Category Archives: Public Sector

Pensions and retiree healthcare challenge some of the largest mass transit enterprises

Source: Thomas Aaron, Timothy Blake, Moody’s, Sector In-Depth, April 11, 2019
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Pensions and retiree healthcare pose a credit risk for some of the largest mass transit enterprises. Transit enterprises with material unfunded liabilities face budget challenges that can limit capital reinvestment, contribute to rising debt loads and/or lead to lower service levels.

State Collective Bargaining Laws and Public-Sector Pay

Source: Eric J. Brunner, Andrew Ju, ILR Review, Vol. 72 no. 2, March 2019
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From the abstract:
Using the Public Use Microdata Sample from the 2005 to 2015 American Community Survey, the authors provide new evidence on how state collective bargaining laws affect public-sector wages. To isolate the causal effect of bargaining laws on public-sector pay, they examine wage differentials between otherwise similar public- and private-sector employees located in the same local labor market. They estimate difference-in-differences (DD) models that exploit two sources of plausibly exogenous variation: 1) policy discontinuities along state borders and 2) variation within states in collective bargaining laws in states where the majority of public workers are without collective bargaining rights. Findings show that mandatory collective bargaining laws increase public-sector wages by approximately 5 to 8 percentage points. Results therefore suggest that mandatory collective bargaining laws provide a formal mechanism through which public-sector workers are able to bargain for increased compensation.

What do government unions do? Public sector unions and nonunion wages, 1977–2015

Source: Jake Rosenfeld, Patrick Denice, Social Science Research, Volume 78, February 2019
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From the abstract:
In this article we investigate the connection between public sector union memberships and nonunion worker pay. We leverage nearly four decades of Current Population Survey (CPS) data on millions of U.S. workers to test whether public sector union density, measured at the state-level, is associated with higher average wages among unorganized workers. We find stable and substantively large positive effects of state-level public sector union strength on nonunion public sector workers’ wages. These results are robust to the inclusion of a range of state-level controls, including GDP, average educational attainment, public sector size, and the strength of private sector unions. Analyses of public sector unions and nonunion private sector pay reveal a robust positive relationship – but one limited to women, revealing how occupational segregation interacts with pay-setting institutions to influence wage outcomes.

Does Increasing Racial Minority Representation Contribute to Overall Organizational Performance? The Role of Organizational Mission and Diversity Climate

Source: Hongseok Lee, The American Review of Public Administration, Early View, March 10, 2019
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From the abstract:
One underexplored question in the representative bureaucracy literature is whether public employees advocate for their demographic groups at the expense of other groups or their organizational roles. Many studies have focused on the link between passive representation, or the extent to which the public workforce reflects the demographic characteristics of its clients, and active representation, or the extent to which policies advance the interests of those people. However, little research has been done on whether and when increased representation by a certain group enhances overall organizational performance. This study examines the relationship between racial minority representation in U.S. federal agencies and the agencies’ goal achievement while considering the moderating role of organizational mission and diversity climate. The panel data analysis shows that increased minority representation lowers agencies’ goal achievement. However, a positive relationship exists between the two in agencies that mainly work to promote social equity for disadvantaged populations and foster a positive diversity climate in the workplace. These findings suggest that racial minority employees can better contribute to organizational success in agencies where they balance advocacy and organizational roles well and they are treated fairly and respectfully.

Pension Brief: Are Asset Transfers A Gimmick Or A Sound Fiscal Strategy?

Source: S&P Global Ratings, February 19, 2019
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(Editor’s note: This publication marks the start of a series of short comments on credit matters of interest in the municipal retirement space. This first “Pension Brief” follows up on our publication one year ago surveying pension reform initiatives across the states (“Recent U.S. State Pension Reform: Balancing Long-Term Strategy And Budget Reality,” Feb. 9, 2018). ….)

…. To face persistent and growing pension challenges, some U.S. state and local governments have looked to develop creative solutions to help mitigate expanding liabilities and bolster wanting asset levels. ….

Illinois Budget Proposal Places Risky Bets On Asset Transfers and Graduated Income Tax

Source: S&P Global Ratings, February 22, 2019
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S&P Global Ratings believes that Illinois’ (BBB-/Stable) executive budget proposal precariously balances the current budget, but punts measures to address fiscal progress to future years. It prioritizes service solvency at the expense of lower pension contributions and does not make meaningful progress toward tackling the $7.9 billion bill backlog or projected out-year deficits….

Amid Strikes and Shortages, Governors Prioritize State Workers’ Plight

Source: Katherine Barrett and Richard Greene, Governing, February 25, 2019

Protesting teachers likely won’t be the only public employees who see pay raises and workplace improvements this year. ….

– In their State of the State addresses and executive orders this year, many governors are making public workforce issues a priority.
– They are particularly targeting teachers and corrections staff for pay raises.
– Several governors are focused on fighting sexual harassment and LGBT discrimination in state government…..

State and local government — US: Market volatility underscores risk of high pension investment return targets

Source: Thomas Aaron, Timothy Blake, Moody’s, Sector In-Depth, February 20, 2019
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Equity market losses in late 2018 will translate into larger than expected pension cost hikes in 2021 for many governments because of equity-heavy investment allocations within their pension systems’ assets. Despite the long-term investment focus of US public pension systems and favorable returns in the past two fiscal years, recent market losses highlight the uphill credit challenge facing governments that rely on high-return/high-risk pension assets to cover a large portion of their pension benefit promises.

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.