Public workers and State Pensions have been all in the news lately – especially in Wisconsin. The basic issue is that back in the boom days, politicians voted to give various state workers either a more generous pension, or an earlier pension in lieu (or in addition) to a pay raise. Most state and city pensions are defined-benefit, rather than defined-contribution, so a retiree gets a percentage of their salary rather than whatever their contribution was to the retirement account.
Partisans will debate the myriad reasons that pensions became a problem. In the worst cases, such as Illinois, pension obligations have forced the state to raise taxes, slash spending, and manage an uneasy standoff between bondholders and retirees. In Georgia, pensions have been on the backburner, mainly because of assurances that the State system is funded and sustainable.
However, the AJC is running an excellent investigation into the status of the State pension funds, and the funds of the five largest counties.
The summary is that Atlanta’s pension system is in very bad shape. Too much money promised to too many people, much too soon is leading the city into higher taxes and diverting money from valuable programs into a pension sinkhole.
So, Athens’ pension system. We have one. There isn’t a lot of information online, but here’s what I found out to start.
-ACC spends 8% of our budget on employee pension contributions. It adds up to $8.3 million per year, according to the budget
–Retirement age is 60 for public safety officers (after 10 years service)
–Retirement age is 62 for everyone else (after 10 years service)
-A FY11 goal of the Mayor and Commission is to “Defined Benefit Pension Plan to provide incentives for retaining long-term employees
-And apparently it is governed by the Pension Board
John Culpepper, our Chief Financial guy, has done an admirable job keeping ACC in the black during this recession. He’s probably one of the ‘long-term employees’ that ACC is trying to incentivize into staying.
Our pension contributions are exactly average compared to other governments (Atlanta’s is 20% to our 8% for comparison)
However, what I would like to find out are our long-term liabilities, and if it’s feasible or desirable to begin a switch to defined-contribution plans, as Gwinnett and Cobb are doing.
This switch to a DC system might be what ‘incentives for long-term employees’ means in ACC political code-speak. It would shift risk onto employees, but that could be compensated with higher matches (the benefit for ACC would be to bring liabilities current, among other things).
All that to say, pensions seems to be an issue that flies under the radar until it is so pressing that it creates an emergency. I’m looking for more information and sources , if any of my readers know anything.
Be sure to read the AJC report to see what is happening in Atlanta. And please comment!