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New Reports Reveal Depth of Corporate Collusion in Pension Attacks

TALLAHASSEE - February 26, 2014
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Florida Public Pension Trustees Association in September 2013 invited reporters throughout the state to participate in a press call with journalist and author David Sirota who had just published a report, "The Plot Against Pensions: How Pew and the Arnold Foundation Plan to Undermine America’s Retirement Security". Sirota’s report was published by the Institute for America’s Future.

During the call, Sirota explained how former Enron executive and billionaire John Arnold has partnered with Pew Charitable Trust subsidiary, the Public Pensions Retirement Systems Project, to manipulate discussion about public pensions in states including Florida, Kentucky, and Rhode Island. Arnold has been actively promoting legislative change in states to replace defined benefit (guaranteed) pension plans with a cash balance plan substitute that would unquestionably enrich Wall Street, while cutting public worker benefits significantly.

More recently, Sirota on February 12 published a report revealing The Arnold Foundation financed a PBS series titled Pension Peril that was to be aired on hundreds of PBS stations nationwide. The series was to be funded through a newly established Pew trust and the Arnold Foundation was the largest sponsor, contributing $3.5 million. The report took PBS to task for violating its own policies and that of the Federal Communications Commission. While claiming that PBS was in control of programming content, its flagship station (WNET) acknowledged that Arnold held the right to terminate funding under “extraordinary circumstances”. FCC regulations also prohibit PBS from developing programming for which the sponsor intends a “pre-ordained conclusion by viewers”. Following the publication of Sirota’s report on February 14, PBS announced it would return the $3.5 million donation.

In “The Plot Against Pensions”, Sirota wrote, "The plot forwards the illusion that state budget problems are driven by pension benefits rather than by the far more expensive and wasteful corporate subsidies that states have been doling out for years. That ends up 1) focusing state budget debates on benefit-slashing proposals, and therefore 2) downplaying proposals that would raise revenue to shore up existing retirement systems."

A particular criticism is that corporate lobbyists and financiers are driving a narrative that public pensions are unsustainable, while committing state money to Wall Street hedge fund managers who will make millions on the fees, far outstripping the cost of public pensions. The New York Times published a report that states, counties and cities are giving up more than $80 billion each year to companies in the form of subsidies and tax expenditures. In Florida, that amounts to nearly $4 billion each year, and 16 cents of every budget dollar.

Worse, these efforts often depend on the reputation of previously independent think-tanks to sell the merits of selective research.

The Huffington Post reported 10 Kentucky state senators were so angry about manipulation by Arnold and Pew they penned an open letter to other states saying, “We want to bring to your attention . . . the deceptive work that the Pew Center on the States is engaged in across the country in order to promote their cash balance overhaul policy.” The letter warned lawmakers “about the ramifications of letting Pew into your state,” as well as “its unholy alliance with the Arnold Foundation.”

In Florida, the LeRoy Collins Institute issued a Report Card on municipal pensions in 2012, assigning letter grades based solely on the plans’ unfunded liabilities – a methodology lapse later disputed in hearings in Tallahassee during the debate about House Speaker Will Weatherford’s proposal to close the Florida Retirement System, replacing it with defined contribution accounts. Weatherford’s plan was taken from a template prepared by ALEC (American Legislative Exchange Council), a consortium of conservative business lobbyists and former Capitol Hill legislators whose agenda includes closing public pension plans.

Increasingly, it appears the public pension crisis is nowhere near as catastrophic as the pending retirement security crisis facing Americans in both the public and private sector as defined contribution accounts and cash balance plans are pushed to replace defined benefit pensions as retirement plans.

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For information about the funding and structure of municipal public pension plans, along with extensive research by national retirement security advocates like the National Institute of Retirement Security and Boston College Center for Retirement Research, please visit www.publicpensioninstitute.org.



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