How Does the Wisconsin Pension Proposal Stack Up Nationally?

By Sean Cavanagh — February 23, 2011 2 min read
  • Save to favorites
  • Print

Wisconsin Gov. Scott Walker wants most public employees in his state to chip in 5.8 percent of their salaries to their pensions. Teachers in Wisconsin generally pay nothing for that benefit now.

How does that proposal compare with what public employees in other states pay?

There’s no easy answer. A recent report by the National Education Association suggests that, on the surface at least, the proposed pension contribution in Wisconsin would be in line with what public-sector employees in other states pay for retirement. The median percent of salary paid by public employees around the country is 6 percent, just a bit higher than what the Republican governor is proposing, according to a survey completed for the report, “Characteristics of Large Public Education Pension Plans.”

The amounts that employees chip in vary widely across states, from nothing to 13 percent, the NEA says. (The relevant section is Chapter 5, which begins on page 51.)

But that’s not the full story.

For instance, while the report lists state-by-state breakdowns of pensions and says what employees pay—described as the “employee rate"—in some cases, states and local school districts have agreed to cover all or a portion of the “employee” share—meaning taxpayers at some level pick up the tab. (I checked with the Pew Center on the States, which has researched state pension systems, and their staff interpret the state-by-state pension numbers in the same way.) In other words, the actual pension contribution that public employees are making may be lower than 6 percent, or whatever a state says its “employee rate” is. So by that measure, Gov. Walker’s proposal to require a 5.8 percent pension contribution may actually be asking more of public employees than what most states are.

Another complicating factor: Judging pensions by what employees are expected to contribute also doesn’t present the complete picture. The generosity of pension plans is also determined by other factors—such as the length of time it takes to get vested, and the multiplier, or formula used to calculate benefits.

Of course, Wisconsin’s teachers have indicated that they will accept the governor’s proposal to pay more for pensions, and to pay more for health care. It’s Walker’s plan to strip collective-bargaining rights that’s drawing their biggest objections.

Even so, a number of governors, including Chris Christie of New Jersey and Rick Scott of Florida, have proposed asking public employees to chip in more for their benefits. When it comes to comparing the pension systems of those states with the benefits offered by other states across the country, it would seem that the details matter a lot.

A version of this news article first appeared in the State EdWatch blog.