Differing Opinions on Whether State Pension Problems are a “Big Deal” – but Why Refuse to Engage?

On September 2, 2011, Josh Rauh of Northwestern University posted a blog entitled “Are State Pension Problems a ‘Big Deal’?” He states this question was asked by a colleague given that pension contributions account for 3.8% of state and local spending.

Doomsday Prediction for Illinois

On August 4, 2011, the Rockford Register-Star published “Our View: Illinois’ money will run out if pension reform not a priority” winning the latest Sky is Falling Award.  Why?  It misses the opportunity to have a serious discussion of needed reforms to the state’s pension systems.

Raising Taxes Isn’t the Only Choice for Funding Pensions

States that Made Changes to Their Pension Plans from 2009 to 2011

Since 2009, 42 states have made significant changes to their retirement programs — more than any other time period in recent history. States have managed their costs in a variety of ways such as by increasing employee contributions, adjusting benefits, limiting or eliminating cost of living adjustments (COLAs), increasing retirement ages, furloughing or laying off employees, and reducing hiring.

Policymakers have more choices — and are acting on them — than just relying on increasing taxes and cutting services.

Sources: National Conference of State Legislatures, “Pension and Retirement Plan Enactments in 2011 State Legislatures,” May 2011; The Pew Center on the States, “Pension and Retiree Health Care Reform in the States,” 2009 and 2010

When PIIGS Fly: Do we Need to Act?

From dire assumptions being widely promulgated as absolutes to a CNBC anchor saying how some “liken the distress in Greece to the distress we have seen in states,” there’s continued heightened rhetoric regarding municipal finances. The Spring 2011 issue of The Lord Abbett Review focused on this very topic — and whether federal bankruptcy laws should be amended with a new chapter that would provide states with the ability to declare bankruptcy, which they cannot currently do.  The answer, according to the author, is no.