March 15, 2016, 11:00 am
Open the books on federal pensions
By Adam Andrzejewski
What has a three-quarter billion-dollar unfunded liability, is manually calculated on paper inside a Pennsylvania mountain, and costs taxpayers more money annually than the entire state budget of Florida? Answer: Federal employee pensions.
It’s national Sunshine Week across America. During this week, good-government groups advocate for open government and transparency in public spending. One area that remains hidden is federal pensions.
Imagine if you could see how much your former congressman makes in federal retirement pension? Just how many years were ‘worked?’ How much money was paid-in? How much did taxpayers finance? And, once retired, just how quickly did the congressman ‘break-even’ on their own contributions?
Even Illinois – where the state’s #1 manufactured product is corruption – has the courtesy to show taxpayers all of the gory details about pensions. The books are open on all 700,000 public retirees at every level of government.
In Illinois, this transparency has been instrumental in identifying pension abuses. For example, our organization OpenTheBooks.com found that a pair of Illinois union lobbyists who substitute taught for just one day in the public school system actually received their $1 million lifetime ‘teacher’ pensions. This happened despite a state law expressly designed to stop them. In another case, a former chief aide to previous Gov. Pat Quinn (D) was receiving an annual pension of $137,000 per year rather than the proper $20,000. A good-government pension hawk exposed the mistake and stopped the over-payments.
Many other states have public pension transparency. Citizen outrage in California drove lawmakers to pass a state law curbing a $545,000 pension to a city manager in Vernon (population 102). Now, that manager is retired on $115,000 per year – an 80 percent reduction.
Inside the cavernous, windowless, Cold War era federal complex in Pennsylvania, what mistakes has the U.S. government made while hand-calculating retirement pensions? Nobody has a clue, because the Obama administration has cited a ‘privacy’ exemption to the Freedom Of Information Act (FOIA) and refused to shine a light on federal pensions.
Two years ago, we filed a FOIA request for individual federal pension data. The Office of Personnel and Management rejected our request saying it was, “… a clear unwarranted invasion of personal privacy.” But, our request for the active salaries of 2.5 million federal employees was fulfilled, with seven-year histories. We post these salaries and bonuses (with names) at OpenTheBooks.com.
If active salaries/bonuses are subject to transparency, why would posting federal retiree pension amounts, service credits and contributions be an invasion of privacy? The same privacy law underlies both records. The Obama administration’s legal argument against revealing pension data is arbitrary.
Taxpayer groups should not have to have a search warrant to see how their money is being spent. Far too often, federal employees are allowed to cut retirement deals rather than face disciplinary action. Consider federal employee-prosecution-escape-artists like the former IRS chief Lois Lerner who invoked her Fifth Amendment protections during Congressional testimony. Wouldn’t it be nice to see her pension information? In another case, it took an act of Congress to eventually fire the embattled Sharon Hellman – former director of the scandal-plagued Carl T. Hayden Veterans Affairs Medical Center in Phoenix, AZ. All indications are that she’s eligible for her public retirement benefits but no one knows for sure. Don’t taxpayers have a right to know?
Even if there is a mix of public and private dollars contributed to a federal pension, taxpayers are guaranteeing the entire formula. The American people deserve to see the granular details of who’s receiving what, when and after how long. It’s the only fair way to debate taxpayer-guaranteed job benefits. In fact, each year, taxpayers spend more on federal pensions than on the entire state budget of Florida – a staggering $84 billion.
Furthermore, the federal pension systems are spending more than $1.3 billion every ten-years in ‘administrative expenses.’ A Government Accountability Oversight report in 2013 showed that the federal pension systems are spending over $132 million per year in management expenses. It’s time to follow the money.
Recently, in Ohio, Treasurer Josh Mandel did just this. Mandel took pension fund transparency to the next level by convincing the state’s retirement systems to post online their line-by-line checkbook spending. Soon, Ohio taxpayers will have the right to examine and determine whether pension fund administrators are spending wisely.
At OpenTheBooks.com we believe the ‘Mandel Rule’ of posting the checkbook of pension fund management fees and expenses must be replicated across America. After all, these expenditures are literally funded with government employee retirement dollars.
The public policy implications for federal taxpayers are obvious. Serious budget reformers on both sides often argue that everything has to be on the table. Pensions deserve their place at the table as well. After all, you can’t reform what you can’t see. The only way to stop corruption – legal or illegal – is to expose the payments.
Together, join us in the clarion call for the transparency of both federal pension annuities and the actual checkbook expenses of the retirement funds. It’s time to open the books.
Andrzejewski is the founder and CEO of OpenTheBooks.com – the largest private repository of public spending in the world.