Category Archives: Public Sector

Public Pension Plan Investment Return Assumptions

Source: National Association of State Retirement Administrators, NASRA Issue Brief, February 2017

From the introduction:
As of September 30, 2016, state and local government retirement systems held assets of $3.82 trillion. These assets are held in trust and invested to pre-fund the cost of pension benefits. The investment return on these assets matters, as investment earnings account for a majority of public pension financing. A shortfall in long-term expected investment earnings must be made up by higher contributions or reduced benefits.

Funding a pension benefit requires the use of projections, known as actuarial assumptions, about future events. Actuarial assumptions fall into one of two broad categories: demographic and economic. Demographic assumptions are those pertaining to a pension plan’s membership, such as changes in the number of working and retired plan participants; when participants will retire, and how long they’ll live after they retire. Economic assumptions pertain to such factors as the rate of wage growth and the future expected investment return on the fund’s assets.

As with other actuarial assumptions, projecting public pension fund investment returns requires a focus on the long-term. This brief discusses how investment return assumptions are established and evaluated, compares these assumptions with public funds’ actual investment experience, and the challenging investment environment public retirement systems currently face.

Public Pension Plan Investment Return Assumptions

Source: National Association of State Retirement Administrators, NASRA Issue Brief, February 2017

As of September 30, 2016, state and local government retirement systems held assets of $3.82 trillion. These assets are held in trust and invested to pre-fund the cost of pension benefits. The investment return on these assets matters, as investment earnings account for a majority of public pension financing. A shortfall in long-term expected investment earnings must be made up by higher contributions or reduced benefits.

Funding a pension benefit requires the use of projections, known as actuarial assumptions, about future events. Actuarial assumptions fall into one of two broad categories: demographic and economic. Demographic assumptions are those pertaining to a pension plan’s membership, such as changes in the number of working and retired plan participants; when participants will retire, and how long they’ll live after they retire. Economic assumptions pertain to such factors as the rate of wage growth and the future expected investment return on the fund’s assets.

As with other actuarial assumptions, projecting public pension fund investment returns requires a focus on the long-term. This brief discusses how investment return assumptions are established and evaluated, compares these assumptions with public funds’ actual investment experience, and the challenging investment environment public retirement systems currently face.

States Struggle to Close Their Own Gender Pay Gaps

Source: Teresa Wiltz, Stateline, February 17, 2017

California has the most stringent equal pay laws in the nation. But among its own workers, the state is still struggling to close the pay gap between men and women.

Women who work for the state earn 79 cents for every dollar that men earn, according to a 2014 report by the California Department of Human Resources. That’s a wider gap than that faced by women who work in the private sector or for the federal government in the state.

California isn’t alone. While nationwide data is not available, male state workers earn more than their female counterparts in many states, including Idaho, Maryland and Texas.

An assessment last year by the online salary data firm PayScale listed the gender pay gap in public administration the fourth-highest among 21 professions and industries across the economy, with women making less than 75 percent of what men make — an average of $16,900 less. The gap in public administration trailed only finance and insurance, professional services and mining.

Many cities, including Alexandria, Virginia, New Orleans and Sacramento, have spotted the gap and tried to address it, just as some states have…..

Republicans Are Set to Destroy Iowa’s Labor Unions

Source: Emmett Rensin and Lucy Schiller, New Republic, February 7, 2017

With the GOP now in full control of the state, 40 years of carefully negotiated agreements are about to be erased. ….

….In 1974, a few years after a public teachers’ strike in which schoolteachers spent 19 hours in jail cells, then–Republican Governor Robert Ray signed the Iowa Public Employment Relations Act into the Iowa Code. The legislation was hyped as a thoughtful balance between employers’ and public unions’ interests. Chapter 20, as the deal came to be called, presented Iowa’s public workers with a trade-off: They lost the right to strike, but won the legal recognition of their unions and their right to collective bargaining. The law outlined mandatory bargaining issues, topics on which employers were required to negotiate, including wages, insurance, overtime, vacation, health and safety. While not entirely satisfying to either party, Chapter 20 has essentially worked: No public sector workers have struck since 1974, and each year, 98 percent of public contracts move forward without binding arbitration.

But now, with the GOP fully in control of the state, a cadre of Republicans have moved to gut Chapter 20, beginning with a bill introduced Tuesday morning that moves both health insurance and supplemental pay from the mandatory to prohibited column. If passed, the bill would bar Iowa public unions from raising these topics in negotiation, thereby allowing public employers to unilaterally impose whatever terms they like. ….
Related:
Iowa Republicans propose sweeping changes to collective bargaining laws, public unions
Source: Brianne Pfannenstiel and William Petroski, Des Moines Register, February 7, 2017

Republican lawmakers on Tuesday proposed sweeping changes to Iowa’s collective bargaining laws that govern the way 184,000 of the state’s teachers, corrections officers and other public sector union workers negotiate for wages, health care and other employment benefits.

