The latest COLA outrage

Recalling that many readers were understandably appalled at the recent move by lawmakers to sweeten their own pension deal, which was already sweeter than Aunt Joy’s Cakes, I thought you might want to discuss today’s editorial.

It’s about something that is, if anything, even more outrageous than what Cindi brought to your attention several weeks back. Last week, after the embarrassing glare of publicity had caused them to drop their own pension cost-of-living increase, they killed the underlying legislation to give a COLA to state retirees just because it didn’t have their sweetener in it anymore.

Or, as we described it in today’s editorial:

IT WAS NO BIG surprise when legislative leaders tried to sneak through a generous perk for themselves on the back of an important bill to stabilize the State Retirement System and protect tens of thousands of state retirees. Sweetening up their own pension system is something lawmakers try to do periodically, and they always do it quietly.
    But what happened last week, after the House had reversed course and rejected the new legislative perk, reached a new low, at least in terms of what lawmakers have done out in the open: The Ways and Means Committee voted 13-11 to kill the underlying proposal, which guarantees 2 percent annual cost of living adjustments for state retirees. Representatives didn’t kill the bill because they thought it was a bad idea. They killed it because they weren’t going to get their perk.

Anyway, I thought I’d provide this space for y’all to discuss this…

44 thoughts on “The latest COLA outrage

  1. Wilson

    Cindi’s column was a great effort, and is exactly what was needed to stop and outrage.
    If only we had more of that. Mostly, we hear theory.
    What we really need is some muckraking. Columbia is full of phantom employees (state employees that make $80,000 and up rarely show at their offices), full of back room deals that the public never hears about, and full of waste and inefficency.
    The real stoey of how Columbia operates could be told…and people would go to jail, and be hounded from office. But no…instaed, our problems are blamed on a “system”.
    And no reform mentioned would change the system that allowed Mark Sanford to raise millions of dollars in nonprofits while supposedly being our governor. Those rules stay…so the corruption, favor trading and the rest of it will continue.

  2. Dum Spiro Spero

    All I know is that one day I want to run for office in South Carolina so that I can receive all the perks! All sarcasm is intended with this statement, as I find it absolutely ridiculous that office holders feel any obligation whatsoever to reward themselves for serving the public. In the beginning of our republic it was believed that someone shouldn’t even enter politics unless they were fully prepared not to receive any pay (a lofty precedent set by the wealthy George Washington). While this didn’t really take hold, it sets a great example against those looking to make a career out of politics. Those who make a career out of politics will ultimately have to alter their tack as the political winds blow their fragile vessel. The saddest part of a career in politics is the crucial moment in which a person alters their value set to please a fickle constituency. That is why I truly believe that career politicians cannot help but be corrupted by the altering views of the populace. That is also why I believe that the constant flow of new blood into political offices is essential to our democracy.

  3. dnd

    @ Wilson:
    You are so right!!!! As a former state employee, I marveled at some of the people in my agency who are put in those positions making that kind of money, yet there were people who actually put in a committed 40 hours a week and couldn’t break $30K even after being the “senior performers” on their jobs with 5+ years of service. I will be interesting to see if someone takes you up on that muckraking suggestion, and fun to watch the drama that ensues.

  4. Wilson

    The less a state employee makes, the more work they do. Those top earners work from beech houses, mountain houses, and other jobs etc.
    Their excuse is that they have cell phones, etc…but I say hogwash. Those with responsibility to an agency need to BE THERE…yet so many big earners do not keep written calendars nor normal office hours. If people knew how little time Mark Sanford spent in Columbia they would be shocked.
    I suspect the taxpayers would see the matter differently from the overpaid government “worker”.

  5. Bob

    Once again, the state retirees take it on the chin. You can be sure that our General Assembly will always look out for themselves before they look out for the WORKING citizens of our great state. Thanks for a place to sound off……..Another bad situation. TERI. Every time a person takes TERI, that is one less position that will require a regular worker to pay into the system.

