Welcome to the latest edition of This Week in Pensions! We have gathered the top stories about pensions and retirement security from the previous week.
Federal Job Cuts Equal State Agency Gains
Sweeping budget cuts and the elimination of nearly 60,000 federal jobs first by DOGE and then by the recently passed H.R. 1 have caused chaos for thousands of public servants. Still, according to new information from MissionSquare Research Institute, many of those job cuts led state and local governments to add 80,000 jobs in June, the largest gain of any employment sector. The research also indicated that changes to educational requirements have lessened the amount of recruitment that state and local governments have had to conduct. Over two-thirds of employers who removed education requirements reported that it resulted in more applicants, and most noted no decline in applicant quality.
The report also noted that recruiting former federal employees is an “emerging priority” in many states, and that pension benefits are a primary driver for public employees seeking a replacement job. Hank Kim, executive director of the National Conference on Public Employee Retirement Systems, noted that the stability of state pension systems also influences potential decisions by state and municipal workers.
“Coming out of the … economic crater that was the great financial crisis of 2008, … many plans, if not most, undertook actions to make public pensions more sustainable,” Kim says. “Those belt-tightening sustainability changes … have largely done their work over the last 17 years or so.”
Programs designed to transition former federal workers to state and local government careers have popped up in many states, including Maryland, where workers are being offered Alternative Certification for Effective Teacher (ACET) classes this summer to fill educator vacancies in the fall. Ethan Taylor, a Maryland resident and former federal employee, spoke about the program, saying, “I can’t speak highly enough about how organized the Montgomery College program is. This has been a huge transition.” Taylor was one of thousands of federal employees who were told to either take an early retirement buyout or risk being fired from their positions.
Many Ohio Teachers Opposed to Losing Their Representation on the STRS Board
The Ohio State Teachers Retirement System has experienced a host of controversial issues in the last three years, and lawmakers’ answer to the ongoing problems is leaving educators in the Buckeye State feeling uneasy.
Governor Mike DeWine passed a budget this year that will eliminate several critical employee-representative positions on the STRS management board. The current makeup of the board has seven elected teachers, five currently working and two retired. The makeup now will only hold two seats for active educators, and only one retiree. The four previously member-elected positions will now be chosen one each by the Governor, the state treasurer, the director of the Department of Education and Workforce, and the Speaker of the House and the Senate President, who will jointly appoint an individual.
Rudy Fichtenbaum, the former STRS Chair who was ousted for suspicion of insider dealings, said, “I believe the legislative change to the make-up of the STRS Board is totally undemocratic, a disservice to members, and will erode confidence in the system.” He went on, “There were no hearings, no opportunities for members or the public to weigh in on this legislation before it was passed.”
Public Servants in Iowa Face Job Loss in Potential Privatization of Services
Citing staff shortages, growing pharmaceutical costs, and transportation issues, the Iowa Department of Corrections announced it is exploring the option of hiring a private healthcare provider to care for inmates. Seeking to “explore future options for health care delivery and to replace the current electronic health record system,” the Department of Corrections’ chief of staff, Paul Cornelius, ensured that this is only an exploratory step, and no conclusions have been drawn.
Todd Copley, president of AFSCME Council 61, is concerned about the loss of employment for the DOC employees whose jobs are on the line. “This is a slap in the face to the public employees who’ve kept Iowa’s correctional health system running through crisis after crisis,” Copley said. “Instead of investing in the frontline workers already doing the job, the state wants to hand it off to a private contractor. That’s not a solution, it’s a mistake.”
Be sure to check back next Friday for the latest news in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.