A pension for promises

— Rollie Atkinson
In this mid-summer of 2009 we find ourselves mired in an
economic downturn where our state government is in billions of
debt, our local governments and schools are shedding jobs and
cutting programs. And, our own household budgets are shrinking.
Everybody’s pension just got smaller and planned retirements are
being delayed for a few years or much later.
How long these economic bad times will last is hard to guess.
Experts say housing prices might rebound a little at the end of
this year. Others say jobless counts will continue to get worse for
many more months. More huge government bailouts might still be
needed before Detroit, Wall Street and our own Main Street are once
again adequately stimulated.
It’s safe to say this is not just a period of summer malaise. We
have heard the comparisons of today’s recession to the Great
Depression of the 1930s. Could we be facing society-altering forces
brought on by the collapse of our biggest banks, the bankruptcy of
the U.S. auto industry, a burst housing market bubble and too much
government debt?
What if the values of our 401(k)s, public pensions and real
estate investments never come back? What if we really do have to
begin to “live within our means?”
California’s state government is facing a $26 billion deficit.
Billions of this debt are owed to hundreds of thousands of
retirees. The County of Sonoma is facing an immediate $2 million
shortage in covering pension plan obligations next year. Local
school districts are forced to curtail classroom programs to meet
retired teacher pensions. Private employers are trimming or
eliminating health insurance coverage and 401(k) contributions.
Promises about lifelong health benefits and pension plans are
becoming problems. Bitter contract talks over these negotiated
benefits have emerged. Any compromises suggested so far in local
labor talks are being called “broken promises.”
Could it be more than that? What once was an entitlement is
beginning to look more like a lost piece of the American Dream.
Retiring with 90 percent of your final salary level doesn’t sound
very sustainable right now. Allowing some public employees to
retire as early as age 50 sounds too rich as well.
Just as the largest wave of Baby Boomers is set to retire or
claim Social Security, our pension funds and stock portfolios are
withering away. Part of “living within our means” appears to
include “retiring within our means.”
Self-employed and small business owners who may have never had a
pension or retirement plan likely have a very different view on
this economic change of life for public employees and corporate
pensioners. They question why 55 retired county government
employees receive over $100,000 a year in a pension. Local
government obligations to cover all retiree pensions is rising by
double digits annually while essential programs and services are
being cut.
Obviously, future promises made to public employees will have to
be different than ones made in the past. Governments, too, must
live within their means.
Top level administrators’ and executives’ pay levels must be
reexamined, too. The $331,000 severance package awarded to Sonoma
County administrator Bob Deis is the most recent example of this
top-heavy payroll.
Just last year, another 100 Sonoma County teachers were added to
the rolls of the California Retired Teacher’s Association. This
comes at the same time the CalPERS pension fund dropped 31 percent
in value.
For the sake of the next generation we are trying to educate in
our schools and to maintain a basic social safety net of serivces
for the elderly and poor, we need to link future pension plans with
our gvernment’s ability to pay.
After all, we owe them our promises, too.