The Trillion Dollar Pension Gap

Slowly there is an increasing awareness and, hence, a discussion of the huge crisis that has been kind of ignored for a while--the gazillion dollar deficit in public sector pension funds.  I have blogged about this before (the first one was in July 2008!) and I getting back to it because of this news item in the NY Times:

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken.

A billion here, a billion there, and soon you are talking real money, eh!  a trillion dollar shortfall. But, guess what?  That does not account for all the public sector pensions.  Did that make you sit up?

The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding.

Cue that Twilight Zone score :(

Here in Oregon?  Here is the Register Guard on that very topic:

As employer contribution rates rise, school boards, city councils and legislators will feel the pinch. Even if state and local revenues rise as a result of an economic recovery, much or all of the increase will be claimed by rising PERS obligations. Oregonians will notice that even as budgets get bigger, they’ll be pedaling harder to stay in the same place — their classrooms will be no less crowded, their police forces no better manned and their social services no more comprehensive. And if public agencies’ budgets stagnate or decline, the erosion of public services will accelerate.

The projected increases in public employers’ PERS contributions should be a prominent issue in this year’s election campaigns. Oregonians will need to resist demagoguery and public-employee bashing — but at the same time, they should demand candid appraisals of the problem and leadership in addressing it.