For critics of traditional pensions, it doesn’t matter that the clear majority of states have kept their pensions on solid financial ground—88 percent to 90 percent of plans meet or exceed funding levels based on widely accepted criteria for public pensions.

Nor do critics care that teachers, when asked, want the type of retirement security traditional pension plans offer and that they are willing to pay their fair share of the cost.

It’s even irrelevant that public employees in many states already have access to defined contribution plans, the 401(k)-type vehicles that are the darlings of those who want to eliminate pensions tied to such factors as length of service and final salary.

These facts are nonissues to groups like Americans for Prosperity, Americans for Tax Reform and other organizations of the right-wing fringe that are working to paint traditional pensions as financially unstable, fatally flawed and obsolete. These groups have worked hard to manufacture a pension crisis—one that neatly fits the agenda they’ve pushed for several years.

“The same characters who would privatize government services and school vouchers are the ones promoting this agenda,” warns AFT president Edward J. McElroy. “It is nothing more than an attack on working families. But it can be stopped through collective legislative and political action.”

The trend could escalate now that “pension reform” legislation on Capitol Hill has found its way into law. The law pushed by the GOP majority (see sidebar, “Moving the goal posts”) will ratchet up funding rules for traditional pensions in the private sector—tightening them to the point where many companies may be compelled to eliminate them entirely because the financial burdens of keeping them will prove too costly.

Experience shows it won’t be long until these rules are grafted to the public sector—threatening to strangle the traditional public pension out of existence. That’s exactly how it played out when new rules were introduced for evaluating the long-term cost of public retiree health plans, notes Bill Cunningham, senior associate director of the AFT’s legislation department.

Fueled by what’s happening in the private sector, traditional defined benefit pensions for public sector employees are now under fire in at least 25 states. “I don’t think we’ve been angry enough about this trend” in pensions, McElroy recently told leaders of all AFT divisions. And the union’s response must be just as broad as the attacks themselves.

DEFUSING LIES
Colorado shows the battle over pensions can be won when unions join together to educate and mobilize their members and the public. This year, the right-wing group Americans for Prosperity was forced to withdraw a pension privatization ballot initiative, thanks to the work of a 10-union coalition—which included the AFT—representing public employee unions across the state. The unions countered critics’ claims that the state pension system was in desperate straits—and the only way to save it was to gut it.

Americans for Prosperity’s baseless and alarmist assessment of the pension system could not stand up when the union coalition revealed that the largest public employee plan is currently running at about 75 percent funding—hardly an irreparable problem in a system that survived drops to 45 percent funding in the 1960s and 1970s. The unions also pointed out that the cost of the state retirement benefits amounted to less than 1.5 percent of the state’s budget, an extremely solvable “crisis” if unions, lawmakers and pension managers work together to find constructive solutions to the shortfall.

And that’s exactly what happened.

In April, Colorado legislators, public employee unions and pension administrators struck a compromise to reform the state’s largest pension plan and fix the pension’s $11.3 billion unfunded liability. Ultimately, Americans for Prosperity and other interests behind the attack were forced to fold their tents and move on. “A lack of political steam” was how the right-wing group explained its move, and no one doubted the claim. Most of the hot air went out of its shrill claims once the group came face-to-face with a broad coalition of public employee unions armed with the facts.

“The coalition worked hard to mount a political and public relations campaign to show that this was no crisis and that a reasonable solution could be crafted,” says David Sanger, president of AFT Colorado. “We designed consistent messages, trained members on the issue, met with editorial boards and wrote letters to the editor. Our consistent message was simply that Colorado’s teachers, state troopers and other public employees work hard for all of us every day. They deserve a secure retirement after long years of public service, and taxpayers deserve a [pension] system that is on a sound footing for the future.”

THE POWER OF INFORMATION
The Colorado fight highlights the importance of information in pension battles—not just for the public at large but for individual union members as well. It’s a challenge that AFT-West Virginia accepted this year, when teachers across the state were given a say on the future of their pension plan.

The state, which closed its traditional pension system several years ago to new teachers, revisited the question this year. Prompted in large part by AFT affiliates, West Virginia allowed excluded teachers to choose whether to opt back in to the traditional plan.

