March 2012 Archives
Today's New York Daily News has a strong editorial condemning the "breathtaking hypocrisy" of New York state government's biggest union, which is now complaining about a retirement "perk" that the union blocked for its own members.When Governor Cuomo proposed giving future employees the option of choosing a defined-contribution retirement plan, the 66,000-member Civil Service Employees Association (CSEA) and its allies angrily rejected the idea, calling DC plans part of an "assault on the middle class" and a threat to retirement security of workers. To be sure, Cuomo's proposal was poorly conceived and inadequately funded. But instead of lobbying for a better DC plan, like the one already chosen by three quarters of the professors at the State University of New York (SUNY) and City University of New York (CUNY), CSEA President Danny Donohue and other union bosses loudly, persistently and categorically rejected any kind of personal retirement account option.
Continue reading Hypocrisy, thy name is CSEA.
While one can never get too confident in the reformist promises of Los Angeles Mayor Antonio Villaraigosa, it seems unlikely that the Democratic chief executive of America's second-largest city would pick a fight with public employees just for sport. And with the City of Angels facing a $220 million budget deficit, Villaraigosa is beginning to talk tough about a substantial increase in the retirement age for the city's new hires.
Maine has been considering a "right-to-work" bill for the last two legislative sessions that would eliminate "fair share" or "agency shop" fees in government--or what critics call "forced dues." If the current bill were to pass, these practices would remain legal in the private sector, where the argument for them is stronger. The sort of step being considered in Maine is among those that seek to reduce the number of significant advantage public employee unions enjoy over other interest groups in terms of retaining members and raising revenue. It shows that there are multiple routes to reconfiguring government labor relations that don't touch on collective bargaining.
Several years ago, the Wisconsin Education Association Council sued to stop the operation of one of the state's first 'virtual' public charter schools. A resulting political compromise piece of legislation allowed these online public schools to continue to operate, but imposed a strict enrollment cap of 5,250. In his first state budget, Gov. Scott Walker eliminated that cap. This and other pro-student efforts have earned him praise from a variety of education reform advocates. Just this week, the Wisconsin Coalition of Virtual School Families named Walker their Rock Star of Education Reform. Bill Osmulski reports from Madison.
If Jon Corzine thought pension obligation bonds were 'the worst investment idea in the world' then how could anyone else possibly think they are a good solution to unfunded pension liabilities? Steve Malanga discussed the pension crisis and the terrible ideas that are being used to "fix" the problems in cities and states across the country on Fox Business Network's "Varney & co." yesterday. As the segment wrapped up, Stuart Varney paid Steve a compliment noting "You know more about this than most people, I do believe."
Watch the segment below to see why Stuart is so impressed with him.
Pat Snyder, host of "Wisconsin Morning News" interviewed Daniel DiSalvo about his new report, Dues and Deep Pockets: Public-Sector Unions' Money Machine, earlier this week. Listen to their discussion where Pat presses Daniel with poignant questions about the content of the report and it's implications on Wisconsin.
According to a new poll released today by Marquette University, Wisconsin Governor Scott Walker holds a narrow lead over potential recall election challengers, although his stiffest potential opponent, Milwaukee Mayor Tom Barrett, isn't even in the race:
Continue reading Walker in Slight Lead in New Wisconsin Poll.
The Los Angeles Times reports today that states and cities are increasing their use of borrowing to finance pension fund shortfalls, even though the practice has been disastrous for most governments who have used it in the past. According to the Times, issues of pension obligation bonds, which even former Jersey Gov. Jon Corzine once called "the dumbest [investment] idea I ever heard" (so you can imagine how dumb they must be) has increased since 2009 from $1.4 billion to $5.2 billion last year. This despite the fact that many POBS are under water.
Continue reading Pension bonds: Bad idea that won't die.
These are not exactly the salad days of public pension reformers in California. As Dan Walters, the dean of Golden State political columnists, notes in his latest at the Sacramento Bee, Governor Jerry Brown's statewide reform initiative is withering on the vine thanks to opposition from legislative Democrats and their union allies. Organized labor is also pulling out all the stops to obstruct reform efforts in the cities of San Jose and San Diego. There is one bright spot, however: in San Diego, the electorate doesn't seem anxious to buy what big labor is selling.
