State Workers Face Cuts, But Say 'Don't Blame Us'
share this story
NEWARK, New Jersey (Daniel Trotta and Edith Honan) - When a New Jersey family with an autistic child walks into the state office seeking help, Norlande Perpignan is often the first person they see.
A clerk making $41,082 a year at the Division of Developmental Disabilities, Perpignan, 40, is also on the front lines of a national debate about public spending, taxes and a fiscal crisis facing local governments.
With the sluggish economy constricting tax revenue, many states, counties and local governments are fiscally distressed, adding unprecedented volatility to the traditionally safe, $2.8 trillion municipal bond market.
New Jersey Governor Chris Christie has called the state's long-term pension obligations "fairy tale promises" that are unsustainable," saying the state's unfunded pension liabilities -- $46 billion and growing -- threaten the system with collapse.
As a result, state worker benefits are being targeted by budget-cutting politicians and resentful taxpayers whose defined benefit pensions disappeared a generation ago and whose retirement savings shrank in the financial crisis.
But state workers of modest means are asking why they are being asked to pay for the mistakes of Wall Street, which inflated the bubble with easy credit and big bets on risky mortgages and then got bailed out with hundreds of billions of dollars in taxpayer money after the crash of 2008.
"There's more stress because you don't know when they're going to call you in and give you a pink slip (dismissal notice)," said Perpignan, a single mother and 20-year employee suddenly faced with reduced benefits. "I'm always stressed, wondering if 20 years means anything to them. I have a child in college plus two other kids."
Christie, whose aggressive budget-cutting has made him a national star in the Republican Party, wants to help balance the budget by paring the benefits of employees like Perpignan.
Without reform, New Jersey's unfunded pension liabilities would grow to $181 billion in 30 years, he says.
PENSION POLITICS
Under Christie's plan, Perpignan would pay an extra $5,700 a year in contributions toward her pension and health care benefits -- another 14 percent of her pretax salary -- on top of the $2,875 she pays now.
In addition, she would have to work another 10 years before retiring -- at age 65 instead of 55 -- and would collect a $15,800 annual pension, nearly $3,000 less than what she has been promised since she was hired 20 years ago.
Public sector workers recognize that they often have more secure retirement plans than their private sector counterparts and reputations as lazy underperformers who have been rewarded by politicians courting favor with public-sector unions.
They may suffer from association with cases of politicians collecting generous pensions despite being convicted of crimes.
Some of them are fighting back.
"Even if you are at your worst, you have to try your best, because there are families coming in, and there's nothing else you can do but be your best and greet them with dignity," Perpignan said.
A DEAL IS A DEAL
Many pensioners who retired under one set of rules are now facing reductions years after they stopped working. Their unions typically negotiated more modest salary packages in exchange for better retirement benefits.
"It's ridiculous the way they're attacking the pensions," said Dennis Ahern, 69, a retired New York City transit police officer who had a gun pulled on him twice and lost seven friends who were killed on the job. "They have us on the beach of Bermuda because we have a pension. No. You're paying your bills. I live modestly. I can buy a Hyundai."
In 21 years on the job, Ahern said he never made more than $36,000 a year and retired in 1987. He collects a pension of $26,000 a year plus a variable supplement that amounted to $12,000 last year. Mayor Michael Bloomberg wants to eliminate that supplement.
"That isn't fair. That wasn't the agreement. It wasn't a bonus. We paid for it. It was negotiated. It's fair and square," Ahern said.
Christie last year skipped a $3 billion payment to the fund, meaning the contribution will have to be made up in the future or asset prices will have to rise dramatically for the fund to meet future obligations to pensioners.
Critics fault a series of governors who chose not to make employer contributions.
"What really is at issue here is an ideological theory that says that the individual should take care of his retirement economic security and any pooling of resources into a pension fund is ideologically unacceptable," said Denis Hughes, president of the New York State AFL-CIO and a former chairman of the Federal Reserve Bank of New York's board of directors.
"Private sector employees had defined benefit pension funds for many years and they suffered the same problem that the public sector has now, where employers didn't fund them."
(Additional reporting by Joan Gralla; Editing by Eric Walsh)
Copyright 2010 Thomson Reuters. Click for Restrictions.
Loading comments… 
First Posted: 02/17/11 08:43 AM ET Updated: 05/25/11 07:35 PM ET