Public Policy and the Blame Game

Instead of working to solve problems like underfunded pensions, too often we spend our time and energy pointing fingers.
July 27, 2016
Feather O'Connor Houstoun
By Feather O'Connor Houstoun  |  Contributor
A senior adviser to the Wyncote Foundation

"It may not be your fault, but it is your problem."

The first time I heard that phrase, I was 3,000 feet in the air, piloting a single-engine plane, with a hood wrapped around my head that blocked all view of the horizon and the ground. Beside me, the instructor watched as I struggled to scan the instrument panel and keep the plane within the instrument flight rules tolerance of 100 feet above or below the assigned altitude.

Seemingly within the time of a single scan around the instruments, we were under our assigned altitude by 300 feet. Had I been distracted and drifted downward? Or had the rolling Pennsylvania hills below me created a downdraft that had sucked us toward the earth? "Did I do that?" It was only a rhetorical question, but a dangerous one if we had been flying in the clouds. We had to get back to a safe altitude. Stewing about why it happened had to take a backseat to fixing the problem.

This tale should resonate with a public-administration audience. A common characteristic in deadlocked public agencies and policy debates is a preoccupation with assigning blame, often as an avoidance strategy to solving an unwelcome, difficult problem. And yet, as a journalist friend remarked when we talked about this, "Don't those words kind of define government, i.e., dealing with problems that aren't your fault, but your responsibility?"

Certainly those problems are all too familiar to public officials at every level of government, from deferred maintenance of critical infrastructure to the horrific failure of our health-care system for military veterans to our poorly performing public schools. Yet one need look no further than the current state of public-sector pensions for an answer to my friend's question. From the vantage point of two states, I've watched ongoing pension crises disrupt budget cycles year after year.

Twenty years ago, most states were in strong positions when it came to funding pensions for their retirees. But beginning in the mid- to late 1990s, small but often knowing deviations from good pension practice began creeping in, compounding until the straying states faced billions of dollars in unfunded obligations.

In New Jersey and Pennsylvania, successive executive administrations and legislatures overestimated future fund returns; offered enriched benefits without adequate, actuarially calculated catch-up payments; and simply failed to appropriate full Annual Required Contributions. It was a hot mess growing exponentially, as data compiled by the Center for State and Local Excellence for the teachers' pension funds for New Jersey and Pennsylvania illustrate.

Even as the public plans have headed further and further into disaster, the blame game has continued, stretched across decades, gubernatorial administrations and political parties. In states facing these self-inflicted pension pressures, " reform" rarely refers to finding money to address disastrously underfunded future obligations that already have been incurred but to changing pension systems going forward. Challenges to decades of judicial decisions protecting earned pensions similarly delay starting to pay the piper. They would be Pyrrhic victories anyway: The fiscal hole is so deep that any judicial relief would only marginally affect the size of the deficit.

As a pilot, I had to correct my mistakes quickly, because the consequence of not making a course correction was potentially fatal. These pension challenges have been years in the making and will now take decades to fully correct. But the longer the delay, the more fiscally brutal the price of doing so.

While the two states' teachers' funds are still deeply underfunded, Pennsylvania has begun the slow slog back by successively increasing the proportion of required employer contributions actually paid until it reached 80 percent in 2015. The budget pain at the school-district level has been acute and will continue, but the fund is at last moving in the right direction. Meanwhile, however, its neighbor across the Delaware River continues to fly heedlessly into the clouds.