Your Letters: Public pensions not to blame for state's budget problems
Recent efforts to balance Minnesota's budget have brought intense debate involving the role of government as related to issues of social programs, health care, public education, local government funding, and other programs/policies. Unfortunately, many bring opinions to the table and seem unwilling to consider opposing perspectives. The most effective leaders at all levels of public and private institutions are those who can make rational, well-informed decisions that are both fair and effective even though they may be controversial, leaving most people with a belief that the leaders have pursued the best choice for all.
Often our political system carries with it polarized viewpoints and an antagonistic approach to problem solving. I really do not understand why our leaders cannot draw on their experiences from childhood when trying to solve problems. As with any sports team, the basics are what separate success from failure. Basic problem solving thus would need an approach of jointly identifying the problem, agreeing on the facts, soliciting and debating solutions, and then deciding which course to pursue. While this will not guarantee consensus, at least this approach is one in which civility can be maintained and in which people can work together for a common goal.
Recent debate over solutions to solving the state's budget issues have stemmed deep divides in our Legislature, but we must hold our leaders accountable for a civil approach to the solution. Many legislators have argued that solving the crisis with sweeping reform of public employee's wages and benefits is a leading priority. The perception that public employees are overpaid and have "cushy" benefits packages ignores the facts that salaries of most public employees are not as high as private sector employees with the same job/education descriptions. Recently, Pat Kessler, WCCO News, articulated this with his Feb. 25, 2011 report on his "Reality Check: Pensions for MN, WI state workers."
Here are some other interesting facts:
Beneficiaries' spending led to 22,500 additional jobs statewide.
State and local taxes paid by pension benefit recipients and the holders of the 22,500 new jobs exceeded the public employer pension contributions to the systems by $80 million.
The impact of benefits paid was larger than the gross state product attributable to several major economic sectors in Minnesota, including the mining sector; the crop and animal production sector; and the air, rail and water transportation sector.
Defined benefit plans encourage experienced employees to remain with their employers until retirement age. Keeping a workforce from turning over frequently is important to all employers, as turnover, particularly of skilled employees, is very costly. Since both employees and employers contribute to the retirement systems throughout the employees' tenure, there is a long period during which investment earnings on contributions can be accumulated to become the largest source (75 percent) of revenue to finance benefits.
Average individual benefit = $20,399 of which 75 percent was due to investment growth, 13 percent member contributions, and 12 percent state contribution ($2,448)
Source: Retirement Systems of Minnesota, Measuring the Economic Benefits, 2008, www.nasra.org/resources/economic/MinnesotaSummary.pdf
Source: Information presented in this booklet was prepared using data from "Measuring the Impact of Minnesota's Retirement Systems: Minnesota State Retirement System, Teachers Retirement Association, Public Employees Retirement Association," prepared by Andrea Lubov, Ph.D., March 2008.
Whatever the numbers, though, putting a large burden on public employees in cutting the state budget is unfair, trivializes what state employees do, will have a negative impact on education and other aspects of the state, and -- much like Wisconsin and other states -- directly attacks the collective bargaining process already in place between public unions and government.
There are other concerns with state funding of education and consequences of reducing funding. Current potential legislation is aimed at reducing funding to MnSCU (higher education) even more than that which has been reduced over the past several years while at the same time limiting tuition increases from 2 to 3 percent. After two consecutive years of budget cuts to state colleges and universities, more cuts could mean more faculty/staff cuts, reductions in class offerings, program cuts, and a more remote possibility of campus closures. In addition, the state is required by past legislation to fund 2/3 of the cost of student's education but now funds nearly 1/3 of the cost of student's education. This has effectively placed the rest of the funding onto students. We could argue that the cost of an education should be the sole responsibility of the student and decide that no public money should be invested through higher education. In Minnesota higher education provides a qualified workforce, helps drive the state's economy, and makes for a more educated citizenry. Failing to adequately fund higher education will result in a less prepared work force, so where will this bring our state?
Furthermore, the impact of reduced funding is having an impact on student retention and success. For example, our college has cut back library hours and laid off critical support staff that will directly lead to lower student retention. Many students in the two-year technical and community college system depend on a small class size that affords them the opportunity for more instructor interaction. Without this support, many of our students would not succeed. In years past, I have worked one-on-one with students who had learning disabilities and who struggled academically. I have seen students, with personal or financial issues that threatened their success, use critical services provided by the college. Watching them succeed and become active members of the workforce has shown me first-hand the importance of a strong two-year, post-secondary system. Now with cuts to these services where will these students turn when they need help to succeed? If they do not succeed what will this cost the taxpayers of Minnesota?
I know that there are no easy answers, no magic bullets, but all Minnesotans need to follow this budget process closely and contact the governor and their legislators about the right choices to make.