The costs of higher education have been rising dramatically over the last two decades. 
Consequently, many students graduate burdened with debt or forgo college altogether. Parents question the value of much of the material taught. And some studies suggest that students don't learn much. Nevertheless, a four-year degree is increasingly necessary for economic success and security. As Stuart Butler argues, this is an industry ripe for change.
One of the costs of higher education, the faculty, are coming under scrutiny. "Overlooked in the debate," David C. Levy writes in the Washington Post, "are reforms for outmoded employment policies that overcompensate faculty for inefficient teaching schedules."
Consequently, many students graduate burdened with debt or forgo college altogether. Parents question the value of much of the material taught. And some studies suggest that students don't learn much. Nevertheless, a four-year degree is increasingly necessary for economic success and security. As Stuart Butler argues, this is an industry ripe for change. One of the costs of higher education, the faculty, are coming under scrutiny. "Overlooked in the debate," David C. Levy writes in the Washington Post, "are reforms for outmoded employment policies that overcompensate faculty for inefficient teaching schedules."
Continue reading Do lazy professor drive up the cost of higher education?.
In Orange County, the local Republican Party chairman, Scott Baugh, is headlining a fund-raiser for a supervisorial candidate, Todd Spitzer -- a former Assemblyman, prosecutor and previous board of supervisors member. This is significant because Spitzer, a close ally of the public safety unions, let the charge in 2001 for a retroactive pension increase that dramatically boosted the county's unfunded pension liability.
Continue reading Local GOP lines up behind pension-hiker.
All issues these days seem to lead back to the pension issue, and the latest Southern California battle over rising water rates is no exception. Some cities are responding to rising rates from the privatized Golden State Water Company by coming up with their own taxpayer-funded plans to take over the water systems.
Continue reading Current water wars lead back to pension tsunami.
Pension expert David Crane, a Stanford lecturer and former Gov. Schwarzenegger's top pension adviser, threw water on Gov. Jerry Brown's plan to raise taxes. In Crane's view, a tax hike that doesn't address the state's massive unfunded pension liabilities won't do much to save current services. This is significant because Crane is well respected and he comes from the Left side of the political spectrum. He writes in the Sacramento Bee:
Continue reading Tax hikes without reform would be 'lethal'.
During his recent trip to Wisconsin, Daniel DiSalvo sat down to discuss his new report, Dues and Deep Pockets: Public-Sector Unions' Money Machine, with David Haynes of the Milwaukee Journal Sentinel for a special segment of "Fourth and State." He outlines the source of public-sector labor unions' unchecked political power and how this provides unions with an unfair edge over other interest groups. Watch the interview below.
Madison, Wisc...] Wisconsin gained 8,300 jobs between January and February this year, according to the Federal Bureau of Labor Statistics, and the unemployment rate held at 6.9 percent, down from February 2011′s mark of 7.6 percent.
"Wisconsin's preliminary February unemployment rate remains below 7 percent, the lowest it's been since December of 2008, and well below the national rate," said Wisconsin Department of Workforce Development Secretary Reggie Newson "In addition, the preliminary monthly estimates indicate continued job growth overall."
Wisconsin added 4,000 private sector jobs in February. This follows January's estimated private sector job growth of 15,700 jobs.
Continue reading Wisconsin's jobs surge continues.
Dan DiSalvo's new report for the Manhattan Institute points to the enormous resources that government unions garner through dues to spend on influencing policy in lobbying and political advertising. Increasingly, union leaders find themselves being called by the media to justify this enormous spending, and their justifications can be wildly creative, according to Mike Antonucci at the blog Intercepts.
Continue reading Tough times require big bucks.
Yesterday, I noted that the group "Wisconsin for Falk" began running ads against Governor Scott Walker in the forthcoming Wisconsin recall election. While "Wisconsin for Falk" sounds very much like a campaign committee for Kathleen Falk, Walker's primary union-backed challenger, it is actually a third party group unaffiliated with Falk's actual campaign. (Despite their ability to magically obtain video of Falk posing for them, runway-style.)
