Welcome to the latest edition of This Week in Pensions! We have gathered the best stories about pensions and retirement security from the previous week. You need to know this news in the fight for a secure retirement.
The Long-Term Costs of a Shrinking Public Workforce
This week, Hank Kim, executive director and counsel for the National Conference on Public Employee Retirement Systems (NCPERS), penned a piece for Governing.com with a warning for federal and state lawmakers: efforts to “shrink” public service will be costly to taxpayers and state and local governments.
Citing the history of job cuts in both public safety and K-12 education following the Great Recession, Kim details how the erosion of the public workforce can actually increase costs in unexpected ways. For instance, with fewer workers actively contributing to a state pension system, taxpayers would have to make up for the lost revenue so the system could meet its obligations.
Additionally, the nearly $400 billion in annual benefits paid to pensioners goes right back into local economies. “When taking into account the impact of pension retiree spending and investment of pension assets, an analysis of 2023 data by our organization found that every dollar taxpayers contribute to state and local pensions supports an additional $13.40 in total economic output,” Kim wrote.
Federal Slashes Affect Alaska’s Efficiency
In an address to the Alaska Legislature this week, Senator Lisa Murkowski described the current presidential administration’s sweeping terminations of federal jobs as “indiscriminate” and “traumatizing.” In Alaska, federal workers, including fishery biologists, land managers, and meteorologists were fired until a federal judge reinstated them. The Department of Governmental Efficiency is also withholding over $1 billion in federal funding from the state, causing disruptions to critical renewable energy programs.
“Firings are being made regardless of performance, and with little understanding of the function and the value of each position,” Murkowski said. “So at any human level, they’re traumatizing people, and they’re leaving holes in our communities.” Murkowski also mentioned that imposed tariffs on China and Canada will affect the state’s logging industry and increase the cost of living.
Alaska is already struggling with faltering public services as the public sector vacancy rate continues to climb, and the disintegration of federal services could place an even heavier burden on residents. There are currently two bills in the Alaska Legislature designed to restore defined benefit pensions for public employees, which will aid in easing the public service crisis.
Ohio Teachers’ Pension System Board Could Lose Voting Power
Ohio lawmakers are considering how to restore order to the State Teachers Retirement System of Ohio (STRS) after a tumultuous year that included unexpected board resignations, lawsuits, and alleged corruption and mismanagement.
In May 2024, Ohio Attorney General David Yost filed a lawsuit against STRS to remove two board members. The lawsuit came after infighting over investment strategies and fierce advocacy for a cost-of-living adjustment sent the STRS board into chaos.
Now, Senate Education Chair Andrew Brenner says it’s time to act before the $100 billion system becomes more vulnerable. “The last thing we need to do is put those funds in severe jeopardy,” Brenner said. “I would propose, probably, to have at least a bipartisan study committee of the General Assembly take a look at it… And come back with recommendations for improvements. If it’s done in an open, public, transparent process, I think that’s a process that if everybody can see it, they understand it, then I think they would be a little more comfortable with whatever the results are, the recommendations are, in the end.”
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.