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VOL. 126 | NO. 41 | Tuesday, March 1, 2011

Haslam: Tenn. Should Seek Balance in Pay, Benefits

ERIK SCHELZIG | Associated Press

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NASHVILLE (AP) – Gov. Bill Haslam says he's unconvinced by arguments that state workers deserve better benefits because they may be sacrificing better pay in the private sector.

The Republican governor told The Associated Press after a speech to a private colleges association last week that the state's salary and pension levels need to be in balance, even when it comes to positions like accountants and attorneys who could make more money in the private sector.

"I've seen some governments go in and say we'll give you a lot better long-term pension plan, but we won't pay you as much right now," Haslam said. "Now I don't think that's smart on either end."

Haslam said government should offer compensation plans that are competitive with the private sector, not ones that stress benefits over salary.

"I don't think you're incentivizing the very best people to come to work for you, because your short-term pay isn't the best," he said. "And you aren't thinking through the total long-term cost of packages by saying that's a pension plan that's going to come due 20 years from now, it's not my problem."

Haslam, who took office in January, said he faced a similar challenge when he was mayor of Knoxville.

"We spent a lot of time making certain that everything from salaries to health care costs to pensions and other long-term benefits were competitive in the marketplace, but where we weren't paying more than we should be," he said.

State Treasurer David Lillard told a Senate committee last week that the average annual pension for state employees is $30,000, and Tennessee's public pension program does not suffer from the vast unfunded liabilities in place in some other states.

But Lillard also presented several options for the state to convert its pension program from a traditional defined benefit to a 401(k)-style system. Lillard and Republican lawmakers said they won't pursue any changes this year, but want to keep their options open for changes in the years to come.

Haslam said changes to the state pension system are "one of the things we've looked at," but that he has no immediate plans to make changes. "Our pension has been a lot more realistic than most," he said.

The governor said there are some systems around the country that are "just very unreasonable and have to be addressed right away – I don't think Tennessee is there."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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