What will it take

[Deleted]

for unions/employees to get that their state is broke and just because they made a promise years/decades ago doesn't mean they can afford to honor it currently.

Florida teachers want to sue because they are will be required to contribute 3% towards their retirement. Who cares if the stare is facing a $3.5 billion dollars deficit, I will be damn if I contribute towards my own retirement.

Do they get that instead of the 3% contribution, pink slips might come instead? The state just can't afford it anymore.

At least the lawyers are getting paid ;D

Florida teachers have filed a lawsuit seeking to stop the state from requiring them to contribute 3% of their pay towards their pensions.

The lawsuit, filed Monday by the Florida Education Association in Circuit Court in Tallahassee, argues that the new mandate is unconstitutional because Florida law says employees do not have to contribute toward the state retirement system.

The teachers' union, which calls the contribution a pay cut, is also protesting the reduction of cost-of-living benefits. The Florida Police Benevolent Association joined the lawsuit.

"This pay cut was used by legislative leadership to make up a budget shortfall on the backs of teachers, law-enforcement officers, firefighters and other state workers," said Andy Ford, president of the teachers' union. "It is essentially an income tax levied only on workers belonging to the Florida Retirement System."

The new contribution requirement is one of several cost-saving measures contained in the fiscal 2012 budget that Governor Rick Scott signed into law last month.

The governor and state lawmakers, who were wrestling with a $3.6 billion budget deficit, have said that public employees should help finance their own retirements.

On Monday, Scott said asking state employees to pay a small percentage into their pensions is common sense.

"Floridians who don't work in government are required to pay into their own retirement," he said. "This is about fairness for those who don't have government jobs. Plus, we are ensuring a pension will be there for state employees when they retire."

Members of the Florida Retirement System have not contributed to their pension since 1974. The system collects retirement money for more than 900 state and local government employers, covering 655,000 active workers and 219,000 retirees.

The Florida teachers' union represents 140,000 members.

Governors across the nation are leaning on state workers to pay more toward their retirement, saying the current system is unsustainable. Many are increasing the amount employees pay toward their contribution or raising the minimum retirement age.

States have also been shortchanging their pension contributions for years, leading to yawning shortfalls that have raised concerns among municipal bond investors.

States faced a $660 billion gap in their pension accounts for fiscal 2009, according to a recent Pew Center on the States report. However, the deficit has likely narrowed since then thanks to a stock market recovery.

[Sum Dum Gai]

Do they get that instead of the 3% contribution, pink slips might come instead?

Some of them would probably prefer the pink slips. Most people can probably look around their workplace and point out a few people that would probably get the ax before they would.

If I got a letter from my employer saying we got to vote on either a 10% pay cut or 10% of us getting laid off I'd vote for the layoffs. Maybe that would bite me in the ass, but I'd take the chance.

[Deleted]

Jun 20, 2011 14:36:44 GMT -5 @horatiolegrand said:

What does it take for you to understand that if someone doesn't want to honor the contract they made with you. They can just say they have more important things to spend the money on?

If they had the money to honor it that would be a different issue.

Let's say I try to sue such business partner that promised me 200K... but that business partner is on the brink of bankruptcy, over 1million in debt, basically no money.

Suing him for 200K is going to get me what? oh yeah lawyer bills and nothing else. But I would have no problem taking a 3% loss and collect whatever he can pay.

The choices are the following:
- 3% contributions and most people get to keep their job
- Pink sleeps because the state cannot afford everyone on their payroll.

[❤ mollymouser ❤]

The threat of pink slips in seniority-based employment situations seems to worry those at the bottom of the seniority totem poll more than every one else. When 90-95% of employees aren't at risk of receiving those pink slips, they usually prefer to protect their own salary and benefits rather than sacrificing to save the jobs of the 5% most recently hired employees.

At least that's what I've noticed locally as our City and County undergo budget crises.

[CarolinaKat]

I'm from the land of no union/no strike public sector. Here, instead, they fire the most expensive (senior) people before they start to fire the entry-level jobs.

