The staggering level of ignorance about public employee pensions never ceases to amaze me. Josh writes the post I’ve been trying to get to for some time, though I think I’ve mentioned the issue previously:
I did some calling around on this issue yesterday and got much the same impression. What Brady seems to have overlooked is that the state’s teachers — who make up about 80 percent of the government workforce — don’t get Social Security. That means the state doesn’t have to pay the 6.2 percent federal payroll tax on these workers. If new employyes were instead offered a 401K, the state would have to start paying that tax and there’s reason to believe that this would actually be more expensive than the current pension system. Add to that the administrative costs of managing two retirement programs and … you get the picture.
Chalk it up as just the latest evidence that Brady doesn’t understand the ramifications of his own policy prescriptions.
In the effort to demonize public employees, Brady and those like him don’t seem to understand the basic math surrounding getting rid of public employee pensions and largely this is the fault of the press which can’t deal with this complicated of an issue well and just hears the constant fretting over how the state will make its pension payments. The problem isn’t with outsized pensions, it’s with a state government that has relied on gimmicks to balance its budget and pensions have always been an easy target to divert. That’s not the fault of public employees, it’s the fault of politicians not making hard decisions.
Why would the state have to pay SS for teachers employed by local school districts? Wouldn’t that be the local school district’s liability as well as the teachers themselves?
I realize there’s more to it than that but this has me a little confused>
Currently the state pays most of the employer contributions to teacher pensions–not sure about other local entities. One could argue that could be shifted to the local districts, but in such a case, the local budgets would have to be significantly increased.
I’m oversimplifying the issue a bit, but that basic bit is a very significant issue that few address in talking about how a switch would work.
Teacher’s take home probably wouldn’t be affected much, but they would also be losing essentially a part of their whole employment package which if one thinks about jobs work in markets, their overall benefits would have to be held harmless. A second part of the issue is that many accept lower pay as teachers (science and math especially) because of generous retirement benefits make up for it.
The larger point simply being that any of these solutions are a lot more complicated than proponents make them out to be and cost a lot more than they either let on or realize.
“The larger point simply being that any of these solutions are a lot more complicated than proponents make them out to be and cost a lot more than they either let on or realize.”
Oh, I absolutely agree.
It’s been my observation that most discussions of the State’s pension liabilities are off the mark due to a variety of reasons including politicization. I’ve yet to find a good overall source that addresses the fundamental issues (most particularly the concept that the state theoretically can not declare bankruptcy and yet has a constitutional obligation, I take it to mean full faith and credit, to make the obligations whole).
I’ll keep looking.