No doubt, many federal employees will remember Feb. 20 as a dark day. The Defense Department formally unveiled plans to furlough most of its almost 800,000 civilian workers if sequestration comes to pass. More agencies could soon follow suit.
But such sacrifices are old hat to state and local government employees who have been enduring stiff cutbacks since the economy tanked in 2008. In recent years, for example, dozens of states have furloughed employees, resorted to outright layoffs and/or required workers to pitch in more for benefits, according to a rundown by the National Conference of State Legislatures.
One of the largest, California, has been furloughing employees for a couple of days a month ever since 2010. Under a law passed last year (now being challenged in court), Arizona state workers are responsible for paying 53 percent of contributions to their pension plan, according to the conference. By contrast, Federal Employees Retirement System participants (with the exception of folks hired since the beginning of the year) pay less than 7 percent, according to a recent Congressional Research Service report.
The underlying reason for the tougher stance is that state governments generally have to balance their budgets and can’t borrow money for operating expenses when they run short. As a result, state employees have faced “significant changes” in the wake of the “Great Recession,” Todd Haggerty, an NCSL policy analyst, told FedLine.
So if misery really does love company, well, feds have plenty.
So what if state and municipal employees are just now starting to pay more for their retirement? Compared to FERS, they have a far better benefit–much like CSRS. Most state and municipal employees pay a far lower percentage of their pay for health care (which in the case of police and firefighters I fully support)
Yes, they’ve been furloughed in order to permit states and municipalities to balance their budgets. That is ultimately beneficial to all citizens in that state/municipality.
Contrasting that with the federal furloughs soon to happen: There will be no balanced budget resulting from this. If there were, I would gladly make this sacrifice. But no: Budget deficits and the total debt will continue to grow and eventually reach a point where it becomes totally unmanageable. Rather than do these pointless furloughs under the guise of deficit/debt reduction let’s consider something more meaningful:
1. Eliminate FERS totally for new hires and instead apply an extra 5% of pay into their TSP accounts. The government is essentially saving 9% of employee pay this way.
2. For current employees, cease the contribution to FERS and establish an annuity comprising employee/employer contributions paid during employment, with an option for employees to add after-tax dollars to this annuity. Earnings from this would not be taxed until retirement.
This immediately ends, totally and permanently any unfunded liability for pensions–over the decades, the savings will be in the hundreds of billions of dollars–which is enough to make a real difference.
Grumpy, this is easy for you to say. I’ve been a dedicated Fed’l Govt employee for over 25 and can’t afford to start over or start a new retirement plan. I’ve acted responsibly during time of peace and been expected to do the unspeakable during time of war. It is absolutely unacceptable that the Govt employee are being held hostage by a government which is ill equipt to do their duty. When those of us who are in positions of public trust, safety, and welfare, fail to perform our duty to the fullest, people get hurt. Check your fire before you decide to send a round over the bow! Besides, our Govt has demonstrated they cannot and will not act in the best interest of the nation or its citizens. Enough said!
Replying to Patriot,
I too,have worked for DoD for over 26 years, and yes, this is painful, but necessary. Miltary compensation and benefits will have to be changed as well as civilian compensation, otherwise we will not have funds sufficient to pay for defense, period.
The affordablity of pensions in future years was predicated on interest rates exceeding inflation. Today they do not and annuity rates prove that. If we don’t stop the nonsense now, you will find yourself retired with a pension that suddenly stops for lack of funding.
Stop kidding yourself and start endorsing a revised benfits package that offers YOU more control of your financial future.
Seriously–and BTW, thanks for your work and sacrifices as well.
You guys are completely missing the point in the whole affair. They could fire every employee in Federal Service and bring the total payroll to zero and it still wouldn’t fix our budget problems. If you take everything that people think of as “The Government”, DoD, Interior, State, whatever and add them all together they all only account for about one third of the budget. The other two thirds is entitlements and they are growing to where they will eventually require MORE than 100% of tax revenue. Medicare IS the budget problem. Anything that’s done to Federal employees is merely politics to appease the voting public. It has absolutely nothing to do with fixing the budget. You want to fix the budget? Cut Medicare.
You sound grumpier than me! LOL. But yes, medicare and social security are indeed going to eat us alive. That said, restructuring federal compensation (military and civilian) would go a long way down the road. Short term savings would indeed be nil, but short term savings are not the goal. Long term savings are. What I have suggested will save hundreds of billions, perhaps exceeding a trillion dollars over the next few decades. That is nothing to sneeze at. It is a helluva lot more in savings than the stunt being pushed vis a vis the furloughs
IDIOT GOP draft dodgers. At the end of WW2 we had 12.8 million in uniform. Country was broke. They worked through it. Payed Veterans and retirees without question. Today we have 1.4 million active duty. Do the MATH you brain dead GOP draft dodgers. It really isn’t costing that much. You are LIARS. We really need to return to the draft.
Replying to Patrick,
Your incomprensible screed is beyond contempt, given the lack of factual basis.
Seriously, go do your homework and come back when you have a credible argument.
It seems to me that the fundamental issue is whether the federal government will stand by its commitments, that is, whether the full faith and credit of the US Government actually means anything?
The US government made a commitment to its employees to pay them at a given rate and fund their retirement in exchange for their labor. Now some folks want to change the term of the bargain after some or nearly all of the work has been done. That’s unconscionable. How would people feel if the Treasury decided to modify the terms of your t-bills or savings bonds when you went to redeem them? Its the same thing. Either the government stands behind its commitments or it defaults on them.
People should be very careful encouraging defaults because next time the government defaults it may be on a commitment to you!
There is a very inaccurate statement in the original posting. You claim that Arizona State workers make 53% of the contributions that go into their pension fund, but Federal employees only do 7%. Actually the employee contribution into Federal pension plans is around 50% of what the fund receives, with the government putting in the other 50%. The 7% number is the percentage of pay the employees contribute that makes up that 50% of what is going into the fund. Totally inaccurate to compare 7% of one thing to 53% of something completely different.
Somehow the thought that some state and local government employees have suffered worse than what the politicians are currently planning to do to us does not give me even the slightest amount of comfort. Actually I find it somewhat offensive when a politician or anyone else tries to justify screwing over federal employees on the grounds that other people have already been screwed over by their employer. I also find it offensive when politicians claim that there is no money to pay for the workers to actually be on the job and working, but there is still plenty of money to give to countries that hate us. Cut off all the military and other aid to countries like Pakistan and Egypt first, then maybe you can try to claim you are out of cash.