ACHD
Greed and Politicos Diddle Retirement System
December 24, 2010 
A reader sent us a link to a WALL STREET JOURNAL story about ailing public retirement plans. Idaho’s PERSI (Public Employee Retirement System) covers city county and state workers so each city doesn’t have its own burden, but we still need reform.
PERSI is full of flaws that cost taxpayers millions and is in danager of foundering. It is a defined BENEFIT plan rather than a defined CONTRIBUTION plan. In short, that means former public workers get a specific payout even when the stock market and other investments take a dump. If it stays as is, look for even more contribution hikes which could also mean tax increases. PERSI will certainly be a topic of concern during the next legislative session.
The GUARDIAN’s biggest problem with the system is the abuse by elected officials. At all levels of government we have commishes, councilors, legislators, and others who serve for years at elected jobs paying a mere stipend–say $5,000 a year. When retirement nears they magically get appointed to positions paying upwards of $90,000.
One of the hidden treasures for these elected officials is the retirement boost they get.
Because the state retirement (PERSI) is based upon length of service at ANY pay rate with any participating agency. Their retirement checks are based on the highest pay for any 42 consecutive months…that’s also why politicos in formerly high paying jobs stick around for minor jobs if voted out of office as well.
The “rule of 90” requirement means their years of service plus age must equal 90 for them to retire with benefits based on their highest 42 months of pay…pretty nice if you can get appointed or elected to a four year term at high pay.
Former Gov. Phil Batt tried to get the law changed to read “full time employment” to no avail. A tough task when you see how many legislators end up working for the state at high salary after leaving the part time legislature with 20 years under their belts.
Here is a link to a well done PERSI VIDEO aimed at informing new legislators. While not in a crisis mode, the plan will need some increased contributions.
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Comments & Discussion
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Dec 24, 2010, 12:35 pm
Persi is only one part of a system for government employees that helps maintain a system not comparable to the private sector, dollar wise. I’m sure those on this site are aware at what teachers make. If there is nothing at the end of the rainbow, more would be bailing like crazy. Those who have been bailing like crazy since Luna took the reigns to harm teachers, are teachers whose spouses have decent retirement and health insurance funds. Many master teachers within few years of retirement have literally walked away, because of the “broken”, George Bush, Tom Luna, teach to the test plan. So if you are looking to harm Persi, think a little about the teacher who can’t teach without dipping into his own pocket, who works summers, who pays for his own Master’s degrees, and who is just damn exhausted. Cuz if Persi gets screwed with, Tom will be right up there trying to take more away. Mark my word.
Dec 24, 2010, 5:13 pm
Great article. I am a retired cop who will be receiving my first retirement check on 1/1/01. I am rule of 80, early out at 50 with a large reduction.
In 1983, I began my law enforcement career at 6 bucks an hr. Significantly below the average wage at that time. I worked from 83 to ’07. During that time, my peers were making lots of dough, framers making 30k a yr. more than I was, driving new diesel trucks and buying bigger houses. When the party was ON nobody cared about what we made or taxes. In fact, citizens were busy swilling wine and watching TV. That’s my ts side of this.
So now that the party is over, the partiers are making 10 bucks an hr. if anything, and now every one is upset at public retirement systems. It is the ant and grasshopper story. Now, conveniently, people are upset.
PERSI took nearly 19% of salary during those years- about 7.5 from me and 11.5 from my employer. That 11.5 is tax money. Is that too large? Probably. They also passed a little bill that said they must be 100% funded which was unnecessary except that it made every one sound fiscally responsible. None of this was sleight of hand. Like I said, when the party was ON- nobody cared.
Persi is currently funded at about 90% I suspect right now. That is a lot better than most systems. Persi postponed a tax increase this year- the political climate being what it is. But they can’t keep kicking that can down the road and they are entirely dependent on the Bernank and his money printing apparatus to keep the market ramped. When QE2 shuts down in June, things could get ugly fast.
I’m a libertarian guy. I don’t like government anymore than the next guy. But those were the rules, I had no say in the matter. I just wanted to be a cop. I suspect that every state is going to feel this pain..and reform. If they can. In europe they call it austerity. If you think Idaho Persi is bad, you oughta take a look at that sham of a retirement system, Calpers, in Ca. They are bankrupt. No way can they pay their freight.
Dec 24, 2010, 5:45 pm
I fear that because a few politicians “diddle” the system, that will be used as an excuse to screw the average civil service employee who works for 30 years or more and plays by the rules. Changing the rules in the middle of someone’s career or moving the goalposts is unethical. The rules are the rules.
