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Reality Check: Public Employees' Contributions To Pensions

Published On: Feb 28 2011 08:05:36 AM CST
Updated On: Feb 28 2011 10:43:45 AM CST
MADISON, Wis. -

WISC-TV and Channel 3000 have received a number of e-mails from viewers about an article circulating online that claims state workers pay 100 percent into their pensions, while Gov. Scott Walker and others say they pay nothing.

The issue centers on a question: For workers who are provided a pension and a health care plan by their employers, is the money employers pay in on workers' behalf the workers' money?

In a report on Tax.com, writer David Cay Johnston makes the argument that "out of every dollar that funds Wisconsin's pension and health insurance plans for state workers, 100 cents comes from state workers."

Why?

"Because the contributions consist of money that employees chose to take as deferred wages rather than immediately in cash," Johnston writes.

The governor has been arguing that state workers contribute nothing, at the envy of private employees.

"(Private employees) are looking at this and saying, 'I'd love this. I would love to pay 12.6 percent. I would love to have a pension where my employer pays half of it.' It's a total disconnect," Walker said.

WISC-TV found this needs clarification.

First, all of the money paid to most state workers is taxpayer money, whether it is their salaries or fringe benefits, so it is inaccurate to say that any of the money is "coming from state workers," although they are taxpayers, as well.

Whether this is deferred compensation is a little trickier.

According Wisconsin Employment Relations Commission General Counsel Peter Davis, many years ago, workers may have bargained to take less in salary to have the state contribute to their pension plan, but that doesn't mean that the amount contributed now by the state is any less taxpayer money.

Johnston argues that a correct way to describe the governor's plan is that Walker "wants to further reduce the cash wages state workers take home in their paychecks."

This is true. But Walker wants to get this savings by requiring employees to contribute more of that paycheck to a pension the state covers.

The bottom line is that it's inaccurate to say that employees "contribute nothing" toward pension, because that contribution is part of their overall compensation package provided by the state.

But it is also inaccurate to say that employees "contribute 100 percent" toward their pension, because that money is taxpayer money and part of a compensation package that could be bargained or, in this case, taken away.

If people have a question they'd like "Reality Check" to look into, they can e-mail it to tips@channel3000.com.

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