A report urging reform of the public-pension benefits given to Colorado educators was skewered Wednesday by the chairman of the House Education Committee, himself a retired teacher.

Rep. Michael Merrifield, D-Manitou Springs, drew applause from a standing-room only crowd when he closely questioned Michael Mannino, a University of Colorado professor who helped write the report. (You can read the report here)

“Is it possible that your phrases like drastic tax increases and meltdowns could be fear-mongering on your part … in support of your political agenda?” Merrifield asked […] Reaction to Mannino’s testimony at the weekly meeting of the House and Senate education committees prompted the Senate Education Committee chair to calm the audience, made up largely of retirees.

Current retirees, of course, have the least to fear – their pensions are relatively safe.  However, if you are still teaching, depending on how much time you have before you retire, a little fear and self-interest might be a really good idea.

Of course, one of the first tactics of someone with a political agenda is often to claim that their opponents have a political agenda, so let’s look around at some other sources. To start the ghoulish truth, here is a paper by the non-partisan National Bureau of Economic Research, written before the economic crises, highlighting the problem at the state level:

The value of pension promises already made by US state governments will grow to approximately $7.9 trillion in 15 years.[…] We conservatively predict a 50% chance of aggregate underfunding greater than $750 billion and a 25% chance of at least $1.75 trillion (in 2005 dollars). Adjusting for risk, the true intergenerational transfer is substantially larger.

Here is that deeply subversive magazine The Economist, also written before the credit crunch:

The result may be that many employees face retirement with an income well short of their expectations. An employee who pays into a DC [note: defined contribution] scheme for 40 years may get only half the retirement income he could have expected…

What is wrong, fear or accusations of fear-mongering?  Here is an informative website on pensions (see the breakout for public employees and start reading the headlines).  Here’sanother article from Bloomberg about how many pension funds are intentionally fudging the numbers:

Public pension funds across the U.S. are hiding the size of a crisis that’s been looming for years. Retirement plans play accounting games with numbers, giving the illusion that the funds are healthy. […]

The misleading numbers posted by retirement fund administrators help mask this reality: Public pensions in the U.S. had total liabilities of $2.9 trillion as of Dec. 16, according to the Center for Retirement Research at Boston College. Their total assets are about 30 percent less than that, at $2 trillion.

Oh, and here is John MacPherson, described as a watchdog for DPS retirees:

Perhaps most importantly, MacPherson expects both DPS and PERA will soon be making changes to their pension plans, already hit hard by the economic recession.

State law protects retirees’ benefits from cuts. But it’s less clear what protections are offered for the benefits of existing workers.

Back to the lede.  After the Chair of the House Education Committee gives teachers reason to believe they should fear nothing more than fear itself, and after its executive director then mocked the study, PERA went ahead and set the record straight:

PERA spokeswoman Katie Kaufmanis said preliminary results as of March 20 show the value of PERA’s investment portfolio is $28 billion, down from $41 billion as of Dec. 31, 2007 – not a 50 percent drop.

Only the most cynical of fear-mongers would gain reassurance that PERA has lost not 50%, but only $13 Billion in 15 months (which is a loss of between 32% and 46% depending if you start at the bottom or top).  Oh, and PERA was badly underfunded well before the market downturn, by some 25%.  It’s a pretty safe bet that currently PERA is a lot closer to being 50% funded than 100%.  Still feel like everything is ok?

Since an honest attempt to discuss pensions, and to calculate the value of current retirement compensation, gets categorized as political fear-mongering, let me be really explicit about my beliefs:

If you are a Colorado teacher with 5 years or less experience (25 years to full retirement), in my opinion, your chances of receiving pension benefits equal or greater than those received by today’s retirees (in real dollars) are zero.Zilch, zip, nada, nah-nuh, won’t happen. And that is the bet with 99% confidence; if you have more than 5 years experience I would not get too comfortable.  In coming years, weather it is 5 or 25, benefits are going to be reduced, and/or contributions raised. Anybody telling you otherwise is deeply misguided, intentionally deceptive, or simply irrational.

If you are a teacher, ignore these at your peril, but go ask your college economics professor, or local public policy wonk.  Ask anybody who is disinterested, then decide if it is a political conspiracy or if you should have some concerns.

Those of you who think I am wrong can opine in the comments. But to make this more meaningful than the political benefits of elected officials chirping to their constituencies, hopefully you’ll be prepared to back up your words with a willingness to bet.  Of course if you are a Colorado teacher – particularly early in your career — you are already betting, substantially and with your own money.