The Unstoppable Teacher Pension Fund Monster

Michigan Capitol Confidential ^ | 2/2/2012 | James Hohman

[MichCapCon]

The state’s teacher retirement system continues to increase burdens on taxpayers and local school districts. The costs exploded in the recent years, and without substantial reform there is no reason to expect that trend to change.

The explanation isn’t hard to find: Since 1988, the system has been close to “fully-funded” in just three years, all in the high-growth 1990s. Its unfunded liabilities are now $17.6 billion. To put this into perspective, it would take roughly all of the state’s annual tax revenue to fully fund the system.

School districts are required to contribute an amount to the retirement system based on their payroll expenses. The money is used to prefund benefits earned by employees during the year, pay the health care bills of current retirees’, and to “catch up” at least a little on the system’s unfunded liabilities.

The upward trend of these payments is striking: In 1984, they cost just 3.22 percent of school payroll expenses. Today they swallow nearly 25 percent of payroll.

This problem can be contained. Adopting the reforms made to the state pension plan is necessary to ensure that the state fix this problem over the long-term. Both taxpayers and public schools would appreciate this.

[volunbeer]

It’s the teachers we read about now, but the sad fact is that just about every government pension fund in the United States is failing.

Federal, state, county, and municipal. They are failing.

[denydenydeny]

I contrast this with Wisconsin, where Governor Walker accomplished the seeming impossible.

If you have the strength to endure the stuck-pig squealing of the Left, you can accomplish anything.

[Mr. Jeeves]

So are a lot of the private funds. Their actuarial assumptions (8% growth - forever) weren't any wiser than the government's.

I think of Bernie Mac as the mall security officer in "Bad Santa" when the dwarf store thief was trying to negotiate down the officer's cut of the take. Bernie Mac just kept saying "Half"' no matter what lower figure the dwarf proposed. That's exactly what the market is going to be saying to retirees and in every industry, public and private (including Social Security recipients) - "You'll take half of what you thought you were getting, and like it."

[Chode]

so give them 10cents on the dollar for their pensions, it's not like they put anything into it themselves like the rest of have to do...

[Old North State]

Here is a serious question;
Why can’t public union pensions put under the jurisdiction of the Pension Benefit Guarantee Corporation as is done with failing private companies?
All pensions would be capped and then paid out of existing fund assets and government employee contributions. I am not sure of all ramifications, legal or otherwise, but it may be something to consider other than kicking the can down the road.

[volunbeer]

I agree with your logic but disagree with your end game. While taking half is better than nothing our selfish unions, entitlement crows, and idiot politicians won’t be able to bear the pain.

I fully expect our leaders to honor their promises. They will monetize our debts and keep the checks coming. They will create money out of thin air to rescue the democratic strongholds of California, Illinois, and Detroit. They will inflate the money supply to issue checks for the government.

By the time our nation wakes up and realizes the check can’t cover the groceries it will be too late. Our nation has no appetite for sacrifice anymore. The baby boomers expect their checks and anyone who expects them to take half can go to hell. Government retirees at all levels feel the same. The politicians promised and they will deliver.... any politician that ask the citizenry to make sacrifices will be promptly replaced.

Don’t send the checks out and many of our big cities will collapse in chaos and riots. The government will borrow or print money to rebuild after the dust settles.

Sorry, sounds pessimistic but that is the way I see it. If we were decent we would follow your plan and not expect our children and grandchildren to pay for it. It pains me to say it, but we are not that decent anymore.

[Fledermaus]

And to think these governments took on unions for pension funding crimes.

I guess you have to get rid of the competition first and take the turf with new unions.

[television is just wrong]

this is simply not sustainable.

[max americana]

“If you have the strength to endure the stuck-pig squealing of the Left, you can accomplish anything.”

Amen. I learn to keep my mouth shut especially here in a fag-loving, super lib city but there were times I;m in a really bad mood and I “slip” and let the libs have it.

Then I really learned I truly hate liberals 100 times more than they hate right-wingers.