Governor Scott Walker of Wisconsin could not have foreseen how his Budget Reform Bill may backfire and contribute to larger pension liabilities. A structural issue that causes increased pension liabilities and deficits for states is early retirement of state and local employees. The Wall Street Journal article published today, “Public Employees Rush to Retire,” plays it off as government savings and only a loss of expertise in state employees. This is not the case.
A significant reform of Gov. Walker’s budget bill was an increase in employee contribution toward their pension and benefits. The notable increase in state employees applying for retirement in Wisconsin negates a primary cost-saving measure of the bill. From “Public Employees Rush to Retire”: