Defined-benefit pensions at risk

By Edward J. McElroy
AFT President

Union members, especially in the public sector, are among a dwindling number of workers who have been able to hold on to adequate health benefits, fair conditions of employment, and pensions providing a secure and dignified retirement.

Logic would suggest that such benefits should be the standard, not the ceiling, but there is a concerted effort in many places to balance budgets by plundering public employees’ hard-won benefits and to quash workers’ expectations that their employers will help provide for their current and future well-being.

This year, political attacks on public employees’ benefits have been waged in a number of states—Alaska, California, Colorado and Illinois, to name a few. Elected officials in these states are attempting to rewrite public pension systems and renege on their promises to public employees.

The Alaska Senate and Gov. Frank Murkowski recently pressured House lawmakers into approving a Senate bill that will close enrollment to the state’s defined-benefit pension system for new employees starting July 1, 2006. The same measure also requires current employees to contribute more to their pension plans—the Public Employees Retirement System and the Teachers Retirement System.

In Illinois, Gov. Rod Blagojevich wants to rewrite the rules on retirement age and cost-of-living increases for future retirees. He, too, hopes to create a two-tiered system by instituting a defined-contribution plan for new public employees. In Colorado, state treasurer Mike Coffman has established a commission, primarily made up of business executives, to develop recommendations on how the state can “restore fiscal stability” to its defined-benefit system.

And in California, Gov. Arnold Schwarzenegger has proposed a number of radical ideas that would have a significant negative impact on funding for public services and public employee pensions.

Schwarzenegger wants to put automatic spending caps on state budgets and allow the governor to make across-the-board reductions to all state spending; eliminate public employees’ death and disability benefits; shift their pensions to 401(k)-type investment plans; invalidate collective bargaining agreements by making significant changes to teacher tenure and due process; and restrict the ability of all public employees from making certain types of voluntary political contributions. Since it is improbable that the governor will drive these changes through the Legislature, he has vowed to call a special statewide election this November, at the cost of $80 million to $100 million of Californians’ taxpayer money.

The stakes are high—and not just in Alaska, California, Colorado and Illinois. The outcomes there are certain to influence lawmakers in other states.

So, what can we do? In partnership with the AFT and the AFL-CIO, AFT state federations and locals have launched campaigns to challenge these assaults, forming broad-based coalitions. In addition to lobbying and public relations activities, your union is engaged in unprecedented member education and mobilization. The idea is to build a permanent infrastructure that will last long beyond these fights.

The AFT is sounding the alarm in other states, as well, calling on our members and leaders to mobilize or be vigilant, depending on how advanced the threat.
This is a potent reminder of how important it is to make sure the right people are elected to office—and to hold them accountable once they are there.

Our work is far from done after Election Day. In fact, in many ways, that’s when it really begins.

We must work with elected representatives to ensure that issues of importance to our members are handled appropriately. And we must prepare for future elections either to return responsible leaders to office or to bring in people who can do the job the right way.