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If university students think that debt and tuition is high now they should wait until all these unfunded pension liabilities will come due across the nation.
US colleges barely break even on tuition v. operating costs. @ the very high end, tuition isn't even a consideration in the operating budget. Most state schools are operated by their state, & that (TMK) includes pensions & other defined benefits for staff & faculty. It's like the unfunded pension costs that are all over the US - police, fire departments, teachers & other government workers. A few states have done fairly well @ containing those costs - most haven't - apparently because those costs are actually incurred long after the current office holders are gone.
In short, it's not the current or actual students of the colleges who will wind up paying for those costs. Or rather, it may be those students - but not because they're students of said institutions, but rather because they'll likely be tax-payers @ the time that the bills come home to roost.
We also need to reform pensions & other defined benefits, so that the eventual cost is clear to everyone, especially the taxpayers who will eventually be on the hook for the money. Offhand, we (the federal & the state legislatures) need to run budget projections that are as close to real as possible - probably three: an optimistic projection (everything goes right), a medium projection (the most likely), & a pessimistic projection (the worst case, & a cautionary tale for those who pay attention).
These projections should run 5, 10 & 20 or so years into the future, & the projections should be graded in retrospect for how accurate they were. So that future legislatures & voters & taxpayers can have some idea of what they're all in for.
We also need to reform pensions & other defined benefits, so that the eventual cost is clear to everyone, especially the taxpayers who will eventually be on the hook for the money. Offhand, we (the federal & the state legislatures) need to run budget projections that are as close to real as possible - probably three: an optimistic projection (everything goes right), a medium projection (the most likely), & a pessimistic projection (the worst case, & a cautionary tale for those who pay attention).
These projections should run 5, 10 & 20 or so years into the future, & the projections should be graded in retrospect for how accurate they were. So that future legislatures & voters & taxpayers can have some idea of what they're all in for.
Or we could go from defined benefit to defined contribution plans. You know, like the plans the vast majority of private sector working tax payers have been on for at least a couple decades, now.
Then there'd be absolute clarity what the "eventual costs" would be, because all the costs would be born in real time. No need for projections and retrospective grading and such. No chance of burdening our children and grandchildren with sky-high taxes because projections didn't bear out.
Or we could go from defined benefit to defined contribution plans. You know, like the plans the vast majority of private sector working tax payers have been on for at least a couple decades, now.
Then there'd be absolute clarity what the "eventual costs" would be, because all the costs would be born in real time. No need for projections and retrospective grading and such. No chance of burdening our children and grandchildren with sky-high taxes because projections didn't bear out.
Yep, that's another option - & more likely, in the future, than the pension plans we've been discussing. @ the same time, I don't think the current US pension plan whopping underfunding is a question of bad faith. It's more poor planning, & letting the legislators tiptoe away from what looks like dispensing free money.
But it isn't free money, of course. Upping pension plan % outlays in out-years looks like a no-brainer, until you start calculating how much that will actually cost. But it's invisible to the legislators, because they're giving away % points on pensions, instead of raiding (or rearranging - thus causing political pain that they have to address in the here & now) the current budget to pay a 2-4% (or whatever % it is) pay raise. If you let legislators put off political pain now, @ the cost of incurring pension plan shortfalls long after most of the legislators have gone home - that is what most legislators will do.
US colleges barely break even on tuition v. operating costs. @ the very high end, tuition isn't even a consideration in the operating budget. Most state schools are operated by their state, & that (TMK) includes pensions & other defined benefits for staff & faculty. It's like the unfunded pension costs that are all over the US - police, fire departments, teachers & other government workers. A few states have done fairly well @ containing those costs - most haven't - apparently because those costs are actually incurred long after the current office holders are gone.
In short, it's not the current or actual students of the colleges who will wind up paying for those costs. Or rather, it may be those students - but not because they're students of said institutions, but rather because they'll likely be tax-payers @ the time that the bills come home to roost.
We also need to reform pensions & other defined benefits, so that the eventual cost is clear to everyone, especially the taxpayers who will eventually be on the hook for the money. Offhand, we (the federal & the state legislatures) need to run budget projections that are as close to real as possible - probably three: an optimistic projection (everything goes right), a medium projection (the most likely), & a pessimistic projection (the worst case, & a cautionary tale for those who pay attention).
These projections should run 5, 10 & 20 or so years into the future, & the projections should be graded in retrospect for how accurate they were. So that future legislatures & voters & taxpayers can have some idea of what they're all in for.
There are 7 states,including my own, that embedded state pension guarantees into their constitution. It's a very different situation than say Texas, whereby the state legislate can change accrued and actual benefits.
Accountants have been warning my state about under funded pension obligations for nearly 70 years. Both Republican and Democrat governors ignored the warnings, agreed to increased benefits and did not raise taxes or cut spending to pay for it. Of course they too benefitted.
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An Rx for melancholy