[Deleted]

Just because contributing to the pension plan is common sense, doesn't mean it isn't also unconstitutional. If the state law says employees don't have to contribute, then the law needs to be changed before employees are asked to contribute.

There is also something shady about changing the negotiated contract. It isn't like unions haven't made concessions - you can argue whether or not they were big enough concessions, that is fair - but the state should have to honor the terms of the negotiated contract, and changes to that contract should be made at the bargaining table.

[Wisconsin Beth]

Jun 20, 2011 15:25:44 GMT -5 @craftysarah said:

Just because contributing to the pension plan is common sense, doesn't mean it isn't also unconstitutional. If the state law says employees don't have to contribute, then the law needs to be changed before employees are asked to contribute.

There is also something shady about changing the negotiated contract. It isn't like unions haven't made concessions - you can argue whether or not they were big enough concessions, that is fair - but the state should have to honor the terms of the negotiated contract, and changes to that contract should be made at the bargaining table.

Been there, doing that here. Your governor and legislature then push though a bill stating that unions can't bargain for anything other than their raise and that's capped at something like 1%.

[MN-Investor]

Just curious. What's your opinion on home buyers walking away from the contracts they have signed because now it's too expensive, that it no longer makes sense because the value of the home has declined? Just say, "Sorry, bank, you should have known that I couldn't afford it in the future and you're just going to have to take less"?

[giramomma]

Jun 20, 2011 15:49:39 GMT -5 Wisconsin Beth said:

Been there, doing that here. Your governor and legislature then push though a bill stating that unions can't bargain for anything other than their raise and that's capped at something like 1%.

Yes, and on top of it, the gov and legislature have been figuring out ways to spend money.

I mean, if broke is indeed broke, then we shouldn't be spending any new money.

If a poster came here and said "I'm broke. I can't pay my mortgage. I'm short 500/month. But, look, I'm figuring out a way to spend 500 per month going out to eat, buying new clothes, buy new Apple products as soon as they come out, and I need to buy a new car. And all my new spending is justified because we all know consumer spending drives the economy, and I'm doing my part to prop it up."

that poster would get crucified here.

Yet, our government behaves in the same way, and it's OK.

[Deleted]

"for unions/employees to get that their state is broke and just because they made a promise years/decades ago doesn't mean they can afford to honor it currently."

A contract is different from a promise. These are interesting times as far as government employers, government employees and unions are concerned.

[8 Bit WWBG]

Everyone is trying to do what gets them the best outcome. That is an absolute in almost all these situations. It just so happens that sometimes the paths that get each individual his/her maximum payoff are not always parallel -- sometimes they are even mutually exclusive.

I agree that it also depends on where you, yourself are in proportion to others. If you are the top performer among a bunch of layabouts, maybe you want layoffs to thin the herd. If you are the newly hired teacher who had finally gotten a job after being unemployed, you might not like the "seniority" system. If you are the highest paid, you might be the first to go.

And yes, the lawyers make the money regardless.

...:::"Suing him for 200K is going to get me what? oh yeah lawyer bills and nothing else. But I would have no problem taking a 3% loss and collect whatever he can pay.":::...

Its not always that simple. While I agree one has to weigh the odds of a worthwhile payout against the effort required to win, sometimes you just have to take a stand. I'm sure glad a ragtag bunch of colonists did not just accept the tyranny of their absent imperialist overlords. OK extreme example, but still... perhaps this fictional business partner has a bunch of non-monetary assets you can try to force sale of. Or perhaps you can at least get his name dragged through the mud enough that he'll never be able to trick anyone else.

[Sum Dum Gai]

What's your opinion on home buyers walking away from the contracts they have signed because now it's too expensive, that it no longer makes sense because the value of the home has declined? Just say, "Sorry, bank, you should have known that I couldn't afford it in the future and you're just going to have to take less"?

They aren't walking out on a contract. I don't know what your mortgage said, but mine said I had to pay $X per month, or give the house to the bank and take a hit to my credit score. I can stop paying whenever the hell I want for any reason I want, or none at all I suppose, as long as I turn the keys back over to the bank when they ask for them and I don't destroy the property, all without ever breaking the contract in any way.

