The truth about public pensions [Letter]

November 24, 2013

A recent report published by the Center for Retirement Research at Boston College belies the exaggerated storyline in the press that public employee pensions are the major expense of American cities and will lead to municipal bankruptcy if they are not reformed.

The report, authored by Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz and Mark Cafarelli, took a sample of 173 cities and included the associated contributions to state plans for school districts as well as the contributions to their own plans. What is revealing in the report's findings is that the overall pension costs borne by city residents amounted to 7.9 percent of revenue. This is a far cry from the public perception, stoked by the press and those elected officials attempting to reform public pensions, that the percentage of revenue earmarked for that purpose is close to 50 percent.

Included in the report's sample was the city of Baltimore which ranked 89th in terms of pension costs to the taxpayer and percentage of tax revenue committed to funding pension plans. Baltimore taxpayers spend 6 percent of their tax dollars on pension plans for police, firefighters, teachers and all other city employees. Just 8.5 percent of the revenue collected by the city of Baltimore is allocated to fund these same pension plans.

As compared to Baltimore, New York City taxpayers spend 12.9 percent of their tax dollars on pension plans, and 12.9 percent of their revenue is allocated to fund their plans. Many other cities spend much more than Baltimore: Chicago's figures are 17 percent and 16 percent; Providence, 12.4 percent and 12.4 percent; Philadelphia, 11.4 percent and 12.5 percent.

Baltimore City Fraternal Order of Police Lodge 3 is committed to fully funding the Fire and Police Employees Retirement System here in Baltimore. Our police officers and firefighters agreed, long before the current federal lawsuit about the city's changes to the pension plan, to increase employee contributions from 6 percent of our pay to 10 percent to assist with this endeavor. As of July 1, 2013, every Baltimore City police officer and firefighter now contributes 10 cents of every dollar he or she makes to their pension plan.

We are also committed to finding a compromise in calculating a reasonable cost of living adjustment for our retired members. This is real reform — and reform coming from police officers and firefighters who do not participate in Social Security, thereby relying on the city pension as their sole source of income.

Let's retreat from the exaggerated rhetoric and give the Baltimore City police and fire unions credit for taking the lead in reforming our own pensions. Let's be straightforward with the taxpayers of Baltimore City and remind them that 6 percent of their tax dollars are spent on public pensions — all public pensions, not just police and fire. And let's work to settle the federal lawsuit between the police and fire unions and the city of Baltimore.

Robert Cherry, Baltimore

The writer is president of Baltimore's FOP Lodge 3.

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