Groups: Wisconsin Pension Plan Healthy, but Health Insurance Funding Needs Altering
Two outside groups made their case this week in both Madison and Milwaukee, that the state should make changes in a couple programs.
According to a review by the conservative-leaning National Center for Policy Analysis and MacIver Institute for Public Policy, Wisconsin's pension system is among the best-funded in the nation. John Graham is a senior fellow with the center.
“Well in Wisconsin, because of the way it’s operated the funding ratio is 100 percent, which means that Wisconsinites can be as confident as any human being can be in any human system that the obligations to the retirees and to the workers are going to be satisfied and that there won’t be any unpleasant surprises in future years,” Graham says.
Graham says a lot of other places, can’t say the same.
“I came from California where municipalities are going bankrupt because of their public employee pensions,” Graham says.
While Graham applauds Wisconsin’s job managing its pension system, he insists the retirement age of 55 is too low. Last year, a Republican legislator circulated a bill to boost the retirement age for state employees under 40, but it did not advance.
A bigger change Graham recommends is in Wisconsin’s health insurance program for state workers. Many continue using it in retirement.
“One of the things that is problematic is that it is a pay-as-you-go system. So people who are working in the public sector now, the premiums that they’re paying for health care are actually going right into - they’re not paying for their retiree health care benefits, they’re paying for people who are already retired health care benefits,” Graham says.
Graham says the state should expect a shortfall of $953 million, over the next 30 years.
The problem of funding health care for retirees is not unique to Wisconsin, according to Sheila Weinberg. She is CEO of Truth in Accounting. It’s a nonprofit organization that aims to help people better understand government finances. Weinberg says a better system would involve more discipline on the part of states.
“As the employee is working, it would be kind of like if you’re going to retire and you want to have $100,000 when you retire to cover your medical benefits you should put a little bit away every single year, and that’s what the state’s should be doing also,” Weinberg says.
Weinberg says the states have amassed $584 billion in unfunded liabilities for public workers and retirees.