  6. bud

    Every time a person takes TERI, that is one less position that will require a regular worker to pay into the system.
    Although everyone’s sentiments are spot-on this particular claim is not accurate. TERI employees pay the same 6.5% into the retirement system as the a regular, non-TERI worker.

  7. blueforce

    The legislators in the General Assembly need to answer their village phone calls.
    I realize that it can be very mentally challenging for a lot of them to actual “think,” but it only takes one law to repeal TERI. The employees under TERI are just waiting for their windfall after 5 years. The fellow “Frank” who is the executive director of the Budget and Control Budget got a little more than $300K at the end of his post TERI time.

  8. Bill C.

    Why doesn’t Cindi have her own blog? It appears the most popular topics you post are just cut and paste sections of her editorials… except when you toss in your weekly bashing of the governor.

  9. Mike Cakora

    Please don’t encourage Cindi to start her own blog. Her day is filled with meetings with folks, phone calls, and researching, then putting together a first-rate column. The time it takes to blog would displace these regular and essential activities.
    That’s my two cents.

  10. charles

    Is there any way to let us know how the lawmakers voted on the cola increase. My wife is a state retiree.

  11. Scott Malyerck

    Most folks are forgetting just how good a bill this is (even after taking out the legislative pension part). For the first time in 40 years we’re addressing the unfunded liability of the Retirement Systems. Yes, retirees get another 1% COLA (and more only if certain conditions are met) but it helps to finally strenghten the Retirement Systems. This bill is fair to everyone…even SC taxpayers.

  12. Lee Muller

    The only fair thing to SC taxpayers would be to abolish the entire system, privatize it, make state employees pay 100% of their own retirement, just like most taxpayers have to do.
    Elected officials should not be getting any retirement. Holding office is not a job, it is supposed to be a part-time, temporary, short-term act of citizenship.

  13. Bill C.

    Lee – The matching contribution by the state is part of our salary structure. If you want to do away with it, then I’d say the state needs to up it’s salaries to corporate America pay scale. BTW – many companies still do matching funds for employee retirement programs, this is nothing different than that.
    I agree with the elected officials part of your statement, this is a voluntary position not a permanent employment position. Elected officials need to have the same benefits as the other state short-term temporary positions.

  14. Mike Cakora

    Bill C. –
    I think that Lee may have been pointing toward going to a defined contribution plan (like a 401K) instead of a defined benefit plan (a/k/a pension); that’s what industry is doing. Under the former the individual controls / directs the investments and there’s no stinking board / legislature to muck around with the details.
    Were this state to make such a move, the size of any salary adjustment would be in part determined by the state’s contribution to the individual’s retirement fund.

  15. penultimo mcfarland

    What is it about retirement that turns people we were more likely to criticize than praise into people we think deserve a raise?
    All our lives we’re likely to wonder if government workers are actually worth what they’re being paid, because government almost always stumbles over itself, but when state workers retire, we think they should be paid better to do nothing at all?
    Have I stumbled onto a blog for state government workers, or is it that getting state workers off the job and out of our way is worth an extra one percent?
    Protect the taxpayer, I say. Private retirement doesn’t give real workers COLA adjustments. Treat retired state employees and legislators the same way.

  16. Brad Warthen

    Yeah, listen to Mike C. — Cindi is way too focused on serious bidness to blog. It would be alien to her whole oeuvre. Or idiom. Or style, or M.O. Or whatever. She’s too busy to play with words.

  17. Brad Warthen

    To put it another way — you’d never see Cindi putting together a “Top Five Movies” list. I sort of doubt that Cindi has SEEN five movies. If she has, she wouldn’t admit it. She considers all popular culture, entertainment, the arts, etc., a huge and shameful waste of valuable time.
    And she only reads blogs to the extent that I require her to do so… I can be cruel that way.

  18. Brad Warthen

    Put YET ANOTHER WAY — she’s not cool. Not by any stretch of the imagination. I mean, if you and I and some of the other cool guys were standing around doing cool stuff, she’d be the one to turn us in to the teacher…
    She would never have used a way cool simile like “sweet as Aunt Joy’s Cakes.”
    I mean, I start a blog, and BUST MY BUTT to be popular, and y’all like HER better?!?!

