Category Archives: Public Sector

Understanding Decisions in State Pension Systems: A System Framework

Source: Gang Chen, The American Review of Public Administration, Vol. 48 no. 3, April 2018
(subscription required)

From the abstract:
State governments establish pension systems to provide retirement benefits to public employees. State governments as sponsors, state legislatures as policy makers, and public-sector unions as representatives of public employees may exert considerable influence over the decisions made in pension systems. This study applies a system framework to examine these influences. It focuses on four decisions in pension systems: benefits, employer contributions, employee contributions, and the asset smoothing period. The findings show that changes in the short- and long-term financial conditions of a state government have different influences on pension decisions, and that legislatures and public employee unions play important roles that affect these decisions.

The Only Way to Survive Janus

Source: Alexandra Bradbury, Labor Notes, March 30, 2018

The snows were still flying, but for unionists, spring came early this year. West Virginia’s teacher uprising burst onto the scene like rhododendrons opening: first one walkout, then another, and before you knew it a statewide strike was in full bloom.

The strikes were born at the grassroots, and that’s how they spread. Classroom teachers passed the word on Facebook, organized school votes, and rallied at the capital. Union leaders followed their members, but never took the reins.

No one seemed much concerned that public sector strikes are illegal in West Virginia. “What are they going to do, fire us all?” said Jay O’Neal, treasurer for the Kanawha County local.

It didn’t take long for the spirit to spread to underpaid teachers in three other states—thus far.

Their actions drove home a point that’s crucial for anyone who wants to see the labor movement survive. What’s required is members organizing themselves like those teachers did.

Public Unions Under First Amendment Fire

Source: Tabatha Abu El-Haj, Drexel University Thomas R. Kline School of Law Research Paper No. 2018-W-01, February 28, 2018

From the abstract:
Unions today are under First Amendment fire, with the compelled speech doctrine as the weapon of choice. Conservative interests are waging a legal war against agreements that include “fair-share service fees,” under which public-sector unions are permitted to charge non-union members to pay their share of the costs of collective bargaining. Espousing libertarian theories of free speech doctrine, the National Right to Work Legal Defense Foundation and its allies maintain that fair-share service fees, at least in the context of public-sector unions, constitute a form of political speech, and that laws mandating their payment by non-union members violate the First Amendment’s prohibition against compelled speech. The Supreme Court is poised to accept this position, having granted certiorari in Janus v. American Federation of State, County & Municipal Employees, Council 31, a case that threatens to overrule the Court’s longstanding acceptance of the constitutionality of fair-share service fees.

Notwithstanding the superficial appeal of the compelled speech argument, this Article argues that pro-union interests have plenty of cover within the First Amendment’s freedom of association doctrine. Viewing Janus and its ilk through an associational lens demonstrates the fallacies that lie behind doubts concerning the constitutionality of such agreements. Although it is doubtful that the Supreme Court will reaffirm the constitutionality of fair-share service fees this term, it is important to air such arguments in order to head off potentially even more significant First Amendment attacks on unionism that are currently underway and to articulate a theory of the First Amendment that remains consistent with the basic New Deal compromise that leaves matters regarding labor policy to our legislatures, where they belong.

Whose Money Is It Anyway: Have We Been Wrong About Agency Fees All Along?

Source: Aaron Tang, Harvard Law Review Forum, March 9, 2018

From the abstract:
In Agency Fees and the First Amendment, Professor Benjamin Sachs offers a pair of novel arguments for why the Court should pause before invalidating public sector union agency fee agreements throughout the country.

First, he argues that the money sent to unions to offset their bargaining costs is better viewed as the government employer’s money than as the employees’. Collective bargaining agreements force employees to turn the money over to the union on pain of losing their jobs, after all, and so the workers never have a “genuine choice” whether to make the payment at all. That, Sachs explains, should lead us to “treat agency fees as a direct payment from employer to union.”

Second, Sachs argues that the money might instead be better understood as the union’s all along. But for the wage premium that unions bring about for their workers, the argument goes, the fees that unions receive would not exist — and so the money is properly viewed as the union’s property from the outset.

These arguments are among the best defenses of agency fees that I have seen. Ultimately, however, both arguments are susceptible to counterattack for reasons discussed in Parts I and II herein. In a final concluding part, I express my agreement with Sachs on another point: the twenty-two states that currently permit agency fee agreements in the public sector can undo the impact of an adverse outcome in Janus by authorizing government employers to reimburse unions directly for their bargaining costs. It is this legislative alternative that, in my view, warrants the greatest attention from labor proponents in the coming years.

Federal Work-Life Survey Results

Source: U.S. Office of Personnel Management’s (OPM), March 2018

From the memo:
The key findings of the U.S. Office of Personnel Management’s (OPM) Federal Work-Life Survey administered January 25 to March 10, 2017. This memorandum highlights the Federal workforce’s use and impact of work-life programs and provides guidance for agencies. OPM’s analysis indicates a significant relationship between participation in work-life programs and optimal organizational performance, retention, and job satisfaction. These outcomes emphasize the value of work-life programs as strategic tools that support organizational effectiveness. At the same time, there are opportunities for improvement through expanding support and reducing barriers to utilizing these programs…..

Milliman Analysis: Public pension funded ratio surges to 73.1% in Q4

Source: Rebecca A. Sielman, Milliman, February 2018

From the summary:
In the fourth quarter, there was a $60 billion improvement in the estimated funded status of the 100 largest U.S. public pension plans as measured by the Milliman 100 Public Pension Funding Index. From the end of September through the end of December, the deficit shrank from $1.392 trillion to $1.332 trillion. As of December 31, the funded ratio stood at 73.1%, up significantly from 71.6% at the end of September.

Related:
Milliman analysis: Corporate pensions’ $61 billion funding gain in January may cushion early February market slide
Source: Charles J. Clark, Zorast Wadia, Milliman, February 2018

From the summary:
In January, the funded status of the 100 largest corporate defined benefit pension plans improved by $61 billion as measured by the Milliman 100 Pension Funding Index (PFI). As of January 31, the funded status deficit narrowed to $221 billion due to investment and liability gains incurred during January. As of January 31, the funded ratio rose to 87.2%, up from 84.1% at the end of December. January’s impressive funded status improvement was greater than that seen in any of the prior months of 2017.

The market value of assets grew by $13 billion as a result of January’s investment gain of 1.20%. The Milliman 100 PFI asset value increased to $1.505 trillion from $1.492 trillion at the end of December. The projected benefit obligation decreased to $1.725 trillion at the end of January.

Over the last 12 months (February 2017-January 2018), the cumulative asset returns for these pensions has been 11.88% and the Milliman 100 PFI funded status deficit only improved by $50 billion. The funded ratio of the Milliman 100 companies has increased over the past 12 months to 87.2% from 83.8%.

Unfilled Jobs Take Toll on Governments Across the Country

Source: Katherine Barrett & Richard Greene, Governing, February 8, 2018

When vacancies are high, there are consequences — and many places are feeling them. …. Some vacancies are expected, even normal, but when they get too high, there are consequences: Permits aren’t renewed, inspections are missed, backlogs grow, overtime costs swell and services are reduced…..