Category Archives: Public Sector

The President’s House Is Empty: Losing and Gaining Public Goods

Source: Boston Review, Forum III, 2017
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Many of the critical issues of our time—from clean water to health care to schools—are about public goods, things that are owed to the members of a democratic society. In the United States, these goods are endangered and access to them is constricted by class and race. Against this background, Trump’s nearly empty White House stands as a symbol of the crisis our democracy faces. In this Forum we consider public goods: what they are, how to provide them, how to ensure equitable access. The debate about public goods is at heart a debate about what it means to be an American. What is at stake is not only what we owe to each other but who we are.

Articles include:
Losing and Gaining Public Goods
K. Sabeel Rahman

To build a tangible, inclusive, meaningful, and durable community, we must begin with public goods….

Free College for All
Marshall Steinbaum

The movement for free college has gained considerable momentum in the past year, in no small part thanks to the sad state in which many college graduates currently find themselves. …. The United States has never had free, high-quality college education. But that does not mean we can’t. In the past, we have included world-class public education in our understanding of public goods, and we have successfully expanded public education on the premise that society as a whole benefits from a well-educated population. Previous generations and social movements fought hard to create good educational institutions at public expense. The current generation is discovering why that matters. ….

A Public Good Gone Bad: On Policing
Tracey Meares

….However, the best way to solve the epidemic of police violence against black Americans is far from obvious, and it should not be surprising that the solutions advanced by communities of color often run counter to conventional solutions. In some communities marked by extreme levels of violent crime—those one would think most in need of police—residents are calling for a complete and total end to policing….

Draining the Swamp: On Mar-a-Lago
Julian C. Chambliss

….Mar-a-Lago is the apotheosis of the Florida Dream in which wealthy interests degrade the environment and hollow out prospects for the poor. But as Hurricane Irma shows, this dream was never sustainable….

The Third Rail
Elaine Kamarck

….Although we are a long way from the pioneer era, a nation’s DNA dies hard. A substantial number of Americans still glorify the individual and believe that it is everyone’s responsibility to work hard and take care of their own. It’s why, for instance, America has never had a successful socialist party while Europe has. Progressive or liberal policy that ignores this strain in the public consciousness will always be vulnerable to the argument that government that takes from those who work and gives to those who do not is illegitimate. Fortunately policy that is constructed with an understanding of this tension can stand the test of time…..

Saving the Commons from the Public
Michael Hardt

Sabeel Rahman’s argument against the privatization of public goods and services contributes to a rich stream of contemporary critiques of neoliberalism that rightly focuses on how privatization creates and maintains forms of exclusion and hierarchy. In response to privatization, Rahman calls to make public goods public again—that is, to design and bolster government programs that foster social inclusion and equality, broadening both our conception of public goods and the populations whose membership grants them access to those goods. Rahman’s argument, however, rests on a notion of the opposition between public and private that obscures the full range of political possibilities. …. Fortunately the private and the public are not our only options. The common—defined by open access to, and shared democratic management of, social wealth—provides an alternative. ….

All Good Things
Jacob T. Levy

….What do we want in the provision of a good? Is it sufficiency, equality, progress, or simply more? Different answers to these questions call for genuinely different kinds of responses. If we want sufficiency, as we do with dignity goods and necessities, very often we should not pay much attention to the provision of the goods themselves; we should pay attention to the problem of poverty, and worry about economic growth, barriers to entering the labor market, redistribution and poverty relief, or some combination of these. (Direct public provision of food, or indirect provision through food stamps, is certainly not better for recipients’ dignified membership in the community than their having enough money to be able to simply afford food.)….

Naming the Villain
Lauren Jacobs

Sabeel Rahman’s essay is a call to action. Progressives should take seriously the coming political struggle over public goods generally and infrastructure specifically. They should also be better skilled in the administration of government and learn how to use the tools available to incrementally transform the material conditions of our current system. But as a lifelong organizer, dedicated to the dignity and economic security of all workers, I know that this is not enough. It is also critical that we see the big picture: the corporate power and its accompanying dogma of the supremacy of profit that brought us to this brink. They are the enemies we face. And they must be named. From fairy tales such as Rumpelstiltskin, to J. K. Rowling’s Harry Potter series, many of the stories of our childhood teach us the same lesson: we must name the villain before we stand any chance of defeating it. Any discussion of public goods is ultimately a discussion of values. How we define who is included in the notion of a “public”—and what we think is in the best interest of that public—are inherently political and therefore always contested. Those definitions live at the intersection of race, wealth, gender, and work….

