IPERS defenses are ‘care tactics’

Concerns about IPERS changes stem directly from leaders’ comments, proposed legislation and a longtime goal of ideologues on the right who have become more strident.

IPERS, the Iowa Public Employees’ Retirement System, has come under attack in recent years for no substantive reason — only ideology and politics. Understandably, IPERS members, who number well over 10 percent of the population of Iowa, are concerned.

So, some folks are engaged in what might be called “care tactics,” to make sure the stakes on that issue are well-understood. People who care want good information, and are asking for it.

These efforts and concerns are being dismissed by those who claim there is no threat to IPERS. Political scare tactics indeed are part of the 2018 campaign on several issues — primarily taxes, as illustrated by the hair-on-fire ads on television that do more to distort than inform.

But it’s hard to make that case about pension concerns, which stem directly from leaders’ comments, proposed legislation and a longtime goal of ideologues on the right who have become more strident.

Those now dismissive of pension concerns point to recent campaign-season comments by Governor Kim Reynolds. Yet not so long ago Reynolds herself raised the prospect of some change in IPERS’ actual pension structure to a “defined contribution” or 401k-style structure for new employees.[1] Her predecessor, Terry Branstad, had made similar comments.[2] Legislation was proposed in 2017 in the Senate.[3] All of this remains fresh in the minds of those who are worried, as do efforts by others to undermine IPERS.

IPERS critics have promoted that riskier “defined contribution” structure, needlessly scaring Iowa taxpayers about Iowa’s secure IPERS system. The Des Moines Register has run such scare pieces, by Don Racheter of the Public Interest Institute[4] and by Gretchen Tegeler of the Taxpayers Association of Central Iowa.[5]

Neither the media nor IPERS critics have been able to explain how a separate system based on a 401k style structure — “defined contribution” — could be introduced for new employees without undermining existing and promised IPERS benefits for current members.

Contributions plus Interest investments equal Benefits plus Expenses in administration of the system— this is what is required for full funding of IPERS. If you reduce that first item, contributions, by setting new employees apart in a different plan, clearly that matters. It’s math.

In fact, it affects more than those new employees. Reducing contributions by diverting those from new employees reasonably means lower benefits — for current members!

The media and all policy makers should be asking more about this. It’s not enough to accept a “nothing to see here” argument from someone who in the recent past declared herself open to a change — especially when activists have pushed for it, and legislation has been proposed. The dismissal — not exposing it — is the “scare tactic.”

Let’s stay away from the “scare tactics,” and focus on the “care tactics.”

 

[1] Ed Tibbetts, Quad-City Times, “Reynolds says state looking at IPERS task force,” Jan. 26, 2017. https://qctimes.com/news/local/government-and-politics/reynolds-says-state-looking-at-ipers-task-force/article_bf76d410-c70b-5300-951c-ad1cb6bced3f.html

[2] William Petroski, The Des Moines Register, “IPERS cuts key target; unfunded pension liabilities up $1.3 billion,” March 24, 2017. https://www.desmoinesregister.com/story/news/politics/2017/03/24/ipers-cuts-key-target-unfunded-pension-liabilities-up-13-billion/99600866/

[3] O. Kay Henderson, RadioIowa, “Democrats accuse GOP of plotting that IPERS be dismantled,” December 11, 2017. https://www.radioiowa.com/2017/12/11/democrats-accuse-gop-of-plotting-that-ipers-be-dismantled/

[4] Don Racheter, Public Interest Intitute “Replace IPERS with defined-contribution plan,” The Des Moines Register, May 27, 2016. https://www.desmoinesregister.com/story/opinion/abetteriowa/2016/05/17/replace-ipers-defined-contribution-plan/84492576/

[5] Gretchen Tegeler, Taxpayers Association of Central Iowa, “Don’t minimize Iowa’s public pension debt,” The Des Moines Register, January 16,2018, https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2018/01/16/iowas-public-pension-debt-eclipses-other-public-debt/1035979001/; also “Public retirement systems are not ideal for young, mobile employees,” The Des Moines Register, December 8, 2016, https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2016/12/08/public-retirement-systems-not-ideal-young-mobile-employees/95148216/

 

Mike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

 

 

 

Labor Day: Celebrating what was, and what could be

This Labor Day could be the low-road benchmark for celebrations of improvements to be seen in the future, reversing current trends against working families.

As always, Labor Day is a day to celebrate Americans’ work ethic and spirit — things that hold promise for better times ahead.

But it is not a time to celebrate what has been happening in Iowa.

A look at the landscape for working families shows this Labor Day could be the low-road benchmark for celebrations of improvements to be seen a year, two years, maybe 10 years from now.

