’s apparently little political concern about it. The Morning Call reports:

On Monday, the 23 steps and two landings were packed with corrections officers and lawmakers voicing opposition to Gov. Tom Wolf’s plan to close two state prisons.

On Tuesday, the steps were empty when three citizens and two lawmakers held a news conference to draw attention to what they believe is the biggest problem facing the state: pension debt and the need to somehow pay it off to keep it from growing.

The void was not lost on Rep. Paul Schemel, R-Franklin. In June, Schemel said, the Rotunda was jammed with lawmakers joining Wolf to announce a bipartisan effort to combat the scourge of heroin and prescription-opioid drug abuse. The pension debt crisis is just as important, Schemel said, even if the long-term ramifications of it are not as visible to the public.

Pennsylvania has either $69 or $74 billion in pension debt, depending on how one calculates it. By 2019, that number is expected to rise to $94 billion. So far, repeated reform efforts have failed, and there’s little indication that future attempts will succeed.

Can kicking is all fine and dandy as long as the problem remains unnoticed by voters and as long as there’s enough money to fund liabilities. But when, for example, education and social service budgets are cut so that the state can pay its retirees, people suddenly start to care. The problem for policymakers and constituents alike is that by the time people care, it may be too late.

The big-picture challenge, of course, is that public sector workers have become used to making far more than their private sector equivalents. While wages have stagnated for most Americans, they’ve increased (dramatically, in some cases) for civil service employees. In California, government workers earn twice as much as private sector workers do. The California Policy Center has more:

[T]he average pay and benefits for a full-time state/local government employee in 2015 was $121,843.

At the same time, the study found that the average pay and benefits for a full-time private sector worker in California in 2015 was half that much, $62,475.

Moreover, the study found that if the pensions these state/local workers have been promised were being properly funded, their actual pay and benefits in 2015 would have averaged $139,691. And that elevated figure still didn’t take into account the impact of properly pre-funding their supplemental retirement health care, nor did it normalize for their myriad paid days off – typically including 14 paid holidays, 12 “personal days” and 20 or more vacation days as they acquire seniority. And let’s not forget the “9/80” program, common in California government but virtually unheard of in the private sector, where public sector salaried professionals can skip a few lunches and show up a few minutes early or depart a few minutes late each workday, and take 26 additional days a year off with pay because, every two weeks, they worked “nine hour days for nine days, then took the tenth day off.”

If you’re not counting, that adds up to 72 days off per year with pay for a seasoned public sector professional. The study didn’t take that into account.

This is all great for public sector workers, but it’s terrible for taxpayers. And it can’t go on forever.

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