Last year, Idaho taxpayers pumped about $317 million into the state pension system, according to data from the state government retirement agency, the Public Employee Retirement System of Idaho (PERSI). That’s about 8.6 percent more than the year before, or $25 million. What could Idaho do with $25 million? Perhaps pay its great teachers more, repair roads or bridges or cut or eliminate some taxes.
But that extra $25 million—the result of higher wages, additional employees on government payrolls and higher pension contribution rates—probably isn’t enough to sustain our state’s retirement system. Critics of PERSI, including Idaho Freedom Foundation and groups like the American Enterprise Institute, the Reason Foundation and State Budget Solutions, say state and local governments use accounting methods that make pensions look better positioned than they are in reality. That includes Idaho.
PERSI, on the other hand, contends it is one of the best-funded state retirement systems in the country, and spouted out accordingly in a recent letter to lawmakers saying we critics are using “spin, misdirection and confusion to distort perception about PERSI’s funded status and liability.”
That’s a really unfortunate characterization of people who have nothing personal to gain from offering a different perspective of the state’s retirement system. We’re just trying to shed light on a potential problem, with the hope of saving taxpayers millions of dollars while offering a sound, responsible and affordable retirement plan for future state and local government employees.
I have no doubt that PERSI is financially better off than most states in the country, but that’s a particularly low bar. States like California and Illinois tend to be poster children to bolster claims that Idaho is doing comparatively well. But our state pension program is still greatly underfunded and expensive to operate; it costs about 18 percent of payroll, funded by contributions from taxpayers and government employees. The high cost to sustain PERSI results in lower wages for government employees, including schoolteachers, police officers and social workers.
Other states and businesses are shuttering expensive retirement programs that pay out a defined benefit to former employees. Utah did so a few years ago, and Oklahoma followed suit with reforms last year.
I have to commend the folks at PERSI, including the executive director, Don Drum, and communications chief Kelly Cross. Don has always been a courteous professional, going back to when I first dealt with him at the state Department of Correction many years ago. And I’ve known Kelly since he was an intern at the TV station we worked at together in Twin Falls nearly 20 years ago. Kelly is smart, friendly and thorough. They and their staff at PERSI always respond quickly to my and my team’s intricate questions about the program’s finances and operations, even though they probably understood we’d view the agency’s data through a critical lens.
That’s what made the agency’s letter to legislators something of a disappointment. Rather than acknowledge a different and widely accepted point of view regarding government pension accounting and sustainability, PERSI’s letter appears to attempt to discredit those who disagree with the state pension agency’s position.
After almost 50 years in business, you’d think the agency could stomach a little critical review of PERSI’s costs to current and future Idaho taxpayers.
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