Today, Mother Jones, of all places, exposes what everyone suspected about "Wisconsin for Falk:" it's funded with government union cash:
Today, Mother Jones, of all places, exposes what everyone suspected about "Wisconsin for Falk:" it's funded with government union cash:
Continue reading Surprise! "Wisconsin for Falk" is government union money.
Wisconsin is going to be the epicenter of American politics this spring. The recall election of Governor Scott Walker and four state senators will be a litmus test for national trends. Wisconsin is a purple state, nearly evenly divided between the parties, and polarized over Act 10--the legislation which dramatically changed the state's public sector labor law. I just spent a little time in the Badger state...
Continue reading The view from Madison.
With the Wisconsin gubernatorial recall election tentatively set for June 5 of this year, anti-Governor Scott Walker forces have already taken to the air to support the preferred union candidate, former Dane County Executive Kathleen Falk. In January of this year, Falk publicly promised the public sector unions that she would veto any budget that didn't fully restore their ability to collectively bargain. That promise has begun to bear fruit, as a pro-Falk ad called "Believer" has begun to run, paid for a group called "Wisconsin for Falk." Here's the ad:
Continue reading Anti-Scott Walker forces take to the air.
Government union leaders as well as their political allies around the country have often blamed the state and local pension crisis, in which governments have built up some $3 trillion in unfunded liabilities, on the 2008 market crash, not on unaffordable pension systems. They see themselves as a victim of Wall Street machinations.
But David Crane, a California Democrat who served as an adviser on pensions to Gov. Arnold Schwarzenegger, reminds us in a recent op-ed why that's simply not true. As Crane notes, the market's recent rise has put the Dow Jones Industrial Average above where it was before the crash in 2008. But pension funds remain seriously underfunded and annual required pension contributions are growing for states, cities and school districts around the country.
But David Crane, a California Democrat who served as an adviser on pensions to Gov. Arnold Schwarzenegger, reminds us in a recent op-ed why that's simply not true. As Crane notes, the market's recent rise has put the Dow Jones Industrial Average above where it was before the crash in 2008. But pension funds remain seriously underfunded and annual required pension contributions are growing for states, cities and school districts around the country.
Continue reading Wanted: Dow 31,000.
On The Wall Street Journal's "Opinion Journal," E.J. McMahon discussed New York's pension deal that Governor Andrew Cuomo struck with unions. He addressed the governor's claims that the reforms were "bold" and "transformational" by describing the non-reforms as nothing more than "significantly incremental." McMahon addressed the premature celebrations from Albany and highlighted some of the points in his recent Newsday article "Don't believe Cuomo's pension hype." Watch the segment below:
Public school teachers in New York's Long Island suburbs are among the best compensated in the nation--and, not by coincidence, their unions are both prosperous and powerful. Nonetheless, as detailed in Newsday, taxpayers are actually footing the bill for many union leaders' salaries.
Continue reading Long Island's non-teaching teacher union leaders.
Even by California's debauched standards of public thrift, a scandal emerging this week out of the University of California system represents a new low.
UC-Berkeley administration Diane Leite is on the hot seat after it was revealed that a purchasing officer she supervised saw his annual salary nearly triple from just over $40,000 in 2005 to $120,000 in 2010 -- pay increases pushed by Leite at the same time she was having an affair with him.
UC-Berkeley administration Diane Leite is on the hot seat after it was revealed that a purchasing officer she supervised saw his annual salary nearly triple from just over $40,000 in 2005 to $120,000 in 2010 -- pay increases pushed by Leite at the same time she was having an affair with him.
When Wisconsin Governor Scott Walker introduced his proposal to scale back public sector collective bargaining last year, organized labor immediately announced that their opposition "wasn't about the money." State union leaders said that they would accept Walker's proposed higher health and pension contributions if they were able to retain the ability to collectively bargain in the future.
Continue reading Teachers' unions suddenly at odds in Wisconsin.
Daniel DiSalvo's PSI piece refers to an outrageous situation, described in a George Will column that quotes Goldwater Institute journalist Mark Flatten's work exposing how taxpayers in Arizona pay for the salaries of union officials. I wrote about this in 2010 regarding the prison guards:
Continue reading It's common for taxpayers to fund union work.