Iowa lawmakers repealed local minimum-wage increases in four counties that acted when state and federal leaders refused. Iowa’s minimum wage is a measly $7.25 an hour and has been held there for 10 1/2 years; some 400,000 workers — and their families — could gain with a raise to $12. (IPP report, 2016) Twenty-nine other states have acted, including all but two of Iowa’s neighbors.

In the middle, Iowa as usual lags the region and the nation, as IPP Senior Research Consultant Colin Gordon showed in a wage update for The State of Working Iowa.

Even at higher wage levels, Iowans are falling short. As Gordon noted:

Colin Gordon

“(T)he wage structure in Iowa is more compressed than it is nationally or in the Midwest. Low-wage workers in Iowa make about the same as low-wage workers everywhere else, but at the higher wages, Iowa workers fall further and further behind. Higher wage jobs are scarcer in Iowa than in most states. And wages in many professions — such as nursing or teaching — trail national and regional peers by wide margins.

“The key point here is not just that wages have stagnated, but they have done so over an era in which the productivity and educational attainment of Iowa workers have improved dramatically.”

If the wage levels weren’t lagging enough already, policy makers have utterly failed Iowa workers by refusing to assure that wages owed are actually paid. Wage theft — refusing to pay wages owed, or violating overtime and employee classification rules — is winked at by a state system that devotes too few resources to enforcement. Lawmakers have refused to act.

Lawmakers deliberately smacked working people with significant legislation in the last General Assembly in at least two other areas:

•   They curtailed collective bargaining rights of public employees, making it tougher for them to organize, and tougher for them to negotiate. In the arena where the state, counties, cities and schools should be leading by example on how to treat employees, the Legislature has chosen to push Iowa toward a race to the bottom. And make no mistake about the impact on the economy: Public-sector jobs are 1 in 6 of all jobs in the state.

•   They also passed legislation to erode workers’ protection and financial security long provided through Iowa’s workers’ compensation law. A study of the effects of one change, reclassifying shoulder injuries, found that the typical worker with such an injury could expect to receive 75 percent less under the new rules.

On top of these, we see the University of Iowa unilaterally acting to eliminate, or eliminate funding for, its own Labor Center that serves thousands and helps Iowans understand what rights they have in the workplace.

And we can count on a continuing assault on Iowa’s strong and accountable public employees’ retirement plans — not to help employees or actually save money, but to feed the ideological drive against public services that is illustrated in examples above. How better to damage those services than to lessen the attraction of jobs that provide them?

Celebrate Labor Day for the people who work to make our nation great. Keep in mind throughout the day that forces are trying to undermine the security of working families — and that Iowans can come together behind policies to support all.

Think of how much better that Labor Day burger off the grill will taste — in some future year — with a side of responsible minimum wage and workplace protection laws, topped off with a stronger economy that will result as more Americans prosper.

Mike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

 

Another reason to support IPERS

How bad might this identity theft case have been for retirees with their IPERS benefits in one of any number of privately managed accounts?

An estimated 103 beneficiaries of the Iowa Public Employees’ Retirement System (IPERS) were recent victims of identity theft — about 0.09 of 1 percent of all retirees receiving IPERS benefits. The system reacted quickly and transparently to support its retirees.

IPERS is cautioning all beneficiaries to make sure their October payments were made properly, and has issued new payments to those affected by this theft, in which criminals used personal information to redirect payments for a group of retirees.

All of this leaves a burning question for 2018: How bad might this have been without the IPERS system looking out for these retirees?

Put another way, what if all 115,000 of IPERS retiree beneficiaries and 350,000 IPERS members overall had been forced to private retirement plans, instead of the traditional pensions they have, as some lawmakers and hard-right activists would do with the future of IPERS?

By early news coverage, IPERS appears to have reacted very quickly to handle this security breach. IPERS had the backs of its beneficiaries, funds recovered and benefits on track to those counting on them, according to these early accounts.

It is unfortunate that this is not the emphasis of such stories. It should be. Identity attacks and threats are commonplace, and how the retiree’s account is protected is a critical issue.

Could you count on the manager of your private retirement account, such as a 401k, to respond so quickly, and with such accountability? Maybe. 

The new story about this identity theft assault on IPERS beneficiaries is one more reason — along with the positive performance of IPERS investments and retirement security offered by the program — to be putting the brakes on any attempt to rush through major changes to IPERS.

Privatization advocates make ideological arguments. In practical terms proposed changes would allow private outfits to profit unnecessarily from comparatively unaccountable management of public workers’ retirement investments, causing extra costs to employees and perhaps to the state.

So-called “reforms” have never been about making retirements more secure for those whom we as taxpayers employ to provide essential public services. This security, not private profit, is fundamental to the purpose and commitment of IPERS.

Mike Owen, executive director of the nonpartisan Iowa Policy Project

mikeowen@iowapolicyproject.org