Category Archives: Public Sector

Police and Fire Pensions in Florida: A Comparison of Conditions After 10 Years

Source: Joseph Vonasek, Robert Lee, Compensation & Benefits Review, OnlineFirst, April 5, 2021
(subscription required)

From the abstract:
This article is an analysis of 31 defined benefit police and fire pension plans of 20 municipalities in Florida. The authors conducted a similar assessment of these same plans ten years earlier to determine the fiscal impact of these plans due to state mandates that accompany state funding for each of these plans. The current study analyzes key measures of fiscal health over the last ten years for these same plans to ascertain whether the fiscal condition of these plans remained constant, that is, whether underfunded plans continued to be questionably managed and whether well-funded plans continued to be fiscally stable considering economic trends and the lessening of state mandates on the use of state funding for these plans. The findings show that the overwhelming majority of the plans neither significantly changed their financial condition nor their general ranking among the plans evaluated.

Diversity in Public Sector Hiring Report, 2021

Source: NEOGOV, 2021

From the beginning of 2018 to the end of 2019, we analyzed millions of recruitments through our applicant tracking system that serves city, county, and state governments across the country. Analyzing 16 million applicants by race and ethnicity and 17.4 million applicants by gender, we sought to identify where the drop-offs took place throughout the recruitment process by race, ethnicity, and gender.
• Diverse candidates are well-represented in government, but Black candidates have to apply at a significantly higher rate to maintain that representation
• White candidates are always hired above their application percentage, while Black candidates are always hired below their application percentage
• Eligible Black female applicants are 39% less likely to be interviewed and, once interviewed, are 31% less likely to be hired than eligible White male applicants
• Black females were 26% more likely to be interviewed and 33% more likely to be hired when PII blinding was used. When interviewers use a scoring rubric, Black females are 21% more likely to be hired.

Public Pension Governance and Opportunistic Accounting Choice: A Politico-Economic Approach

Source: Odd J. Stalebrink, Pierre Donatella, The American Review of Public Administration, Volume: 51 issue: 3, April 2021
(subscription required)

From the abstract:
The selection of actuarial assumptions used to value state and local government pension liabilities is an important culprit of the looming state and local pension crisis in the U.S. Due to the impact these selection choices have on the value of pension liabilities and annual required contributions (ARC), pension plans are often said to make these choices opportunistically for purposes of freeing up budget resources and making pension funding look better. Using empirical data on 114 state-administered pension plans, this research shows that the likelihood of such opportunistic pension accounting choices (OPAC) increases when the plan is underfunded, organized as a cost-sharing plan, governed by a politically embedded fiduciary body, and when the sponsoring government is surrounded by a high degree of unionization, and is divided in terms of partisan control. The results also show that the likelihood of OPAC decreases when a pension plan is subjected to an audit by a Certified Public Accountant (CPA), suggesting that professional gatekeepers can play an important role in limiting the adverse effects of OPAC behavior, including insufficient ARC payments and reduced transparency of governmental financial reports.

Public Corruption and Pension Underfunding in the American States

Source: Cheol Liu, John Mikesell, Tima T. Moldogaziev, American Review of Public Administration, OnlineFirst, Published February 16, 2021
(subscription required)

From the abstract:
Unfunded public pension obligations represent a great challenge for policy makers in the American states. We posit that a part of pension underfunding relates to the level of public corruption. Empirical findings in the article show that funding ratios in public pension funds are inversely related to the incidence levels of corruption in the state, with other fiscal, political, and institutional covariates held constant. We show that this can happen through higher pension benefits, lower actuarially required contributions (ARCs), lower percentage of actual ARC contributions, and poorer investment outcomes. Based on empirical estimates, we find that a reduction of corruption by one standard deviation around the mean would permit the states to save on pension benefits by 10.24% annually (or US$1,894.64 per recipient), increase required ARC by 4.40%, increase actual ARC contributions by 8.46%, and improve investment returns by 4.72%. Therefore, policies to reduce public-sector corruption, or to improve the insulation of pension funds in relatively more corrupt environments, can make a significant contribution toward tackling the public pension underfunding crisis in the American states.

Reward Preferences of the Youngest Generation: Attracting, Recruiting, and Retaining Generation Z into Public Sector Organizations

Source: Nana Amma A. Acheampong, Compensation & Benefits Review, Volume 53 Issue 2, April 2021
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From the abstract:
Generation Z is the youngest and newest entrants into the workforce. However, confusion about their characteristics, work values, and reward preferences hinders effort to attract, recruit, and retain this generational cohort into public sector organizations. Accordingly, this study investigates effective reward strategies for recruiting and retaining Generation Z into public sector organizations. I used an evidence-based research approach and an aggregative systematic review as the study methodology. The evidence curated from 32 studies reveals how the background and life experiences of Generation Z influence the importance they assign their work values, reward preferences, and how they prioritize rewards in terms of their employment decisions. Additionally, gender also influenced the importance Gen Z assigned to specific rewards. Overall, Gen Z’s strong attractiveness to specific extrinsic and intrinsic rewards makes public sector organizations a likely employer of choice and offers managers a viable strategy for attracting, recruiting, and retaining the youngest generational workforce.

