Pension reform has been a hot topic all over the country–and some states have already enacted reforms. Minnesotans are aware of the issue but it did not get much play in the governor’s race. (The recent debate focused on the so-called $6 Billion dollar budget deficit—a deficit that only exists if you keep spending as planned. There is no deficit if the state cuts the budget to live within its means. And the “means” or tax revenue, despite hard times, is anticipated to grow, not shrink, in 2011. )
The deficit should focus us all on cutting state spending rather than raising taxes and fees. This effort must include reforming pension and health care benefits for public employees. We have a massive unfunded liability; the official number, using actuarial valuation, puts it at $12-15 Billion. If you use a more realistic market valuation, the unfunded liability grows to almost $25 Billion. You can see all the details at www.mnfreemarketinstitute.org/pensions .
Please support this effort with your donations so we can take the lead on this issue. FYI–We are looking for a part time intern (sorry! unpaid) to help us.
The current pension and health benefits place an undue burden on taxpayers–and the costs are simply unsustainable. Public employee unions have done a great job of getting amazing packages for their members (not just retirement but work rules, pay and benefits, retirement age, opportunities to retire and get re-hired while drawing a pension, etc.). These kinds of taxpayer funded packages are not defensible or sustainable even in a good economy. Unfortunately, it takes a crisis to get our attention and to get legislators motivated to make hard, unpopular decisions.
The Wall Street Journal has done a great job on this issue. Here us the latest editorial conclusion on the subject. “The debate over pension reform has shifted markedly in the last year. Polls even in such government union strongholds as California and New Jersey show overwhelming voter support for moving new workers to defined-contribution plans. Governors and lawmakers would be wise to exploit this public mood to pass reforms that go beyond one-year fixes and lock in limits on union pay and benefits for the long run.” Let’s add Minnesota to the list. You can read the entire editorial, which includes reforms passed in other states, here: