Wednesday, May 26, 2010

Public Employee Benefits? "That's where the money is."

The Center for Michigan article Special Report: Public worker benefits under scrutiny puts the issue of controlling the cost of public sector employee retirees’ health care costs in perspective. Unfortunately, any effort to deal with this gargantuan cost is labeled as “unfair” and “anti-people”.

“Why the clamor over health benefits for people once they’re no longer in the workforce?

Money. And lots of it.

The cost of pension benefits is astronomical for both the private and public sectors. . . .

Health (including dental and vision) benefits cost the Michigan Public School Employees Retirement System $795 million in fiscal year 2009, a 70 percent increase since the start of the decade.

At that rate, longtime Michigan education leader Tom White isn't far off when he says anticipated retiree health care costs for school employees could total $15 billion in the next 20 years.
And that's just for retirees. That doesn't cover medical expenses for current staffers, let alone pensions.

Total retiree expenses (including health care and pensions) is expected to comprise nearly 20 percent of school districts' payrolls next year, White says.”

This issue is similar to the question Willie Sutton, the famous bank robber was asked, “Why do you rob banks?”, and he replied, “That’s where the money is.”

Public employee wages and benefits make up the vast majority of government expense. Why look here for savings? Well, “That’s where the money is.” Couple that with the fact that public employee benefit costs far exceed the cost of comparable private sector employees.

Legislators serious about balancing the state budget do not look here because they do not like state employees or public school employees. On the contrary, they see them as providing essential public services.

The issue is not whether we like them; the issue is whether the costs have gotten out of control. When Michigan was a rich state, we could afford them. Now that we rank 37th among the states in per capita income, we no longer are a rich state, and we simply can’t afford them any longer.

I am sorry if this offends the public sector unions and their members. Many are my friends, teachers who I have seen work very hard to give their students the same opportunities that lifted me out of poverty. Many dug into their own pockets to provide extra classroom supplies. As individuals, I love the teachers. Collectively, however, through their unions, public employees are trying to protect the past, rather than look to the future our state could have.

Adopting the Michigan Turnaround Plan, or at least most of its provisions, can make Michigan a Top Ten state again. But, we must let go of the past and reposition the state to seize the opportunities the future will bring.

We can do it!

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