Representatives from labor unions across the state filled the Capitol to protest the changes, chanting and holding signs while urging their elected officials to back down from a piece of legislation that faces all but inevitable passage. ….

….. Since gaining control of the House, Senate and governor’s office for the first time in nearly 20 years, Iowa Republicans have called collective bargaining reform one of their top priorities. Both the House and Senate plan to hold subcommittees on the legislation Wednesday, setting it on a course to receive final approval from the governor as early as next week. Gov. Terry Branstad even called an unscheduled afternoon press conference with Lt. Gov Kim Reynolds and Republican legislative leaders to express his support for the bill. ….

…. The bills — House Study Bill 84 and Senate File 213 — also would require unions to go through a certification process ahead of each new contract negotiation. That would require a majority of their members to agree to be represented by union negotiators …..

The Winds of Changes Shift: An Analysis of Recent Growth in Bargaining Units and Representation Efforts in Higher Education

Source: William A. Herbert, City University of New York – Hunter College, December 2016, Journal of Collective Bargaining in the Academy (forthcoming)

From the abstract:
This article analyzes data accumulated during the first three quarters of 2016 regarding completed and pending questions of representation involving faculty and student employees in higher education. It is part of a larger and continuing National Center research project that tracks faculty and graduate student employee unionization growth and representation efforts at private and public institutions of higher learning since January 1, 2013.

The data presented in this article demonstrates that the rate of newly certified units at private colleges and universities since January 1, 2016 far outpaces new units in the public sector. There has been a 25.9% increase in certified private sector faculty units over the number of private sector units identified by the National Center for the Study of Collective Bargaining in Higher Education and the Professions in 2012, while the increase in the public sector has been 2.1%. The largest number of newly certified units involves non-tenure track faculty at private non-profit institutions. The second largest group of new units in higher education involves tenured and tenure-track faculty at public institutions. The average final election tallies demonstrate strong support for unionization among higher education faculty: 72.8% among private sector tenured/tenure-track and contingent faculty, and 73.3% among public sector tenure-track and contingent faculty.

The article demonstrates that unionization efforts by private sector tenured and tenure-track faculty and faculty continue to be adversely impacted by two judicially-created doctrines, despite modifications made to the applicable standards in a 2014 National Labor Relations Board decision. It also examines pending and completed unionization efforts by graduate and research assistants in light of the recent NLRB decision finding that private sector graduate student employees are entitled to the associational rights guaranteed under federal labor law.

Public Pension Investment Risk-Taking May Result in Future Challenges

Source: Donald J. Boyd, Yimeng Yin, Nelson A. Rockefeller Institute of Government, Pension Simulation Project, January 2017

The latest report from the Rockefeller Institute’s Pension Simulation Project examines the difficult choices public pension funds faced as interest rates fell over the last 25 years. Public plans generally increased investment risk in an effort to avoid lowering expected investment returns, creating substantial potential for plans to become severely underfunded or to require sharp increases in government contributions in the future. This is the fourth report of the Pension Simulation Project, supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Related:
Policy Brief
News Release

Turning an Issue into a Campaign: How Minnesota Public Employees Stood Up for Paid Parental Leave

Source: Joan Treichel, Steph Meyer, and Johanna Schussler, Labor Notes, January 3, 2017

Many unions agonize over how to get young workers involved. At the Minnesota Association of Professional Employees (MAPE), we did it with a fight over an issue that mattered to younger members—paid parental leave…. It started with just a few of us who got angry about the problem, and grew into a two-year campaign that energized our union by attracting new members, boosting meeting participation, and developing new leaders. And when we won the right to six weeks of paid parental leave for both parents for the birth or adoption of a child, a new generation felt the power of the union. Our victory benefits not only MAPE’s 14,000 members but all 32,000 union-represented executive-branch employees, including members of AFSCME, Nurses United, and the teachers unions…..

What Made Paid Parental Leave a Good Organizing Issue?
Organizers are always on the lookout for problems that can be solved through collective activity. Use these four criteria to evaluate a possible organizing issue:
– Is it widely felt? Many people must feel that this is a real problem and agree with the solution you’re pursuing. It became clear that paid parental leave was a hot issue among MAPE members when an initial meeting attracted 75 people.
– Is it deeply felt? It’s not enough that many people agree if none feels strongly enough to do anything about it. Paid parental leave hit home, touching on the value of family. Enough members were ready to back up their feelings with action to form a Solidarity Team.
– Is it winnable? It’s hard to know for sure whether you will win, but it’s possible to get a good idea of whether you can. Identify the decision-maker who can give you what you want. How hard do you expect this person to resist, and how much pressure can your group muster? MAPE had evidence that workers elsewhere had won similar benefits—and a decision-maker, the governor, who seemed moveable.
– Does it build the union and build leaders? MAPE had a goal to involve more of its newer members—and this issue mattered especially to them. Through this campaign, many newer members participated in union activities for the first time or took on new roles of leadership. ….