Category Archives: Public Sector

The Real Reason Behind Recent Teacher Strikes — And Why They’re Likely to Continue

Source: Katherine Barrett & Richard Greene, Governing, May 10, 2018

It’s about much more than low salaries.

…. In 26 states, average teacher salaries, adjusted for inflation, were less in 2016 than they were at the end of the 20th century, according to the National Center for Education Statistics. Two years ago, an Economic Policy Institute (EPI) report documented the dive in weekly wages for teachers compared to other workers with comparable education requirements. In 2015, an average teacher made 17 percent less than comparable workers in salary. Back in 1994, the salary gap was 1.8 percent. ….

…. Teachers in Oklahoma still worry about the dangers to student education of going to a four-day school week in some districts. In Kentucky, there’s been no money for teacher professional development, extended school services have been cut and schools haven’t been able to spend money on textbooks.
Arizona school districts will still struggle to fund all the needs that have piled up. Years of cuts have, for example, left the school transportation budget severely underfunded. ….

Related:
Where Teacher Salaries Most Lag Behind Private Sector
Source: Mike Maciag, Governing, April 30, 2018

States where teachers are protesting have among the largest pay discrepancies when compared with similarly educated private-sector workers.

When the City Goes Broke: Pensions, Retirees, and Municipal Bankruptcies

Source: Kevin M. Lewis, Congressional Research Service, CRS Legal Sidebar, LSB10116, April 10, 2018

In recent years, a significant number of cities, towns, and other municipalities in the United States have found themselves increasingly unable to pay their debts. In order to offer municipalities relief from many types of debts they cannot repay, Chapter 9 of the Bankruptcy Code authorizes certain municipalities to file for bankruptcy. However, filing for bankruptcy may adversely affect the municipality’s creditors, especially beneficiaries of underfunded municipal retirement plans (who, along with bondholders, often hold “the lion’s share” of a municipality’s financial obligations). Because a number of municipalities face a “dramatic and growing shortfall in public pension funds,” many “firefighters, teachers, police officers, and other public employees” who purportedly have “a right to pension benefits at retirement” face a significant risk that their pensions will ultimately not be fully repaid. The fact that public pensions, unlike their private counterparts, are neither subject to the “vesting and funding rules imposed by” the Employee Retirement Income Security Act of 1974 nor “protected by the federal pension guarantee program operated by the Pension Benefit Guaranty Corporation” could, according to some commentators, further exacerbate that risk. Moreover, because courts presiding over municipal bankruptcy cases have generally been “amenable to modifying pension debt in bankruptcy,” retirees’ pension benefits may potentially be significantly curtailed when a municipality declares bankruptcy. Although many Chapter 9 debtors have ultimately opted not to cut pensions “for political or practical reasons,” courts and commentators generally accept that, under certain circumstances, municipalities “have the legal ability to shed pension debt” in bankruptcy if they so choose.

This Sidebar first explains how, under current bankruptcy law, Chapter 9 debtors have significant freedom to modify their outstanding pension obligations through the bankruptcy process. The Sidebar then explores proposals to alter the legal principles governing the adjustment of municipal pensions in bankruptcy….

Why More Than A Million Teachers Can’t Use Social Security

Source: Cory Turner, NPR, All Things Considered, April 20, 2018

Teachers have staged protests in recent weeks in West Virginia, Oklahoma, Kentucky, Colorado and Arizona. Some are fighting lawmakers who want to scale back their pensions.

It’s no secret that many states have badly underfunded their teacher pension plans for decades and now find themselves drowning in debt. But this pensions fight is also complicated by one little-known fact:

More than a million teachers don’t have Social Security to fall back on.

To understand why, we need to go back to Aug. 14, 1935. That is when President Franklin Delano Roosevelt signed the original Social Security Act.

The Teacher Strikes Show That Workers Are Really, Finally, Fed Up

Source: Eillie Anzilotti, Fast Company, April 19, 2018

By walking out of their classrooms, U.S. teachers are part of a global uprising against low wages for the benefit of increasing corporate profits. ….

