Unions and Their Pensions: Not the Problem

Lots of push out there trying to pin local governments' financial woes on union workers in general and their pension benefit packages in particular. This piece appeared just last week in our local paper...

“According to Pension Trust, we currently have 1,890 recipients,” County Administrator Jim Grant wrote in response to The Tribune’s query. “The average annual benefit paid to recipients is $23,778, or $1,981 per month. These numbers include safety and probation members.”

Multiplying 1,890 by $23,778 yields $44,940,420. The pension costs represent about 10 percent of the county’s overall budget, which is $450 million.

The simplistic math reported there is flat wrong and reveals a fundamental misunderstanding of just how the County's pension system works. I sent a letter to the editor explaining just that...

I am writing in response to Bob Cuddy's recent article concerning "Public Employee Pensions...and the County Budget." Cuddy's column, I’m sorry to say, is shoddily reported and short on relevant information. This is regrettable, in these tough economic times, because public employees are already an easy scapegoat when so many of our citizens are suffering.

Reporting on this controversial issue should help to enlighten the public, not to further confuse it. Cuddy's most egregious error comes in the very first sentence of his piece. When he says "the County is spending nearly $45-million a year on pension payouts," he is flat wrong. His simplistic mathematics aside, the actual dollar figures are readily available at the Pension Trust website, which clearly indicates that, in 2009 the County's contribution to employees’ pensions was $31.4-million. That may sound like a lot of money, but it's worth noting that employee contributions totaled $24.1-million, and those contributions are and were part of a fully negotiated agreement.

When Cuddy says the County spends "$45-million per year on pension payouts," this belies a fundamental misunderstanding of the pension system. In fact, the County does not pay pension benefits out of general operating revenues, but rather contributes to an investment trust (the Pension Trust), the same one to which all public employees also contribute during all the years they work. That fund, through good management, wise investment and continuing contributions, currently has a net asset value of about $765-million! Yes, you read that right. That fund is flush. In fact, thanks to wise investment and prudent management, the Pension Trust actually made $144.5-million in 2009 alone.

The bottom line is this: While the County most certainly has its fiscal woes to deal with, the implication that County employee pensions are a major driver in the struggle for solvency paints misleading picture, with the apparent aim of demonizing a valuable and important component of the local economy. County employees are a part of this community. They perform valuable services, ranging all the way from acute care nurses and water quality mangers to animal services officers and software engineers. They’re well-educated, well-trained professionals. Most of them actually make less than they could in the private sector in their chosen field. And they deserve our respect and our gratitude for getting the job done.