Thursday, December 20, 2012

Headlines Paint Different Pictures of Nuanced Thought Regarding Pensions

We at TEXPERS have been concerned the last few years that negative news headlines alerting the informed about pension problems in other states might rub off on folks here in Texas. Failures in Illinois, New York, California and other places tend to dominate the headlines of national newspapers like the New York Times, Wall Street Journal and LA Times and then all the TV media that tend to feed off issues that start in print. They have caused people to raise questions about what is going on here in Texas.

We have been contending all along – with facts and figures – that Texas cities have not had the same degree of pension problems, with most of our cities being able to handle any underfunding issues that may have occurred due to previous failures to contribute. But nonetheless, we’ve been very concerned about the headlines that may influence public opinion about pensions in general.

Now, closer to home, there’s a lesson to be learned about headlines from news coverage here in Texas.

Two weeks ago Texas Comptroller Susan Combs held a press conference to issue a very balanced report educating taxpayers about the conditions of public employee pensions in Texas. The main thrust of her report was to encourage greater transparency at the local levels of government, pensions included. But the pensions’ performances merited very balanced comments from Ms. Combs.

In her words, the two biggest pension plans in Texas, the Employee Retirement System and Teacher Retirement System are in "pretty doggone good shape.” She noted that “there are some warning signs in Texas” for other public employee pension obligations but she didn’t call any particular system out. 

Overall, Combs issued a very moderate report, refusing to advocate for or against defined benefit plans, saying “Plan design is so individual. You may be able to have a great defined benefit plan depending on what’s going on. We’re agnostic on that [assertion that defined contribution plans should be employed instead]. We simply say ‘Know what you’ve got.’”

TEXPERS greatly appreciates Ms. Combs realistic and fact-based stance, as it indicates a top state official’s informed position that the status quo is working. Texas allows cities to determine how they compensate their employees with current payments for salaries – typically low – and future payments for retirement using investment returns. Ms. Combs’ position reflects the conditions here in Texas, that most pensions are sound, with only a few needing some attention and concern. In those cases, remediation is already occurring because neither the sponsoring cities nor their employees can abide by failure. They don’t require, nor are they requesting any state intervention.

So that being said, it’s interesting how news outlets headlined their coverage of Ms. Combs press conference, with the headers often giving a different impressions of the content beneath. This is a very typical dynamic in public issue coverage, of the media trying to draw attention to these fairly boring-by-comparison policy matters. To make our point, here’s a sampling of some of the coverage Ms. Combs’ presser received, with our assessment of their tone above them:




Of course, the goal of every headline is to attract attention to the story, to gain eyeballs and keep viewing audiences. We never begrudge the media’s need to make a living in a competitive environment. We just thought it was an interesting comparison for your consideration. – Max Patterson