Maybe why college costs so much

Balthezar
Tue, 29 Jun 2010 10:20:46 +0000

University employees that have pensions aren’t eligible for, nor do they pay into Social Security, and in most cases, they pay via deduction from 8-11% into that pension. The state, as the employer, doesn’t pay into Social Security either, and here’s the reason why there’s a pension crisis now, while the state does have the obligation to pay into the pension fund of its employees, IT decides whether or not to do so. For many years, many states have decided that money could be better spent elsewhere. Thus, the unfunded liability that we are faced with now.

If a defined benefit plan goes away, the state will need to make that employer payment to Social Security that they have been diverting to pay for state programs. They will also need to make those matching payments to 401K state equivalents that state employees will demand in order to attract and retain those employees. That’s about 11% of total wages and benefits. Those funds now go to pay for other state programs. Where do you think the state will get that 11% from? I’m not seeing a savings here. They certainly won’t just cut the programs. They never do.