Skip to comments.Michigan school worker retirement plans are underfunded by over $17 billion
Posted on 03/14/2012 4:52:58 PM PDT by MichCapCon
Unfunded liabilities tied to public employee pension plans are bankrupting communities and school districts and are doing so without much attention from state officials, says Michael J. Hicks, director of the Bureau of Business Research at Ball State University, and an adjunct scholar with the Mackinac Center for Public Policy.
Politicians dont address the issue because the effects of the promises they or their predecessors made come long after they leave office. But it is urgent that the unfunded liabilities of state pension funds be addressed immediately, Hicks said at a March 7 speech in Lansing sponsored by the Mackinac Center.
His concerns are echoed by the Mackinac Centers Assistant Fiscal Policy Analyst James M. Hohman, who said in a study released Monday that there are numerous ways to address the barriers to pension reform.
In particular, the notion that it would cost too much to transition from defined benefit pension plans to defined contribution plans that exist in the private sector, is untrue, Hohman said. One need only look at the unfunded liabilities of state pension plans to see the urgent need.
Consider that the pension plan in the Michigan Public School Employees Retirement System has unfunded liabilities of $17.6 billion (the state has set aside $43.3 billion aside to pay for $60.9 billion worth of pensions).
State officials claim the transition costs associated with closing such pension plans and starting 401 (k)-style individual retirement savings account or other measures are prohibitive, but Hohman disagrees. These transition costs are little more than accounting gimmicks that the state can ignore at its own discretion, Hohman said.
Even so, Hohman shows that any transition costs can be mitigated a number of ways.
For example, generous retirement health insurance benefits for public school employees could be reduced, he said. The state also could pay upfront transitional costs, which would accelerate the payment of unfunded liabilities.
Hohman says the state must re-examine ways in which to mitigate the transition costs and be open to new options. His study is available at www.mackinac.org/16589.
I’m sure public sector unions will be exempt from “complete lives “ curve
I'm pretty sure they thought they would be. However, there is no loyalty among the thieves of this age.
Good. We need the other end of the default process to stop all funding to pushers of socialism, deleterious regulations and anti-family policies. Most federal funding should be limited to defense.
We’ve been hearing a lot that “there’s no money for Social Security”. Well, guess what? If there’s no money for SS, it means there’s also no money for underfunded public pension plans.
Bankrupt the cities, and print maps of bridge locations to be given to the public trough feeders.
The trolls will enjoy new faces under the bridges.
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