Consider changes to preserve IPERS

A sour economy has inflicted some significant damage on the Iowa Public Employees Retirement System.

On June 30, 2008, the pension fund for public employees in state government, cities, counties and school districts was worth $22.4 billion. A year later, that value plunged to $17.9 billion. It has since rallied to around $19 billion. Other pension systems around the country saw similar declines as the stock market plunged.

Still, word of the drop fell on Iowa's political landscape this week like a ton of bricks.

Gov. Chet Culver, a Democrat seeking re-election next year, insisted all is well, losses would not harm the system and that no legislative action would be needed to address the problem. Republicans lining up to challenge Culver in 2010 used the news to level a new series of attacks at the governor's stewardship of state finances.

Outside that crossfire, Senate Majority Leader Mike Gronstal, D-Council Bluffs, said the Legislature would consider measured, cautious changes in the system to guard it against further damage. Gronstal knows the system well and has been a key player in previous attempts to revise IPERS.

We agree with Gronstal. The public pension system's troubles are too serious to ignore, even at this politically delicate moment.

But lawmakers should tread carefully.

All Iowans benefit from attracting high-quality people to public service. And the state's generous retirement benefits are a major selling point.

That's especially true in Iowa's classrooms, where the IPERS' promise helps make up for often low salaries. It's already difficult to fill many key teaching posts, especially in math and science. A major rollback in retirement benefits likely would make it even tougher.

The system currently includes 312,000 current, former and retired public employees. Employee contributions account for 40 percent of the system's costs.

Retirees are living longer but there are several options for protecting the system without jeopardizing benefits.

Revising the “rule of 88,” which provides full benefits to workers whose age and years of service add up to 88, could produce long-term savings. Future benefits could be calculated using a five-year salary average, rather than the current three. It also may become necessary to ask employees to chip in a larger contribution.

One option that shouldn't be on the table: a taxpayer-funded bailout. And the pension system must not become a political football in an election-year struggle for partisan advantage.

The IPERS fund losses are no reason for panic, but their seriousness demands more than passivity. Lawmakers returning to the Statehouse in January should move deliberately as they weigh how to best preserve the public pension system for decades to come.