MORE WISCONSIN FACTS
The more you read the easier it is to see why the unions have destroyed our economy and killed manfacturing “THINGS” in America. I have watched the entire result evolve in my 80 years. Even now now be too late to adjust? C Brewer
Union Fails Pension Math: Part Time-Teacher Set to Earn More in Retirement than She Did While Employed
Posted By Ben Everard
Shortly after the Green Bay Packers turned the nation’s attention to the Midwestern state, Wisconsin once again has garnered the nation’s attention. At stake this time is not a trophy, but a prized retirement package promised to public employees. Throngs of protesters have taken to Madison, Wisconsin to either show their support or disdain for Governor Scott Walker’s plan to require public employees to pay 5.8 percent (the national average is roughly 12 percent) of their salary as a contribution to their pension.
The looming issue of funding public pensions is not unique to Wisconsin. Governor Walker’s stand, however, has focused the nation’s attention largely because he is the first Republican leader to propose legitimate legislation designed to address the problem head on. The debate in Wisconsin is a precursor to one that will be seen New York, California, Illinois, and dozens of other states. Unfunded liabilities stemming from decades of generous retirement packages for public employees has finally reached the breaking point. Without reform, state fiscal collapse is inevitable. Often lost in the debate is a simple explanation of what exactly the problem is with the system today. Fortunately, a pertinent example helps shed light on the financial precariousness of the situation in Wisconsin, and more importantly, the nation at large.
My mother worked as a public employee when she was a teacher’s aide in Sheboygan, Wisconsin. She was employed by the state for five years, from 1981-1986. However, she worked only part-time, so was never credited for a full year of employment by the state for each year she worked. Instead, she received only partial credit each year. Fortunately for her, Wisconsin and two other states (Minnesota and South Dakota) allow for full vesting for public teachers after only three years of employment. Using a deduction for her part-time status, Wisconsin determined her creditable service amounted to 3.07 years. Had she worked three weeks less during her last year, she would be entitled to nothing. As luck would have it, she fully vested, and is entitled to receive a monthly check from the state of Wisconsin for the rest of her life.
Like millions of fellow baby boomers, she turns 55 this year. And in Wisconsin, one can elect to draw benefits at age 55. If she retires this year and elects to take her pension, she would receive a check, once a month, for $230. She receives this check for the rest of her life, and, if she predeceases my father, he is entitled to cash the check for the rest of his life.
A meager $230 a month may not sound like much—until you consider the salary she earned when she was employed, and how long she will likely draw her pension. The average life expectancy for women in the United States is roughly 78 years. Assuming my mother has an average life span, she will collect 276 separate checks from the state of Wisconsin for her five years of part-time service. These checks, without adjusting for inflation, amount to $63,480. Of course, in reality, the checks are adjusted upward annually for inflation, so her accumulated payout will be well north of $63,480.
To put things into perspective, consider the salary she drew when she was actually employed. In her final year, she made $7,650. Wisconsin’s pension formula averages the highest three years’ salary, which for her amounted to $7,072 and $6,191. Over the course of her career as a salaried part-time teacher’s aide, she made approximately $35,000.
Thus, for five years of part time service in which she was paid a cumulative total of less than $35,000, she will collect nearly twice that if she has an average life span. She will be paid more money to be retired than she was ever paid by the state of Wisconsin when she was actually employed.
Let us not forget the other tiny detail—she has not lived in Wisconsin for over a quarter century, meaning she has not paid a dime to Wisconsin’s tax system in over 25 years. Yet, she is entitled to tens of thousands of dollars in pension benefits for her five years of part-time employment as a teacher’s aide.
Her scenario is just the beginning. It represents a tiny sliver of the enormity of the looming financial disaster. Substitute my mother’s modest salary with a superintendent of a school district, for example, who was paid over $100,000 per year, and the gravity of the situation is put into proper perspective.
Ultimately, this means the taxpayers of Wisconsin will be paying, not for services, but for retirees. If the state has not woken up to this reality yet, it will. When a 911 call goes unanswered due to lack of emergency personnel on the streets, there will be calls for reform. When public schools cram 40 students into each classroom for a below-average education in an underfunded school district, there will be calls for reform. When checks are no longer issued, there will be calls for reform.
Fortunately, there already are calls for reform. They come from Governor Scott Walker in Madison, Wisconsin. He will not change existing benefits for present retirees. But he is attempting to tackle a ticking time bomb before it explodes. Let us, in the words of our free-spending President, hope, that the Democrats in the Wisconsin Senate, who have fled the state to avoid voting on the measure, eventually get the message. They are paid to cast votes. It is time they earn their paycheck. From what I hear, the pay can be quite generous in Wisconsin.
Article printed from Big Government: http://biggovernment.com