State Officials Continue Struggling With Pensions, Benefits

May 17, 2005 ( - State governments around the country continue grappling with often-severe employee pension and benefit woes, including recent actions in states such as West Virginia, New Jersey and Louisiana.

According to news media reports, the legislative and political deliberations include:

New JerseySaying the rising costs of public employee health benefits and pensions pose a risk to all other government operations, state Treasurer John McCormac said the state is forming a commission to study reforming the current benefits programs. Phillip Murphy of Red Bank, a budget advisor to acting Governor Richard Codey and a former executive at Goldman Sachs, will be its chairman. McCormac said that, by fiscal year 2010, payment into the state health benefits and pension programs will consume 20% of the state budget. In the current budget proposal, now under consideration by the Legislature, it amounts to $2.5 billion, or about 9% of the total budget. Also Monday, a throng of Garden State educators, police, firefighters and other public employees rallied on the Statehouse steps to protest criticism saying pensions and benefits are overwhelming the state budget.

Louisiana – A bill that cleared the Louisiana state legislature’s Senate Retirement Committee would require future state workers to ante up more for their pensions and get lower benefits as lawmakers accused pension executives of trying to stymie their reform efforts. The bill by Representative Pete Schneider now heads to the Senate floor after a hearing punctuated by testy words from Schneider and other legislators. Although the Louisiana State Employees’ Retirement System, or LASERS, has not officially taken a position on the bill, Schneider accused the agency’s trustees of working behind the scenes to throttle it. Schneider’s bill would require state workers hired after January 1, 2006, to contribute 8% of their paychecks toward retirement benefits that would build up more slowly than the benefits promised to current workers. The legislation is designed to save money in a system that is about $4 billion short of what is needed to pay the benefits promised to current and future retirees, making it one of the most underfinanced public retirement systems in the country.

West Virginia – Meanwhile, in West Virginia, Governor Joe Manchin brought the legislature back into a special session for the third time this year to ask lawmakers to tighten future pension benefits for the judiciary and scrap new pay raises for his and other statewide elected offices. Hoping the special session will wrap up Tuesday, the governor also wants the Legislature to ensure that the Public Employees Insurance Agency can delay premium hikes for workers until January. Another measure would allow the city with the worst-funded police and firefighter pension program – Huntington – to sell bonds to shore up plan funding.