The Columbian editorial board’s support of the legislative plan to cut public employee pensions is off-base. As a member of the State Investment Board, I can tell you this plan hurts all taxpayers for decades to come and jeopardizes long-term funding. The Senate striking amendment to the state budget and the pension bill will, in the long term, reduce the investment returns to the pension trust fund.
Capping retirement “Plan 2s” and/or withholding the $130 million payment to the “Plan 1s” or withholding contributions from any of the plans will have a direct impact on investment earnings on the funds. The kind of legislative changes proposed will force the State Investment Board to change its strategy from long-term investments to more short-term liquid investments. This will lower the investment returns to the pension trust fund.
Washington pension plans are among the top three public pension plans in the nation as reported by the Legislature’s own actuary. The investment returns were the best for public funds for the 10-year period ending June 2010.
Employers and employees should work together to identify ways to make the contributions necessary to fund all plans over the long term. Withholding employer contributions and changing benefits results in higher costs and lawsuits. Such actions are not reform.