[8 Bit WWBG]

You know I love all our members, but if I get too many complaints, neither will you.

As an aside, how do you feel about counter-offers. Suppose Dark is unable to pay, but makes an offer to re-negotiate his deal with the bank and offers them, say 20% premium if they let him skip 2 payments or something.

The bank has the right to say "no".

[greenstone]

As I read it, this is not an issue of changing a union contract. The union is just opposed to the change. It is a legal issue. The law currently says employees don't have to contribute. Gov. Scott is mandating a change in usual heavy handed I-am-God way and ignore the fact that he has to change the law first. If the legislature changes the law then that is the new reality for state employees. This not the same issue as what is happening with unions in other states.

[❤ mollymouser ❤]

Jun 20, 2011 14:48:22 GMT -5 @horatiolegrand said:

What state doesn't have the money? California? Illinoise? Raise taxes, cut parks.
If you don't want to pay a contract you agreed to, do you just get to keep on spending money however your prioritize and let the people you owe be damned? If you owe money to someone do you cry "poor me" and expect to be let out of your obligations or do you think of more ways to bring in money?

They already have raised taxes.
They already have cut parks.

[Deleted]

My wife is an IL union teacher so I am a beneficiary of this. But seriously, deal or not, I can't see how any teacher or public worker can say with a straight face that this isn't a HUGE ripoff for taxpayers.

The main reason I don't like the "Deal is a deal" argument is because one political class, looking to win favor, can make a deal that will destroy the state for decades to come. That's why I favor 1-year contracts and limiting it ONLY to pay.

Look at how IL does their pensions. Contribute 11% of your pay, work for 30 years, and then get 70% of your HIGHEST 3 years salary. Does that make sense? At the very least, it should be 70% of your AVERAGE salary. After all, that's what the contributions are based on.

[Sum Dum Gai]

Look at how IL does their pensions. Contribute 11% of your pay, work for 30 years, and then get 70% of your HIGHEST 3 years salary. Does that make sense? At the very least, it should be 70% of your AVERAGE salary.

Why would anyone be willing to give up 11% of their pay for a pension based on average salary over your whole working life? You'd be paying way too much for a tiny pension, and we're already doing that through SS. How many crappy pensions can people afford to buy into while still saving enough to actually retire at some point?

[Deleted]

I am a state employee (teacher), and they recently raised our contribution to our pension 2.5%. We already contributed 5%.

I don't mind contributing. I just wish the state felt like contributing, too. They aren't using the additional 2.5% to increase the pension plan's financial health; they are using it to decrease what the state has to contribute. So if the pension plan continues to have a shortfall, they can continue to come back at state employees as often as they like. It only takes an act of the legislature.

By the way, Davebo, the state assumes they earned 8% each year on your contributions. Teachers who had to withdraw before they were vested (usally SAHPs) learn this the hard way when they find out that 1 year fifteen years ago costs them a lot of money that has to be paid in a lump sum. Most of them can't do it.

[robbase]

they should just grandfather in the current employees and change it for the newbies

also in the future the states should be more careful with their money and contracts to employees

[MN-Investor]

they should just grandfather in the current employees and change it for the newbies

also in the future the states should be more careful with their money and contracts to employees

Karma for you!

[Deleted]

Jun 20, 2011 18:17:23 GMT -5 @robbase said:

also in the future the states should be more careful with their money and contracts to employees

Yes but it is easy for politicians to sign those contracts or make those promises since they know they will not be around when it will be time to pay up.

[dancinmama]

Jun 20, 2011 21:16:52 GMT -5 TheHaitian said:

Jun 20, 2011 18:17:23 GMT -5 @robbase said:

also in the future the states should be more careful with their money and contracts to employees

Yes but it is easy for politicians to sign those contracts or make those promises since they know they will not be around when it will be time to pay up.

And not only that, but the politicians signed with the understanding that the union bosses would rally the union members to throw their support to the politician or their party the next time they are up for re-election.

