It’s budget crunch time at the Legislature, which in recent years has given state employees the jitters. Lawmakers have turned to state workers several times to help fill budget deficits, asking them to take pay cuts and contribute more to their medical and pension plans.
A Senate bill introduced this year to change the state’s public employee pension plan with a defined-contribution plan added a new worry. That measure is not off the table yet, and could resurface in the Republican-controlled Senate budget expected this week.
But according to State Treasurer James McIntire, the proposed pension plan change attempts to fix a problem that doesn’t exist. In a recent Seattle Times op-ed piece, McIntire said the state’s plan is in great shape.
He said “Washington ranks fourth-highest in the country for funding our pension programs. Our ongoing pension plans are funded at 113 percent of future liabilities based on independent actuarial analyses.”
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Those remarks provoked some technical debate from conservative think tanks about how pension plans are evaluated. The bottom line on the debate is that experts have differing opinions on pension accounting rules. Those who advocate for public pensions, such as McIntire, believe one thing, while other experts believe another.
It’s not an insignificant issue. At stake are people’s retirement earnings and a real cost to taxpayers.
However, the trigger for the public conversation – proposed legislation to convert from a defined-benefit plan to a defined-contribution system – seemed more like an attack on a public employee benefit seen as too generous when compared with the private sector.
McIntire set the record straight on that score. He said more than 95 percent of the 293,000 employees and 138,000 retirees on the plan receive annual benefits below $50,000. Employees in a previous iteration of the plan that was closed in 1977 earn an average of $26,690 per year. Today’s state workers will receive an average of $24,051 if they retire at 65.
That doesn’t appear too generous. Granted, state employees do better than workers whose employers don’t provide any pension plan.
McIntire also notes that state workers and the state each pay just 8 cents for every dollar in benefits received, with 84 percent earned from pension investments.
McIntire makes a good case for sticking with the state’s well-funded and modest plan. “This works well for public employees and for taxpayers, so why make an expensive mess by trying to fix a problem that doesn’t exist.” We agree.