Tuesday, February 28, 2012

Lawmakers propose robbing, then punishing, public employees

It's the same old song.

State Constitution empowers lawmakers to raise revenues necessary to fully fund the state's essential obligations and institutions. It doesn't give that power to the rest of us, only to the 170 men and women sitting in judgment in Columbia.

And when their decisions to rejigger how we invest retirement system funds, at precisely the moment of an economic downturn, results in a big drop in investment returns, what's their best proposal?

Rob more money from the pockets of poor, working-class public employees, then punish them further with cuts to retirement benefits.

This is not creative problem-solving; this is abrogation of responsibility. Deadbeat dad-ism. Absentee landlord-ism.

Here are the highlights identified by The State newspaper:

State workers to put more in, get less out

A look at the financial impact of proposed retirement changes

The average state employee would pay an extra $408 a year in retirement contributions.

State retirees, over the next 30 years, would receive $8 billion less in benefit payments.

State taxpayers, over the next 30 years, would pay $8.3 billion less into the retirement system.

It's a win-win-win, right? For everyone except those poor individuals who were willing to devote their careers to public employment, knowing that it meant lower wages but safe, secure retirement benefits that let us age in dignity.

Proposals like these drain the dignity from the process.

Proposed changes to the state retirement system immediately would cut $2.2 billion from its $13 billion deficit, according to a review of the plan by an independent accounting firm.

That is because, under the proposal, state workers’ retirement benefits would be based on five years of salary instead of three years of salary, a move that could lower benefits. And state workers could no longer include unused sick and vacation days to earn higher benefits.

The proposed changes mean that, over the next 30 years, state retirees would get $8 billion less in benefits than they would have under the current plan. And state taxpayers — required by law to contribute to the state retirement fund — would contribute $8.3 billion less than would have been required under the current plan.

House lawmakers plan to introduce a retirement bill this week, following months of negotiations with state workers, retirees and Gabriel Roeder Smith & Co., the consulting firm paid hundreds of thousands of dollars to advise lawmakers on the retirement system’s finances.

Here's the answer -- and it wouldn't have cost the state those "hundreds of thousands of dollars": Treat public employees with dignity and respect. Either pay them up front in much higher wages, or afford them the retirement security that comes from having reasonable retirement benefits they can count on.

“We are pushing hard to make sure we take corrective action now,” said House Majority Leader Rep. Kenny Bingham, R-Lexington. “If we can do it now, we’re really going to save the system a great amount of pain in years to come.”

Corrective action was necessary two decades ago, when lawmakers chose a path of atrophy: Paying less from state resources, investing less from state resources, cutting corporate taxes by loopholes and wholesale, demanding more from employees and offering less to them.

Or, if you want to look at things in the much longer view: Corrective action was necessary two generations ago, when lawmakers voted in 1954 to establish South Carolina as a "right-to-work-for-less" state, anchoring us forever to the old plantation and mill labor systems.

The S.C. State Employees Association opposes the changes for current employees, which would have the biggest impact on the deficit, according to the consultants’ review.

“We didn’t get into this scenario overnight, and we’re not going to get out of it overnight,” said Carlton Washington, the association’s executive director. “It would be, we think, punitive to punish employees who have provided the committed service over a number of years and built their portfolio around those expectations.”

Washington hit the nail on the head: South Carolina punishes its public employees -- just as it allows private employers to punish its workers -- for not being born into the state's aristocracy and ruling elite. Born powerless, we're kept powerless with a corporate boot on our collective neck.

In addition to benefit changes, state workers would have to pay an extra 1 percent from each paycheck into the retirement fund — an average increase of $408 a year. State Rep. Gilda Cobb-Hunter, D-Orangeburg and a member of the House retirement ad hoc study committee, said Monday she will push to have that increase phased in over two years to lessen the impact.

Why accept this proposal at all? Rather than offering to lessen the impact by phasing it in over two years, why not send those high-paid consultants back to the drawing board and asking them this question: How much revenue must be raised and appropriated to the retirement system in order to preserve -- and even strengthen and improve! -- retirement benefits while holding harmless our public employees who don't have the extra thousands of bucks to cover this gap.

Say it with me: Public employees are not responsible for this problem. State lawmakers had, have and will always have the power to do what's right.

But Bingham, who is also a member of the retirement committee, said the reason for the 1 percent increase is to “make sure the (retirement) system got an infusion immediately.”

The system needs an infusion immediately? Easy fix: Immediately eliminate all corporate tax loopholes and instruct a grand total of one staff person to direct all necessary additional corporate tax revenues directly to the retirement system. And when the system is solvent, apply the rest of the additional revenues directly to the base student cost under the Education Finance Act.

By my calculation, that should take care of the retirement system AND restore the base student cost to 2012-13 levels.

Problem solved. And I won't charge a penny for the consultation.

But, no, that leaves public employees whole. It affords them a little dignity. It helps them sleep a little more soundly at night. So it's absolutely unworkable. If slavery and mill culture taught us anything, it's that the ruling class must keep its workers hungry and anxious in order to get the most compliance. So, another quarter-turn to the thumbscrews.

If passed into law, the proposal means new employees would have to work 30 years, or reach age 65 with five years of service, in order to retire with benefits. And they would be ineligible for the TERI program, the controversial program that allows employees to retire and receive benefits while still working.

Current employees — who are eligible to receive retirement benefits after 28 years of service — would be exempted for both of those changes.

All of the changes would apply to members of the S.C. Retirement System, the largest of the state’s five pension systems, which includes state employees, local government employees and teachers.

Police officers, firefighters and other law enforcement officers have their own retirement system. They also would have to use an average of five years of salary to calculate their retirement benefits. And they would be banned from using unused sick or vacation days to determine the amount of their benefit checks.

But law enforcement officers — including new hires — still would be able to retire after 25 years of service.

Lawmakers would not escape unscathed, either.

Under the bill, a state lawmaker would have to give up his or her seat in the Legislature in order to receive retirement benefits. The proposal would end the practice of lawmakers retiring but remaining in office and replacing their $10,400-a-year salaries with much larger pension benefits — more than $30,000 a year, in some cases.

My heart bleeds for our lawmakers, forced to retire before they could collect their thirty grand a year for life. How will they live?

For advice, they might consult their public workers, who've been living on pittances for generations.

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