I’m going to make a prediction: public pensions’ days are limited.
Now, I don’t say this lightly but after researching and reporting for my latest ASBJ feature on this very topic, it’s hard not to reach the conclusion that retirement plans for public employees like school teachers will have to be restructured in a big way— or else risk pulling down the entire state’s economy.
Such is the case in Pennsylvania, where school districts will have to hike their employer contribution rates in the retirement system some 700 percent by 2014. To say that district officials are freaking out, would be an understatement.
Districts can’t rely on local taxpayers to bail them out and hence states can’t rely on districts to make up the gap, which was caused primarily by huge investment losses last year— a phenomenon that hit anybody that played in the stockmarket which means Pennsylvania’s pension isn’t the only one in jeopardy.
Oregon, Ohio, Michigan, West Virginia, California, and the list goes on and on of states that will need to have a serious reckoning with the way they fund retirement for its public employees.