Argus, Ric Flair And The Looming State Pension Debt

As our first meeting of the Joint Committee on Pension Systems Review drifted into the fourth hour, I watched several eyelids in the audience begin to droop. Given the complexity of the subject matter, I was surprised that they were alert for that long.

The audience shouldn’t be held responsible for their somnolence. Having worked in the pension compliance business since I was a graduate student at Clemson, I can attest that discussing the finer points of pension funding would put even Argus to sleep.

Remember Argus? Not Argus Filch from Harry Potter lore but Argus the giant from Greek mythology. He had 100 eyes that never slept and was made to watch over a sacred cow. And no, he wasn’t a Clemson graduate. And don’t confuse him with Hypnos, who personified sleep or Magneto who . . . well, he wasn’t a Greek god; he was an X-Men nemesis. Anyway, each generation has its superheroes. The ancient Greeks and the Millennials have theirs. My generation had Ric Flair and Dusty Rhodes but I don’t see either one hanging around to explain the need for our review committee or the severity of South Carolina’s pension funding problem. So, I will try.

The 2008 market crash accelerated funding shortfalls in governmental pension plans nationwide including the five plans that make up South Carolina Retirement Systems (SCRS). Before the crash, unfunded liabilities of governmental pension plans were off the political radar. After the crash and ensuing recession, unfunded liabilities grew exponentially.

In response, the Governmental Accounting Standards Board adopted new pension reporting standards in 2012 that require state and local governments to report their total pension liability, the fair value of plan assets available to pay pension benefits and their net pension liability. This may seem rudimentary to anyone who has balanced a bank statement, but it takes a crisis to bring clarity to governmental accounting.

The new standards highlighted a serious downward trend in South Carolina’s pension liability. According to SCRS Comprehensive Annual Financial Report for June 30, 2015, we have promised $50.7 billion in retirement benefits to over 550,000 government employees who participate in those plans. We had $29.3 billion in assets on hand. Which means our net pension liability was $21.4 billion.

More simply stated, our system at that time was 57.85% funded. As a reference point, the system was 88.5% funded in 1997. We have experienced a 30% funding decline over the last twenty years. The 2016 report is due before the end of this year but don’t expect much improvement.

Before anyone panics and jumps off of the Statehouse Dome, rest assured that we don’t owe all of the money at once. We have a window of opportunity afforded by the creation of the Joint Committee to stop the downward spiral. We can restore financial soundness to the system if we avoid a few political pitfalls.

State pension plans are political sacred cows and having attended the 2012 pension reform meetings, I recall several Argus-like groups ever watchful that their accrued benefits, contribution rates and cost of living adjustments were protected. They were prudent to do so. Pension benefits are just one part of a governmental employee’s compensation package and accrued benefits are a promise to pay that must be protected. Future contribution rates and cost of living adjustments are not as sacred.

State pension plans are the victims of political schizophrenia. Many variables make up the pension funding formula and each has contributed to our current problem in some way. However, two variables are fundamental to ensuring the long-term self-sufficiency of a pension plan: an annually increasing payroll and an expanding workforce. Here’s where the break with reality occurs. These two variables conflict with political promises to limit government growth and reduce spending.

How then does a small government majority party work with a big government minority party to restore the financial foundation of the plan? Hopefully, with the objectivity that this problem demands and leave the political posturing aside.

We should start with a frank discussion about the future of the plans within SCRS. Are pension plans, which were 19th century creations, still appropriate retirement vehicles for our 21st century mobile workforce? To achieve a self-sufficient plan in the long term, are we willing to expand our governmental workforce or pay them more?

After those questions has been answered, the committee members will need some backbone to issue a report back to the General Assembly that contains a viable solution. The solution will require a hard-bargained compromise on future employee benefits, a long-term strategy that controls every variable of the funding formula, the political will to execute the strategy and the institutional discipline to monitor the strategy over a prolonged period – maybe as long as twenty years.

Political will? Compromise? Institutional discipline? Long-term strategy? Do these virtues still exist in the General Assembly? They must simply because the debt is not some ancient Greek myth. Make no mistake. The dollars owed are as real as the South Carolinians to whom they belong.

