Pension cuts considered by ten states
Rockefeller Institute has come up with a pretty balanced report on the public sector pension crisis.
Spurred on by what’s going on in Detroit, at least ten states are trying to cut pensions of municipal workers, or eliminate defined-benefit plans. The Japan Times reports that from New York to California, mayors and county officials are asking legislatures, courts or voters to allow the changes as a way to maintain government services as pensions consume a larger portion of budgets.
Elected officials are intensifying efforts to trim benefits even as local economies and tax revenue recover more than four years after the longest recession since the 1930s. They are searching for ways to reduce the costs of pensions that cover more than 14 million workers and are underfunded by at least $1 trillion, according to a January report by the Nelson A. Rockefeller Institute of Government in Albany, New York.
Legislatures in many instances have changed laws to reduce benefits of state employees, or forced them to pay more. Seven states, including Virginia and Tennessee, have agreed to phase out defined-benefit plans for certain employees, including some from local governments who are included in the state program. Cities pressing for more control over pensions include Chicago, Houston, New Orleans, San Jose, California; and Syracuse, New York. Their mayors say they have limited ability to control costs. In Houston, the fourth-most-populous U.S. city, pensions accounted for 11 percent of the $2 billion budget, up from 6.9 percent a decade earlier, according to budget documents. In San Jose, the 10th-most-populous, pensions totaled 20 percent of the $1.1 billion budget, up from 9 percent in 2004.
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
