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One town shows how it's done. Reducing the cost of govt.

by James Denison / December 23, 2010 11:44 PM PST

Sad for those who lose out, but reality bites. Those on the public dole must remember that in the end it's always the people aka taxpayers who must pick up the bill, or cut the cost. I'm all for the concept that if you don't have the money, you don't spend the money.


LINK

PRICHARD, Ala. - This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

The situation in Prichard is extremely unusual - the city has sought bankruptcy protection twice - but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money. (more...)

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Pension plans may need to be modified
by Roger NC / December 24, 2010 12:08 AM PST

perhaps eliminated, but in this case it should have been done years ago and gradually.

I don't agree with cuts in what you were promised for years AFTER you retire, or the immediate months before.

Any changes in pensions payouts should be decided and announced years before they affect anyone. And definitely not after you retire basing your decision on what you were promised as a part of your job compensation. While most of them may not be able to, if the city is going to cut a pension they retired under, they should be offered their jobs back. How is the city going to pay for that?

Once again, it's not facing the facts of the future that is the problem. No one had the will to say a decade ago we're going to cut pensions over the next few years or raise taxes now. Why, because it's political suicide because those same taxpayers that you mention paying the bill don't want to hear the truth either.

Roger

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I think a lot of things at work in this
by James Denison / December 24, 2010 12:27 AM PST

Resentments by those currently in power in having to adjust their pensions below what others were promised prior to them. Towns people who saw well paid govt employees living better than they did. Often in small towns the best jobs are those on the public dole and townsfolk often resent that too. Toss into the fray that those retired in recent years are the very ones responsible for letting the pension situation develop, so probably a lot of feeling they screwed themselves over, so why should we take the fall for them on it? When it's a choice between those working getting paid or the work not being done, and those retired, guess who will usually win out. What are they going to threaten, that they might strike? Only workers can strike, retirees can't do anything much other than sue and spend years in court. So, immediate coverage of workers is of paramount importance. I see the failure of the pension plan having a large part of the blame on those now retired, since this didn't happen overnight but was building over years of failure to secure the fund properly against the future.

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As far as those retired that
by Roger NC / December 24, 2010 4:54 AM PST

helped put their own plans in place with no regard to the viability or future of the community, your points may have validity.

After-all, many if not most of us don't agree with the heads of companies recently walking away with no penalty with all the failures and bailouts that are argued to be the results of bad management by those same guys.

However, if someone works 20 years or more and plans his/her retirement finances on what is promised by others, how can you argue to take away the very foundation of their financial planning to support themselves?

If promises are extravagant, then the problem still lies in both the managers who made them and the people that were suppose to watch the managers, doesn't it?

You're talking about a group retired having a better retirement than those working now will expect causing resentment. I'm sure it does. But the article wasn't even talking about readjustments, it was a cut off completely of funds.

Tell me, if everyone retired in the US was barred from all SS payments, company retirement payments, military retirement payments, etc, and only had what they had saved personally in personal accounts, what do you think the results would be?

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What would the result be?
by Steven Haninger / December 24, 2010 7:13 AM PST

Minimally, a lot of evictions in Washington D.C. and maybe of the bodily type.

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I got curious
by James Denison / December 25, 2010 12:49 PM PST

So went looking for info on the town. Sounds like it turned into a little Detroit.

http://en.wikipedia.org/wiki/Prichard,_Alabama

Following the Civil Rights Movement however, Prichard's rigid system of segregation collapsed, and many blacks who had previously lived in the Bullshead/Neely/Trinity Gardens area of Prichard began moving into East Prichard (downtown Prichard) causing a dramatic white flight to occur.

In 1960, Prichard recorded a population of 47,371. In 1970, the population had decreased to 41,000 and by 1990 it had decreased to approximately 34,000. In 1970, Vigor High School on Wilson Avenue, which had been Prichard's white high school during segregation was 70% white, by 1980, it was 80% black, even considering the fact that most of Prichard's remaining white areas were in its district.

The racial makeup of the city was 84.53% Black or African American, 14.18% White, 0.30% Native American, 0.12% Asian, 0.02% Pacific Islander, 0.07% from other races, and 0.79% from two or more races. 0.57% of the population were Hispanic or Latino of any race.

There were 9,841 households out of which 36.3% had children under the age of 18 living with them, 32.8% were married couples living together, 36.0% had a female householder with no husband present, and 26.1% were non-families.

http://www.thecityofprichard.org/cityfacts.html#population

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