The Daily Citizen
From California to Michigan cities and counties are facing bankruptcy, and the rising cost of paying for their retired employees is usually a major factor.
The sad fact is that state and local pension funds have trillions in unfunded liabilities, liabilities that continue to grow. It’s easier for politicians to agree to gold-plated retirement schemes for government workers than it is to find the money to pay for those plans.
Fortunately, local leaders have proven to be more prudent.
Whitfield County’s pension plan is 100 percent funded. The city of Dalton’s plan is funded at 66.3 percent. That’s not ideal, as city leaders admit. But it’s far above the level many governments are at.
And the City Council took a major step towards getting its pension costs under control 12 years ago. It closed the pension to new hires in 2002. Everyone hired since then has a “defined contribution” plan, similar to the 401(k) plans many businesses provide to their employees.
Many state and local governments are now looking at doing what Dalton did long ago and closing their pensions to new employees. But they are doing so under financial duress, because their finances have become unsustainable and they have few other options.
Dalton made its move well ahead of the curve. And that means the city isn’t accruing any new liabilities for taxpayers to bear.