Personal Attacks Don’t Change Facts

Letter to the editor published in the Wyoming Tribune Eagle, September 28, 2014

As is often the case, those without a response to an argument resort to ad hominem attacks, as in Rodger McDaniel's commentary, the rick think differently, in Saturday's Wyoming Tribune Eagle.

Former state of Wyoming pensioners, such as Mr. McDaniel, must understand that without reform they, like government workers in places such as Pritchard, Alabama, could be left standing at their mailboxes, waiting for a pension check that never arrives.

A brief review of the facts would help assist with Mr. McDaniel's call for an "honest dialogue." Wyoming legislators have recognized that current pension plans must be reformed since 2012. That year two bills—Senate files 59 and 97—illuminated the weaknesses in Wyoming's retirement system. Senate File 59 removed the cost-of-living increase and Senate File 97 increased the number of years used to determine the level of retirement benefits for new hires, among other modifications. These two bills alone saved Wyoming taxpayers $1.2 billion over 30 years and reduced the anticipated unfunded liability by $2.9 billion. This left an unfunded liability, or pension debt, of $1.275 billion at the time.

These tweaks, however did not change the plan's fundamental flaws, which leave this legacy of pension debt, now sitting at approximately $2 billion, to our children and grandchildren.

Mr. McDaniel also claims the actuarial status of the plan in excellent. This is simply incorrect.

As of January 2014, the Public Employee Plan (the largest of Wyoming's eight pension plans) was 77.62 percent funded. This means that if the plan closed down today, pensioners would receive 77.62 cents for every dollar promised or taxpayers would be on the hook to bail out the plan—this is simple math. Current contribution increases, or mini taxpayer bailouts, and meeting all the unlikely actuarial assumptions mean the plan should be 100 percent funded by 2043.

These pension contributions are no small sum. More tax dollars go to the Public Employee Plan than all the tax paid into the general fund by the minerals industry—the severance tax. For calendar year 2013, employee and employer contributions to the plan totaled $244.7 million, while severance tax revenue going into the state's general fund totaled $210 million. But there's more. Few realize that taxpayers pick up most of the employee's contribution. Indeed, taxpayers pay about 90 percent of the total pension contribution. This makes a mockery of the term, employee contribution.

Making matters worse, the plan pays out more than it collects in contributions. For example, it took in $244.7 million in contributions in 2013 and paid out $387.3 million in benefits. This happens every year and means the fund depends on investment returns to ensure pensioners will receive a pension and taxpayers won't be on the hook for a massive future bailout. However, in a year when the market declines and investment returns fall, such as 2008 when the plan lost $1.6 billion, and again in 2011 when the investments lost $63.5 million, the amount of money available to pay promised pensions plummets.

These are the facts, and we don't need the help of the State Policy Network, the Koch Brothers or the American Legislative Exchange Council to know them. To provide security to government retirees, and to ensure a legacy of debt and higher taxes are not left to our children and grandchildren, the state must move to a pension plan in parity with private sector pension benefits.