State workers rally against bills to change retirement benefits
Several hundred public employees and retirees rallied Saturday at the state capitol, speaking out against legislative efforts to restructure the state's retirement system.
They argue that cutting pension benefits for future workers and removing a 1.5 percent 401(k) match for state and school workers would stifle recruitment and retention efforts.
But the system, which covers more than 180,000 current and former state and local government workers, has taken a beating during the recession and stock market downturn. The state pension fund's value is down by an estimated 20 percent to 30 percent.
Lawmakers say they're worried that if no cutbacks are made, state and local governments will someday have to provide overwhelmingly large sums of money each year just to pay retirement benefits.
Under several bills proposed by Sen. Dan Liljenquist, R-Bountiful, those hired after July 1, 2011 wouldn't be eligible for the current state pension plan. Liljenquist wants new employees to be put into a new retirement plan with reduced benefits.
"We're trying to make sure there's money in this system 30 years from now," Liljenquist said Saturday, underscoring that the pension plan for current employees would be unaffected.
The changes being proposed for future workers are similar to what's happened in the private sector. For years, companies have scaled back and even eliminated pension plans.
Yet public-employee groups say a state-funded pension plan is a powerful tool to recruit and retain workers who otherwise could go to the private sector and earn substantially more. The state's retirement system covers people working for state and local governments.
"We're concerned this is going to affect our ability to attract and retain good employees," said Michael Kelley of the Utah Education Association. "We're asking the Legislature to slow down and carefully consider what these changes would really do."
Teachers, firefighters, police officers and scores of other public employees expressed frustration Saturday at any possible cutbacks. While current employees and retirees wouldn't see any changes in their pension plan under any of the current proposals, state and school employees, who have 401(k) plans in addition to a state pension, could be affected in one way: Those employees could lose their 1.5 percent 401(k) match.
That proposal angers Francine Bailey of West Jordan.
"I took a job with the state at a 30 percent cut in pay because the benefits were so good," she said. Bailey, who works in technical support, has worked nearly 25 years for the state. Her husband, who is now retired, was a public employee for 14 years.
Aside from current and future workers, proposed legislation seeks to stop pension payments to retired workers rehired by state or local governments, a practice known as double-dipping. Those currently "double-dipping" would not be impacted.
"It would only affect people rehired after July 2010," Liljenquist says.
Audry Wood, executive director of the Utah Public Employees Association, said her group and other groups comprised of public employees want the Legislature to take time to study what should be done rather than taking action now.
"We need to make sure the decisions we make [about the state retirement system] are the right ones," she said.
Salt Lake City fire department captain Ryan Mellor said studying the issue during the next year would give legislators plenty of time to personally hear from state workers.
"It's our retirement," he said. "We'd like to be involved in the conversation."
Changes to the state's retirement system are scheduled to go Wednesday before the Senate Retirement and Independent Entities Standing Committee. The changes are covered in Senate Bills 94, 63, and 43.