Public Sector Compensation: An Application of Robust and Quantile Regression

Source: Salomon Alcocer Guajardo, Compensation & Benefits Review, Volume 53 Issue 2, April 2021
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From the abstract:
This study assesses whether the theoretical compensation framework used to explain differences in public sector pay among full-time federal and state employees may also explain differences in pay at a local government level. In doing so, this study uses ordinary least squares (OLS) regression to test the application of the theoretical framework to a specific local government. Robust and quantile regression models are used subsequently to validate the findings obtained by the OLS model. The findings reveal that the covariates used to explain differences in compensation among full-time federal and state employees have similar effects at a local governmental level. While the OLS statistical model explains 26% (R2 = .26) of the variance, the robust regression model explains 39% (R2 = .39) of the variance. The percentage of variation explained by the quantile statistical models ranges from 14% (pseudo-R2 = .14) to 50% (pseudo-R2 = .50).

State Employee Health Insurance: Assessing the Scale of State Purchasing Power

Source: John Kaelin, Jim DeWan, Rockefeller Institute of Government, December 2020

From the introduction: https://rockinst.org/issue-area/state-employee-health-insurance-assessing-the-scale-of-state-purchasing-power/
Across the nation, state governments are major purchasers of health insurance for their employees. According to the US Census Bureau, 100 percent of state governments offered health insurance benefits to their employees in 2018. The Census Bureau further reported that state governments provided health insurance benefits to 67.6 percent of their 5.4 million employees in 2018. This total of approximately 3.7 million employees does not include the number of dependents, retirees, or enrollees of local governments, and other public employers that also participate in states’ health insurance programs. In 2012, based on a report published by Pew Charitable Trusts and MacArthur Foundation, total spending exceeded $30 billion covering 2.7 million households.

Between employee benefits and Medicaid programs, states’ spending on health insurance represents a major budgetary item. In 2018, the federal Center for Medicare and Medicaid Services (CMS) reported that health insurance spending for all state and local governments totaled $433.6 billion and that spending has experienced an average annual increase of 3.9 percent over the past five years. In Fiscal Year 2019-20, the state of New York itself spent $22.1 billion on Medicaid and $4.3 billion on employee and retiree health insurance costs. To alleviate these escalating costs, some states have examined options to coordinate purchasing across state programs in an attempt to achieve economies of scale. Recently, California proposed policies to leverage their purchasing of prescription drugs by combining employee health insurance programs with other state programs such as Medicaid and Correctional Health.

The purpose of this policy brief is to examine the extent to which the states in their role of purchasers drive the evolution of the healthcare delivery system. This brief examines the availability of basic financial and cost data relating to state employee insurance programs. It assesses the scale of state health insurance purchasing using existing data and presents results from a preliminary survey of states. We also review the degree to which employee purchasing decisions are coordinated with other state health policy purchasing goals such as Medicaid and the Affordable Care Act (ACA) insurance marketplaces.

Public Work Provides Economic Security for Black Families and Communities

Source: Michael Madowitz, Anne Price, and Christian E. Weller, Center for American Progress, October 23, 2020

….
Public sector jobs provide economic security for Black households

Public jobs provide good wages, better benefits, and greater job security, all of which are critical components of economic security and help families build wealth. Moreover, the wealth gap in the public sector is much smaller. For example, in the private sector, white households have as much as $10 of wealth for each $1 Black households hold; in the public sector white households hold closer to $2 for every $1 of wealth for Black families.

Public employment can provide greater economic security for Black workers for several reasons:

  • Public sector hiring is more accountable to citizen influence than private sector hiring, providing stronger checks on employment discrimination.
  • Public sector jobs are more likely to provide a defined benefit pension, which guarantees lifetime benefits upon retirement.
  • Public sector jobs offer more stable employment, providing economic security otherwise available only to households with wealth.
  • Public sector jobs are more likely to be unionized. Unionized jobs are highly beneficial to workers, and Black workers in particular.

Walking the Walk: Does Perceptual Congruence Between Managers and Employees Promote Employee Job Satisfaction?

Source: Miyeon Song, Kenneth J. Meier, OnlineFirst, Published October 26, 2020
(subscription required)

From the abstract:
Public managers and employees should be on the same page for successful performance. Managers’ self-evaluations of their own management, however, often do not match employees’ evaluations. Despite the consistent findings of a discrepancy between managers’ and employees’ perceptions of management, little research has examined how this perceptual incongruence affects employee job satisfaction. The present study addresses this question using parallel surveys from both managers and employees in the context of public education. The findings suggest managers overestimate their management effectiveness in general. As the perceptual gap between managers and employees increases, employees are less likely to be satisfied with their organization and their profession. We also find that this relationship is nonlinear, and the negative effects of incongruence could be accelerated when employees have considerable consensus about management. This study highlights the role of perceptual congruence in creating a better work environment and promoting job satisfaction for public employees.