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Reform Washington state's pension system to help state close its budget gap
Washington state must reform its overly generous pension system. The Seattle Times editorial board favors pension reform of the type proposed by state Sen. Joseph Zarelli.
Seattle Times Editorial
IN the work to balance the state budget, short-term gains are nice, but the long term is critical. One of the most fruitful areas for saving money long term is public-employee pensions. This cannot mean taking away a benefit already promised, which is illegal. Surely it will mean changing what is promised to new employees.
An example is Senate Bill 6378, sponsored by Sen. Joseph Zarelli, R-Ridgefield. Under the bill, new state employees would no longer get a full pension at 62 after 30 years service or an 80 percent pension at age 55 — a benefit light-years away from what most private-sector workers have.
Instead, they would get the standard deal, which is still quite good: a full pension at 65 or a 72 percent pension at age 62.
The more generous formulas have been in effect only four years. The Legislature put them in as a kind of consolation prize for employees having to give up an even richer benefit, called gainsharing. The state couldn't afford gainsharing, but it will not easily afford these gilded early retirements, either.
The bill also includes the closure to new members of Plan 2 pensions for teachers (TERS), classified school employees (SERS) and state, county and some city workers (PERS). Plan 2 pensions are the traditional kind, in which the employee earns a monthly benefit. Instead, employees would join Plan 3 pensions, which have a monthly benefit of half as much, plus a 401(k)-type investment account.
Both of these changes will save the state money in the long run — particularly the change in the formulas for early retirement. Neither saves money right away. To gain support for the long-term benefit, Zarelli has added a candy bar to the bill. The state would get to skip one payment, estimated at $130 million, into the Plan 1 pensions.
It's sad that legislators need such financial junk food in order to vote for a reasonable bill. Still it remains a reasonable bill, and of just the sort the Legislature needs right now: a bill that addresses the long term.