Teachers Beware: They are Coming for Our Pensions

[Hannah Bell]

I have tried, in recent months, to strike a balance between hope and concern about where we seem to be headed in education. Today I am going to sound an alarm bell. The pensions of teachers and other public employees are in jeopardy because a wealthy elite have decided they have better things to do with our money.

On Wednesday, listening to Talk of the Nation on NPR, I heard an expert on the auto industry, Paul Ingrassia, talk happily about the "tough love" the Obama administration had shown for auto workers. Using the device of bankruptcy to break contractual obligations to their employees, the US car makers have reduced their labor costs from 30% of the cost of a car to just 6%. Now, even though they are selling fewer cars, the car makers are raking in the billions again...

And the shoe dropped just a day later, when the New York Times reported that "Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers."

The New York Times story indicates that there is not yet legislation for this purpose, and that there are concerns that if states declare bankruptcy, holders of state bonds might suffer. This would create instability in financial markets - which is of course intolerable to the bankers who are apparently running America. But apparently robbing teachers of our pensions is quite acceptable - so the clever lawyers are hard at work to come up with a scheme that will allow the states to default on their obligations to pensions, while preserving their obligations to bondholders...But take careful note, when Mr. Ingrassia talks about the "entitlement structure we have in this country," these are code words for Social Security, the other target in the sights of the billionaires. So we are in good company. It is not just public employees that stand to lose our pensions - it is every person who does not have an independent means of supporting themselves when they retire.

http://blogs.edweek.org/teachers/living-in-dialogue/

[Smarmie Doofus]

1. They're so helpful:

"Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers."

[Hannah Bell]

2. yes, isn't it kind of them? meanwhile, the banks owe treasury over 1/2 a trillion, but that must

be small change, as you'd never know it from the media reports, which typically give the impression that all the money's been repaid.

[WinkyDink]

12. "Owe Treasury"?! HAHA! Treasury will pay THEM!

[Trajan]

3. The pronounce a concern for the economy and a need for teachers ....

And then impoverish them when they retire ....

And just how do they intend to deal with the needs of these people ? .... How will they deal with the loss of purchasing power of consumers in a marketplace that is already reeling from loss of consumer income ? .....

And WHERE the fuck are the Democrats in all this ? .... This is an absurd play ....

[lib2DaBone]

4. Kick. Strange timing..Olberman's firing and the Comcast/NBC takeover...

It's a well know fact that Mr. Obama does not like Olberman. Was Mr. Obama sending a message to journalists who dare oppose him?

[Hannah Bell]

5. link for that well-known fact? i've not heard about it.

[Le Taz Hot]

6. Bingo!

Excellent correlation between GM/union busting to state bankruptcy/union busting. The ONLY thing teachers have anymore is their health care and pension plans because goddess knows the administration AND PARENTS have been taking a piss on them for years. Good luck in finding good people who will settle for little/no pension, half-assed "health care," minuscule salaries and NO support AFTER they've spent 5 years (at least) in college.

[Smarmie Doofus]

9. If the economy is bad enough they WILL find people.

>>>>>>>>>Good luck in finding good people who will settle for little/no pension, half-assed "health care," minuscule salaries and NO support AFTER they've spent 5 years (at least) in college.
Why do they call it "good girl?" Because "doormat" was already taken. LTH >>>>>>>>

"Good"? I don't know. But they'll find bodies. Since the privileged educate their kids elsewhere, the quality of PS teachers is quite beside the point.

[Le Taz Hot]

15. It's a point I chose to make.

It may be beside your point but I would think parents who have no other choice but to send their children to public schools would appreciate good teachers. Bad teachers make for a miserable classroom experience AND a bad education which affects all of society.

[Smarmie Doofus]

17. I know know it, you know it; but it's not realized....

.... by most of the top 1% income earners. And they're pretty much driving this horsie.

Hell... it's not even realized by most of the remaining 99%. ( Not that it matters what they think.)

>>>> a bad education which affects all of society.>>>>>>>>

[WinkyDink]

11. "Teach for America". U.S. Public Education will be a "stepping-stone" 2-year teaching deal.

All enthusiasm, no time for burn-out, no need for a Master's, no care about planning, teach to the NCLB tests, move along.

[Ilsa]

7. If the federal govt defaulted on military pensions, there would

Be bullets flying. Retired military wouldn't stand for it. But teachers and other public sector employees are easier targets for them. First they need to demonize them to get public sentiment against them.

[WinkyDink]

13. Don't be so sure. Veterans' hospitals have been left to rot, and what's the penalty?

[dkf]

8. Irony is if the stocks in the pensions do well there may be no shortfall

Teachers would be worse off if the banks had failed and the economy crashed. Then there really would be no hope of a pension.

Public workers best chance of a happy retirement is if the corporations make a lot of money. If not the states may or may not kick in the extra needed to keep benefits healthy.

[WinkyDink]

14. The teachers are not the gamblers here.

[dkf]

16. All pensions rest on investments.

How else do you think they work?