I see the other side of the argument also. Many union members PLANNED THEIR LIVES based on what they THOUGHT they would receive for a pension. So maybe they weren't too worried about trying to pay off their mortgages or save in an IRA or some other retirement vehicle outside of their pension fund because THEY KNEW that they were going to get a very cushy pension.

If the unions insist that the states honor the pension obligations, some states could easily go broke. If the states insist that the unions concede, many people who were counting on those cushy pensions could be hurt financially.

The whole ordeal is a huge cluster .

[Deleted]

I think the pensions are a given, at least in my state. After all, we HAVE been contributing 5% toward them and soon to be 7.5%. I don't think they can just say, "Wait, we made that up." Employees in Alabama have a real investment in their pensions. It is not a freebie.

But our pension fund has been invested to date to beneift the state (encourage investment within the state) as opposed to maximizing pension profits. The pension manager has been clear that he could have earned a little higher return if he invested outside the state. If they keep increasing the employees' share and decreasing the states' share (remember my comment that the additional 2.5% id just reducing the state's contribution), you can expect a lawsuit of some sort. Why wouldn't there be?

I am happy to contribute toward a stable pension. I find it hard to believe at times that people were getting pensions without contributing. But I do think the state should contribute as well. That 2.5% is money that I might have to take from other retirement savings. And it won't even make my pension plan healthier.

[lurkyloo]

On one hand, I don't think it's kosher to change the rules of 20-30 years, two years before people are set to retire. I do think there's spiking, etc. going on and cracking down on that would be fine. On the flip side, new hires (and even maybe those hired within the last 5 years) need to be hired under different terms. The current setup is simply unsustainable.

I would also really, really like to see state pensions capped at 100K/year payout--even for those close to retirement. I think that would solve a lot of problems with the state budget, and it'd be hard for those affected to drum up much fuss about how oppressed they are.

[DVM gone riding]

they aren't breaking the "promise' to previous employees they are demanding essentially a new "contract" for the future. Perfectly legit as I see it. the police teachers etc can all try their luck in a different state if they don't like it.

[Cookies Galore]

I don't see state legislatures voting themselves a pay decrease, giving up their per diems and state leased vehicles, offering to pay more for their state benefits, laying off some of their staff, etc. I know in a lot of states the legislature pay is low and the work is part-time, but in PA legislative salaries are over $70,000 (more than many teacher salaries-- my BIL has been teaching for five years and is in the $40,000 range) and the perks are big. I'll believe there's a real financial crisis when everyone is forced to sacrifice.

[Deleted]

Government pensions will soon go the way of private pensions, which is out of existence.

[swamp]

Jun 20, 2011 21:16:52 GMT -5 TheHaitian said:

Jun 20, 2011 18:17:23 GMT -5 @robbase said:

also in the future the states should be more careful with their money and contracts to employees

Yes but it is easy for politicians to sign those contracts or make those promises since they know they will not be around when it will be time to pay up.

Or they don't realize the cost of the benefits down the road.

In the 1970's during the incredible inflation time, my dad was the head of the firefighter's union. The city he worked for didn't have the cash to pay salaries to match inflation, so he got the city to agree to health insurance coverage until death for the employee and his spouse, unless the surviving spouse remarried. At the time, health insurance coverage was cheap, and firefighters usually died young because the of the lack of safety equipment, and then the widow remarried.

Now, the retired firefighters are living until they're 90, as are their spouses, and the cost of health coverage has gone through the roof.

The city would have been better off giving the guys an extra $5k a year instead of the retirement health insurance benefit, but they didnt' have a crystal ball.

I'm sure my city isn't unique in this situation.

[midjd]

Good point, Swamp. Same thing happened in my state - except the healthcare coverage is just from retirement age (Rule of 85) until Medicare kicks in. Still, covering healthcare costs for hundreds of thousands of middle aged people for 10 years a pop can get pretty damn expensive.

[Colleenz]

Isn't the only way out of those health care contracts for the state to declare bankrupcy?