State legislators are looking to change the NDPERS pension plan. This is no small thing, as many public servants have planned their lives around this retirement fund. Many of them also accepted the lower wages of public sector work because the pension plan is so solid -- an arrangement that benefits taxpayers, workers and retirees alike. Ultimately, any potential change to the retirement plan of so many North Dakotans deserves a closer look.
Dave Thompson of Prairie Public reports that the legislative committee is considering converting the NDPERS pension plan to a “defined contribution” plan for employees hired in 2024 and on. The plan currently offers a “defined benefit” pension where retirees can rely on fixed, regular payments. A move to a “defined contribution” model -- more risk, and generally fewer resources in retirement, for employees -- downgrades a plan. Given that wages won’t be increased to offset a downgrade, this equates to a pay cut for the positions impacted. Pay cuts make positions less appealing (or even unlivable) for workers.
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Low pay undermines worker recruitment and retention. The public services we rely on are put in jeopardy when positions go unfilled and high employee turnover damages the quality of services. Our public servants -- neighbors, friends and relatives -- deserve pay and working conditions that are adequate for a decent life. When we offer them less, they quit, often aren’t replaced, and their former responsibilities are assigned to colleagues with already-full plates. This cycle can repeat until entire departments are gutted.
This is not the way to achieve government “efficiency.” The public servants left behind in an understaffed department are often run ragged and unable to complete all work assigned. Citizens who rely on services -- including “safety net” lifelines -- are put at risk, all while we see increased community demand for services! In these situations, doing “more with less” is just as it sounds: too good to be true.
Some readers might not be persuaded to care about NDPERS pensions for future employees. But I hope we can agree that a promise made should be a promise kept. If the NDPERS plan is changed, then current pension plan members will retain their “grandfathered” plan. However, such a plan would be segregated from investments made via new employees. This risks undermining the pension fund’s performance, making it harder for the state to keep its existing promises to NDPERS public servants.
Meanwhile, if the current NDPERS traditional pension is kept as-is and properly maintained, it’s projected to perform well. “If it ain’t broke, don’t fix it,” as they say. Separating employees covered by the NDPERS retirement plan into two, differently managed plans also decreases the funds’ value and increases bureaucratic costs. And when it comes to economic forecasting, it puts both plans at a performance disadvantage when compared with a unified plan.
Fiscal responsibility and making government “right-sized” are values that many public servants and taxpayers share. The way to craft the correct size and scope of government is to do so directly, and by aligning human resources with the work we’ve decided our government should do. Fiscally responsible governance isn’t achieved by assigning outsized work to understaffed departments, overworking employees, and letting the chips fall where they may. That’s willy-nilly, haphazard governance.
Legislators tackling this topic received testimony from Alaska, Kansas and Oklahoma. These states are experiencing negative economic consequences after shifting away from traditional pensions. And as Dave Thompson reports, directors of the North Dakota League of Cities and the North Dakota Association of Counties worry that changing pensions may significantly harm employee recruitment and retention.
Let’s urge caution as legislators study this issue. And when it comes to all governance, let’s demand real-world fiscal responsibility instead of wishful thinking and collapsing public services.
Ellie Shockley is a political psychologist, social scientist and education researcher. This column represents her personal views and not the views of any organization. She completed a doctorate at the University of Chicago and postdoctorate at Nebraska. She lives in Mandan. Find her past columns at EllieShockley.com