Remembering Who We Are – Our Honor Culture and the Graduate Profile

After visiting Atlanta a few days ago, I avoided driving back into Dante’s Tenth Circle of Hell (aka I-285) and came home through the North Georgia mountains. The drive was pleasant and the air fresh as I found myself in Lumpkin County where my grandfather grew up. That part of Georgia remains a family outpost so I stopped to pay respects to my great-grandfather. His given name is William Thomas and he was born in 1854.

As I looked at his gravestone, I thought how many times the names “William” and “Thomas” have been used by my family. Even my son carries “Thomas” as did my uncle on my father’s side and my grandfather on my mother’s side. Since my mother did not care for my uncle’s black sheep ways but wanted me named after her father who was a saintly man, she named me Tommy. She then took my middle name from her favorite cousin, Max. I guess if our parents named us logically, we might all have a serial number instead of a little piece of family history that links us to the past for the rest of our lives.

Naming our children after our ancestors has been a common cultural habit in the South for generations. We can all think of examples or have indulged in the habit ourselves – sometimes extravagantly so. I have met quite a few Southern men who carry a junior at the end of their name. Some carry thirds and a few fourths though it seems carrying a fifth is more about bourbon than birthing. Other than Henry and Jack Daniels, I don’t know anyone with a fifth trailing their name.

Until I began researching South Carolina’s honor culture, I didn’t realize that our naming habits are mostly unique to the South. Apparently people outside of the South just give their children new names devoid of any past family connection. Maybe they don’t realize that to name your child after an ancestor is to show honor to the past and hope for the future. Or maybe they realize that hope comes with a new name. As I recall, John the Revelator alludes to the gift of a new name for those heaven-bound. My purpose here is not to criticize naming habits, but to comment on an anomaly of permanence in our constantly shifting modern American culture.

These links between honor and naming habits are presented in a 2014 study entitled Naming Patterns Reveal Cultural Values: Patronyms, Matronyms, and the U.S. Culture of Honor by Ryan P. Brown, etal. (Note that the authors included the multi-generational use of given names in their definition of patronym. Historically, patronyms are the use of a given name to form the surname for the next generation – i. e. Johnson is the son of John).

The study revealed several significant findings. Men who had formed a personal code of honor tended to name their sons after themselves or other male relatives of past generations. These fathers tended to live in “honor states” where personal reputation still forms a significant part of an individual’s identity. When faced with a substantial collective threat or attack such as 9/11, the use of patronyms rose collectively in honor states. Simply put, all those post 9/11 babies born in the South received a lot of family given names.

The study defined honor as being more than just having virtue. “ For men in such cultures having honor means being (and being known as) strong, brave, and willing to defend one’s person, one’s family and one’s property from any threat.” Proof was offered that even today Southern males respond more strongly to insults than Northern males across “physiological, psychological and behavioral levels.”

Specific honor states were not named other than placing them in the Southern and Western regions of the country but the study did define a common characteristic found in honor states. They are made up of communities having “strong kinship bonds, with extended family systems often forming local clans that, among other functions, serve to reinforce an individual’s reputation as someone with whom interlopers ought not to trifle.”

If we know our family history or had a decent American history teacher, we learned that these communities were formed and interlinked as families expanded from Virginia through the rest of the South into Texas – a distinct nation building process that began before the United States was formed and that was 250 years old by the time of the War Between the States. My own family followed a similar trail from Virginia in the late 1600’s through the Carolinas, Georgia, and Tennessee leaving family outposts along the way and always staying near or in the mountains. Most of these family outposts exist to this day containing cousins to the nth generation. This is not uncommon as many of my neighbors in Northern Greenville County can lay claim to the same heritage. Mind you, I’m not talking about imaginary magnolias and columned houses. These were and continue to be hard working people who want to keep their independence, expand and protect their families, educate their children and worship as they see fit.