"Release" or "official" time is the innocuous sounding name for governments paying the salaries of public employee union officials. George Will's column yesterday hits the tip of an iceberg. He relies on a report from the Goldwater Institute, whose investigative work uncovered that the City of Phoenix is paying the $900,000 annually to the officers of the Phoenix Law Enforcement Association (PLEA), the police union. These monies pay them to work exclusively on union business, including lobbying. In addition, the officials of the six other public employees unions in the city also have full-time city jobs. The total annual bill annual for release time is $3.7 million. And this is in a weak union state. This is not the only way that cities and states can pay for union officials...
Continue reading How government pays unions officials' salaries.
In my column today for Bloomberg, I point to unfunded retiree medical benefits as a problem that potentially could be bigger than the pension mess because localities don't pre-fund these benefits. And a state Supreme Court ruling in November makes it harder to rein in these costs given that the justices found that non-vested benefits could actually be vested if there is an implied promise made by elected officials.
Continue reading Health benefits might dwarf pension problem.
In the wee small hours of the morning--when this kind of stuff usually happens in Albany--groggy New York lawmakers approved a pension reform bill. It's a heavily modified version of Governor Andrew Cuomo's Tier 6 pension proposal, reducing benefits (but by much less than he proposed) while producing net projected savings based on an increase in employee contributions.
Continue reading NY Legislature staggers to pension reform.
Yesterday the Denver Post's Karen Crummy pulled back the curtain on the hefty amount of public sector union political spending in the great swing state of Colorado. It's a real eye-opener for the majority who aren't tuned in so closely. The rest of us? Not so much (though even I was taken aback by Crummy's preceding piece that chronicled a 150-to-1 advantage for Democrats in 2010 super PAC spending). Not that anyone questions the right of government employees to band together in their private lives to speak freely and influence elections. It's the fact that their political fundraising machine depends on two privileged factors: 1) access to government payroll systems and 2) automatic dues collections that in many cases employees have a very difficult time getting out of.
Continue reading Government union giving drives Colorado elections.
We commissioned a poll at the Empire Center -- asking New York public school teachers how they felt about various pension reform options floating around the state capitol -- and the results are truly eye-opening.
Seventy-one percent of those teachers would support giving new hires an option between a
Continue reading We want choices, say New York teachers.
State budget deficits are finally starting to ease thanks to upticks in collections of personal income and sales taxes. But just in time, municipalities face declines in property tax revenues, as housing price declines finally drive down assessments. I wrote about this coming problem back here, noting that:
Property taxes--the main source of revenue for many municipalities--actually kept rising during much of the 2008 and 2009 downturn, reflecting multiyear assessments that still included robust economic years...But collections are starting to plummet. That drop could continue for a while..
Continue reading Property tax woes mean more local budget pain.
The government unions battles across the country to defend unions' privileged bargaining and mandatory union dues protections are coming to a head in Michigan. The state's government unions began a ballot initiative that would place their privileges into the state constitution. Not only would possibly negate a number of laws democratically enacted in recent years, and would empower unelected bureaucrats and union chiefs at the expense of elected officials.
Continue reading Michigan unions file ballot initiative to protect their privileges.
CalPERS -- California's enormous public pension fund -- is in financial trouble. And everybody knows it. A study released in December by Stanford professor (and former Democratic member of the State Assembly) Joe Nation estimated that adding CalPERS' unfunded liabilities to those of CalSTRS and the University of California Retirement Plan (the state's other large public-sector pension funds) resulted in a projected shortfall of nearly $500 billion.
Despite this impending tsunami, however, the CalPERS board seems more concerned with containing the political fallout from the coming crisis than resolving it.
Despite this impending tsunami, however, the CalPERS board seems more concerned with containing the political fallout from the coming crisis than resolving it.
Continue reading California pension fund obscures shortfall for political purposes.
Public sector plans are in trouble because for years they have valued their liabilities as though they are risky investments. The practical result of using a high discount rate - on average 8 percent - is that it results in a smaller present value for the liability and requires less money be set aside today to grow into tomorrow's benefit.
Continue reading The practical results of discount rate reduction.
The governor is talking tough (when he isn't comparing himself to Gumby, that is), unions are blaming everything on "Wall Street greed," and lawmakers in both parties would prefer to remain noncombatants. Welcome to New York State's pension reform war.
