Solutions to New Hampshire’s Public Pension Crisis

The New Hampshire Center for Economic Policy (NHCEP) follows up February’s report on the alarming scope of New Hampshire’s Retiree Funding Crisis with realistic solutions based on reforms that are already working in other states across America.

“Last month, we showed that New Hampshire has an unfunded liability to current and future state retirees of some $13.3 billion, and that this figure will keep growing unless some significant changes are made now,” noted NHCEP president J. Scott Moody.  “The first step we recommend is an Amendment to the State Constitution to guarantee that state employees will have a fully-funded retirement system, and that politicians can no longer manipulate the management of these funds for short-term reasons.  This Amendment, similar to one passed in Maine more than a decade ago, also mandates that state retiree pension funds can never be diverted for other purposes.”

“Another key part of this Constitutional Amendment is that it specifies that the present unfunded liability must be paid down within a fixed 30-year period,” adds Chief Economist Wendy Warcholik.  “This Amendment, plus the other five steps we recommend in today’s report, will bring a professional, business-like approach to state employment, and will create a retirement system that is fair and dependable for state employees, and also transparent to the taxpayers.”

“The solutions we’re recommending today are already working in other states to avoid mass state worker layoffs, employee pension defaults or radical tax increases,” Mr. Moody continued.  “These six steps will correct current problems in New Hampshire’s state employment and retirement systems, avoid new unfunded liabilities and pay down the existing debts.”

Mr. Moody concluded: “Now that we know the problem, see the real danger to the state’s long-term economic prospects, and have workable solutions to correct decades of mismanagement and unfunded promises – we will have no excuses for our children and grandchildren if we don’t act now.”

Read this new report, with specific recommended solutions, here: http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-2-New-Hampshire-Pension-Solutions-031511.pdf

To read the February 17 NHCEP report detailing the state’s growing unfunded liability for retiree pensions and benefits, please click this link:   http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-1-New-Hampshire-Pension-Crisis-021711.pdf

Mr. J. Scott Moody and Dr. Wendy Warcholik are available for press interviews, on-air appearances and in-person presentations of this research.  If you have any questions or would like to arrange a meeting, please contact Martin Sheehan, the Director of Communications via e-mail at martinsheehan@nheconomics.org or by calling 207-650-7335.

Repeal New Hampshire’s “Evergreen” Law

The Union Leader is reporting that the Senate Public and Municipal Affairs Committee has voted 4-1 to repeal the state’s “evergreen” law (Senate Bill 1).  The evergreen law automatically extends public employee contracts regarding compensation packages in the event that the contract is allowed to expire without a new one to take effect.

The evergreen law deserves to be repealed because, first and foremost, it effectively puts the will of public employees ahead of the will of taxpayers.  Public employees work on behalf of the taxpayer not vice-versa.

Additionally, the public employee union has little incentive to come to the negotiating table if the circumstances don’t favor them.  For instance, suppose a town is facing a budget crisis and needs to cut spending.  The unions, realizing their compensation is on the block, could simply let the existing contract expire without negotiating a new one knowing the evergreen law mandates the provisions of the old contract.

This point was raised in the article:

Municipal and school officials from Bedford, North Hampton, Milford and Portsmouth testified in support of the repeal, saying it makes it difficult to get unions to negotiate new contracts, especially in difficult economic times.

Not discussed in the article, but really important, is that the repeal of the evergreen law, if enacted, would be the first small step of many big ones required to get New Hampshire’s pension crisis under control.