Note To Gov. Walker: Wisconsin Pension Plan Is 97 % Funded, Could Pay Benefits For More Than 18 Years
"Note To Gov. Walker: Wisconsin Pension Plan Is 97 % Funded, Could Pay Benefits For More Than 18 Years"
Gov. Scott Walker (R-WI) has been using the guise of a budget crisis to propose kneecapping his state’s public sector unions by removing their collective bargaining rights. Though the changes to collective bargaining would not save the state much money (and Walker himself made Wisconsin’s budget picture worse by insisting on a slew of tax cuts upon entering office), Walker contends that his union-busting bill is necessary because his state is “broke.” “The facts are clear: Wisconsin is broke and it’s time to start paying our bills today — so our kids are not stuck with even bigger bills tomorrow,” he said in his budget speech last week.
Of course, Wisconsin’s public employees have already agreed to accept pay cuts and to place more of their compensation in Wisconsin’s public employees pension fund. And upon closer examination, Walker’s house-on-fire rhetoric regarding his state’s finances doesn’t hold up to scrutiny, as McClatchy found:
Ironically, in Wisconsin, where Republican Gov. Scott Walker is trying to weaken public-sector unions and reduce pension benefits, he’s exempted police and firefighters, who are among the most unionized public employees. And Wisconsin’s public-sector pension plan still has enough assets today to cover more than 18 years of benefits.
Keep in mind, that’s nearly two decades of benefits that could be paid even before the changes to which Wisconsin’s current public employees have agreed go into effect. Overall, Wisconsin’s pension system is 97 percent funded, according to the Center for Retirement Research.
In fact, as the Center for Economic and Policy Research pointed out, “the shortfalls facing most state and local pension funds have been seriously misrepresented in public debates”:
The major cause of these shortfalls has not been inadequate contributions by state governments, but rather the plunge in the stock market following the collapse of the housing bubble. Given the low PE ratios in the stock market, pension fund assumptions on the future rate of return on their assets are consistent with most projections of economic growth and past experience. Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.
Walker has already been scolded by his state’s finance director for falsely claiming that he would have to lay off state employees if his budget bill wasn’t passed by a certain date. Politifact also rated Walker’s repeated assertions that his state is broke as “false.”
Ultimately, as the Economic Policy Institute pointed out, ‘Wisconsin’s public‐sector workers have not caused the $1.8 billion shortfall the state faces for fiscal year 2012. Attacks on public‐sector workers would not only further compromise the tentative economic recovery in Wisconsin, but would place further strains on the programs, services, and public structures that the citizens of Wisconsin depend on to build strong and healthy families and communities.”