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Retirement Advice 

Pension funding is an important tradition of public employment, but it's time the City of Spokane reformed its system.

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Word has it that Mayor David Condon would like the city to consider 401(k) s instead of traditional pensions. If the form chart holds, the public employees’ unions will oppose any such move and try to stop the idea from gaining any traction.

Well, yes, the mayor has said he is sympathetic to Tea Party principles, so the suspicion is understandable. Feather the nest of the private sector, and who cares about the public employees? Or maybe this is just another Republican ploy to destroy unions. Certainly it reeks of an attack on working people.

I hope this isn’t the reaction, because the mayor may well be onto something. Here’s what we know: The City of Spokane faces the same growing “structural deficit” that it has faced for years. Our chief financial officer, the very capable Gavin Cooley, has been singing the blues about this matter since he was first appointed by Mayor John Powers a decade ago. The math is simple: The city has limited revenue sources, and it faces a payroll that exceeds its revenue. All that three mayors since Powers have done is either (a) kick the problem down the road or (b) come up with a temporary fix. The best can-kicker was Jim West. The best temporary-fixer was Mary Verner.

Why do we face this nagging structural deficit? Why do our expenses exceed our revenue? The spotlight turns directly on Police and Fire. They are to Spokane’s budget what the Department of Defense is to the federal budget. You could completely shut down the rest of the federal government, and if you continued to fund entitlements, interest on the debt and defense, we still wouldn’t be able to pay the bills. Not even close.

Police and Fire have very handsome retirement deals. They are vested early into their careers, and many find ways to retire even before the age of 50 at much more than anyone can expect to retire on in the private sector, even should they work 10 or 15 years longer. We hear reports that firefighters can put in their time each month and still have time to run a business on the side.

I don’t pretend to be an expert on this matter, but I did put in 31 years at Eastern Washington University, added to almost now 11 at Gonzaga University and before either of these careers, a decade with the Navy. That’s half a century in the work force — in government and the not-forprofit world (Gonzaga).

So I’ve experienced three different retirement systems. At both EWU and now at Gonzaga, I have what amounts to a 401(k), except that it’s is called an IRA. The employee contributes so much every pay period, the employer matches that amount, and the money is invested. At Eastern it went directly to TIAA/CREF; at Gonzaga to the Fidelity fund I selected. I had no control over my pension retirement through the Navy.

My longest stint was with TIAA/CREF, and frankly I don’t know what’s not to like. Indeed, TIAA/CREF offers benefits to the employees that no pension fund can match.

Public-employee unions complain that they are taking a bum rap, that their pension funds are in bad shape and are costing the cities money that they don’t have, because the funds have been so poorly managed.

Fair enough; but with TIAA/CREF you effectively manage your own fund, with the caveat that the selections are limited so no employee can play Russian roulette. If you know early on that you want an annuity, you put all your money into TIAA. Others choose to mix bonds with equities and select from their menu of funds: Stock, Global Equities, Growth, Equity Index, Social Choice, Bond Market, Inflation-Linked Bond, Money Market.

TIAA/CREF, a not-for-profit organization (and I think that is important), does a great job tracking these funds. What I really liked was the ease of changing my investment mix anytime I wanted. In fact, I had far greater control over my money than my administrative assistant had over her money, which was going into a civil-service pension account.

And here’s the key: The benefit to the state was that the day I retired was the last day EWU owed me a thing. I had what I had, and what’s wrong with that? The logistics on both ends were minimized — the divorce, final.

Should Mayor Condon float a formal proposal, as I hope he does, he deserves our support.

Given our structural deficit, it is in everyone’s best interest that such a proposal be taken seriously, with all options on the table, and knee jerks not permitted.

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