  19. Brad Warthen

    Speaking of cool — "Penultimo McFarland" is a pretty cool handle, even if you ARE using it as cover for just more anti-gumming pooge, negative waves and such.

    But I’ll agree with you this far. When I was editing the editorial (which I’ll reveal here was written by Cindi, but you probably already knew that), and I read this part…

    "So, for example, perk opponent Rep. Herb Kirsh notes that he already draws a $32,000 legislative pension — $8,400 more than a legislative salary. A regular state employee would have to work 55 years just to receive a pension that is equal to his old paycheck…"

    I had to say, "Huhn! If I worked 1,000 years (and I think I’m coming up on that fairly soon), I wouldn’t get a pension that was 100 percent of my pay." At least, I don’t THINK I would…

  20. Lee Muller

    The state is going to have to phase out its retirement system soon, because it is bankrupt, relative to future unfunded obligations.
    Maybe they would have to raise some salaries, maybe not. Let the market play that out. If they do have to raise salaries, at least the taxpayers are off the hook for future mismanagement mistakes. And we can reduce the number of state employees to offset the increase in salaries.
    Even the most lavish corporate defined benefit plan pays at best 65% of the average of the last 5 years’ gross wages. For the legislature, that would be maximum of $5,200 a year. Instead, they are getting SIX TIMES that amount, 400% of their salary.

  21. faustd

    No matter what state employees may say, and no matter how much they may fuss, the bottom line to me is that once they get on the state payroll very few of them ever get off.
    This is true no matter how lousy they may screech that their retirement system is. It is true no matter how poorly they claim their pay is. It is true no matter how much they may complain about their working conditions.
    From these truthes, I draw some personal conclusions. Either:
    A) The pay, retirement and benefits state employees receive aren’t as bad as whatever they believe they could earn somewhere else, because if they were, these folks would leave state employment to go somewhere else to earn what they believe they’re worth. Or,
    B) The monetary compensation may not be quite as good as what these people could make in the private sector, but that deficit is more than made up in the non-monetary compensation they receive: Perks like every single holiday known to man and the all-important job security associated with state employment.
    Either way, human beings are genearlly rational and make decisions based on the relative values of things. Assuming that state employees are making their decisions rationally, and given that not many of them ever leave state employment to work in the private sector, I don’t put much stock in their constant fussing about pay and benefits.
    I know this point is not going to be met with enthusiasm, but I assert that state employees who are unhappy with their pay and benefits should do what the rest of us have to do: Find a better paying job in the private sector. David

  22. Brad Warthen

    That was me doing the Fonz.
    What Dr. Faustus said is related to what Cindi said. She maintains that state employees mostly knew what pension benefits they would have when they started their jobs, even though, as I discovered by the most rudimentary examination, Cindi didn’t know anything about HER pension benefits.
    I disagree. When 22-year-olds start jobs, they tend to know little about pensions. Nor do they care. Even if you are in a job with 28-year retirement (which would have meant I would have retired YEARS ago), you think that’s never gonna happen when you’re in your 20s.

  23. faustd

    Dr. Faustus here. I just want to make something clear before I go make make that deal with Satan I’ve been considering:
    I think our state employees are great people who do good work and deserve to get paid fairly for what they do.
    I simply wanted to state clearly what seems obvious to me, and that is that if the conditions of state employment were horrible then state employees would opt to go do something else. Ultimately this would force taxpayers to pay more, because we’d have to make state pay and benefits attractive enough to convince people it’s worth it.
    Last time I checked, most state employees aren’t going anywhere. I’m not condemning them or casting aspersions, but they simply aren’t. That has to mean that, when compared to what these folks could earn elsewhere, state pay and benefits are at least good enough to make state employees stay put. How else can the facts be interpreted? David

  24. Wayne

    Charles, call 803-734-3144 and ask Kim to e-mail you a copy of the roll call vote of April 23 on Mr. White’s motion to adjourn debate on House Bill 4673.A yes vote was a vote against public retirees, a no vote was a vote for us. Or you can e-mail me and I’ll send you a copy.

