Author Archives: afscme

Reforming Public Pay and Benefits

Source: Thom Reilly, State and Local Government Review, Vol. 45 no. 1, March 2013
(subscription required)

From the abstract:
State and local governments are grappling with huge unfunded liability costs centered on public sector pensions and other postretirement benefits (OPEBs). Payments to cover these liabilities are crowding out revenues for essential public services. The policies and practices that determine public sector pay and benefits have become a significant part of the national conversation in the United States and Europe. This article provides commentary and a summary of a book addressing this topic: Rethinking Public Sector Compensation: What Ever Happened To The Public Interest? Recent national reforms on public pay and benefits are documented as well as the subsequent legal challenges that have emerged in several jurisdictions. The article conclusion is that it is imperative that these unfunded liabilities be addressed in a timely, comprehensive and fair manner, and that public sector compensation must be sustainable and reflect the reality of a new emerging workforce. However, the outcome from current litigation in several states will either significantly expand or restrict the ability to manage these public retirement plans.

The Wage–Health Insurance Trade-off and Worker Selection: Evidence From the Medical Expenditure Panel Survey 1997 to 2006

Source: Stéphanie Lluis and Jean Abraham, Industrial Relations: A Journal of Economy and Society, Volume 52, Issue 2, April 2013
(subscription required)

From the abstract:
Key provisions within healthcare reform will likely further increase the cost of employer-sponsored insurance. Theory suggests that workers pay for their health insurance through a wage offset. We investigate this issue using data from the Medical Expenditure Panel Survey. GMM estimates aimed at correcting for endogenous worker mobility reveal evidence of a trade-off for workers who are offered health insurance as the only fringe benefit. On the other hand, employees in establishments with a more comprehensive set of benefits enjoy higher wages relative to employees in establishments that offer no benefits. Health also affects the wage–health insurance trade-off.

Money Matters — The Future of Water Infrastructure Asset Management, Part 2: Protect Your Funding . . . Because All Roads Lead to Finance

Source: Gregory M. Baird, Journal AWWA, Volume 105, Number 3, March 2013
(subscription required)

From the abstract:
How many master plans, project designs, and innovative engineering approaches have been shelved only to gather dust after hundreds of hours of good engineering work? How many capital-budgeted and -approved projects have been deferred or simply canceled after years of dedicated foresight, project planning, and development? The level of frustration among both public and private engineers has heightened in this new economy, which is fraught with uncertainty and doubt. Operations and maintenance personnel share in the experience, with program reductions, hiring freezes, and resources being stretched so thin that they affect service levels and customer response times.
See also:
Money Matters — The Future of Water Infrastructure Asset Management, Part 1: Organizing a Centralized Cost Database
Source: Gregory M. Baird, Journal AWWA, Volume 105, Number 1, January 2013
(subscription required)

How Public Libraries Have Become Spare Homeless Shelters (Hard Times USA)

Source: Evelyn Nieves, Alternet, March 6, 2013

As social safety nets shrink, libraries are more vital than ever as safe spaces for people with nowhere else to go…. More and more, libraries are hiring social workers, nurses and other outreach workers to serve their neediest visitors, with the Sacramento, Tulsa and Salt Lake City libraries being three of the latest. (The Greensboro, N.C. library has even started serving free meals, along with talks with prominent guests, on Mondays through the winter.) More and more, libraries are also setting rules for behavior. Many are banning sleeping, lying on the floors or bathing in the bathrooms. But striking a balance between making the destitute feel welcome and the general library public feel comfortable is proving tricky. …

Inequality in the Social Security Debate

Source: Sarah Anderson and Scott Klinger, Institute for Policy Studies, March 14, 2013

How benefit cuts would impact health industry CEOs versus home health aides…The Fix the Debt campaign, a large, well-funded corporate lobby group, has been leading the charge for massive new corporate tax cuts paid for with cuts to Social Security, Medicare, and Medicaid. The nearly 100 CEOs who are leading Fix the Debt have relatively little to lose from cuts to these benefit programs, particularly when compared with low-wage workers. To illustrate this disparity, we analyzed the potential impact of several proposed Social Security reforms on two Fix the Debt CEOs from the health care industry and a representative low-wage worker from that same sector….

The CEOs of CVS Caremark and UnitedHealth illustrate how lucrative the health industry can be for those at the top. At CVS Caremark, Merlo has accumulated a retirement stash of $46 million, the fifth-largest of the Fix the Debt member CEOs.2 If invested in an annuity at age 65, Merlo’s employer-provided nest egg would deliver him a monthly retirement check of $263,169 for the rest of his life. Combined with Social Security benefits, Merlo could expect monthly retirement income of $267,445 on average over the next 20 years.

UnitedHealth CEO Stephen Hemsley, after only 15 years in the job, has an $18 million retirement cache, enough to provide him a $104,671 monthly retirement check if he converted his golden egg into an annuity at age 65. Combined with Social Security benefits, Hemsley could expect average monthly retirement income of $108,607….

In contrast to the Fix the Debt CEOs, home health aide Rhonda Straw will need to rely almost entirely on Social Security in her retirement years. …Despite the high level of responsibility in her job, she has not earned enough to put much away for her retirement. Her current wage is $9 per hour. (The median wage for the nearly one million people in her profession across the country is $9.91 per hour, or $20,610 per year, according to the Bureau of Labor Statistics)….Together with her Social Security benefits, her retirement income over 20 years is expected to average about $2,704 per month.

Doing the Math: The Cost of Publicly Funded ‘Universal’ Pre-K

Source: Alex Holt, New America Foundation, Education Policy Program, March 14, 2013

During the media frenzy that followed President Obama’s unprecedented call for expanding pre-K to all four-year-olds in the United States, we estimated that the additional cost to states and the federal government, combined, to be somewhere between $10-15 billion per year. We estimate that the feds and the states currently spend about $9 billion on pre-K for four-year-olds. We wanted to explain exactly how we came to that conclusion…

Trends in 401(k) Plans and Retirement Rewards

Source: WorldatWork and the American Benefits Institute, March 2013

From the press release:
Even through volatile economic conditions, employers have demonstrated an unwavering commitment to the 401(k) system according to a study released today by WorldatWork, a global HR association, in partnership with the American Benefits Institute, the research and education affiliate of the American Benefits Council. Despite anecdotal reports of companies suspending or eliminating their 401(k) match to cut costs during the depths of the recession, 88% of respondents said their company maintained matching contributions during the previous five years.

The 2013 Trends in 401(k) Plans and Retirement Rewards survey of 476 American Benefits Council and WorldatWork member companies provides a snapshot of defined contribution plan activity at major American companies. The report summarizes findings on participation and contribution rates, plan design and withdrawal activity. The 2013 Study is a continuation of a survey released first in 2002 and most recently in 2009….

Key Findings:
– For more than three-quarters (77%) of surveyed companies, there has been no change in the 401(k) matching formula during the past 12 months, nor are they currently considering a change in the near future.
– In 2012, for companies providing investment advice services to employees, 67% reported that advice is provided through an independent adviser. This is a significant increase from the 47% who reported using an independent adviser to provide investment advice in 2008.
– A strong majority (73%) of companies in the survey reported that 70% or more of their eligible employees currently participate in their organization’s 401(k) plan.
– Compared to 2008, fewer employees are now taking hardship distributions and loans from their 401(k) plans.