Category Archives: Public Sector

How Government and Community Nonprofit Collaboration and Non-Collaboration Affects Public Sector Outcomes

Source: Rebecca H. Padot, International Journal of Public Administration, OnlineFirst, February 15, 2019
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From the abstract:
This four state foster care study seeks to understand what practices state public managers perform with regards to community nonprofits that contributes to effectiveness in producing better public sector outcomes. The study produced key player field research data on the conditions under which community nonprofits produce better public sector outcomes.

This article offers reasons as to why some effective community nonprofits were able to achieve collaboration with the public sector, while others were not, despite their effectiveness. Effective public managers in the area of foster care administration permit, and at times recruit, community nonprofits to have an impact on their foster care domain, while ineffective public managers never reach out to community nonprofits as partners or further yet, block nonprofits from access.

State and local government – US: Retiree benefits drive growth in fixed costs, posing greater challenges than debt

Source: Benjamin J VanMetre, Grayson Nichols, Thomas Aaron, Rachel Cortez, Alexandra S. Parker, Moody’s, Sector In-Depth, February 5, 2019
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Fixed costs — the combination of debt service, pension contributions and retiree healthcare— continue to rise for many US state and local governments. While retiree benefits (pensions and healthcare) will continue to drive this trend, the growth level is heavily dependent on unpredictable factors such as pension investment performance and workforce demographics. Debt service costs, on the other hand, are largely stable and unlikely to increase materially,continuing the trend of the last decade. Still, total fixed costs create budgetary challenges for some governments, potentially affecting their ability to deliver core services, a dynamic also known as “crowd-out” risk…..

2018 NCPERS Public Retirement Systems Study

Source: National Conference on Public Employee Retirement Systems and Cobalt Community Research,January 30, 2019

From the press release:
Fueled by strong investment returns, public retirement systems continued to strengthen their funding levels and fine-tune their assumptions, according to an annual study by the National Conference on Public Employee Retirement Systems.

The 2018 NCPERS Public Retirement Systems Study underscores the success of efforts by pension trustees, managers, and administrators to make steady improvements that enhance the sustainability of pension funds, said Hank H. Kim, executive director and chief counsel of NCPERS. ….

…The 2018 study draws on responses from 167 state and local government pension funds with more than 18.7 million active and retired memberships, actuarial assets exceeding $2.5 trillion and market assets exceeding $2.6 trillion. The majority—62 percent—were local pension funds, while 38 percent were state-wide pension funds. NCPERS conducted the eighth annual study in September through December 2018 in partnership with Cobalt Community Research.

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The Gender Disparity in Climbing Local Government’s Ladder

Source: Katherine Barrett & Richard Greene, Governing, January 28, 2019

Women are less likely than men to aspire for and occupy top jobs. They’re also less optimistic about their chances of moving up at all.

…. Late last year, National Research Center, Inc., released data it had collected over the last five years from 20,000 local government workers in more than 40 jurisdictions. Its survey reveals some gender disparities: 39 percent of men rated their opportunities for promotion as excellent or good, compared to only 29 percent of women. And 49 percent of men rated their opportunities for career growth as excellent or good, compared to just 43 percent of women. ….

ALEC’s New Union-Busting Toolkit Illustrates the Goal Is to Bankrupt Unions Not Protect Workers

Source: Mary Bottari, PR Watch, January 22, 2019

It’s becoming an annual ritual. The Koch-funded cluster of groups, which has long abused their 501(c)3 IRS “charitable” designation by working to destroy political enemies, has concocted another “union busting” toolkit, giving ammunition and guidance to Republican politicians on how to attack and dismantle a major funder of the Democratic Party.

The toolkit appears to have been prepared by American Legislative Exchange Council (ALEC) staff shortly after the Supreme Court’s June 2018 Janus vs. AFSCME decision, which held that unions could no longer require individuals in a bargaining unit who did not want to be members of a union to pay agency or “fair share” fees. Fair share fees compensate union staff who are required by law to represent all workers in a bargaining unit in their quest for better wages and working conditions.

