Mon April 23, 2012
Pension Debate Pits Government vs. Government Workers
Key pieces of Governor Bobby Jindal's pension reform have started to make their way through the legislature.
A bill that aims to change retirement eligibility heads to the full House tomorrow for further debate. Meanwhile, legislation to create a cash-balance plan for retirees and raise employee pension contribution by 3-percent is slated for the full Senate floor in the coming weeks.
Jeffrey Sadow is an Associate Professor of Political Science at LSU Shreveport. He is also the author of the Louisiana politics blog "Between The Lines".
Sadow spoke with WRKF's Ashley Westerman via telephone about the political dynamics at play in order to get pension reforms passed.
WESTERMAN: Where do you stand on these reforms? And if you don't stand with these reforms, or if you do, what do you think the pension system needs?
SADOW: I'm largely in favor of them. When we look in a comparative perspective to the private sector, for example, we find the average amount that is deducted from a check and sent either to a pension fund or into a 401K-like instrument in the case of some state employees is significantly below that in the private sector. The average here is 8-percent but in the private sector the average is 18-percent. And then the state also, in most cases, matches that 8-percent with a similar amount. So relative to those in the private sector, Louisiana state employees have a better deal. I think the burden would be first on them to fund their own retirements then to go to tax payers and ask for it.
WESTERMAN: These pension reforms only attack a certain sector of public employees, the rank the file.
SADOW: Yes, it basically affects one system: the LASERS system, Louisiana State Employers Retirement System, which is only one of 20 different systems in the state. And while it includes a large proportion of state employees and its responsible, the LASER system is responsible for about one-third of the UAL that's been building up. But, you're right, it doesn't affect the other large systems; the Teachers Retirement System of Louisiana or any of the some-what smaller systems. Most of the UAL is from those two large systems right there. And it's a legitimate question to say, "Well, you're going to do it to one, why not the other?" It's a fair argument, but at the same time is it better to have a one-third of the solution or none of the solution. So I'm not sure where the logic is there that we have to go all the way or not at all. Incremental reform can also be valuable.
WESTERMAN: One final questions, a little bit about the politics about these proposals because you know that these legislatures, more than likely, have constituents that are state workers. What is the likelihood of these proposals passing?
SADOW: I think probably at this point, a toss-up. But the fact of the matter is, since this is something that much more directly impacts a state worker, they're going to be more activated over it. So it's a matter of the benefits that would be changed by this legislation being fairly concentrated in a group and for the other side, whatever benefits it would get, that being maybe taxes not being raised to pay for all this. Those benefits are much more widely distributed and in smaller amounts so it's more difficult to activate those individuals if their preference is to support this kind of support. The raw numbers are clearly on the side of the reformers but the level of intensity is going to be greater for those who are against. I think it's going to make it a pretty close contest.
WESTERMAN: Jeffrey Sadow is an Associate Profession of Political Science at LSU Shreveport. He is also the author of the political blog, "Between The Lines". Thank you for your time.
SADOW: Sure, no problem.