A Beautiful Public Good
Joshua Cohen

Sabeel Rahman’s democratic conception of public goods is founded on the idea of a public responsibility for ensuring the essentials of a democratic society. Public goods are among those essentials. They answer to the basic needs of persons, conceived of as free and equal members of a democratic society. What those public goods are and the best methods for providing them vary across time and circumstance. In our time and circumstance, public goods should include clean water and air, good schools, broadband Internet access, and quality health care. Discharging the responsibility to provide those goods is not only a core public responsibility, Rahman says. It will also help to foster a sense of commonality—of a we with a common fate. Rahman calls this dimension of public provision the “constitutive” aspect of public goods.
I agree with much of Rahman’s view, but found his account of this constitutive aspect surprisingly thin. In a collaborative spirit, I propose to thicken this aspect of the democratic conception with a story about how the ambition to foster democracy and democratic sensibilities helped to shape the design of Central Park, one of the country’s truly great public goods…..

The Last Word
K. Sabeel Rahman

Throughout this forum, the idea of public goods has been linked to water, housing, parks, and more. Taken together, the thoughtful responses highlight two crucial questions about our understanding of public goods. First, what types of goods qualify as “public” in a democratic conception? Or, more precisely, what makes a good “public,” as opposed to merely ordinary? And second, what kinds of policy tools—including but not limited to direct state provision—can we employ to ensure more equitable and inclusive access to these goods?….

Hawaii Adds New Tool to Monitor State Pension Fund – Regular stress testing will help track fund’s fiscal health

Source: Greg Mennis and Tim Dawson, The Pew Charitable Trusts, September 11, 2017

Hawaii is the latest state to require regular analysis of the potential impact of future economic swings on its public pension funds. Known as stress testing, such calculations can help states monitor the fiscal strength and sustainability of these funds.

This spring, the Legislature unanimously approved a bill requiring the analyses, and Governor David Ige (D) signed it into law July 5. California, Virginia, and Washington already require extensive and routine sensitivity analyses on their public pension plans. Typically, these tests provide estimates of the future financial position of these funds under various economic and investment return scenarios. Interest among other states appears to be growing as well. ….

Investment Return Volatility and the Pennsylvania Public School Employees’ Retirement System

Source: Yimeng Yin and Donald J. Boyd, Nelson A. Rockefeller Institute of Government, Pension Simulation Project Policy Brief, August 2017

The Rockefeller Institute of Government released a report that examines the potential implications of investment return volatility for the Pennsylvania Public School Employees’ Retirement System (PSERS) using the Institute’s state-of-the-art Pension Simulation Model. It also examines the implications of a recent reform that created a hybrid pension plan for new employees. PSERS was selected for study as part of the Rockefeller Institute of Government’s ongoing analysis of risks related to public pension systems.

PSERS is a defined benefit retirement plan for public school employees of the Commonwealth of Pennsylvania. The state and individual school districts are participating employers. As of June 30, 2016, PSERS had over 257,000 active members and approximately 225,000 retirees and other beneficiaries who receive over $476 million in pension and health care benefits each month. PSERS has an uncommon approach to funding under which some employees share partially in the plan’s investment risk, in certain circumstances.

PSERS is deeply underfunded and faces greater challenges than other pension funds we have examined recently. At the end of the 2016 fiscal year, it had a market-value funded ratio of 50 percent and an unfunded liability of approximately $50 billion.

PSERS currently uses a 7.25 percent earnings assumption. Recently it has fallen short of this assumption: its one-year, three-year, five-year, and ten-year annualized rates of return were 1.29 percent, 6.24 percent, 6.01 percent, and 4.94 percent, respectively, for periods ending on June 30, 2016.

In an effort to improve the overall fiscal health of the fund and reduce risks to employers, Pennsylvania lawmakers recently changed the retirement benefit structure available to new state employees. New members of PSERS hired on or after July 1, 2019, will be offered three options for retirement benefits: two hybrid benefit options that include a defined contribution component in addition to a defined benefit component, and a pure defined contribution option. The defined benefit options will provide lower benefits than the current defined benefit plan for existing workers.

The reform is intended to shift part of the funding risk, which is almost entirely borne by the state and school districts under the current defined benefit structure, to new employees…..

Decisions, Decisions: An Update on Retirement Plan Choices for Public Employees and Employers

Source: Jennifer Brown, Matt Larrabee, National Institute on Retirement Security (NIRS) and Milliman, August 2017

From the summary:
Public employees with retirement plan choice overwhelmingly choose defined benefit pension plans over defined contribution 401(k)-type individual accounts.

