Source: Matthew Butler, Moody’s, Issuer Comment, June 6, 2019
On May 29, the Kansas legislature voted to override several spending vetoes that Governor Laura Kelly made when she authorized the state’s fiscal 2020 budget. One of the vetoes was of a supplemental payment to the Kansas Public Employees Retirement System (KPERS). The lawmakers’ action preserves a $51 million supplemental contribution to KPERS, a credit positive for the state. At the same time, the legislature failed to override a veto of an income tax relief bill that would have cost the state an estimated $240 million over three years. This is also credit positive, because it reduces the amount of budget reserves Kansas will use to make the supplemental pension payment, increase school funding and more quickly retire an internal loan.
Source: Katherine Barrett & Richard Greene, Governing, June 10, 2019
Whether it’s violence like the Virginia Beach shooting at a municipal building, or danger due to the nature of the job, government workers lack health and safety protections in nearly half the states.
Source: S&P Global Ratings, May 14, 2019
– Illinois is considering consolidating numerous single-employer public safety plans as a possible remedy to its pension woes;
– While consolidation will likely lower long-term costs through the pooling of resources, we view these as benefits as marginal, and the current proposals leave major pension funding issues largely unaddressed;
– A proposal to reduce statutorily mandated funding to 80% from 90% and allow an additional 10 years to reach this goal would exacerbate existing pension funding weakness among these types of public safety pension plans.
Source: Thomas Aaron, Timothy Blake, Moody’s, Sector In-Depth, April 11, 2019
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.
Source: Eric J. Brunner, Andrew Ju, ILR Review, Vol. 72 no. 2, March 2019
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.
Source: Jake Rosenfeld, Patrick Denice, Social Science Research, Volume 78, February 2019
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.
Source: Eleni Schirmer, Dissent, Spring 2019
A Wisconsin law stripped their union of its rights. So the teachers got to work.
Source: Hongseok Lee, The American Review of Public Administration, Early View, March 10, 2019
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.
Source: S&P Global Ratings, February 19, 2019
(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. ….
Source: S&P Global Ratings, February 22, 2019
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….