Back in 2003 and 2004, the state of Wisconsin and many of its municipalities faced growing pension liabilities. To deal with that, the state essentially punted the problem down the road by borrowing $1.8 billion. It put about $700 million into its pension system and used another $782 million to finance payoffs to retiring state workers who had accumulated unused vacation time. Other governments in the state joined the pension debt rush, including the Milwaukee Public Schools, which borrowed $165 million. It's important to keep those numbers in mind amid reports that Wisconsin has the best-funded pension system in America.
This week, California is going through the final stages of its annual collective meltdown over putting together a state budget. The final deals are being cut, the interest groups are screaming, and the state's more than 37 million citizens, as usual, are just shrugging it off (if they're paying attention at all). You would think, given that the state is trying to patch a $16 billion budget deficit, that Governor Jerry Brown's administration would be focusing solely on the mechanics of state finances. But according to reports out of Sacramento this evening, Brown is also attempting to use this an occasion to get a strategic advantage in his quest to increase both sales and income taxes for Californians.
One of the key arguments that tax-hikers have used to promote Gov. Jerry Brown's tax-hike initiative in November is that because of budget cuts, many state parks will close. Californians, myself include, love the state's natural beauty and its magnificent public parks. But news coverage rarely mentions the obvious: almost none of the 70-plus parks targeted for shut down will actually be shut down. Private foundations and even some local governments are picking up the slack. The state is having training seminars for private groups that want to run these parks. This is a good news story, an example of how privatization and private philanthropy can help stretch tax dollars. Given the bureaucratic mismanagement that plagues the government-run parks system, this approach might even improve park services.
While the pension problems of K-12 teachers dominate the headlines in California, yet another huge unfunded liability is taking shape in the University of California system, home to the state's flagship universities, such as UCLA and Berkeley. The culprits? You guessed it. A huge wave of impending retirements (which will more than triple the current number of pensioners), a tendency towards excessive benefits (more than 2,000 former employees have six-figure pensions, with a former UCLA dentistry professor topping the list at $337,000 a year), and a long history of failing to fund the obligations.
California legislators increasingly resemble those out-of-touch authoritarians who, huddled up in their government chambers, ignore the revolutions taking place outside their front door. Awash in red ink, even the most liberal cities are passing pension reform by huge margins. The public -- and even polls of Democratic voters -- show strong support for reform. Reformist candidates are winning local office. The U.S. Supreme Court ruled that unions must get the OK from non-members for political spending. Yet the Legislature absolutely will not let pension reform go forward, even a modest plan from a liberal Democratic governor who is a close union ally.
One of the many ways in which California teachers unions resist accountability is through their long-standing opposition to using student achievement as a metric by which to judge the classroom performance of educators (a tool that is used in at least 30 states). The problem for the unions is that this resistance is in violation of the Stull Act, a piece of legislation signed into law by Governor Ronald Reagan in 1971. But a ruling out of Los Angeles County Superior Court earlier this week looks to be bringing the obstruction to an end.
The overwhelming victories for pension reform initiatives in San Diego and San Jose in Tuesday's California primaries were rare occasions for celebration in the fight to take back Golden State government from Public Sector Inc. But don't think for a moment that California's public-sector unions are taking any lessons in humility from their losses at the ballot box. Instead, they're now setting their sites on eliminating the competition, using a variety of methods to ward off privatization proposals that have gained traction in the wake of the state's budget crisis.
A lot of attention rightly has been given to this week's electoral results from Wisconsin -- and to a lesser extent, San Diego and San Jose -- which show some real hollowness in government union political strength. Leaders at the state and city level (Scott Walker foremost among them) have been vindicated for pursuing bold strategies to rein in lavish pension and benefit plans or to limit directly the privileges many unions have enjoyed... and abused. Other governors, legislators, mayors and councilmen are expected to follow suit. Yet at the same time, less-publicized events in a Colorado school district soon may end up resulting in a similar ripple effect.
San Jose's unions didn't really fight the Measure B pension reform that passed with 70 percent of the vote Tuesday, but they did immediately file a legal challenge. Here is Mayor Chuck Reed's response to claims that the reform he championed isn't legal:
The big news is Wisconsin, with Gov. Scott Walker handily beating back a recall challenge and GOP senators/recall targets were headed toward victory, but the California news was good, also. In San Jose, the most far-reaching pension-reform measure in the state was winning with 71 percent of the vote. A pro-reform council member, Rose Herrera, was in the lead to keep her seat.
Here in the Keystone State, taxpayers are on the hook for about $1.7 billion to pensions next year, a figure that will climb to more than $4 billion by 2016. In the face of these exploding costs, a group of GOP senators have proposed legislation that would move all employees hired after December 1, into a new pension plan that would operate like a 401(k) plan instead of the existing defined-benefit system, which provides pensions on a formula of years worked, highest salary and a multiplier based on position.
In 2007, a stealth unionization campaign organized some 60,000 home health care workers in Michigan. Many of these union members are taking care of family members and receive no benefits from the union. But this has not stopped the union from collecting over $30 million to date as automatic union dues deductions from state Medicaid checks.
extend the 
judicious and evenhanded. It clarifies key distinctions, familiar to readers of this blog, between unions in the public and private sectors, and between labor relations in federal and state and local government. The author, Georgetown labor historian Joseph McCartin, deftly shows how the union representing the air traffic controller's sociological and psychological dynamics made a strike almost inevitable. McCartin makes a powerful case that the strike was a huge mistake: no union can (or should) back the president of the United States into a corner. Ultimately, it was suicidal for federal workers to call an illegal strike against a popular president in the midst of an economic downturn.
