Chris Christie isn’t the only governor to rob worker pensions to balance a budget

by Laura Clawson –

christie 3

attribution: Gage Skidmore

In 2011, Gov. Chris Christie and the New Jersey legislature passed a law raising retirement ages and increasing the amount some state employees would contribute to their pension fund, which was underfunded after years of the state failing to make its full contributions. The 2011 law also contractually obligated the state to make its contributions. But here in 2014, Christie is using money that was supposed to go to the pension fund to balance his budget. A long list of unions is suing to block Christie’s plan. But while Christie is a particularly odious assailant of public workers, he’s not alone in robbing their pensions.

You might call it a trend. States that long underfunded their pensions are now targeting the workers who have paid into those pensions or accepted lower salaries in exchange for the deferred pay of a safe pension. And even if a state has made cuts or demanded increased contributions from workers in the past few years, that doesn’t mean the state will keep up its end of the new, worse-for-workers bargain.

Take Pennsylvania. Like New Jersey, Pennsylvania’s public pension system was underfunded because the state and local governments hadn’t been putting in their share, followed by the stock market crash we all know so much about. In 2010, the state passed pension reform lowering benefits for new employees and calling for increased contributions from state and local governments. Below the fold, fast forward to 2014:

Corbett outlined his budget proposal for the 2014-15 fiscal year, which begins July 1, and called for the General Assembly to defer about $300 million in pension payments at the state and local level next year. Though the deferments will add to the state’s long term pension costs — already exceeding $47 billion and set to grow as high as $65 billion within a few years — the administration promised to offset the additional costs with changes in benefits for new employees. […]Paying less into the pension systems means the state and school districts will have more money to spend on other things this year. But just like deferring payments on a mortgage or credit card bill, that doesn’t really save money.

“It’s savings in your budget for this year. It’s not savings in the sense of savings,” said James McAneny, executive director of the state Public Employees Retirement Commission, which advises the Legislature on pension issues. “It’s a budgetary action that does not reduce any of the funding problems with the pensions.”

The state legislature hasn’t yet acted on Corbett’s plan, but is expected to do so.

Then there’s Virginia. In 2010, state worker pension contributions were increased. But the state continued not paying its full share of pension contributions, and 2012 brought more pension “reforms” that were taken out of the backs of workers.

It’s not just states with Republican governors, either. In 2011, Maryland’s legislature and Democratic Gov. Martin O’Malley passed a plan increasing state worker pension and healthcare contributions and reducing benefits for new hires. But in 2014, O’Malley decided the state couldn’t afford to keep up its end of the bargain. The legislature restored some of the money O’Malley had proposed cutting from the state’s pension contributions, but not all.

For decades, workers have taken state and local government jobs knowing that they were making a trade-off: lower wages than they might make otherwise, but long-term stability including retirement security. Now that bargain is increasingly broken. The new way of doing things is that workers make their full required pension contributions but their employers don’t do the same. Then workers are called on to make greater contributions and/or see benefits cut, with the promise that this time, their employers will really pay their own full contributions, and maybe even start catching up on their failures of the past. And then that promise is broken, and governments once again rob teachers and librarians and police and firefighters of their pensions in order to balance budgets. It’s just one more part of the upward shift of income and wealth in the United States, and of the intentional chipping away at the American middle class.

Reprinted with permission from Daily Kos


Free Gift with Every Gift Membership!