Kai Ryssdal: As if the economics of the federal deficit weren't enough, the states now have $1 trillion problem of their own. That's the shortfall that state-run retirement systems are facing over the next 30 years. Some, including New York, where we are today, are making changes to those pension plans to fill the funding gap. Which has public workers claiming the states are breaking a trillion-dollar promise.
From the Wealth and Poverty Desk, Marketplace's David Gura reports on the changes facing one group of middle-class Americans and why benefits for public workers have become so political.
David Gura: English teacher Ray Pultinas has taught at a big high school in the Bronx for 22 years now, and he says he's got three more left.
Ray Pultinas: I'm ready to retire. Not that I'm talking about it all the time, but I'm... I feel like I've done my time.
After college, Pultinas tried acting, but that didn't work out. Teaching, he says, was a way to contribute to society. Pultinas teaches an elective class on activism, and he started a community garden at Dewitt Clinton High School. But over the years his job has changed. He's trying to teach American literature to students who are reading at five, sometimes six grade levels below where they should be, and his school is way overcrowded.
Pultinas: It's not the way high school used to be.
When Pultinas retires early at 55, he'll get what is called a defined-benefit pension -- a check in the mail every month for the rest of his life. That's what he signed up for.
Pultinas: We didn't have the expectation of getting a high salary, but we did have the expectation of having a stable job.
And a secure retirement. He makes just over $90,000 a year. He and his wife rent an apartment in a middle-class neighborhood in the Bronx. They have two kids. Still Pultinas says, in New York City, they're living paycheck to paycheck, and he's looking forward to moving somewhere with a lower cost of living.
For decades, public sector jobs, like teaching, were considered "good jobs." But they don't guarantee the kind of stability they used to. Lee Adler teaches at Cornell University's School of Industrial and Labor Relations, and he says pension reform has raised a big question.
Lee Adler: To whom should the government be responsible? To its employees? To its citizens?
The private sector began to answer that question years ago. Responsibility has shifted away from employers. These days, most workers in the private sector won't get the kind of retirement benefits Ray will. They're putting money in 401(K)s. When it comes to retirement, Adler says, public sector workers are getting a lot less sympathy.
Adler: I think average folks -- especially folks that aren't in unions, citizens that aren't in unions -- have every right to ask and wonder about this whole process.
Many state-run retirement systems have been underfunded, but Adler says New York's is not one of them. It's actually in pretty good shape. But many politicians, including New York's Democratic governor, ran on a platform of pension reform, on "fiscal responsibility."
So the debate over pension reform in New York state was political and acrimonious. It pitted lawmakers against each other -- and against unions. And high school teacher Ray Pultinas says that fight changed how public sector workers are perceived here.
Pultinas: We're looked upon as kind of people who are somehow abusing the system.
If he were starting his teaching career today, Pultinas would have to contribute more money to his retirement plan, and he'd have to retire years later.
The unions and other opponents of pension reform promise to use their influence in the next election. They argue it's not their fault states mismanaged retirement systems, and they're worried it is going to get harder for the public sector to attract top talent. And to keep it.
Bethany Weisberger teaches environmental science at Brooklyn Community Arts and Media High School. She says she got a job with the New York City Department of Education right after college.
Bethany Weisberger: Yeah, I guess I didn't expect that I would be a teacher, and I definitely didn't expect that I would still be a teacher.
In New York City, some 50 percent of teachers quit after five years. Weisberger has been teaching for nine now. She says that while good benefits aren't the only reason she's stuck with the job, it's one of them. And Weisberger says that if she stays in the profession, she deserves a pension.
Weisberger: I don't know if it's a reward, but we should support teachers, or any sort of service job. I mean, it's a public school. It's a public service.
And so for Weisberger, the debate over pension reform isn't just about the government, keeping its promises to teachers like her. It's about the value of public sector workers.
Ryssdal: David Gura's in the studio with me out here in New York City. Hey David.
Gura: Hey Kai.
Ryssdal: So you said New York state's pension fund is actually doing all right?
Gura: Yeah so the Pew Center on the States has actually crunched the data and when you look ahead 30 years, New York state is actually 101 percent funded. So much better than other states like West Virginia or Illinois, which are just over half funded. New York State's actually in pretty good shape.
Ryssdal: 101 percent, more than they need?
Gura: Right. So that's led some people to say maybe this latest round of pension reforms in New York state was more politically motivated than fiscally motivated.
Ryssdal: What was it, though, that New York did that got it to be in such a good place and other states maybe didn't?
Gura: Basically when it made promises to its workers, it made provisions in the budget to pay for them or to pay for them in the future. Other states didn't do that. You'll remember in the '90s we had some pretty good times, the markets were doing well. Many states and municipalities just stopped contributing to these plans altogether. Obviously events intervened and now they're having to pay for it.
Ryssdal: Right. What happens now then? If they haven't made the preparations and they've got hundreds of thousands of people?
Gura: Well, it varies state by state. Some states are able to make really big changes. Other states can make smaller ones, maybe raising the retirement age for new employees. This is something that states are going to be wrestling with over these next couple of years because if they don't, the situation's only going to get worse and worse, Kai.
Ryssdal: Yeah. David Gura and pension reform. David, thanks a lot.
Gura: Thanks Kai.
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