Frankenstein, who posted above is correct, employees contribute to their retirement plan just like they do to their 401 (k). It’s their money and they deserve it.
If PERSI or CALPERS is underfunded because Idaho or California have stolen the money and spent it (like the US Congress has stolen the Social Security Trust Fund and spent it) they need to pay that money back with interest NOW. A promise is a promise. If the legislators want to screw the next generation of state and local employees, they can do that, but good luck hiring anyone competent.
Dec 24, 2010, 7:02 pm
This is America… The land of Hope and Change. All can and might be undone… especially if we ain’t got no money. And if anyone thinks they’ll get those kinda tax-rates (wsj article) past people in this state they are nuts. But then again, we did just vote to give away voting rights… so who knows. This link below really blows, makes it real, be sure to be seated.
http://www.usdebtclock.org/
http://www.usdebtclock.org/state-debt-clocks/state-of-idaho-debt-clock.html
Dec 25, 2010, 10:11 am
I receive a pension in Minnesota from a similar plan but you have to be vested into the plan as a full time worker to be eligible for benefits. I also paid in monthly; in other words they deducted the MSRS contribution from my pay. I think talk radio and others have targeted government retirees unfairly because the private sector doesn’t offer defined retirement benefits. But our new governor Mark Dayton promised that he would protect state government retirees benefits from the hawks and I personally thanked him at a fundraiser this fall.
EDITOR NOTE–Private sector doesn’t offer defined benefits because they don’t have the money to fund the program in hard times. The point of our post is the greed of those who diddle the system, not the folks who have worked FULL TIME for years to earn a pension. Even so, the WSJ story points out that in some cases property taxes are being raised to fund a prior commitment.
Dec 25, 2010, 11:27 am
Pollypinks needs to post her anti-republician off topic post some place. This is about PERSI, not about a president we had 2 years ago or Tom Luna. I am a 30 year cop also eligible to retire now. If they are going to make some drastic change immediately, I am out of here. I too took the job in the early 80’s . That was when Micron was hiring and paying big bucks. A lot of my friends went to work there making 3x what I was and some even more. They were buying Rv’s and expensive houses and cars etc. I just kept working nights, holidays and such saving as much as I could. If PERSI was a defined contribution plan like most 401K’s, there would be no incentive to stay. It is sad to think that they are thinking of changing the system because of a few politicians that diddle the system. That is the problem with a system that treats the daily county and city worker that same as an elected official. One size does not fit all, but that is the way the rule of 80/90 is written.
It is interesting to note, that some of the investments of PERSI go toward things like low interest Idaho Housing loans. This shows the conflict of interest involved here. Is PERSI supposed to make as much money as possible for the members? Or is there a social/economic factor involved here. The legislator, (rule makers) now have a pot of money to draw from for economic development of Idaho. They call it investment. So what is PERSI to do. Make the maximum amount of money where ever they can invest it? Or use the money for Idaho economic development at the expense of the members in the form of reduced return??? If the plan moves to a defined contribution model, Idaho better accept that money will be best invested out of state where it can be the most productive for the member.
Dec 25, 2010, 1:11 pm
When I hear stories of PERSI abuse by high ranking elected officials appointing people to high paying jobs so they get a “BUMP” it makes me angry. I do not know this to be fact but the mere reality the door is there for someone to walk through needs to be fixed.
The only way I know how to do this is to make PERSI like a 401K or self directed IRA. The payout in the retirement years is a reflection of how people manage the funds and which sectors they invest their retirement monies.
A defined system can be “fiddled” with and self directed retirement plans can’t be “fiddled” with by elected officials.
The only problem with IRA’s and 401K’s is the MRD (minimum required distribution” once you reach 70. You are forced to take distribtuions and pay taxes on those distributions even if you don’t need the money. There is no reward for living a frugal lifestyle. The IRS want’s their cash.
Right now I know of no loophole around the MRD’s and I worry about outliving my money. I would like to be able to live in my home until I die but taxes on my home and income simply cause me a lot of worry about the future.
Dec 25, 2010, 4:00 pm
I can only hope that Polly Pinkdrawers never teaches any of my grandchildren. This is an angry, bigoted, person who certainly shouldn’t be in a classroom!
Dec 26, 2010, 10:47 pm
Hey pollypinks, most private employers have shed their defined retirement plans in favor of a watered down 401K, 457, or some other plan with no guaranteed benefit.
I have a family member who is a teacher making well over $50k/yr for 180 days of work. The math works like this. She makes $305/day and if you multiply that by the 237 day work year of most folks that comes to the equivalent of $72,285.00!
