Police Thwart Cities’ Moves to Cut Their Pensions

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When San Jose, Ca., had trouble affording services such as road repair and libraries because of the cost of police pensions, voters approved cutting them. What happened next proved sobering for other cities. Hundreds of police officers quit. Response times for serious calls rose. Faced with labor-union litigation, San Jose restored previous retirement ages and cost-of-living increases for existing police officers, and last month it gave them a raise, the Wall Street Journal reports. Police pensions are among the worst-funded in the nation. Retirement systems for police and firefighters have just a median 71 cents for every dollar needed to cover future liabilities, according to a Wall Street Journal analysis of data from Merritt Research Services for cities of 30,000 or more.

The combined shortfall in the plans is more than $80 billion. Yet any attempt to bring police pensions into line with today’s municipal budgets and stock-market performance runs into the reality that many officers won’t stand for it, and they often have the public behind them. “They have extra clout because people love police,” said Dallas Mayor Mike Rawlings. “I love police. You love police. An electrician—you don’t have that emotional tie.” Police pensions were the first nonmilitary retirement systems to be created in the U.S., in the 19th century. When municipal budgets were tight, augmenting pension promises in lieu of raises was a way governments could make peace with politically powerful police unions without incurring immediate new spending. The 2008 financial crisis wiped out pension-plan earnings and put stress on municipal budgets, leading some cities to contribute less to the plans than what actuaries calculated was needed.

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