150 years after that war ended, the South still retains the foundational notion of personal honor – a present-day fact proved by numerous studies devoted to honor cultures within the United States. Before we go further, we should understand that the underlying premise of most studies assumes honor to not be a meritorious code for oneself, family and community but a justification for patriarchal violence, gender oppression and child poverty. Somehow, these researchers have isolated personal honor from a host of other positive character traits, religious influences and manners. They have concluded that the influence of honor is the cause for all that ails us. The significance of the naming study is that it shows how the notion of honor influences a non-violent act such as the naming of children. If I had time to answer the critics, I would propose that the notion of honor, especially when combined with the traits that they did not study, prevents violence rather than encourages it. But that is a subject for another day.

So what does honor have to do with the Profile of the South Carolina Graduate and the education of our children? South Carolina has 300 years of cultural development that’s ingrained with this notion of personal honor. Our General Assembly has instructed our public schools to teach our children about integrity, an ideal which rests at the core of being honorable.

During a review of the new Graduate Profile last session, I asked an educator how schools would teach the importance of integrity especially since we have removed even the acknowledgement of any moral or religious authority that used to be inherent in education. He replied that schools would have a hard time teaching integrity if it was not taught at home.

I disagree. In the past, schools had honor codes that were simple yet taught students the importance of taking personal responsibility, valuing your own effort and trusting your classmates to do the same. These days, honor codes have been abandoned in favor of developing self-expression, collaboration and interpersonal skills. Hey, who needs an honor code when cheating is just a form of collaboration? That answer will come in our next installment in the honor series, where we will take a look at the disappearance of honor codes on the college level and the efforts that high schools have to expend to maintain order.

Who knows? It might be that students will discover who they are through guided self-restraint rather than unguided self-expression.

Ryan Lochte, Orion and the Profile of the South Carolina Graduate

Those who still care about the Olympics have heard ad nauseam about Mr. Ryan Lochte and three other US Olympic swimmers who got drunk, urinated on a gas station wall, was challenged by police and then claimed to have been victimized by armed robbers. When finally caught out in his exaggeration or what used to be known as a lie, the 32-year old Mr. Lochte apologized for his immaturity.

We can assume from his immaturity that Mr. Lochte did not attend a religious school. If he had done so, he might have read the Old Testament warnings against those that “pissith against the wall” but only if he had been exposed to the King James Version or the Rheims Douay. He may also have learned about Orion, the ancient Greek mythological hunter, especially since urine is one remote etymology of Orion. Mr. Lochte could now become Orion, the modern hunter of gas station restrooms.

After the sniggering dies down about Mr. Lochte’s inability to hold his liquor, all we are left with is another winning athlete busted for anti-social behavior with a trite apology on his lips. Let’s remember what Mr. Lochte actually did. As a United States Olympic athlete, he was invited to a foreign country where he embarrassed himself and us. Not because he lost, but because he won. He urinated on his hosts even though he was the victor.

No gentlemen he. Nor is he a positive example for our children to admire despite his athletic skills. Though his $25,000 bonus and his sponsorship opportunities are being threatened, I suspect his immaturity will be quickly forgotten. For the rest of us, Mr. Lochte presents a problem for those who wish to teach children self-respect and proper manners toward others.

The General Assembly passed Act 195 earlier this year defining the Profile of the South Carolina Graduate. Within the Life and Career Characteristics section several ideals were listed that our students should be taught or as the actual wording in the bill says “Students finally also must be offered reasonable exposure, examples, and information on the state’s vision of life and career characteristics such as: Integrity, Self Direction, Global Perspective, Perseverance, Work Ethic, and Interpersonal Skills.”

The Act does not expressly say that negative examples may be used but Mr. Lochte expressly presents poor examples of Integrity, Interpersonal Skills and Global Perspective. Only the gas station wall can attest to his Self Direction.

As I read through the Graduate Profile prior to passage, I thought about one important ideal that was omitted – the notion of honor – not just showing honor to another person but the development of an honor code for oneself. A personal code of how you will behave and what behavior you will tolerate from others. Maybe Interpersonal Skills have taken the place of an honor code. Interpersonal Skills suggest acceptance while an honor code suggests mere tolerance. Our society often confuses the two.

Over the next few weeks, I intend to write a short series on our state’s “honor culture” and how the notion of personal honor and honor codes should be revived in our education system. In the interim, one warning remains whether our graduates learn personal honor or interpersonal skills, if they urinate on their employer’s office wall, they will be terminated.

Tommy Stringer