Category Archives: Public Sector

Ten Years After: The Development of a University Staff Pay System—Reflections and the Lessons Learned

Source: Steven L. Thomas, Lyn M. McKenzie, Compensation & Benefits Review, OnlineFirst, July 22, 2019
(subscription required)

From the abstract:
This article documents the development and implementation of a new staff pay system for a large, comprehensive, public university. It discusses decisions that were made, alternatives chosen, important process issues and outcomes, as a guide to administrators and human resource staff into what can be expected as new job structures, pay and performance management systems are developed. The authors review program successes and remaining challenges from the perspective of 10 years after system implementation.

US Public Pension Landscape Series – July 24, 2019

Source: Thomas Aaron, Timothy Blake, Moody’s, Sector In-Depth, June 24, 2019
(subscription required)

Many US states and local governments, though certainly not all, face heightened credit challenges stemming from exposure to pension obligations, resulting in a highly varied and complex landscape. The severity of public pension challenges can differ substantially between, and even within, states.

Unfunded liabilities in many cases have reached historic highs, rising costs increasingly pressure some budgets, and aging demographics leave government finances increasingly susceptible to pension asset volatility. Yet in some cases, low or declining levels of pension risk bolster the credit profile of a given state or local government.

Governments grappling with pension challenges must often navigate legal protections for employee benefits that can limit reform options. However, litigation on a variety of pension reforms continues to work its way through courts across the country, offering the potential for precedent-setting decisions.

This series provides a state-by-state, in-depth review of the key issues related to pensions facing state and local governments. ….

State listing:
California
Colorado
Connecticut
Florida
Illinois
Louisiana
Minnesota
New York
Ohio
Oregon
Pennsylvania
Tennessee
Texas
Wisconsin

Adjustments to US State and Local Government Reported Pension Data: Proposed Methodology Update

Source: Thomas Aaron, Marcia Van Wagner, Timothy Blake, Moody’s, Request for Comment, July 10, 2019
(subscription required)

In this Request for Comment, we propose a number of changes to the Adjustments to US State and Local Government Reported Pension Data cross-sector rating methodology published in December 2017. Under our proposed changes, we would add descriptions of how we calculate the pension asset shock indicator and how we adjust other post-employment benefits (OPEB). The OPEB adjustment relies on information now required to be reported by issuers under Governmental Accounting Standards Board (GASB) Statements 74 and 75. We also propose to make some editorial changes to enhance readability.

US Public Pension Landscape Series

Source: Thomas Aaron, Timothy Blake, Moody’s, Sector In-Depth, June 14, 2019
(subscription required)

Many US states and local governments, though certainly not all, face heightened credit challenges stemming from exposure to pension obligations, resulting in a highly varied and complex landscape. The severity of public pension challenges can differ substantially between, and even within, states.

Unfunded liabilities in many cases have reached historic highs, rising costs increasingly pressure some budgets, and aging demographics leave government finances increasingly susceptible to pension asset volatility. Yet in some cases, low or declining levels of pension risk bolster the credit profile of a given state or local government.

Governments grappling with pension challenges must often navigate legal protections for employee benefits that can limit reform options. However, litigation on a variety of pension reforms continues to work its way through courts across the country, offering the potential for precedent-setting decisions.

This series provides a state-by-state, in-depth review of the key issues related to pensions facing state and local governments…..

State Listings:
California
Colorado
Florida
Illinois
Louisiana
Minnesota
New York
Ohio
Oregon
Pennsylvania
Tennessee
Texas
Wisconsin

Paid Parental Leave: On The Table

Source: Rob Taylor, Employment Alert, Volume 36 Issue 12, June 13, 2019
(subscription required)

Doubtless, teachers have taken notice. Last year Delaware Gov. Carney approved a new law giving state workers—including educators—12 weeks of paid parental leave. That’s dramatically different from the situation nationwide where just a few states offer that benefit. Also, the United States is widely known to be one of the least responsive of developed nations in this regard, a somewhat surprising occurrence given the push in this country to find creative solutions to the large, ongoing problem of teacher shortage.

In most places in the U.S., according to an EdWeek series, since teachers do not have paid time off related to pregnancy and birthing, they first use accumulated sick days to stay home with their newborn, and then go to unpaid leave, getting back to the classroom and a needed paycheck as rapidly as possible.

Related:
With No Paid Parental Leave, Many Teachers Return to Class Before They’re Ready
Source: Madeline Will, EdWeek, April 1, 2019
(subscription required)

Kansas (State of) – Retained pension funding, vetoed tax relief are credit positive

Source: Matthew Butler, Moody’s, Issuer Comment, June 6, 2019
(subscription required)

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.

Illinois Pension Consolidation: A Path Forward Or A Road To Nowhere?

Source: S&P Global Ratings, May 14, 2019
(subscription required)

– 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.

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
(subscription required)

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
(subscription required)

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.