  25. Wayne

    Mr. Muller, Please do not confuse the formula for legislators with the formula used to determine retirement benefits for regular state employees, teachers, law enforcement, and local government employees. That formula provides for a retired employee to recieve 52% of their highest three years.
    Also, several of the state’s that have gone to a defined contribution plan are now considering shelving it as being to expensive.

  26. Lee Muller

    I am not confused at all about retirement formulas. Of course the legislators, who should get no retirement at all, have their own lavish retirement system.
    But the state retirement benefits promised are much better than most of the private sector, and are not sustainable. If the system were dismantled today and everyone paid out the cash value, they would be shocked at how broke the system is.
    On the other hand, teachers, especially college teachers, have really fat retirements. The annual report of TIAA-CREF shows the median retirement account to be worth over $550,000, in addition to whatever other retirement they may have. Over 20% of teacher retirement funds exceed $1,000,000 – and this is THEIR MONEY, not the promise of some future check in the mail.
    A defined contribution plan cannot be more expensive than a bankrupt defined benefit plan, unless it is poorly set up. The plan should start off with no salary increases, then inch up only as necessary to keep and attract good state employees. As Faustus notes above, the short hours, short weeks, extensive vacations, low work load, and rampant cheating on “sick days” are big attractions for workers with low ambition.

  27. just saying

    I’m not sure I followed your comment concerning the TIAA optional retirement plan.
    Are you saying we should run all state retirement plans like the optional retirment plans (like TIAA-CREF) that college professors use (where the employee must contribute a certain % and where the state pays a slightly lower one)?
    If so… I’m kind of scared because it means we agree on something.

  28. Wayne

    Mr. Muller,
    People who know it all are rarely confused but that does not mean they are right.
    The State Retirement System is not broke nor bankrupt and the State Treasurer’s Task Force Report was designed to futher strengthen the SRS to provide COLA’s from the system’s return on investment.
    Your comments about government and public employees are generally negative if not downright hostile. Therefore I question your objectivety in recommending a wholesale change in how public retirement systems are funded and managed.
    FYI,changing to a different retirement system, ie. defined contribution,will not release the state from its legal requirement to continue responsibly managing the current system as long as there are surviving beneficiaries.
    Finally, I’m not sure you accurately quoted Dr. Faustus. It seems to me he was saying that the combination of salary and benefits are attractive to people who might prefer public service to private enterprise. He is probably right and that is probably a good thing. We can’t all be cutting edge entrepreneurs like yourself. You are a cutting edge entreprenuer aren’t you?

  29. Lee Muller

    Why do government employees have to sneer at us taxpayers? Do you think it bothers us?
    I posted facts and figures obtained from TIAA-CREF and the SC Budget and Control Board. Wayne posted no facts, and no dispute of my facts.
    Another poster, “bud”, claims he is a state government employee, looking forward to milking a lavish retirement system to which he contributed almost nothing, pulling out his entire 30 years of contributions in 4 years. Others claim that state employees don’t get enough. Who is telling the truth?
    Since many of the government jobs are patronage jobs, and many are for obsolete programs, and we have no zero-based budgeting (no budget, in fact), it is obvious that we have people on the payroll who are not performing any service to the taxpayers. If those state employees who are working will not stand up for cleaning out the freeloaders, then they can’t expect a pay increase.
    Defined benefit plans are a relic of the wage-controls of World War II. The private plans are bankrupt, and the more lavish and less-well-funded government plans certainly have to be just as broke.
    I just filed a FOIA request for what it would take to cash out all those in the SC State Retirement System. Let’s see if they management is capable of doing it, and if they will.