Don’t like the pay or Mr. Luna then take the private sector job with longer hours, fewer holidays, no defined pension, and no tenure laws.
Dec 26, 2010, 11:24 pm
Typical,
Leave it up to the politicos to screw it up. Been in law enforcement Since 1984.
Now on the eve of reaching the rule of 80, they want to take away what little I will be getting in retirement.
You know this seems a bit unfair when you consider we don’t even get to choose whether or not we want a private 401k or PERSI.
Guess I’ll be working till the day I die too.
EDITOR NOTE–Don’t know where everyone is getting the idea government workers are getting screwed out of something. The issue is two-fold. Part time politicos diddle the system and get pensions based on high pay for a short period of time. #2 is the fact the system is victim of the hard times and there simply isn’t enough revenue coming in to continue defined benefits. In the private sector today you need well over $1 million salted away to yield an annual income of just $30,000…and that is based on a whopping 3% return which is hard to find these days.
Dec 27, 2010, 12:19 am
I can remember a conversation with a local photographer back in the day telling me how much he was worth and how much money he was capable of making AND wincing at the pitiful amount of money I made as a State of Idaho worker. I have not had a raise in 3.5 years. I will never reach the rule of 90. My PERSI pension might pay for gas or utilities when I retire.
Politicos gaming the system? Wonder of wonders for the most Republican state in the nation. They want to destroy Social Security and the few defined pension plans left. Thank you party of NOthing for you, stupid wage slave.
EDITOR NOTE–And we remember a prosperous small businessman who left free enterprise for the security and comfort of government employment. 🙂
Dec 27, 2010, 1:22 am
I agree with the editors note. It doesn’t matter though…the legislature is in charge of those PERSI changes and if you think that they are going to rollover on this…
We voted for term limits, two or three times and passed th measure. Public officials sued. It was challenged all the way to the Supremes. They found the issue was valid and sent it to the legislature. The legislature then dutifully canned it.
That same legislature, the ones who thumb their noses at term limits are what? Going to enact a law counterproductive to their own selfish interests? When pigs fly.
Dec 27, 2010, 11:40 am
“Editor Note:Don’t know where everyone is getting the idea government workers are getting screwed out of something”
I believe the Statesman article said something about the new defined contribution plan could be just for new hires or could be implemented for current employees.
EDITOR NOTE–Thanks Clancy, we weren’t aware of the Statesman piece.
Dec 27, 2010, 5:19 pm
G-man, yes too bad the prosperity of the free enterprise system and small businesses has been undone by the very free market deciders who convinced us we were living the dream ( on borrowed debt) and sold our economy out to the Wall Street casino they so love. Go kiss a Republican and thank it for your freedom to find work where ever you can. I’m told these days you need to brand yourself and go GLOBAL. I think it is deciderese for , go f-yourself and die.
Dec 27, 2010, 5:26 pm
Keep in mind that legislators enjoy the same benefits as Public Employees. They are Persi members and they are on the same Health Care Insurance as State employees – even though they are in fact part time employees but treated by law as full time employees.
We State employees have accepted their special benefits because we know they are less likely to screw with the system if they are beneficiaries.
Few realize that many legislators run for office for one reason. They and their families are covered by the State health care insurance plan. This is very desirable since many of them are self employed or farmers and don’t have access to a group plan.
Dec 27, 2010, 10:38 pm
Wrong Idahole! The majority of them run because of HUGE egos and a sense of entitlement! The health care package is just a “perk”.
Dec 28, 2010, 12:17 am
Do legislators continue getting health care benefits after they leave office? We don’t. In fact we will be lucky if our pensions even cover the cost of health care.
Like I said, the dream of a decent retirement for public employees is a farce. Just look around at all the courthouses and see all the recently retired cops coming back to work part time as front door security officers to make ends meet. I’m sure it’s no better for teachers or other public employees either.
Dec 28, 2010, 1:38 pm
Dontcarenomo and others, thank you for your service to the community.
What you say about the typical recipient may well be correct. However, there is a shocking amount of abuse of this system in some places. I do think that $$$ problem should cost the pension and not the taxpayer. Only a few need pee in the pool to mess it up for all.
If Idaho is still in fairly good shape?? Then let this be a warning to the community and leaders to keep it that way. That means the courage to reverse the trends.
PS: Becha $5 the Idaho media won’t touch this. Gives me hope when a national outlet did.
PPS: It’s not clear yet, but it seems the internet may be shrinking the population of apathetic voters/non-voters.