A Half Trillion Dollar Mess…

The state of California pension funds are 500,000,000,000 (Billion) in the hole. How does a state get that far behind in their responsibility to fund state employees’ retirement, and how do they accept that type of liability on behalf of the taxpayers? Contracts for state employees have become a tale of bad political decisions. The first problem is politicians are in charge of negotiating complex employee contracts with unions that have been unwilling to concede the limitations of tax payer based compensation. The second problem is that employees of the state need to understand that tax payer based compensation has limits. One of the limits is balance. Tax payers are no longer willing to fund over reaching contracts. It is not personal toward state employees, it is personal in the sense that the tax payer feels like the state employee should be in line with the private sector. The private sector expects; a full days work, at a fair wage, with reasonable benefits, and the ability fire people for lack of performance. It’s that simple, and the same should apply to state employees.

The state and municipal employees need to be paid fairly and should be in a 401-K program just like the people paying the bills. I have been validated in this opinion by this Stanford University study of California state pensions. One of their recommendations is to implement a 401-K program and reduce benefits for new state employees.

The way to fix this isn’t through an “us and them” posturing, it is just “us”. We all utilize our police, firefighters, and teachers (to some degree). We can agree law enforcement and our firefighters are critical functions of the state, but the pay and benefits (where most of the issue lies) just need to be reasonable. We need to have that discussion in a collaborative way. Not the way unions and management have traditionally bargained. That is why so many states are in the same mess as California or are not far from it…