Wisconsin’s Pension System Strongest in the NationScotty's got some of that right- that Pew Report showed Wisconsin as the only state in the nation with a 100%-funded pension (see page 49), and credited wise fiscal management as a reaon behind staying afloat despite the Wall Street meltdown of 2008-09. And Illinois' 45% funding of pensions (because of decades of tax cuts and special giveaways instead of backing up their promises) means that $4 billion a year has to be put into Illinois pension funds just to keep from falling behind - nearly 6 times what we need in Wisconsin. Sure makes you glad to be a Cheesehead in this case, eh?
A recent PEW study shows Wisconsin’s pension fund is the only one in the nation that is 100% funded.
Madison – Governor Walker is traveling to Illinois today to talk to business, education, and cultural leaders about pension reform and fiscal responsibility. Governor Walker will address the Commercial Club of Chicago which is the oldest civic organization in the city, founded in 1877.
According to a recent PEW study, Wisconsin’s pension system is the only in the nation to be 100% funded and labeled a ‘solid performer’. Illinois’ pension system is only 45% funded and is labeled with ‘serious concerns’.
“Our reforms will only make Wisconsin’s pension system stronger by protecting current and future retiree benefits and keeping the state fiscally strong,” said Governor Walker. “Illinois’ leaders could learn from the hard, but necessary decisions we made in Wisconsin. Because of our prudent decisions, state programs as well as our employers and taxpayers will not be under the imminent stress of increased taxes and/or cuts. Wisconsin is leading the nation forward to a more prosperous future.”
But Walker's moves have very little to do with that. The Pew Report only goes up to the end of 2010, under the Doyle/ Dem budget, and they're the ones that deserve the credit for overfunding the 2010 pensions by $55 million, not Scotty or WisGOP Legislators (not one GOP legislator voted for the Doyle/Dem budget). The only thing Walker did on the pension side that might have any positive effect is increasing the amount of years someone had to work before they could vest their WRS pension (upping it to five years), which could reduce the amount of payout expenses in a given year, albeit not by much. Walker's much-bragged about "taxpayer savings" in Act 10 did nothing for the WRS's solvency, because it merely shifted the funding from the general taxpayer to the public employees- no extra money was put into the fund itself. And I bet your taxes didn't go down either. Nice deal, huh?
The deal was found out to be even worse for Wisconsin taxpayers last week, as Walker and WisGOP apparently overlooked the fine print in Act 10, and ended up costing taxpayers as much as $87.5 million in extra required contributions.
Most of the increase is the result of the [Wisconsin Retirement] system's continuing recovery from investment losses in the 2008 world financial market crash, but an unintended consequence of Act 10 is expected to boost the employer-employee contribution rate to about 13.2 percent — and possibly as high as 13.7 percent — of payroll, the highest since at least the mid-1980s.
Without the Act 10 effect, the rate would have been about 12.5 percent, [ETF actuary Brian] Murphy said. (So public employees get ANOTHER take-home pay cut next year while general taxpayers still pay more!)
Because of a quirk in the law, in the past, a little less than half the employer-employee contribution was credited to employee accounts that are used to calculate retirement benefits.
But Act 10 required that employees pay exactly half of the overall contribution, so when the law took effect last year a little more started being credited to employee accounts, and that increased future employee benefits, Murphy said.
The effect is compounded because higher benefits mean the annual contribution must be increased to cover the higher future benefit cost. In turn, that means employees must put even more money in their accounts, which boosts projected benefits again, and requires a still higher contribution, Murphy said. The benefits structure eventually stops the cycle, Murphy said
Act 10 and other Walker moves caused something else that will put pressure on the WRS. Remember that WRS member retirements doubled in the first 6 months of Fitzwalkerstan, as they had legitimate fears about Walker and WisGOP cutting their benefits and pay, and so those members go from being contributors that put money into the fund, and are instead taking money out of the WRS. Then recall that many of those retirees were not replaced and other public employees were laid off or resigned, to the point that we have 8,700 fewer government employees today than we had when Act 10 was passed in March 2011, and that's a whole lot less money that is going into the system (or that much more will have to be put in by current workers like me. Yee-HAH!!)
But maybe that's what Scotty and his ALEC buddies want- to reduce the input of funds into the WRS, which then will make it "underfunded", and it'll be the excuse they need to sell it off as a 401 (k) system that can be run by Wall Street campaign contributors. Don't laugh this off, it's classic right-wing "starve the beast" mentality, where GOP politicians run up revenue decreases and spending increases, and FUBAR things so badly that the taxes or spending can't be adjusted back to a proper level because is too high. At which point people like Scott Walker can throw his hands up and say "See, this is unsustainble", and use it as the excuse to throw out and sell off a system that was working just fine before they got into power.
And as I'm writing this outside my Madison apartment on a gorgeous June day, I see that Walker is now claiming he is "open to changes" in the WRS. Hmmm, think he's already seen (or instructed!) what that report that's coming out this week will say on a 401 (k) possibility for the WRS?
Hold onto your wallets and be ready to hit the streets with the truth, because we can't let the Big Lie and the Big Liar continue to wreck destruction on the things that made Wisconsin a place worth living in and caring about.