From Cadillac to Chevy
Pension reform—not typically a hot political issue, nor one full of intrigue—has emerged as a major platform element for candidates running for governor, legislator, and state treasurer in many locales. As almost everyone is beginning to understand, the standard public-sector practice of paying out a guaranteed monthly stipend (called “defined benefit”) is proving fiscally unsustainable, the more so when joined to generous health-care benefits. The private sector has been shifting to defined contribution plans (think 401(k)). So how does America, in the face of entrenched public-sector practice and intense union lobbying, make a similar shift for its state and local employees—teachers included? We take the matter to the voting booths. On November 2, California voters in ten cities (including San Francisco and San Diego) will see ballot initiatives aimed at reining in public employee pension costs. Polls suggest that most of these Golden State voters favor some reform. Over on the East Coast, pension reform is receiving top-billing on gubernatorial candidates’ platforms. The Republican candidate for governor in Florida has already dropped $1 million on television ads slamming Democratic nominee Alex Sink, the state’s CFO, for losing billions of dollars by poorly investing the state’s pension funds. Equally big stories around pension reform are popping up in New York, Minnesota, Nevada and Oregon—to name a few states. This “things need to change” public sentiment has GOP candidates riding high, and those on Democratic tickets scrambling to find a voice that people want to hear. It’s doubtful that November 2010 will be marked on the tombstone of defined benefits, but the upsurge of interest around this seemingly mundane topic has us hopeful.
“Pensions Become a Heated Issue in 2010 Politics,” by Stephen C. Fehr, Stateline, October 1, 2010.
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