Cheeseheads Agree: 401(k)s for New Hires

The headline from a recent Reason-Rupe poll of Wisconsin voters is that reformist Gov. Scott Walker is likely to win a June 5 recall election.

Other findings have relevance for debates underway here in Michigan, notably one on government employee pension reforms.

Specifically, “69 percent favor shifting future state employees, those who haven’t been hired or promised pensions yet, to 401(k)-style retirement plans instead of the current defined-benefit plans,” according to Reason’s report.

That’s what a bill passed by the Michigan state Senate on May 17 would do for new school employees here. (This reform has been in place for state employees hired since 1997, helping taxpayers avoid as much as $4.3 billion in unfunded liability since then.)

Other Wisconsin findings also have relevance for the current Michigan debate. Reason reports, “When asked what state and local officials should do if pensions and health benefits are underfunded, 74 percent favor requiring government employees to pay more for their own health care and retirement benefits. In sharp contrast, 75 percent oppose cutting funding for programs like education and 74 percent oppose raising taxes to help fund government worker benefits.”

Michigan House Appropriations Committee, however, has reported out its own version of the Senate-passed pension reform bill that seems to fly in the face of both those preferences, assuming voters here feel the same. Unlike the Senate version, the House bill does not close the school pension system to new employees, and it also would redistribute hundreds of millions of taxpayer dollars to “prefunding” optional school retiree health benefits that the state has no legal obligation to provide.

The Wisconsin poll surveyed 708 adults, including 609 who said they were likely to vote in the June 5 recall election.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.