Is it hypocritical for a pension recipient to attack pensions?

Is it hypocritical for a pension recipient to attack pensions?

Originally posted April 7, 2017; updated April 17, 2017

In my March 29 story Not sure about Schor, I suggested that Andy Schor, candidate for Lansing mayor, may be more concerned about the welfare of unions than of Lansing citizens in general. What made me say that was 1) the biggest contributors to his House campaign account were union PACs and 2) after checking with the UAW, he declined to move forward with a bill to make pension details of retired public employees available through FOIA. City council member Jody Washington sent me this email:

As always, I enjoy reading your blogs. I'm not sure what you are getting at with this one.

I'm always quite puzzled that you enjoy a healthy pension, which I'm certain you are not willing to give up, and yet, you constantly complain about other folks receiving pensions. I am not sure if you ever belonged to a union, but I imagine you enjoyed comfortable working conditions, a 40-hour work week, a healthy environment, and yes, even a pension due to the hard work unions put in throughout many years and all across the nation.

It is difficult for many of our younger workers to listen to folks that are older that enjoyed a robust wage and pension system that you now complain about and demonize. I'm not saying that we don't need to look at some options and that we need to be fiscally prudent, but I find it a bit hypocritical when I read these types of articles from folks that are enjoying exactly what they are complaining about.

I replied:

I would never defend a harmful public policy just because it was beneficial to me personally. What kind of person do you think I am?

Jody replied:

No, Steve, you already got yours and continue to get yours.

I do enjoy a generous state pension, but I was never in a union, so I am not going to give unions credit for the salary and benefits I received. I began working for the state in 1966. There was no collective bargaining for state employees until 1980, and at that time I was in a business and administrative unit that voted against union representation. That unit, which now includes about 5500 state employees, is still not represented.

My interest is public policy, and like any politician, blogger or columnist with integrity, my concern is the common good. I don't favor any special interest group, not even retired state employees. When City of Lansing finances are being devastated by defined benefit pensions, I am not going to shut up about it just because I receive a state pension.

Lansing's unfunded accrued liability for its two retirement systems is $802.9 million. That's over $16,000 per Lansing household. These figures come straight from the latest actuarial reports. (Actuarial reports and other information on Lansing's retirement systems here on this website.)

This does not mean every Lansing household will be billed for $16,000. The debt is spread over 30 years, like a mortgage, only there is no home ownership at the end. The City makes the payments on our behalf. In his cover letter for the 2015-2016 Executive Budget Summary, Mayor Bernero said

In terms of legacy costs, we currently pay more than $45 million annually in city contributions to pensions and retiree health care . . . [P]ension and health care costs continue to grow, which means they take a larger share of our total budget and threaten to crowd out spending on the core services we are required to provide around the clock.

Of that $45 million, $6 million was for pension benefits earned in the current year, $15 million was a payment on the pension funding shortfall and the rest was for retiree health insurance.

Those "core services" that are getting crowded out include street and sidewalk repair. The mayor's March 27 press release for the 2018 budget says

Engineering estimates indicate it will cost more than $25 million to restore our neighborhood sidewalks and $211 million to restore city streets to an average condition.

So we have total backlog of $236 million for street and sidewalk repair.

Bernero will seek a ballot proposal asking voters for a 6-year, 1.0 dedicated millage (outside of the city’s operating levy), targeted specifically for sidewalks and neighborhood street maintenance as a stopgap to the anemic funding from the Michigan Legislature. If approved, this millage would represent a $50 annual increase for a home with a market value of $100,000.

"[A]nemic funding from the Michigan Legislature" gets the blame this year; no mention of the $45 million in city contributions to pensions and retiree health care.

Lansing is not the only Michigan city with a serious underfunded pension problem. The issue was addressed at a West Michigan Policy Forum in December. One suggestion was to cut or eliminate retiree health care:

Unlike pensions, municipalities have no constitutional obligation to honor retiree health care benefits, which can get extremely expensive given that many government employees can retire more than a decade before Medicare subsidies start to pay for some of their care.

That would be tough for retirees to take. But so is that $16,000 burden borne by each Lansing household.

(Note: The unfunded pension and retiree health care burden for East Lansing households is $8144. The unfunded pension and retiree health care debt is $128,563,856 and the number of residential units is 15,787.)

Send comments, questions, and tips to stevenrharry@gmail.com or call or text me at 517-505-2696. If you'd like to be notified by email when I post a new story, let me know.

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