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Welcome to Project: Pensions

MAY 17, 2011 Bookmark and Share

Project: Pensions has been updated as of October, 2012

We started Project: Pensions in response to the extraordinary amount of coverage public employee pensions have been receiving in recent months. Federal, State, and Local Government employee pensions and benefits are becoming such a sizeable (and rapidly growing) share of spending that nearly everyone is talking about the need for change.

Many say that public pensions and benefits are too rich. Some suggest that there needs to be a shift from defined benefit systems (where an employee is guaranteed a certain amount of money and level of benefits upon retirement) to defined contribution systems (where employees contribute money throughout their careers and receive the resulting amount -- which will vary with the market -- upon retirement).

Defined benefit plans have long ago been abandoned by the vast majority of private employers because they are unsustainable. Yet they persist in the public sector. Why? The simple answer to that is two-fold. Public employee unions have been growing in power and influence for the past 60 years and are now so entrenched in our political processes that they can practically write their own ticket.

As well, the government is immune to the profit motive that keeps private companies from granting such generous pensions and benefits. In other words, instead of declaring bankruptcy when they promise too much to their employees, they simply raise taxes or borrow more. Because they have treated tax revenue like a well that can never run dry, they have made promise after promise to our public employees without regard for the final costs.

Of course, we now realize that the well can run dry. Yet the expansive promises to public employee unions remain largely unchanged. To illustrate the fact that this is not merely a Federal problem -- or even a State problem -- we decided to create an interactive map (together with a detailed, downloadable spreadsheet) tracking the spending on public pensions and benefits in each individual county in Maryland.

To this end, the Maryland Public Policy Institute painstakingly gathered data from each of the Comprehensive Annual Financial Reports (CAFRs) released by all 24 counties in the state. These reports are not entirely uniform, so there are, unfortunately, some holes in the data. This means that the map and associated should be taken as a "conservative estimate" of the hole we have dug ourselves at the local level. While the map paints a fairly grim picture of (in)solvency, it is important to remember that it still understates the problem.

Click here to see the map and download the data.