ALEC is a collection of state politicians and corporate lobbyists from many of the largest corporations in the country. The Janus case was spearheaded by ALEC’s sister group, the $80 million State Policy Network (SPN), made up of 66 right-wing think tanks and other Koch-funded institutions. ….

…. The toolkit touts ALEC’s 18 anti-union bills, including the misnamed “right to work” bill, and highlights a new post-Janus bill, the “Public Employee Rights and Authorization Act,” which states: “Any authorization of payments to a labor organization provided before June 27, 2018 [the day of the Janus ruling], is insufficient to constitute affirmative consent or a waiver of an employee’s rights under Janus v. AFSCME.” ….

Illinois (State of) – Pension funding improves, but lags other states due to weak contributions and high payouts

Source: Ted Hampton, Thomas Aaron, Timothy Blake, Moody’s Investors Service, Issuer Comment, State government – Illinois, December 18, 2018
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Illinois’ (Baa3 stable) pension funding slightly improved under our adjustments in the year ended June 30, 2018, despite higher unfunded liability figures that the state reported December 7 (see Exhibit 1). Rising interest rates that lowered liabilities, combined with favorable investment returns, drove down the state’s adjusted net pension liability (ANPL) by an estimated 2%-5% in the year. Nonetheless, Illinois’ recent pension funding gains lag those of other states, largely because of its weak contributions and rising payouts.

Local government – Illinois: Ability to absorb pension costs supports exceptional credit quality for some cities

Source: David Levett, Rachel Cortez, Alexandra S. Parker, Moody’s Investors Service, Sector In-Depth, Local government – Illinois, December 14, 2018
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Heavy pension burdens have weakened credit quality for many Illinois cities in recent years, but some Illinois municipalities have maintained exceptional credit profiles.

Local government – New Mexico – Pension burdens will continue to weigh on credit quality, prompting potential reform

Source: Heather Correia, Roger S Brown, Naomi Richman, Alexandra S. Parker, Moody’s Investors Service, Sector In-Depth, Local government – New Mexico, December 18, 2018
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Without changes to New Mexico’s two statewide cost-sharing pension plans, municipalities’ elevated pension burdens will intensify. Although pension contribution rates are set by state statute, if rates increase through legislative reform, local governments will likely be responsible for these cost hikes.

Adjusted net pension liabilities rise for most of the 50 largest local governments in 2017

Source: Thomas Aaron, Timothy Blake, Moody’s Investors Service, Sector In-Depth, Local government – US, December 18, 2018
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Adjusted net pension liabilities (ANPLs) reached new peaks for most of the 50 largest local governments (by debt outstanding) in fiscal year 2017 reporting, due to poor investment returns and low market interest rates. Most governments report pension funding with up to a one-year lag, so favorable investment returns in fiscal 2017 and 2018 will lead to a decline in ANPLs through many of those governments’ 2019 reporting. Nonetheless, pensions continue to drive historically high leverage and elevated annual costs for some governments, and risks from potential pension investment losses are significant…..

Five U.S. State And Local Government Pension And OPEB Trends To Watch For In 2019 And Beyond

Source: S&P Global Ratings, January 16, 2019
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Key Takeaways
• Volatile markets could affect future pension costs and funding status.
• States might need to offload pension costs to local governments.
• Updated disclosure on reported retiree health care obligations could heighten awareness and spur reform.
• States continue to pass pension reform and sustainability measures in an effort to manage costs and improve system health.
• The combination of environmental, social, and governance obligations and retirement obligations could also stress long-term government costs.

In this economic recovery period since the Great Recession a decade ago, many state and local governments faced rising costs and risk further increases related to funding long-term pension and other postemployment benefit (OPEB) obligations. S&P Global Ratings incorporates a forward-looking view of pension risks to costs in its credit opinion and ratings approach. As we look forward to fiscal 2019, we believe there are five key trends related to pension and OPEB liabilities that could have implications for future government costs: market volatility; states’ offloading of costs to local governments; retiree health care liabilities; pension reform; and the management of environmental, social, and governance (ESG) obligations and retirement obligations.