“The union didn’t take a position [on which plan was the right one for individuals], but it’s clear we had a role,” says state federation field representative Josh Sword, who crisscrossed the state conducting informational meetings prior to the March vote. “There were wild claims being made by a vocal minority, saying things like ‘the state wants to reopen the pension because they want to steal your money,’” Sword explains. “We needed to make sure teachers had the best available information.”

A convincing 61 percent of teachers and PSRPs voted to return to the traditional plan, even though the move would require them to increase their out-of-pocket pension contributions.

Mike Rogers, a middle school teacher from Morgantown, says the additional cost was more than offset by his own experience in managing a defined contribution pension fund when the stock market slumped several years ago. “Being a new teacher is difficult enough—now you have to worry about being a teacher and a [pension] manager.”

A broader professional consideration also guided Rogers when he cast his vote. West Virginia competes with neighboring states for new teachers—states that have not abandoned the traditional pension option. Rogers believes staying with the old plan “only made any sense if you were a short-term teacher” looking to move to another state or another profession.

It was a bad fit for Rogers, he says, and also for other educators who wanted a long-term teaching career in West Virginia public schools.

HEADS, I WIN ...
Do a minority of state pension plans need shoring up? Certainly. But what gets lost in this debate is that traditional pensions are a partnership, with the state and the individual contributing mutually agreed-upon amounts to a strong system. Employee contributions are deducted automatically—meaning that not a penny of the problem in any state stems from workers’ failure to meet their responsibility.

New Jersey is a textbook example of where the problems lie. The pension shortfall for the public employee plan in New Jersey is approaching $30 billion, the AFL-CIO reports, and the problems began in 1994. That was the year Republican Gov. Christie Whitman raided pensions to pay for a $1.2 billion tax cut for the wealthy. Problems were compounded when Whitman and subsequent governors allowed the state to defer payments to the plan by riding the stock market to cover pension obligations. In fact, the state pensions director testified last fall that they had shortchanged the pension by $5.5 billion. The state has not paid into the pension fund for 10 years.

Public employees already have been pressed to clean up the state’s mess—Whitman increased employees’ contribution to the plan to 5 percent even as the state was failing to pay its share. Lobbying by the AFT and other organizations prompted lawmakers to reverse this state of affairs with a budget that includes a modest 1 percent sales tax increase to provide $1.3 billion for the pension system.

In June, more than 10,000 public employees rallied to demand that the state meet its pension repsonsibilities. Some lawmakers, however, are backing plans to “reform” public employee pensions by, among other things, offering 401(k)-type retirement plans for new public workers. These plans would reduce the state responsibility to simple lump-sum contributions to an individual account. The risk for pension fund investments—the same risk that the state bungled when it cut contributions and overestimated stock returns—would fall entirely on the shoulders of individual teachers and other employees in the public sector.

“Public employees do not have stock options or a golden parachute. All we have is the promise of a modest pension, which we have contributed to with our hard work and hard-earned dollars,” says Joseph Del Grosso, president of the 6,000-member Newark Teachers Union. “We’ve paid our contributions; all we ask is that the state pay its share.”

Pensions also promise to be a hot-button issue in New York’s fall elections. On Aug. 1, GOP gubernatorial candidate John Faso called for a state law that would replace traditional public pensions with 401(k)-type plans for newly hired state, school district and local government employees. “That kind of thing would really save taxpayers money,” Faso told reporters, adding that he was also open to ideas for creating a tier of lower pension benefits for new employees under the existing system.

Faso’s scheme was immediately rejected by both Democratic front-runner Eliot Spitzer and the AFT-affilitated New York State United Teachers.

Faso’s plan “is consistent with his ultraconservative, right-wing agenda that seeks to destroy public employee unions,” says NYSUT executive vice president and AFT vice president Alan Lubin.

In Montana, legislative efforts to mandate a defined contribution plan for new employees were recently defeated with the help of the governor and strong lobbying by MEA-MFT, a joint affiliate of the AFT and the NEA. Most state lawmakers have shunned the rhetoric and focused on realistic steps to keep the current pension system strong and viable, MEA-MFT president and AFT vice president Eric Feaver reports. But there also are groups, he adds, that aim to take a pension problem caused by ordinary market fluctuations and “turn it into an ideological divide.”

The pension issue is part and parcel of a larger battle to destroy “the social compact” between generations, Feaver believes. Just like a strong Social Security system or guaranteed access to quality healthcare, traditional pensions don’t fit neatly into the archconservative vision of an “ownership society.”