PERSI: No talks with Vander Woude on large-scale pension reform plan

PERSI: No talks with Vander Woude on large-scale pension reform plan

by
Dustin Hurst
March 6, 2015
Dustin Hurst
Author Image
March 6, 2015

To reform a multi-billion dollar program, a lawmaker might spend months or even years perfecting wording, discussing details with agency officials and pacifying critics.

That’s why Nampa Republican Rep. John Vander Woude’s talk of dramatically changing the state’s pension system is curious: He appears to have done none of that.

During debate on a small pension bill earlier this week, Vander Woude told colleagues he’d like to switch Idaho to a defined-contribution program, a significant shift from the defined-benefit pension the state offers retirees.

That’d be an incredibly heavy lift and would likely meet steep opposition from, at the very least, Idaho’s unions and Democrats, who like the guaranteed nature of the defined benefit program.

But the agency that administers Idaho’s multi-billion dollar pension program, the Public Employee Retirement System of Idaho, told IdahoReporter.com Vande Woude hasn’t contacted them about the reform idea.

“To my knowledge, Representative Vander Woude has not contacted PERSI,” Cross told IdahoReporter.com Friday.

That’s like Tom Brady switching the New England Patriots to an NBA team and the quarterback not working with Bill Belichek to make the change.

Vander Woude was the key figure in a second attempt to kill a bill that would end pension spiking by state lawmakers. After voting for the measure, he appealed the vote and asked colleagues to reconsider. During the second round of debate, Vander Woude suggested the bill might be unconstitutional and proposed large-scale reform might be a “cleaner” option for lawmakers.

For his part, Vander Woude didn’t answer an IdahoReporter.com question asking he if he planned to propose the reform plan this year.

Cross told IdahoReporter.com his agency is ready to help if the Nampa Republican goes down that path. “If he does, we will do our best to provide him with any background or resources he may require in his research,” Cross said.

If Vander Woude pursued the reform, he’d burnish his conservative credentials. Switching the state from a defined-benefit system, where taxpayers would have to pick up shortfalls in pension funds, to a 401(k)-style system would win him support among limited-government advocates.

Joe Luppino-Esposito, policy analyst at State Budget Solutions, counts himself among those cheering Vander Woude’s move if it is, indeed, authentic.

“Switching to a defined-contribution plan is always one of the best reforms a state can do to control pension costs,” Luppino-Esposito told IdahoReporter.com Friday.

At a quick glance, observers suggest Idaho boasts one of the country’s strongest pension plans. They point to a high funding percentage, more than 90 percent, as a sign of health.

But it has eaten up more taxpayer dollars in recent years, an unseen and mostly hidden tax on Idaho’s families. A contribution rate hike, split between governments and workers, took $50 million out of the budgets for cities, counties, school districts and the state.

PERSI officials estimated the move cost Idaho school districts $7 million a year.

If Idaho switches to a defined-contribution system, retirees themselves, not taxpayers, would be on the hook for shortfalls.

Luppino-Esposito said while ending pension-spiking is a big issue in Idaho, it’s minute compared to switching to a more fiscally responsible retirement program.

“Don’t nitpick,” he said. “They should continue down that path and work with the pension system to find a way to make that switch.”

“That’s the most responsible choice for everyone involved.”

 

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