With a deepening financial crisis spreading across the country, it’s become quite popular to target those who work in government, especially those who have served for a long time. Virtually every newscast and newspaper has some story reporting on the unreasonable and unsustainable benefits being paid to public workers.
There’s no question that states are in trouble. The vast majority of states are running major deficits and some are nearly insolvent. The obvious question is: How did we get into this mess? Although many pundits would have the public believe it’s the fault of the evil person committed to a lifetime of public service, it’s not that simple. The truth is that this is the result of several complex, coinciding events.
Public Safety as a Career
The reason many public employees, including police officers, have relatively generous retirement and benefit plans is that these packages were often necessary to attract quality applicants in a competitive job market. Remember those days when we had to commit considerable resources to recruiting teams and job fairs?
Meanwhile, the stock market was on a long run toward new highs. This meant above-average returns on the investments made by pension fund managers. Flush with cash, retirement systems increased the level of benefits and some even agreed to provide lifetime medical coverage.
One of the dirty little secrets of public safety pensions is that there’s a fundamental reason why the retirement age of police and fire personnel is lower than other government workers: We don’t live nearly as long as “normal” workers. The actuarial experts—some call them bean counters—ran the numbers and looked at the historical data. Until recently, most public safety workers died within a few short years of their retirement, meaning they were paying much more into the system than they were deriving in payouts.
Fast Forward to Today
Now, let’s take a look at what preceded our current meltdown status. The stock market took a dive, taking a huge bite out of pension funds. The country went into a prolonged recession, resulting in a significant decrease in revenues to state and local governments, thereby affecting their ability to support even basic operations. Finally, public safety employees are now living longer because of improved awareness of potential health issues and improved medical care.
Living longer is a good thing, but it’s wrought havoc on the actuarial tables. For agencies that provide lifetime medical benefits, they’ve been hit with a triple whammy. Costs of medical care have spiked dramatically; retirees are living longer; and there’s an overall increased expectation of extraordinary and expensive comprehensive medical treatment in the last few years of life.
So now what? Some departments have been forced to lay off officers and many more have frozen hiring and promotions. Some smaller departments have had to cease operation all together. Many officers are facing an uncertain future in terms of their career advancement. Most assume that pay raises will be minimal or non-existent. For those who are able to negotiate with their employers, many have had to accept pay cuts in order to save their jobs.
One of the more popular approaches in areas that have some type of contractual negotiations is a two-tiered benefit system. This is a fancy term that means the incoming employees get less than the existing employees. Be careful about going down this road, because it can have some unexpected consequences.
Short term, it looks like a pragmatic approach. Labor groups tend to agree because the decreased benefits don’t immediately affect the existing employees. However, in the longer term, agreements like this tend to fracture an organization, impact morale and decrease recruiting effectiveness. Note: Those in the lower tier will someday be in the majority and may have a different view of priorities when it comes to bargaining with their employer. In other words, the previous majority may quickly find itself the minority.
To be sure, there are daunting challenges ahead. It’s incredibly important that those in a position to make a difference in their organization—you—maintain a level of professionalism and commitment to duty that is above reproach. This is not the time to be bitter or self-righteous. It’s the time for exemplary service. Police work is not an easy occupation. Earn your money, even if you think you should be paid more. Devote yourself to the organization and people you serve. The return may not be immediate but it’s a great long-term investment.
—Dale Stockton, Editor in chief