Try digitalPLUS for 10 days for only $0.99

Readers Respond

News Opinion Readers Respond

Md. pension shortfall: It's worse than you think

R. Dean Kenderdine's attempt ("Pension chief: Mossburg ignores reforms," Dec. 10) to argue the facts in Marta Mossburg's excellent Dec. 5 column, "Maryland's Debt Bomb," is ludicrous on the face of it. Ms. Mossburg cited the State Budget Solutions' national State Debt Study which, using two-year-old data, actually understated the pension debt.

Extrapolating from the latest full-year data for 2011 from the U.S. Census survey of public pensions, I put Maryland's unfunded pension debt at $78 billion as of this year. Results through the second quarter indicate that number may be optimistic.

From 2007 through 2011, workers "contributed" more than $2.3 billion to pensions, and those running the system blew 98 percent of it. Yet they doled out $869 million in "Other Payments" over that time.

Acknowledged pension obligations increased more than $7 billion and worst of all, while "Active" members paying in dropped about half a percent, the number of beneficiaries increased almost 12 percent. My calculations are based on the pension systems' own assumptions and performance.

When you look at reality the debt must be even worse. Officially Maryland's pension debt is estimated based on investments getting 7.75 percent a year forever. In reality that has been only 4.74 percent over the past 10 years.

The methods used by economists that Mr. Kenderdine attempts to refute are universally accepted because they eliminate the politically influenced assumptions and deceptions that let legislators and governors use pension funds as hidden loans that will not come due until long after they are out of office.

In a recent study, Boston University professor Jack M. Beermann refers to public pension "pathology" and warns that "Retirees face the risk of reduced pension payments and current employees face the risk of receiving less generous retirement benefits than the promises that they have been depending upon."

Other studies this year by economists at the Cleveland Federal Reserve Bank, Harvard Kennedy School Mossavar-Rahmani Center, Notre Dame and Maastricht universities, and The Center for Retirement Research at Boston College, confirm that without fundamental reform, public pension funds eventually will run out of money.

Maryland is a classic case of the "moral hazard" cited by pension actuaries victimizing taxpayers and government workers. Gov. Martin O'Malley's dumping of teacher pension debt on local governments this year is hard evidence that politicians know it is hopeless.

None of the "reforms" Mr. Kenderdine touts have had any significant impact on existing pension debt to date, other than possibly in Rhode Island.

Maryland taxpayers and younger government workers are going to be burdened with this debt for decades unless they force real reform now.

Frank Keegan, Baltimore

The writer is editor of State Budget Solutions.

Copyright © 2015, The Baltimore Sun
Related Content
  • Mossburg column presents a distorted picture of the pension system

    Marta Mossburg's recent column on state employee pensions cites the work of Joshua Rauh and Robert Novy-Marx to say how much more Marylanders can expect to pay to "fully fund the system" ("Shifting pension burden means higher taxes," June 5).

  • Pension chief: Mossburg ignores reforms

    In her latest column, "Maryland's debt bomb" (Dec. 5), Marta Mossburg cites a report by the State Budget Solutions that Maryland's "pension obligations to state employees are about $48.2 billion." Ms. Mossburg and other critics of defined benefit plans continue to make such erroneous assertions...

  • Killing the Red Line would be a big mistake

    Killing the Red Line would be a big mistake

    I don't know whether Gov. Larry Hogan and Transportation Secretary Peter Rahn are clueless or vindictive or both ("City leaders seek path to reverse Hogan Red Line call," June 29).

  • Sauls was a great school board chair

    Sauls was a great school board chair

    As a former city school board student member, I developed great relationships with several school board members and the board chair. I would like to join others to express my appreciation to Shanaysha Sauls for her outstanding service to our city school system ("New leadership appointments for...

  • Let's add statues, not subtract them

    Let's add statues, not subtract them

    We should not rewrite history, burn books or destroy statues. Besides those principles, Robert E. Lee was an honorable American who was forced to make an unwanted choice. However, Baltimore's Lee statute always made me uncomfortable, so I would like a change ("Status of Confederate statues to be...

  • BGE should invest in solar

    BGE should invest in solar

    Ever since we had solar panels installed on our roof, I have been following the interest in solar. We had solar installed with no initial investment on our part. We just pay for the energy used ("Maryland embraces solar power," May 21).

  • Veterans deserve nation's support

    Veterans deserve nation's support

    Every year on July 4th, we celebrate the birth of our nation taking special pride in the men and women who wear the cloth of the nation in defense of our freedom. For more than two centuries now, Americans have been called to serve and sacrifice, enduring hardships of all kinds to protect those...

  • Removing history to suit ideology: Isn't that what ISIS does?

    Removing history to suit ideology: Isn't that what ISIS does?

    As a member of the Maryland Historical Society, I am deeply dismayed at activists' calls to remove any monuments associated with the Confederate and Civil War history of Baltimore and Maryland in light of recent events in Baltimore and South Carolina — even denigrating Robert E. Lee whose name...

Comments
Loading

64°