A new national poll released Friday finds a staggering 72 percent of Americans are worried about the cost of public pensions. And 82 percent say public employees should contribute more to their own retirement.
The Reason-Rupe national telephone poll of 1,003 adults released Friday finds the chief concern of nearly three-quarters of Americans is that their state and local governments may not be able to afford the promised pensions down the road. If the economy falls on its face again, it will be taxpayers who bear the brunt of making those promises good -- and the poll shows that possibility hasn't escaped the American people.
In fact, the poll is virtually confirmation of information in a report Florida Taxwatch gave the Legislature in 2013. A bill to reform Florida's system failed in 2014 (SB 246) and is back this year in Senate Bill 172.
According to the poll, a majority of Americans, 53 percent, believe public employees should contribute at least 50 percent of the cost of their retirement benefits. Fifty-eight percent of Americans favor setting a cap on the maximum dollar amount of annual pension payments public workers can receive during retirement, while 35 percent oppose a cap on pension payments.
All this is likely to sound familiar to Floridians -- particularly government employees -- who in recent years have heard options discussed:
In 2013 the U.S. Census Bureau reported there were 303 so-called defined-benefit plans offered to Florida state and local government employees.
Morgan McCord, spokesperson for Florida TaxWatch, told Sunshine State News on Friday that TaxWatch is currently updating its 2013 pension report. She did say the cost of public pensions continues to increase for municipal governments around Florida and the taxpayers who fund them. The benefits some cities are paying to their retired employees are so high, she said, that many of them are facing tough choices in their city budgets.
"Cities cant afford to set aside money for their pension benefit obligations and continue to provide the same quality of services without raising taxes, and increasing costs to local taxpayers," McCord said.
She explained that Florida cities have little control over skyrocketing benefit costs because of a state mandate that requires them to pay for more benefits than they can afford. A bill passed in 1999 amended Florida Statutes 175 and 185, which govern local firefighter and police officer pensions. The new law set minimum pension benefit levels that all cities now had to comply with.
This new floor significantly increased costs for Florida cities, McCord said, but it didnt stop there. Florida cities also had to use extra Insurance Premium Tax money from the state to pay for extra benefits for employees, even with an underfunded pension plan.
The U.S. Government Accountability Office says government pension plans at 80 percent funded or better are on sound footing, even if theyre expensive to maintain.Floridas municipal pensions, which by far make up the majority of the states defined-benefit plans, are much worse off.
The Leroy Collins Institute, a state-policy organization located at Florida State University, reported that only 26 percent of the states 254 municipal pensions are funded above the 80 percent threshold. More than 60 plans are less than 60 percent funded.
The Collins Institute attributed the underfunding primarily to higher pension costs and insufficient contributions.
In its 2013 report Doing it Right, the organization recommends five ways to reverse the 10-year trend of Floridas defined-benefit municipal pensions coming up short:
- Funding annual pension contributions at 100 percent, or more.
- Requiring that employees share in the cost of their pension plans.
- Limiting the size of cost-of-living adjustments.
- Limiting the ability of employees to engage in pension spiking, or artificially inflating their pay right before their retirement.
- Setting realistic assumptions as to what a pension will earn.
According to the Reason-Rupe poll, a majority of the respondents would find raising taxes or increasing costs for government services unacceptable.
When confronted with the hard choice of pension reforms or higher taxes, 81 percent of Americans say public employee contracts should be renegotiated to reduce pension benefits and current employees should contribute more to their own pensions, while 16 percent say taxes should be raised to fully fund public pensions at promised levels.
Likewise, when presented with the choice between cutting government services and pension reform, Americans choose the latter. Eight in 10 Americans favor renegotiating public employee contracts to reduce pension benefits and making current employees contribute more to their own pensions, while 15 percent favor reducing public services ranging from police and fire protection to recreation so that pensions can be maintained at current levels for past and present public employees.
Sixty-seven percent of Americans favor shifting future public employees, those who havent been hired yet, from guaranteed defined-benefit pensions to 401(k)-style retirement accounts and 59 percent of Americans favor shifting current public employees to a 401(k)-style retirement system. However, only 38 percent of Americans support transitioning current public employees from guaranteed pensions to 401(k)-style retirement accounts if it means breaking a contract with existing workers.
Ultimately, 66 percent of Americans think shifting public employees from guaranteed pensions to 401(k)-style retirement accounts is a good idea because 401(k)-style accounts give employees flexibility to take the plan with them from job to job and are less costly to taxpayers, while 29 percent say such a reform is a bad idea because benefits would not be guaranteed and would depend on how well the employees and governments saved and how the market performs.
The full Reason-Rupe poll is available online by clicking here.To see the poll top lines, click here. Its cross tabs are here. And you can find the methodology here.
For Florida TaxWatch 2013 pension reports, click here. See the LeRoy Collins Institute 2013 pension reporthere.
The public opinion survey released Friday is the latest in a series of Reason-Rupe surveys dedicated to exploring what Americans really think about government and major issues. This Reason Foundation discloses that its survey project is made possible through the financial support of the Arthur N. Rupe Foundation.
Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. Twitter: @NancyLBSmith
