While Wake Up, Detroit might not be what most people in Montana have in mind, there is a good chance events like that could play out in the not-too-distant future if things aren’t taken care of.
So what’s the problem?
Good question. First let’s take a look at how pensions are funded and where your tax money is going. To do this, let’s take a look at the following three pension funds:
- Teacher Retirement;
- Firefighter Retirement;
- Police Retirement.
Those three areas should be of interest to you, and you can bet they’ll be an issue in the 2015 Montana Legislative Session, and afterward. And remember, public pensions at the national level are underfunded by $1 trillion.
Yeah, I don’t like to think about it either, but they didn’t want to think about it in Detroit as well. Look how that turned out.
Teacher Retirement Costs in Montana
Now, if you divide that by the 180 days in the school year you get to $300 a day that the teacher is getting paid, and that means they’re putting in $21.45 a day into retirement, or 7.15%.
But the teacher isn’t the only person contributing to the Teacher Retirement System (TRS). Yep, you are too. Let’s break down payments and add them up:
- Teacher’s contribution of $21.45, or 7.15%
- School district taxpayers put in $22.41, or 7.47%
- State general fund taxpayers put in $7.47, or 2.49%
So the total contributions to the TRS for that day would be $51.33, with state and local taxpayers paying $28.92 of it, or 56%.
Firefighter Retirement Costs in Montana
- When a firefighter earns $200 for a day’s work he or she puts in $21.40, or 10.7%, into FURS
- Local taxpayers put in $28.72, or 14.36%
- State taxpayers put in $65.22, or 32.61%
The combined contributions to FURS by taxpayers and the employee for that day is $115.34, or 57.66%. $93.94 comes from taxpayers, or 81%.
The FURS pension system is one that’s a bit costly. The firefighter takes home $178.60, minus deductions, for the day, but taxpayers end up paying $293.94, plus benefits.
Police Retirement Costs in Montana
For that day’s earnings, $105.56 is being paid into the system, and taxpayers are footing most of the bill.
So Who Pays?
I personally don’t have any retirement savings and no system to put them in – I’m self-employed. But if I worked for a company perhaps they’d contribute some money in matching funds if I did the same. I certainly don’t expect to find a company that provides me with retirement after 25 or 30 years. Those days are gone.
Well, not if you’re working for the government. Whether it’s federal, state, or local, you know that a government job will have retirement.
Or will it? Remember that $1 trillion in underfunded pensions at the national level? Seems kind of like a ticking time bomb to me. And I’m sure Republicans would love to get ahold of these pensions – and the fact that taxpayers are largely footing the bill – and make an issue out of it.
So who wins then? I’m not sure there are any winners on this one. But I sure know what the losers look like.