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IEA retirement exposes another dirty little secret about the state's pension system

IEA retirement exposes another dirty little secret about the state's pension system

Wayne Hoffman
August 8, 2011
Wayne Hoffman
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August 8, 2011

Let’s imagine, shall we, that an Idaho company’s CEO retires in her early 50s. Said CEO earns $105,000 a year from her job managing her statewide company.

The retirement income of this CEO shouldn’t be of public concern unless, of course, this CEO were getting a retirement benefit via the public trough. But that couldn’t possibly happen. Or could it?

Last week, Idaho Education Association President Sherri Wood announced her retirement. Wood spent six years as president of the IEA, a private organization we often refer to as “the teachers’ union.” Prior to becoming the union prez, Wood spent 28 years in the Caldwell School District, where she left a job earning about $50,000.

As a school district employee, Wood was a member of the Public Employee Retirement System of Idaho (PERSI). Had Wood retired from the public school, she would have been eligible for an annual pension of about $34,000 a year. But because the teachers’ union is a member of the state pension system, Wood’s IEA salary and tenure counts in the calculation of her retirement benefits, which is based on longevity and her highest 42 months of earnings. That’s why Wood will instead enjoy a lifetime pension of about $71,400 a year — almost double what she would be getting through her school employment alone.

The IEA is a private organization. If a private organization wants to pay out lifetime retirement pensions to young folks in their 50s, that’s their business. Seems foolish to me, but that’s not my concern.

But remember, the IEA is allowed to participate in PERSI because state law says associations formed by governmental employees can participate in the public employee retirement system. Bear in mind also that any funding shortfall in the state pension system is the responsibility of the Idaho taxpayer. Pensioners have a guarantee of a lifetime of retirement benefits because it is up to taxpayers to make up for losses affecting the retirement fund’s solvency. That makes Woods’ retirement benefit a public matter.

IEA’s participation in the public employee retirement system is the handiwork of state lawmakers who elected to grant this special perk to a private organization. If any other private company were similarly situated, say, Micron Technology or Idaho Power or Albertson’s or Monsanto, there would be protests from folks who would rightfully be angry at the prospect of Idaho taxpayers being on the hook for a corporate CEO’s retirement.

But for some reason, there’s absolute stone-cold silence about this peculiar bonus that allows for a private organization to benefit from this all-too-cozy arrangement between the teachers’ union and the pension system.

This setup isn’t Woods’ fault. She merely benefits from the system in place, and she should be paid what is promised to her.

Nor is it the IEA’s fault, which, like Wood, makes contributions to the state retirement system. And incidentally, Wood is no different from other government employees who have chosen to use Idaho’s very generous retirement program to retire in relative youth with the security of a lifetime of post-employment earnings. She’s also no different from state lawmakers, who have used the system to convert part-time legislative salaries into full-time administrative jobs with lucrative state retirement benefits.

This is merely the last exposure taxpayers have to the dirty underbelly of a pension system that some lawmakers eagerly defend, in good times and bad. State lawmakers are entirely responsible for the current system. It is entirely their power to fix it.

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