  30. Lee Muller

    just saying,
    I am saying that all employees, public and private, should own their own private pension accounts, annuities, etc. If the employer wants to kick in some extra, that’s fine, but it should count as income to the employee. Public employers should not contribute any extra, because they lack the incentives of private industry to control costs.
    All the way around, it is better for the employee to be paid, for him to contribute 100% of the money to his retirement, to own it and not have it attached in any way to a particular employer – just as they have been doing in Germany for decades.
    Any time the employer can offer lower wages in return for a promise of future benefits, the temptation for fraud exists, as we see with the bankrupt corporate and public pension plans. The employee loses control of his money, loses control of his job changes, etc, which is the reason management likes it. The stockholders and taxpayers lose visibility and control of the true costs.
    Look how wealthy most teachers are, off their extra contributions to TIAA-CREF. Replacing Social Security and public pensions with persons retirement accounts would make most Americans millionaires.

  31. just saying

    I agree that personal retirement plans make a lot more sense than the pension plans that aren’t actually funded by the people they support.
    A few disagreements with your other comments…
    “Public employers should not contribute any extra, because they lack the incentives of private industry to control costs.”
    I don’t think that’s entirely accurate. Its just that the share-holders (voters) for the governement don’t ever seem to demand that the board (legislature and governor) fix things up. Isn’t that the same structure as business? (Unfortunately citizens take their voting responsibility about as seriously as most share holders when the proxy notices come around).
    Unfortunately, I’ve never seen any candidate run with specific waste they wanted to cut, or with particular plans to make it so that the governement can hold their employees accountable. Unfortunately the people who seem like they should be pushing for efficiency tend to do so by pandering (tax cuts for everyone, we’ll work out the cuts later!), stupid hack and slash (it is patently absurd that every governmental agency has exactly 5% to spare), or not caring what their fellow voters want (I don’t care that 60% of you like the program, I’m going to waste my time arguing it should all be cut instead of pointing out specific places to fix it).
    “it is obvious that we have people on the payroll who are not performing any service to the taxpayer”
    Who? Name specific people. When you find them, e-mail their names to your legislators and fellow voters and post them here with why you think they aren’t doing a service.
    “him to contribute 100% of the money to his retirement,”
    People tend to be stupid (not that governments aren’t), and if we trusted people to save for their own retirements we would end up with lots of starving old people out there we’d have to pay to clean up the corpses from. I think its in the public good to compel people to put some amount of income aside for retirement. Given that it is a relatviely minor point whether it is as pay or as a benefit.

  32. Lee Muller

    “it is obvious that we have people on the payroll who are not performing any service to the taxpayer”… from the examples I cited:
    * jobs created just to provide paychecks for cronies. Examples: every agency is full of them.
    * jobs in agencies which have been obsoleted but not shut down. Examples: the ICC and FAA jobs that remained after trucking and airline regulation.
    * Until we have real budgets, which publish every job, and justify them every year, then I assume that a great many of them serve no purpose. No one can dispute me, until they justify the job.
    Pro-government types presume that all spending, taxes and jobs are justified, until proven otherwise. That is wrong.
    America was designed on the presumption that government is inherently corrupt, a necessary evil which should be restricted to necessary functions. No expenditure, tax, or job is to be created without being justified, and re-justified every year.
    We don’t have that sort of government today, which is why honest, hard-working Americans don’t like it.

  33. just saying

    “I assume that a great many of them serve no purpose”
    The assumptions of one individual hardly strike me as a good way to run the country.
    “No one can dispute me, until they justify the job:
    They don’t have to dispute you, duh. They are the status quo and you are the one wanting it changed. Although apparently not very much, because instead of actually naming particular names and saying why they should be fired you tell us what you assume.
    That’s why your complaints here are useless (well, except letting people with other political views unwind a bit after a long day), and why you’re a failure at changing things.

  34. just saying

    “We don’t have that sort of government today, which is why honest, hard-working Americans don’t like it.”
    Must suck living in a country where you think more than half of them are dishonest slackers.

  35. Lee Muller

    Your argument devolves into, “because that’s the way it is”, “the bureaucrats are in power”, “might makes right”.
    I really didn’t realize that right and wrong and honest government were irrelevant to your world view.
    I am not wanting to change things. I want to restore honest government. I don’t expect my arguments to have any effect on the indolent or dishonest members of the status quo. They have to be removed from the public trough by the force.

