The Burden of Public Pensions on Cities and the Exaggerated Rhetoric PDF Print E-mail Written by Robert F. Cherry, Jr. Thursday, 14 November 2013 10:45 A recent report published by the Center for Retirement Research at Boston College lays bare the exaggerated story line in the press that pensions are the major expense of American cities and that if they are not reformed they will bankrupt these same cities. The report, authored by Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz and Mark Cafarelli, took a sample of 173 cities and included the associated contributions to state plans for school districts as well as the contributions to its own plans. What is revealing in the report’s findings is that the overall pension costs borne by city residents amounted to 7.9 percent of revenue. This is a far cry from the average storyline in the press, and often invoked by those elected officials attempting to reform public pensions, that the percentage of revenue earmarked for pensions is closer to 50%. Included in the report’s sample was the City of Baltimore which ranked #89 in terms of pension costs to the taxpayer and percentage of tax revenue committed to funding pension plans. Baltimore taxpayers spend 6% of their tax dollars on pension plans for police, fire, teachers, and all other city employees. 8.5% of revenue collected by Baltimore is allocated to fund these same pension plans. As compared to Baltimore, New York City taxpayers spend 12.9% of their tax dollars on pension plans and 12.9% of their revenue is allocated to fund their plans. Chicago is 17% and 16% respectively; Providence 12.4% and 12.4% respectively; Philadelphia 11.4% and 12.5% respectively; and Boston 5.4% and 5.4% respectively. Baltimore City FOP Lodge 3 is committed to fully funding the Fire and Police Employees Retirement System here in Baltimore. Our police officers and firefighters have stepped up and agreed, long before the current federal lawsuit, to increase employee contributions from 6% to 10% of our pay to assist with this endeavor. As of July 1, 2013, every Baltimore City police officer and firefighter now contributes 10 cents of every dollar he/she makes to their pension plan. We are also committed to finding a compromise in calculating a reasonable cost of living adjustment for our retired members. This is real reform - and reform coming from police officers and firefighters who do not participate in Social Security thereby relying on the city pension as their sole source of income. Let’s retreat from the exaggerated rhetoric and give the Baltimore City Police and Fire Unions credit for taking the lead in reforming our own pensions. Let’s be straightforward with the taxpayers of Baltimore City and remind them that 6% of their tax dollars are spent on public pensions - all public pensions, not just police and fire. And let’s work to settle the federal lawsuit between the FOP, IAFF and City of Baltimore. Detective Robert Cherry November 12, 2013
Posted on: Wed, 20 Nov 2013 04:07:55 +0000