June 2012 Archives
They contribute 2 percent of income.
See the graphic and read about Connecticut's other pension plans at Raising Hale.
Norwalk, Conn. - State and local governments will need to disclose unfunded pension promises alongside debt on their balance sheets beginning in 2015 after an oversight board voted unanimously Monday to change relevant accounting rules.
The rule change will not change how much debt governments actually have, just how they are required to report the debt.
Despite recent calls for a federal bailout of the state and local government labor force, it seems self-evident that government workers enjoy more job security than their private-sector counterparts. We've all heard the anecdotes about governments at every level struggling to discharge tenured employees even when there is clear evidence of incompetence or even criminal behavior. These stories are seemingly unthinkable in the private sector--or at least in the non-unionized private sector, where employment is usually at will. We also know that, statistically, discharge rates in the public sector are much lower than in the private sector.
Which is why it is surprising that an increasing number of public-sector advocates are making the claim that job security for public employees is some kind of illusion.
"This morning, the Supreme Court ruled that public sector unions have to get "affirmative consent" from non-members if they want to charge them for things like political spending. This groundbreaking precedent will have a huge impact on the ongoing debate on just how far public sector unions can impinge on the free speech rights of workers. . ."
Last Thursday I appeared on Wisconsin Public Radio to discuss the cost of the state's pension system and the need for reform. I was interviewed for the first half hour, and then Betsy Kippers, a representative of the Wisconsin Education Association Council (WEAC), was the guest for the second half hour.
I had hoped we could both be on at the same time. Frankly, I did not think Ms. Kippers had any serious arguments to make, and I wanted listeners to realize that.
The Los Angeles Times ran a story today about a deal between the Los Angeles Unified School District and the teachers' union, in which teachers agree to a shorter work year as a way to save the struggling system money. This represents the fourth consecutive year teachers have voted for a shorter work period. As the LA Times notes elsewhere, this is actually in the interest of teachers, not students:
Some critics accuse [school] officials of taking the path of least resistance -- under pressure from influential teacher unions. There is, in fact, a strategic advantage for unions in taking furlough days and shortening the school year. The salary cuts that result are temporary; they expire after one year and must be renegotiated every year. In the process, teachers avoid making permanent concessions on pension or health benefits. L.A. Unified employees still pay no monthly premiums for health insurance for themselves or family members. And teachers still receive raises based on experience or additional education.
The voters of Wisconsin and California spoke loud and clear. They are tired of the special privileges and lavish benefits given to government unions and paid for by taxpayers. Apparently unions in Michigan did not get the message.
Last Wednesday, supporters of the so-called "Protect Our Jobs" Constitutional Amendment (POJA) submitted 684,286 petition signatures to the Michigan Department of State -- more than double the amount needed to put the measure on the ballot in November.
Last year, Rhode Island General Treasurer and 2011 Manhattan Institute Urban Innovator award winner Gina Raimondo crisscrossed the Ocean State with a simple message to lawmakers, citizens and public employees: the public pension problem was about math, not politics. Her successful pension reform proposal was based on a report entitled "Truth in Numbers," which shined a light on the real costs and liabilities facing her state. It was an honest effort that forced everyone to take a hard look at the facts, and in the end, take action. Now a national, non-partisan coalition of policy organizations and citizen groups - Truth in Pensions - has come together to demand the same sort of transparency in state and local government pension accounting.
One of my colleagues here at the Manhattan Institute, Fred Siegel, wrote a great post-recall election piece for National Review Online that does an outstanding job of framing the national and historical implications of Walker's victory in Wisconsin. Siegel is honest about the future of public-sector unions and makes it clear that June 5, 2012 will not be the last "show of force" in this ongoing saga. Be sure to give it a read. . .
the public sector is doing so poorly these days, as President Obama claimed on Friday, is because the cost of employing a government worker has soared, forcing cutbacks in cities, towns, school districts and state governments. Josh uses San Jose as an example. There the average cost of employing a full-time worker is a whopping $142,000 a year, up 85 percent in 10 years thanks to the soaring cost of employee benefits. Josh made a similar point in a 2010 Realclearmarkets column that disclosed that the average cost of employing a cop in Oakland is $162,000 annually, which is why the city cut 10 percent of its police force after the union refused to make benefits concessions. There are many other examples:
"Just looking at what he's asking for, I feel pretty confident he'll file bankruptcy as soon as they give him authority," Steve Leonesio said.
Must-reads for today: Two fantastic op-eds by PSI contributors on the results of the recall election in Wisconsin. The first by Steven Malanga on RealClearMarkets.com shows that there's implications for other states - like Illinois:
Scott Walker decided not to hide from his state's fiscal woes, and he spent the last year fighting for his political life as a result. Illinois' lawmakers have been hiding from their budget plight since the downturn began, and they ran away from pension reform again last week to avoid a fight with the state's government unions. But today it's Walker's Wisconsin that is the better for his battle.
In Politico, Michael Allegretti takes a deeper look into how Walker changed the game by reshaping the narrative:
Shortly after the recall was announced, he established three clear criteria on which the relationship between public workers and taxpayers should be evaluated: equity in employment benefits and burdens between public and private workers; the preservation of core government services for all Wisconsinites; and--linked to both these goals--the improvement of the Badger State's economic competitiveness.
There's a new fiscal reality for states and municipalities. As states fight to get back on track, Walker is now the de-facto model for what can - and needs - to be done.
Ready for some numbers?
This morning I had the pleasure of joining central Wisconsin radio host Pat Snyder to discuss today's recall election in Wisconsin and the larger lessons that the nation must takeaway from this battleground state. Wisconsin shows that conservatives can advocate cutting taxes and limiting government without necessarily slashing the vital services that taxpayers demand." Listen to the segment on WSAU's "The Pat Snyder Show" here.