Curmudgeon's Corner

cur-mud-geon: anyone who hates hypocrisy and pretense and has the temerity to say so; anyone with the habit of pointing out unpleasant facts in an engaging and humorous manner

Ticking Bombs: Unfunded Liabilities

Political, Quality of Life, Taxes

The Wisconsin Policy Research Institute released a report that was published in the morning Journal Sentinel.  It detailed the existing promises made to the Milwaukee Public School's teachers for health benefits following their retirement.  The total of those unfunded commitments is expected to be some $5 BILLION by 2016.  For just the Milwaukee school system.  Imagine the magnitude of all these promises if aggregated.

My intent is not to denigrate the MPS Board for making these promises but to point to all the "ticking bombs" to be found across the state and nation of a similar nature.  These future obligations are real and they are coming due.  The retirement deals in Milwaukee County could easily pale by comparison to all the debt that has been and is being accumulated for the promises made over the years.

Not all of these deals were of the "back room" nature of the retirement deals cut in Milwaukee, but they are nonetheless going to have a significant impact on taxpayers.

If the promises have been and are continuing to be funded on an annual basis and if the assumptions being used pass the "sniff' test, that is one thing.  But what about the potential if the promises aren't being adequately funded?  What if the economy continues to lurch along for another two or three years or longer as some believe will be the case?

Every public entity that has made promises of future benefits (health, retirement, long-term care and so on) ought to be carefully examined by those who understand these promises and their implications.  The results need to be well-communicated to the public, and any underfunding needs to be addressed on a regular periodic basis to assure there will be no unpleasant surprise a few years from now.

As these audits/reviews are being done, there ought to also be a moratorium imposed on any such additional promises being included in bargaining agreements or other similar arrangements until the full impact of the already existing promises are thoroughly understood.

There was a time when health care costs weren't doubling every five to seven years.  There was a time when pension benefits were defined but that is almost extinct today.  There was a time when the public sector jobs were not as great a portion of all employment but that has change markedly.  What used to work isn't going to continue to work because we simply cannot afford to make it work.

We have become like the person who is addicted but denies the addiction.  We need something of a twelve step program to come to the aid of taxpayers; the people whom we have elected or who have been appointed too often prove they are addicted to our money.  They write checks on our account that we can't cash.

These reviews need to be conducted at all levels of government and across all public institutions and programs that rely upon taxpayer funding.

How many more ticking bombs are lying out there waiting to blow up in our faces?

It shouldn't have taken the Wisconsin Policy Research Institute to provide this information, but it did.  Now we need to demand such reviews at all levels and we need those to go forward immediately.  If such studies have been made by accredited actuarial organizations in the past two or three years, those studies need to be made public; if those studies haven't been performed within the past three years, they must be initiated immediately and those results made known as soon as findings are presented.

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The Curmudgeon Blog today is titled "Chicago-style Hardball".

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