A Need for Clearer Analysis—Not More Myths

Read a story about public pensions and it, or the comments left by readers, inevitably blame public workers or more specifically unions (see a current recap by wpri.com reporter Ted Nesi “Public worker wars rage on across U.S. in Ohio, Florida, Mass.,” October 27, 2011).

This is one of the myths that former North Dakota Congressman Earl Pomeroy and his co-author, Cathie Eitelberg, tackled in a June editorial for ABC News:

Myth: Public employee benefits are bankrupting states.

Not so. According to publicly available data gathered from government websites, less than 4 percent of state budget expenditures go to funding pension benefits. A recent study from the Center on Budget and Policy Priorities concluded that state budget shortfalls are largely a result of decreases in tax revenue in part due to falling real estate values and shrinking tax revenue in general.

Taking their lead on myth-busting, let’s examine some quotes that appeared in a recent New York Times article by Mary Williams Walsh: “The Little State with a Big Mess” (October 22, 2011).

Public Pension Investment Returns and Market Volatility

For fiscal year ending June 30, 2011, state and local government retirement systems had a median investment return of 21.6 percent.

That statement is often followed by “but…” as in “but look what’s happened to the markets since then!” 

With a slow economic recovery and ongoing global market volatility, the fact remains that taking a long-term focus is an overarching factor in public pension investment strategies and projections.

A Picture Paints a Thousand Alternative Views

Numbers don’t lie.  But how numbers are displayed can significantly shape impressions.