It began in January, when Governor Andrew Cuomo rolled out a so-called Tier 6 pension plan as part of his 2012-13 budget proposal. The plan would retain the existing defined-benefit system while raising the retirement age, increasing employee pension contributions and reducing the benefit level for new employees only.
Continue reading Meanwhile, in Albany ....
In my column this weekend, I write about a proposal by the state's Democratic leaders to provide a new state-created mini Social Security system for private workers. It's the new Democratic talking point -- public pensions aren't a problem. The real problem are stingy private pensions. Never mind that public pensions are bankrupting cities. As I wrote:
Continue reading California Democrats throw public some crumbs.
A recent AP story shows just how much public employee unions want to put every issue in the conceptual basket of collective bargaining. The story describes the progress of a bill working its way through the Michigan legislature that would eliminate dues check-off for teachers. The lead sentence reports that "unions consider [this] another attack on collective bargaining rights." Its curious that a procedure where the government employer undertakes the administrative burden of withholding union dues and sending them to the union is considered part of "collective bargaining." Admittedly, in some jurisdictions dues check-off is a benefit unions seek to secure through collective bargaining. In other places, it is provided for by law and is not a subject of bargaining. In response, teachers unions in Michigan are launching a petition drive to enshrine collective bargaining rights (broadly defined) in the state Constitution through an amendment.
Continue reading What's the link between dues check off and collective bargaining?.
Much attention has focused on public employee union spending in campaigns and on ballot measures. But between elections they are no less active, and possibly even more so. While spending on lobbying at the state level is notoriously difficult to track accurately, news reports indicate that in strong-union states, like New Jersey and California, public sector unions are the top lobbying outfits. In the Garden State, the teachers unions spent $11.3 million on lobbying, more than any other group in the state. The closest rival was Verizon, which spent a comparatively paltry $1.2 million. On the other coast, in the Golden State in 2011, public employee unions spent over $11 million on lobbying, far outpacing business interests.
When news broke on Thursday that Wisconsin had gained 15,700 private sector jobs between December and January, Democrats wasted no time in ripping Governor Scott Walker, explaining how these jobs gains were actually a bad thing. Of course, Democrats, aided by the public sector unions, are trying to recall Walker from office - which explains the preposterous contortions they're willing to get themselves into to hide Walker's successes.
Continue reading It's still working in Wisconsin.
There's much disagreement among fiscal conservatives on the usefulness of municipal bankruptcy in helping cities and counties get out from under the crushing public employee compensation burdens they've placed on themselves over the past decade or so. Vallejo emerged from bankruptcy without abrogating pension deals, but nevertheless unions are fearful that a wave of municipal bankruptcies could harm their pay and benefit packages. Whatever one's views,
Continue reading Sky didn't fall, but pols went back to spending.
The city of Palo Alto, California -- home to Stanford University and a many of Silicon Valley's most prominent tech companies -- isn't exactly lacking in resources. But even by the exalted standards of this affluent community, they're overpaying for public safety.
According to a report in the San Jose Mercury News, 77 of the city's 100 highest paid employees are police officers or firemen, all of whom make over $150,000 a year and many of whom are already retired. The highest paid individual was a retiring police lieutenant who took home over $400,000 in 2011 -- more than half of which was monetized sick leave and vacation time.
According to a report in the San Jose Mercury News, 77 of the city's 100 highest paid employees are police officers or firemen, all of whom make over $150,000 a year and many of whom are already retired. The highest paid individual was a retiring police lieutenant who took home over $400,000 in 2011 -- more than half of which was monetized sick leave and vacation time.
Continue reading California's public workers: defining hardship down.
According to the U.S. Bureau of Labor Statistics, Wisconsin gained 15,700 private sector jobs between December 2011 and January 2012. Consequently, the state unemployment rate has dropped to 6.9 percent, well below the 8.3 percent national unemployment rate.
The BLS report also revised preliminary numbers from the second half of 2011, which overstated job losses between July and December. Previously, the BLS had reported job losses of 35,600 in the previous six months - today, they reported only 22,700 job losses during that period.
The BLS report also revised preliminary numbers from the second half of 2011, which overstated job losses between July and December. Previously, the BLS had reported job losses of 35,600 in the previous six months - today, they reported only 22,700 job losses during that period.
