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Lawmakers in Utah have started wrestling with a $6.5 billion shortfall in the state's retirement fund caused by the recession. The massive budget deficit is a serious threat to the future economic well being of the state's 182,000 active and retired public employees, law enforcement professionals included. According to a recent article in the Salt Lake Tribune, Bruce Cundick, chief investment officer for Utah State Retirement Systems says the normally stable fund took a massive 22 percent hit from losses last year.
While some economists at the Federal Reserve and groups like the International Monetary Fund are downright chipper in their rosy prognostications for a quick economic recovery, others remain skeptical. Many of the bad assets related to sub-prime mortgages, packaged and traded as "financial instruments," are still on the books and continue to threaten any real recovery.
In addition, resistance to any reform whatsoever on Wall Street makes mainstream economic experts pessimistic about a reversal of fortune. As for the state pension funds like the one in Utah, the issue isn't whether or not the funds will show gains or losses based on financial markets, but just keeping the funds solvent so retirees can get paid what they're owed. Utah state Sen.
Dan Liljenquistsaid that keeping the system on a sound footing could mean doubling the current contribution rate of two percent of salary next year and boosting it to a total of six percent the following year. Should public employers be required to bear the whole brunt of such an increase public employees are likely to see massive layoffs.
Throughout last summer, Bountiful City Manager Tom Hardy worked with the Utah League of Cities and Towns to put forward some proposed fixes to keep the checks going out to pensioners. "We tried to pick the best of bad solutions," Hardy told lawmakers at a recent hearing.
"The last thing any employee wants is to worry whether his retirement check will be viable." Add this page to your favorite Social Bookmarking websites        
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