From the “Be careful what you wish for” department

The state wants to reduce its workforce as part of the cost savings needed to balance the budget. But what it saves now it may pay for later.

Ann Fuelberg, executive director of the Employees Retirement System of Texas, warned lawmakers on Monday that they must consider how their decisions to trim the state’s workforce next year could ripple through the pension fund.

Some 18,000 state employees — 13 percent of the workforce — are already eligible for retirement, Fuelberg said.

And they might choose to retire en masse if lawmakers institute employee furloughs, significantly increase health care costs or provide some retirement incentive.

“They’re going to do what is in their best interest,” Fuelberg said.

Those policy changes might reduce payroll costs in the short-term as the state grapples with a looming shortfall of $24 billion or more. But they would have a “double negative” impact on the pension fund because there would a resulting spike in new retirees and a drop in contributions to the fund, Fuelberg explained.

I don’t know how much this is going to bother anybody in our Republican leadership. They have amply demonstrated that they don’t really care about how much their actions will cost later as long as it achieves their short term goals. But at least we can say we were warned.

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6 Responses to From the “Be careful what you wish for” department

  1. John says:

    So a union is trying to threaten everyone with doomsday scenarios, should we all run for the hills?? Everyone knows pensions are a joke and can never meet their obligations, the COH’s 3 are $5B underfunded. So all of these people might retire this year but even if they did not then I am sure they would in the coming years.

    Kuff, what do you suggest as the alternative? The Annise Parker version of sticking your head in the sand? They basically passed a “balanced” budget in the summer that included theoretical cost savings. No specifics just saying they were going to cut costs, 4 months into things and nothing has been done.

    http://abclocal.go.com/ktrk/story?section=news%2Flocal&id=7772248

    I say do the layoffs and call the union’s bluff. What say you Kuff? Care to defend the COH and all of those cost savings measures we have yet to see?

  2. John, what I’ve been saying all along is that we cannot balance the budget on cuts alone, and that until we address the structural deficit caused by the 2006 property tax cut, we’re not being serious about the budget.

  3. John says:

    So do agree with the cuts/layoffs at all? I definitely think we probably need a combination of the two. My point was at least the people in Austin are doing 1 of the 2. While the COH is 0 for 2 and yet you are giving Parker a pass and criticizing the folks in Austin. In full disclosure I did not vote for Perry so I am definitely not a fan of his. I look at it as something better than nothing, and Parker is choosing to stick her head in the sand and has zero plan to fix the COH

    It is like Accounting 101 when you had the “plug” account to make A and L balance. Seems that is what the COH did to come up with their balanced budget. While like it or not the folks in Austin are at least going to put hard numbers to work to balance their budget

  4. First, I think our state government is already pretty lean. Second, what will be cut isn’t fat or waste or whatever you want to call it but services that people who have very little depend on. Third, all that the Republicans are talking about is cuts. Fourth, to address a point you made in your first comment, it wasn’t a union person warning about an overabundance of retirements, it was the executive director of the Employees Retirement System of Texas. Fifth, I have been saying that the city’s property tax rate cuts, just like the county’s, were shortsighted and need to be rethought:

    http://offthekuff.com/wp/?p=32656

    Finally, I guarantee you that the state will engage in all kinds of accounting tricks to “balance” the budget, which is really just a fiction created by the fiscal calendar. See http://offthekuff.com/wp/?p=27941 for more.

  5. John says:

    Fair points, but unfortunately most politicians carry about is being elected again so no Republican can mention tax/fee increases. It has to be all cuts. I don’t agree with the state being lean, you walk around some of those offices in Austin (I have been to ERS just off MLK) and there seem to be a lot of employees doing I am not quite sure what. Plus a lot of extra/empty office space.

    Just not sure why in all of this you are so blind/unable to criticize the fact that Parker has done absolutely nothing on the COH budget. The COH could fire 15% of their employees and see zero reduction in what services they provide, go to the Annex one day (esp Mayor Pro Tem’s office) where you have multiple assistants reading facebook and magazines.

  6. Jeb says:

    ERS is the state pension and benefits system. Not a union.

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