Continue reading Wisconsin gains 15,700 private sector jobs in January.
The insolvency of Stockton, Ca., provides a reminder of another big fiscal woe that states and cities are allowing to build up without much in the way of reform, namely the staggering cost of providing retirees with health care for the rest of their lives. Many places like Stockton, which has an astounding $417 million in unfunded liabilities for retiree health care, have done little to set aside funds for this cost and instead have simply been trying to pay the benefit out of their everyday budgets as more and more workers retiree. According to a new accounting by Bloomberg Ranking, among states unfunded liabilities for these so-called other post-employment benefits (other than pensions, that is) now amount to $627 billion.
Continue reading Health care for life at a staggering cost.
Last week, I pointed out how Wisconsin's public unions were trying to kill a proposed iron ore mine in the northern part of the state, thereby eradicating thousands of potential private-sector union jobs. Last night, it became official - after the state senate voted down a bill approving the mine, Gogebic Taconite announced they were abandoning their mining plan and pulling out of the state.
Continue reading Public unions drive private union jobs out of Wisconsin.
Critics of California's fiscal turpitude often wonder why the state can't get its arms around its hemorrhaging pension obligations, its perpetually unbalanced budgets, or its endless union giveaways. As it turns out, it's not just a matter of scale. California government can't even get the small things write; small things like not writing tens of thousands of dollars worth of checks to a convicted murderer.
Continue reading California writes $20,000 in unemployment checks to imprisoned murderer .
New York Times columnist Paul Krugman has been perhaps the chief advocate for Keynesian style economic stimulus from government throughout this long downturn. While he's focused much of his attention on federal spending, he's also taken on cuts in state and local government, arguing that the layoffs of cops, teachers and firefighters have prolonged the recession. He's advocated for more aid from Washington. In today's column, for instance, he compares government hiring and spending during the recovery of Ronald Reagan's first term, in which payrolls were growing, to today's situation, with a shrinking government workforce. But Krugman's analysis is short on context.
Continue reading Krugman and the retrenchment of local government.
He discussed his recent posts on PublicSectorInc.org regarding Stockton: yet another California city on the brink of bankruptcy. Listen to his segment on KFI AM 640's "John and Ken Show" here.
One of the consistently remarkable traits of public-sector obstructionism is how often it's penny wise and pound foolish for the very unions that are pushing it.
Exhibit A: The San Diego Unified School District, where the local teachers unions quietly killed a plan to rein in health care costs -- only to see a spiraling budget deficit result in over 1,600 teaching jobs being placed on the chopping block.
Exhibit A: The San Diego Unified School District, where the local teachers unions quietly killed a plan to rein in health care costs -- only to see a spiraling budget deficit result in over 1,600 teaching jobs being placed on the chopping block.
Evidence keeps mounting for California cities that letting CalPERS manager their pension money is a losing strategy. In December I described an academic study of CalPERS investing which chronicled a series of bad decisions that cost taxpayers hundreds of millions of dollars and led to the giant fund seriously underperforming its aggressive investment targets. Now we learn that the city of Stockton, on the verge of declaring bankruptcy, owes some of its woes to its misplaced faith in CalPERS investing acumen.
Continue reading Letting CalPERS manage your money.
As I've stressed here and here, public and private sector unions may be of the same genus, but they are really different species. Hence one's views of private sector unions cannot and should not be transposed on those in the private sector and vice versa. While public sector unions remain vibrant, the private sector labor movement has nearly disappeared. According to the Bureau of Labor Statistics, it now only represents 6.9% of the 103 million workers in the private sector and a minority of all union members. This is sparked heated calls for reviving unionism in the private sector. But how to do that remains a difficult proposition.
Continue reading Is this how to revive private sector labor?.
The latest tack by California unions has been denial when it comes to pension reform. The unions claim that there is no pension unfunded liability problem, and they have claimed that San Jose Mayor Chuck Reed, a Democratic reformer, is overstating any sort of problem. Here is a good rebuttal in today's Sacramento Bee from former Democratic Assemblyman Joe Nation, now a Stanford professor, and his researcher, Dakin Sloss:
Continue reading Rebutting the union disinformation campaign.
