Posted on Thursday, March 17, 2011
Call it a sign of the troubled fiscal times, when governors are pushing for steep cuts in employee wages and benefits as they seek to restore their states to fiscal health.
Whatever you call it, it amounts to a huge challenge. Many employees of cash-strapped states, such as New Jersey, California and New York, appear headed for the exits -- trying to get out while they still have pensions -- as governors pressure workers and their unions to contribute more toward their health care and retirement.
That's no surprise, considering the Center for Budget and Policy Priorities estimates that 45 states and the District of Columbia face a combined shortfall of $125 billion for fiscal 2012.
Worsening a Brain Drain
Although politics may play a role in some of these departures, they also underscore a demographic reality. According to the Center for State and Local Government Excellence, public sector workers tend to be older and more educated than their counterparts in the private sector. And growth in government employment outpaced private sector employment growth between 1992 and 2008.
The departures now are coming on top of a brain drain of state workers who were axed in budget cuts over the past few years. Another 400,000 government workers could lose their jobs this year. In Wisconsin, Gov. Scott Walker is threatening to lay off hundreds of state workers unless the legislature passes his spending plan, which includes a controversial proposal to strip employees of most of their collective bargaining rights.
In New Jersey, state worker retirements soared by 60% in 2010 as Gov. Chris Christie pressured them to pay more money toward their pension and health care costs. Bloomberg News estimates that the number of retirement applications has reached its highest level in a decade. Christie's battles with the teacher's union also have taken its toll in retirement plans: The number of teacher retirements surged 95% last year, the largest increase of any public sector group, Bloomberg reports.
A Coast-to-Coast Trend
California also saw retirements of its state workers, including teachers and bureaucrats, jump 22.6% to 30,119 in the 2009-2010 fiscal year. That represents the biggest annual gain in retirements since at least 2000, according to the California Pubic Employees' Retirement System (CalPERS), the nation's largest public pension fund. Projections for retirements for the current 2010-2011 fiscal year anticipate 31,800 retirements, according to CalPERS spokesman Bob Burton.
Nearly 13,000 New York State workers retired in 2010, up more than 60% from the previous year's 7,449 retirements. The state offered an early-retirement plan for some workers, which boosted the number, according to Eric Sumberg, press secretary for the Office of the New York State Comptroller.
That figure doesn't include New York teacher retirements. Those ranks are expected to swell this year, thanks to a separate early-retirement program for teachers, says John Cardillo, a spokesman for the New York State Teachers' Retirement System. Last year, 5,501 New York teachers retired, slightly lower than in 2009.
According to the Florida Retirement System, 11,639 of its members retired between July 1, 2009, and June 30, 2010. That compares with 10,888 retirements for the year-earlier period, says spokeswoman Lauren Engel.
Early Retirement Incentives?
The Pennsylvania State Employees' Retirement System expects 5,751 members to be added to its annuity payroll in 2011, up from 5,109 in 2010 and 3,806 in 2009. The actual number of retirees "will be highly dependent on whether any changes negotiated as part of the new employee contract provide employees with an incentive to leave earlier or stay longer than they might otherwise have planned," spokeswoman Pamela J. Hile writes in an email.
More than 4,800 Texas state workers retired last year as of August 2010, versus 3,044 for the same period a year earlier. The Employment Retirement System of Texas, which excludes teachers, expect 5,425 retirements this year, says spokeswoman Catherine Terrell.
Finally, in Illinois, officials expect 2,600 retirements in the current fiscal year, according to spokesman Tim Blair. That compares to 2,416 Illinois state worker retirements in the 2010 fiscal year and 2,046 in 2009.
Whether more public workers would leave if they could remains unclear, but the morale of government workers certainly appears to be suffering.
"Morale issues are important to think about," says Elizabeth Kellar, CEO of the Center for State and Local Government Excellence, in an interview. "It's important for the general public to know that we are beating up on the people who take care of us."
By JONATHAN BERR, DailyFinance