Decisions, Decisions: An Update on Retirement Plan Choices for Public Employees and Employers, finds that public sector employees with retirement plan choice overwhelming choose defined benefit (DB) pension plans over 401(k)-type defined contribution (DC) individual accounts.

Among the eight states studied that offer employees such a choice, the DB pension take-up rates in 2015 were 80 percent or higher in six states. Two of the plans studied had pension take-up rates higher than 95 percent, while Florida and Michigan had take-up rates of 76 percent and 75 percent, respectively. Importantly, the research finds that even when the retirement plan default option favors a DC plan, most employees still select a DB pension plan.

For example, in Washington the default retirement plan is a combination DB/DC plan. Employees must affirmatively act to elect to participate in the DB pension plan instead, and they do. The majority of newly-hired employees – six out of every ten new hires – actively choose a pension plan.

Related:
Read the press release here.
Watch a webinar replay here.
Download a PowerPoint here.

Government Employee Religion

Source: Caroline Mala Corbin, University of Miami – School of Law, Legal Studies Research Paper No. 17-23, August 5, 2017

From the abstract:
Picture a county clerk who refuses to issue a marriage license to an LGBT couple or a city bus driver who insists on wearing a hijab. The clerk is fired for failing to fulfill job responsibilities and the bus driver for violating official dress codes. Both claim that their termination violates the First Amendment speech and religion clauses.

There is a well-developed First Amendment government employee speech jurisprudence. Less developed is the doctrine and literature for First Amendment government employee religion. The existing Free Exercise Clause jurisprudence usually does not specifically account for the government employee context. This Article attempts to fill that gap by developing a government employee religion doctrine based on the existing government employee speech doctrine.

Part I summarizes government employee speech doctrine. Part II imagines a parallel government employee religion doctrine and applies it to the opening hypotheticals. It concludes that government employees who are religiously opposed to an aspect of their job would lose their religion claims for multiple reasons. In contrast, employees who wish to wear religious garb have much stronger claims. Part III addresses two concerns with my proposed government employee religion doctrine. One criticism is that government employee speech doctrine is too flawed to serve as a model. Another is that speech and religion are too dissimilar to base one on the other.

Pennsylvania’s hybrid plan seen as falling short

Source: James Comtois, Pensions & Investments, July 24, 2017

After many fits and false starts to pension reform, Pennsylvania’s governor has a signed a measure that establishes a hybrid defined benefit/defined contribution plan for new state employees. Although some industry observers believe the new law is a step in the right direction, several others said the switch to a hybrid DB/DC plan does little — if anything — to solve the state’s core underfunding problem…..

…. Both Ms. Childers and Ms. Oakley cited West Virginia and Alaska as two states that decided to switch to a DC plan from a DB plan for state employees — and it didn’t go well for either. In 1991, West Virginia closed its teacher retirement system to new employees to address its underfunding issue, according to a 2016 NIRS survey shared by Ms. Oakley. After 10 years, the replacement DC plan was costing the state twice as much, so it went back to a pension. ….

Ohio Teachers Win Back Regular Raises

Source: Myra Warne, Labor Notes, July 27, 2017

In 2014, members of the Maysville Education Association voted to accept a deal that would end our pay freeze, which dated back to 2011, in exchange for replacing our traditional pay scale with a new merit-pay system.

Local union leaders were warned by Ohio Education Association staff that a return to the step-and-ladder system of regular raises might be impossible—or require a strike. But this year, as the money for sweeteners and incentives dried up, a group of members committed to winning back our old pay scale…..

State and Local Pension Plans Funding Sputters in FY 2016

Source: Jean-Pierre Aubry, Caroline V. Crawford, and Alicia H. Munnell, Center for State and Local Government Excellence, July 2017

From the summary:
SLGE’s annual update on the funded status of state and local pension plans outlines the challenging path that plans have been on, especially since 2009.

Key findings:
• Overall, public pensions are in a better position than they were immediately following the recent economic downturn;
• The ratio of assets to liabilities for the 170 plans in the Public Plans Database decreased from 73 percent in 2015 to 72 percent in 2016, as measured by the traditional GASB standard; and from 73 percent to 68 percent, as measured by the new standard;
• These plans, which account for the vast majority of the members and assets of state and local pension plans, have been paying more of their required contributions (92 percent) relative to recent years;
• Payments as a percentage of payroll have increased to 18.6 percent;
• Plans in the PPD have continued to adjust their annual investment return assumptions downward to an average of 7.6 percent in FY 2016;
• In order to return the aggregate funded ratio above 80 percent, plan sponsors will need to increase their contribution efforts and investment returns must consistently meet or exceed expectations over a sustained, longer term.