  36. just saying

    “I am not wanting to change things. I want to restore honest government.”
    That is a change from the status-quo, isn’t it?
    “I don’t expect my arguments to have any effect on the indolent or dishonest members of the status quo. They have to be removed from the public trough by the force.”
    Don’t most politicians like to hold up examples of how they got rid of waste? So couldn’t pointing out specific, obvious examples of waste get things moving in the direction you want?

  37. Lee Muller

    Most politicians brag to the deadbeat majority about all the money the toss their way. I see very few trying to actually reduce spending in any form. If they were, we wouldn’t have sales taxes 7 times what they were in my youth, income tax rates up 50% since 1993, and huge federal deficits in spite of $1.1 TRILLION in new revenue due to economic growth.
    How old are you and what do you do for a living?

  38. just saying

    “huge federal deficits in spite of $1.1 TRILLION in new revenue due to economic growth.”
    I certainly would like a candidate who sanely pushed for balancing the budget. (Am I misremembering Clinton trying to do that?) On the other hand, I don’t think the current top bracket is too onerous – the 50% increase is somewhat of a red herring, its the percentage points and where they are relative to history and other countries that seems to me more indicative of what is stupidly high.
    “How old are you and what do you do for a living?”
    Still in the 40ish ballpark, 40-50 hour per week servant of an ivory tower. Vote by the candidate and not the party, and have donated to those on both sides of the aisle. Moderate to conservative on the budget (want it balanced, but don’t think government is too big by that much), moderate to liberal on social issues (the state has no interest in stopping homosexuals having contracts with each other, the medical associations have said some late term abortions are never medically necessary so I’d say ban those, the death penalty wastes money and can not be shown a deterrant).

  39. Lee Muller

    Clinton never proposed or signed a balanced budget.
    I have posted the Treasury Dept links here several times to his deficits every year. The total deficits are about $1.5 TRILLION of new debt.
    In fact, Clinton vetoed several budgets because the deficits were SMALLER than he wanted, but Newt Gingrich and Phil Graham lead votes to override his vetoes.
    All the deficit spending under Bush is on new social programs. Without those huge increases, the budget would be balanced, even paying for the war on Islamofascism.
    Percentages do matter. And raw cash matters. For example, the state whines about a “budget shortfall” of $60 million, after the economy brought them a windfall of $2.3 BILLION in new revenue, which they blew on junk. The state has no budget, only spending plans.

  40. just saying

    Lee, a serious question this time. So is: (from numbers from the CBO), missing the trust fund accounts then (like social security)?
    If so, then I can see it not really being balanced (boy do I despise the way Washington balances their books). Even adding that in though, didn’t the Clinton years produce the best budget results anyway in terms of deficit?
    As far as the repubs forcing him to do it that way — I’ve always been a fan of grid lock (one has the senate the other the presidency) to stop either party from enactin all of the silliness contained in their platforms.

  41. Lee Muller

    Clinton’s huge tax increases were enough to stop running deficits, but he kept of the social spending. The only reduction in government was the military. Clinton refinanced the national debt, lowering interest costs. He was only able to do that because interest rates had been falling so under President GHW Bush. His Treasrury Secretary, Robert Rubin, actually engineered this. Rubin’s firm, Solomam Brothers, made over $1.3 billion in fees for handing it, and Rubin collected $305,000,000 in deferred income when he returned to the firm.
    Clinton’s tax increase killed the Reagan Boom and brought on a severe contraction of no growth in 1996. He went on a deficit spree, and sold off public property in a desperate effort to buy re-election. In 1998, his legislation on tech stocks backfired and brought a stock market crash, flat economy in 1999, and recession in 2000.
    The rollback of taxes in 2001 brought us out of the recession by August, just before Sept 11 attacks put a damper on for a few months. The increased revenue from the tax cuts offset the tax cuts and provided enough new money to finance the war and not have any deficits – but Democrats and liberal Republicans passed huge welfare programs.
    Now, the pending return to the Clinton tax levels in 2009, and the prospect of Obama, Hillary or McCain scares the hell out of business and Wall Street.

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