A few weeks ago William Baldwin of Forbes Magazine wrote an article regarding the eleven states that he believes will face the most difficulty in coming years addressing public pension liabilities (Colorado is not included.) Mr. Baldwin was recently interviewed about the article (on Fox). A video clip of the interview is on YouTube:
In the interview, Mr. Baldwin recommends the pension reform proposal that was recently endorsed by Governor Corbett of Pennsylvania, i.e., reduction of the rate of future accrual of public pension benefits for current public employees. (This is a proposal made by Professor Amy Monahan of the University of Minnesota School of Law in her paper “Public Pension Plan Reform: The Legal Framework.”
Link to Monahan paper:
Mr. Baldwin is also a supporter of moving current public employees into defined benefit plans.
(The constitutionality of these pension reform proposals has been questioned; however, I believe that such pension reform proposals are clearly “less drastic” reform alternatives than breaching the fully-vested pension contracts of current retirees. Such retirees have met all statutory conditions for the receipt of their public pension benefits. They have fully performed under their public pension contracts.)
I admit that prior to listening to the interview I expected little sympathy from the Forbes staff for the plight of public pensioners in the U.S. However, Mr. Baldwin surprised by stating that accrued public pension obligations in the United States should be honored. That is, we should actually honor our contracts in the United States.
The YouTube video is quite interesting . . . here are a few quotations from his interview:
“It is not fair, and it may even be unconstitutional to take away a pension that has already been earned. That’s just theft.”
“It’s not as sharp a change (401Ks, reduction of future pension accrual rates) as taking away something that has already been earned . . . which I don’t think you can do . . . I don’t think that’s fair.” “It’s all politics.”