Today is Election Day in cities and states across the United States. While this is considered an off-off-year election, there are still important votes happening today, some of which will have a considerable impact on public pensions. Here’s a quick overview of elections taking place today and their potential effect on retirement security for public employees.
The election with the most direct impact on public pensions is happening in Maine. State Question 4 would amend the state constitution to change the amortization period for public pension plans from ten years to twenty years. An amortization period is the amount of time a pension plan has to recoup its investment losses and get back to full funding. Ten years is a short time for a pension fund to recover its losses, especially after a major event like the Great Recession. This short time frame can make pension funding more volatile. Allowing the public pension system in Maine to get back to full funding over twenty years will make contributions more steady and reduce any strain on the state budget. You can read more about State Question 4 here and read endorsements of Question 4 here and here.
One of the most competitive races today is the one for governor of Virginia. Public pensions have not been an issue in this race; however, there has been a constant threat lurking in the background in Virginia for several years now. In 2012, Virginia moved to a hybrid defined benefit-defined contribution plan for new public employees. That change was not enough, though, for opponents of traditional pensions. Led by the retiring Speaker of the House of Delegates, a study commission has been considering whether Virginia should move to a defined contribution only retirement plan for public employees. It is likely the state will revisit this question in 2018 after the study commission releases its findings and the new governor’s voice will be a critical one in the debate.
The other gubernatorial election happening today is in New Jersey. The Garden State’s public pension problems are well-documented. After signing legislation that cut benefits for public employees, outgoing Gov. Chris Christie violated the terms of his own law and continued to underfund pensions, breaking his promise to public employees. Christie has been no friend to public employees and their pensions over the last eight years. Fortunately, Christie is term-limited and cannot run for election again. The Democratic candidate in this year’s election, Phil Murphy, is heavily favored to win the governor’s mansion. Let’s hope that he does more to shore up New Jersey’s chronically underfunded public pensions than Christie ever did.
The NPPC team will be closely monitoring the results of all of today’s elections. Check back in the days ahead for updates on today’s results.