Reforming Public Pay and Benefits

Abstract

State and local governments are grappling with huge unfunded liability costs centered on public sector pensions and other postretirement benefits (OPEBs). Payments to cover these liabilities are crowding out revenues for essential public services. The policies and practices that determine public sector pay and benefits have become a significant part of the national conversation in the United States and Europe. This article provides commentary and a summary of a book addressing this topic: Rethinking Public Sector Compensation: What Ever Happened To The Public Interest? Recent national reforms on public pay and benefits are documented as well as the subsequent legal challenges that have emerged in several jurisdictions. The article conclusion is that it is imperative that these unfunded liabilities be addressed in a timely, comprehensive and fair manner, and that public sector compensation must be sustainable and reflect the reality of a new emerging workforce. However, the outcome from current litigation in several states will either significantly expand or restrict the ability to manage these public retirement plans.