[msanthrope]

23. Don't bring facts into this. Because then someone might have cognitive dissonance. n/t

[WinkyDink]

36. Are you certain as to how teachers' pensions were invested, in, say, 1959?

http://eh.net/encyclopedia/article/craig.pensions.public.us

How did these early state and local pension funds manage the assets they held? Several state plans restricted the plans to holding only those assets that could be held by state chartered mutual savings banks. Typically, these banks could hold federal, state, or local government debt. In most states, they could usually hold debt issued by private corporations and occasionally private equities. In the first half of the twentieth century, there were 19 states that chartered mutual savings banks. They were overwhelmingly in the Northeast, Midwest, and Far West -- the same regions in which state and local pension plans were most prevalent. However, in most cases the corporate securities were limited to those on a so-called "legal list," which was supposed to contain only the safest corporate investments. Admission to the legal list was based on a compilation of corporate assets, earnings, dividends, prior default records and so forth. The objective was to provide a list that consisted of the bluest of blue chip corporate securities. In the early decades of the twentieth century, these lists were dominated by railroad and public-utility issues (Hickman 1958). States, such as Massachusetts that did not restrict investments to those held by mutual savings banks, placed similar limits on state pension funds. Massachusetts limited investments to those that could be made in state-established "sinking funds". Ohio explicitly limited its pension funds to U.S. debt, Ohio state debt, and the debt of any "county, village, city, or school district of the state of Ohio" (Studenski 1920).

~~~~~~~~~~~~~~~~~
The gambling was ramped up only in recent decades.

[TheOther95Percent]

33. And contributions to invest.

Part of the "problem" is that some states have not made the required contributions to the pension plan in the first place. Take for example, NJ. The pensions are underfunded by the fall in the stock market; which to some extent has recovered AND the failure for state governments to fund the plans.

[Hannah Bell]

26. that doesn't negate the point.

[dkf]

27. Yes pensions are vulnerable if the stock market can't produce good returns.

States budgets are impossible right now and shortfalls may or may not be plugged in. Really it comes down to funding pensions or education or help for the poor or other decisions like this. It might come down to who is suffering more, the poor or retirees.

[Hannah Bell]

28. that's irrelevant to the precediing, & no, it doesn't "come down to" the phoney choice you set up.

[dkf]

32. My parents are both state retirees so I see directly the changes that have been going on.

The pension system they retired with is no longer offered to new retirees. When they retired they and their spouses got health benefits. Now only the retiree gets benefits. They had a non contributory system where the state paid the entire contribution. That is no longer available. Their prescription drugs are now processed through a mainland firm whereas before it could be done at the local drug store. Their Medicare payments are being reimbursed by the retirement fund, but that may change. They are going to be paid monthly instead of semi monthly. Some of these things are incremental and around the edges, but I have no doubt that when the fund is scheduled to run out of money, I believe we are the 7th worst situated state, who knows how their inflation adjustments will run, or their health care costs.

Yet they have a great situation and get social security on top of nice pension payments and the state doesn't even tax employer pensions.

Can we in all good conscience keep providing such nice benefits while we try to cut Medicaid to the poor? Dont get me wrong...I love that my parents have the ultimate in security, but I'm not sure that is morally right.

[Smarmie Doofus]

18. How are the corporations doing right now?

>>>>>Public workers best chance of a happy retirement is if the corporations make a lot of money. >>>>

[dkf]

19. Last year the stock market was up about 15%.

That is pretty good. A teacher who hates corporations hates their pension.

[Smarmie Doofus]

21. Then, why all the talk about cutting and defaulting on pensions?

[dkf]

22. Some states haven't been funding them properly.

My state of Hawaii for instance was taking gains over 8% from the pension fund and using them to expand social services for years.

That was under Democratic party leadership and it eventually was stopped, but it was very shortsighted and irresponsible.

But my point is that people who hate corporations but who have pensions are being self defeating.

[raouldukelives]

29. Exactly. Or if you hate war.

If you hate war then you hate your 401k/pensions and the profits it provides you.

[WinkyDink]

10. There is no Rule of Law when legal contracts can be broken. Period. "America" is a MIRAGE.

[Starry Messenger]

20. Pension raiding, just like in the movie "Wall Street".

It's like a candy store to these assholes.

[maryf]

24. Oh well, I chose to be a teacher...

its my own fault when I lose my job and my pension...

on edit :sarcasm: and k&r for those who don't realize they should be assumed without say...

[Rex]

25. Well they stole trillions from the taxpayers, why just stop there!?

Why not really bankrupt the entire country?! Obviously it will benefit the uber rich in someway...so we're doing it!!! I just hope after the hordes of homeless and unemployed in the future riot and lose all control, they don't do too much property damage - hard to sell a house on fire. :sarcasm:

[sarcasmo]

30. Every pension, not just teachers.

[woo me with science]

35. +1 nt

[Dagaz]

31. Pensions were raided for political donations

Donations should be handled differently than Union dues. Union dues should go in to the pension plans.

[Nye Bevan]

34. I believe that the key point here is that the Pensions Benefit Guaranty Corporation should cover

public employees as well as private employees.

If a private employer goes bankrupt the PBGC will step in and take over the pension payments to the retirees. I guess the reason that this has not applied to public employees is that it has been assumed that municipalities cannot declare bankruptcy. If this is changing, then obviously public employees need to be covered by the PBGC or a similar plan.

If any municipalities to file for bankruptcy then the Federal Government needs to step in and bail out the retirees who lose their pensions by taking over the pension obligations. Not doing so would be a monstrous mistake, given the bailouts that the banks received.

[leftstreet]

37. K&R