….Legislatures in more conservative states have granted tax cuts to corporations, which have constricted budgets. To balance the budgets, the things that get cut are salaries and benefits. In the private sector, there’s often a similar story: Companies keep salaries and benefits low–or outsource work to independent contractors who don’t get any benefits at all–in order to maximize profitability and return money to shareholders.

That leaves us, Orleck says, with a broad coalition of workers, both public and private sector, whose livelihoods have suffered for the benefit of corporations. And as the teachers’ strikes–and scores of labor strikes around the world–have shown, that system has reached its breaking point…..

Asset Growth Trend Continues in Fourth Quarter 2017: Q4

Source: Melinda Caskey, Deron Pope, and Gritiya Tanner, U.S. Census Bureau, Report Number: G17-QSPP4, March 2018

For the 100 largest public-employee pension systems in the country, assets (cash and investments) totaled $3,785.9 billion in the fourth quarter of 2017, increasing by 2.7 percent from the 2017 third quarter level of $3,684.7 billion. Compared to the same quarter in 2016, assets for these major public-pension systems increased 11.6 percent from $3,392.1 billion. The main driver of this gain is earnings on investments, which totaled $142.2 billion during the fourth quarter of 2017. Earnings on investments make up for the deficit between contributions and benefits paid out, and are a critical contributor to the sustainability of pension plans (see Figure 1). The summary highlights the major asset categories (equities, debt instruments, and cash equivalents) and does not reflect all of the categories published for the Quarterly Survey of Public Pensions.
Related:
Complete data sets

How Janus Could Spill into the Private Sector Without Radically Redefining the State Action Doctrine

Source: Boyd Garriott, On Labor blog, April 19, 2018

This term, the Supreme Court will decide Janus, where it will determine the future of agency shop agreements in public sector unions. Despite being a public-sector union case, Justice Ginsburg raised a question on many people’s minds at oral argument: “what happens in the private sector?” Her question may prove prescient, considering that five justices in Harris v. Quinn’s dicta questioned an older line of cases upholding private sector agency fee arrangements. Contrary to others who have spoken on this issue, I believe that a holding striking down public sector agency shop agreements in Janus could spill into the private sector without doing much violence to the state action doctrine….

Indiana Teachers ‘Go Green’ To Track Member Sign-Up

Source: Samantha Winslow, Labor Notes, April 13, 2018

What will happen to public sector unions after the Supreme Court rules on the Janus v. AFSCME case this spring? Indiana teachers are already there. Slammed by a “right to work” law in 1996 and a new barrage of attacks in 2011, the teachers experienced what many unions are afraid of—a big drop in membership.

But the Indiana State Teachers Association didn’t roll over and give up after that. The union developed a tracking system called “Go Green” to help local leaders get membership back up.

It’s working. The first year of the program, the union narrowed its deficit between existing members lost to retirement and new members gained. The second year, it broke even. The third year, statewide membership increased.

This is in a legal environment that’s worse than right to work. Budget cuts in 2011 were paired with sweeping restrictions that kneecapped unions. Teachers bargain over only wages and benefits, and only between September and November of each year. Past that, impasse is declare and a third-party factfinder decides the final agreement.

…. So how does it work? The heart of the “Go Green” program is getting teachers in every school involved in signing up members.

Schools below 50 percent union membership are flagged as red. Schools at 50 percent or higher are coded yellow, and those at 70 percent or higher are green. The color scheme helps officers and association reps (stewards) prioritize which schools, and even which parts of buildings, need the most help. ….

….LIVING WITHOUT DUES DEDUCTION

A popular line of anti-union attack by state legislators is to ban employers from deducting dues from members’ paychecks. Dues deduction is banned for Michigan teachers, for instance, and for the whole public sector in Wisconsin.

Indiana has no such law at this point—but the teachers union opted to stop payroll deduction anyway. When new members sign up, they give the union their bank or credit card information to process dues directly.

This preempts a fight with hostile legislators and keeps the union’s focus on talking to teachers. It also takes control of union funds out of the hands of employers…..

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.