This editorial will appear in Wednesday’s print edition.
All over the country, pension systems for public workers are in trouble. Many are woefully underfunded. Nationally the deficit was $1 trillion at the end of 2008, and it’s been widening since as baby boom workers retired in growing numbers and the recession battered investment funds.
Washington is in better shape than most states. As of 2008, according to the Pew Center on the States, it was one of only four states whose pension systems were fully funded.
But, according to Pew, “Washington needs to improve how it manages its long-term liabilities for both pensions and retiree health care and other benefits. The state has failed to meet its actuarially required contributions since 2001.”
Translated, that means the state needs to make changes to its pension system if it’s to be sustainable in the long term.
A proposal by Republican lawmakers is a good starting point – not “class warfare,” as one state labor-union leader called it. As part of the GOP budget proposal, the state would skip a $143 million payment to reduce liability in two state pension plans, but repay it by cutting benefits to future state employees.
Yes, it’s unfortunate that future workers wouldn’t get the same generous benefits current workers enjoy. But many states have gone down that road. Between 2009 and 2011, 43 states made major changes to retirement plans for state employees. Just last week, for instance, New York lawmakers voted to cut retirement benefits for future public employees in order to avoid tax hikes and layoffs.
In the private sector, many companies have completely dumped traditional pensions and gone to a defined contribution plan, similar to a 401(k). Other workers in the private sector have no pension benefits at all.
The GOP plan would also eliminate an early-retirement benefit for state workers hired after July 1 – something Gov. Chris Gregoire proposed last year. Savings from that would go toward paying off the state’s Plan 1 unfunded liability more quickly than under current law.
Some Democrats have criticized the GOP proposal to skip a payment into the PERS1/TERS1 pension system, but lawmakers should remember that it wouldn’t be something new. Pension payments have been skipped or pushed out six times since 2001 – every time but one when the Legislature was under Democratic control. So crying foul now seems a little hypocritical.
Current state employees would not be affected by these changes – except for the fact that their pension funds would be in better shape. That’s a result worth supporting.