David Brooks highlights the budget problems states are facing due to unfunded pension liabilities:
New Jersey can’t afford to build its tunnel, but benefits packages for the state’s employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year.
New York City has to strain to finance its schools but must support 10,000 former cops who have retired before age 50.
California can’t afford new water projects, but state cops often receive 90 percent of their salaries when they retire at 50. The average corrections officer there makes $70,000 a year in base salary and $100,000 with overtime (California spends more on its prison system than on its schools).
States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations that, if counted accurately, amount to $2 trillion — or $87,000 per plan participant.
Pension reform is going to be one of the most critical issues facing our next Governor/Legislature. Some tough decisions must be made, and everyone is going to have to face reality. We should be asking all the candidates how they would address the problem.