Some people in St. Louis do not have jobs. Many more are working, but are barely making enough money to make ends meet. Others are lucky enough to have good jobs, but with little or no money set aside by their employer for retirement. For these people, talk about a pension, 401-K, or retirement fund is merely theoretical. A fortunate few have both good jobs and retirement funds set up by their employers. Yet, even these people have noticed that the stock market has eaten the value of their retirement funds by a third or more. It is a fact of life for most St. Louisans ' and most Americans - that it will take a very long time for their earned pensions and retirement funds to grow back to what they would have been without the global recession.
One exception is public employees, many of whom have guaranteed, pre-set pensions ' and many of them can retire early ' despite the fact that their pension funds lost the same amount or more than everyone else's. In most cases in the City of St. Louis, the benefits given to our employees, including pensions, are currently more generous than those in most local private sector jobs. After paying salaries, some public employees' health care costs, pension costs, paid time off and other fringe benefits currently cost taxpayers an additional 50 to 70 percent. (To see what this means for city services, imagine that standing next to each firefighter on the fire truck is an "invisible firefighter" equal to two-thirds of a salary.) And that cost will grow next year because pension costs continue to go up.
This is not a surprise. For the past three years, I have worked closely with a task force of government and private sector experts looking at pension costs.
There is no legal way - or fair reason - to change the pension system for public employees who have already retired. And that is at it should be. But, without benefit adjustments soon for current employees and major changes for future employees, almost all states, most other cities, and St. Louis will spend more money on pensions than any service. The City of St. Louis, for example, already pays more for pensions and health care for its employees than it does for trash collection, parks maintenance, road repair, traffic signals, snow plowing, public health, street lights and the operation of the Downtown Justice Center combined.
There are a few things the Board of Aldermen can do right now to address the pension costs and benefits of the City's civilian employees. But, unlike almost every other city and county in the country, the City of St. Louis does not control the level of its police and fire pension benefits. There is nothing the City can do about the rising costs of police and fire pensions without approval from the State of Missouri. That does not seem fair to City residents or to taxpayers who will have to face fewer services or higher taxes to meet the pensions' costs.
It is certainly true that the public employee pension system problems in Missouri are less acute than those in California, where statewide collapse is probably inevitable without drastic, immediate changes. But, the problems in Missouri ' and in most Missouri cities ' are still dire ' and were made more so by last year's stock market losses. It is no consolation that Missouri and its cities will not be the first states to be bankrupted by public employee fringe benefit costs, because the problems of others only tell us where we are headed.