Category Archives: Public Sector

Who Benefits from Pension Enhancements?

Source: Cory Koedel, Shawn Ni, Michael Podgursky, Education Finance and Policy, Early Access, Posted Online February 14, 2014
(subscription required)

From the abstract:
During the late 1990s public pension funds across the United States accrued large actuarial surpluses. The seemingly flush conditions of the pension funds led legislators in most states to substantially improve retirement benefits for public workers, including teachers. In this study we examine the benefit enhancements to the teacher pension system in Missouri. The enhancements resulted in large windfall gains for teachers who were close to retirement when the legislation was enacted. By contrast, novice teachers, and teachers who had not yet entered the labor force, were made worse off. The reason is that front-end contribution rates have been raised for current teachers to offset past liabilities accrued from the enhancements. Total teacher retirement compensation, net of contribution costs, is lower for young teachers today as a result of the enhancement legislation. Given sharp increases in pension costs in other states, this finding may generalize to young teachers in many other plans.

Looming Retiree Health-Care Costs? Let the Feds Help.

Source: Liz Farmer, Governing, March 12, 2014

As retiree health care costs soar, state and local governments would be wise to shift more of the burden to the federal government as they try to get a handle on their growing liabilities. An analysis by Moody’s Investors Service notes that growing health care liabilities pose an increasing credit risk for many municipal governments. States alone listed a total of more than $530 billion in unfunded “other post-retirement benefits” (OPEB) liabilities in 2012, Moody’s reports.

Job insecurity and job satisfaction in the United States: the case of public sector union workers

Source: Benjamin Artz, Ilker Kaya, Industrial Relations Journal, Early View, Article first published online: February 14, 2014
(subscription required)

From the abstract:
We measure the association between perceived job insecurity and job satisfaction in the United States and focus on public sector union workers. Job satisfaction decreases with perceived job insecurity among union workers in the public sector and primarily when tenure with an employer is high.

The Privatization of the Public Workplace

Source: Robert Roberts, Journal of Workplace Rights, Volume 17, Number 1, 2012-2013
(subscription required)

From the abstract:
This article examines the argument that civil service systems should adopt market-based human resource management policies and practices similar to those frequently used by for-profit private organizations, in order to improve the efficiency and effectiveness of public organizations. The article also examines the argument that public employees now typically enjoy job security and lucrative benefits not generally available to private sector employees, and that this situation needs to be adjusted in order to bring public sector compensation in line with private sector pay and benefits. The article argues that critics of the independence of civil servants in the United States have intentionally perpetrated the lie that incompetent, corrupt, and lazy individuals make up the majority of public employees. The fact that private sector employees have seen their economic well-being deteriorate over recent decades has made it much easier for critics of public employees to make public employees scapegoats for economic trends. The article also argues that if this trend continues, it presents a direct threat to the long-term independence of civil servants in the United States and opens the way for ideologically driven individuals and interest groups to again gain control over public agencies.

Regulation of Public Sector Collective Bargaining in the States

Source: Milla Sanes and John Schmitt, Center for Economic and Policy Research, March 2014

From the abstract:
While the unionization of most private-sector workers is governed by the National Labor Relations Act (NLRA), the legal scope of collective bargaining for state and local public-sector workers is the domain of states and, where states allow it, local authorities. This hodge-podge of state-and-local legal frameworks is complicated enough, but recent efforts in Wisconsin, Michigan, Ohio, and other states have left the legal rights of public-sector workers even less transparent.

In this report, we review the legal rights and limitations on public-sector bargaining in the 50 states and the District of Columbia, as of January 2014. Given the legal complexities, we focus on three sets of workers who make up almost half of all unionized public-sector workers: teachers, police, and firefighters, with some observations, where possible, on other state-and-local workers. For each group of workers, we examine whether public-sector workers have the right to bargain collectively; whether that right includes the ability to bargain over wages; and whether public-sector workers have the right to strike.

Why Teachers Unions Make Such Useful Scapegoats

Source: Rebecca Kolins Givan, New Labor Forum, Vol. 23 no. 1, Winter 2014
(subscription required)

In the last several election cycles, it has become de rigueur for right-wing candidates to express their anger at teachers and their unions, blaming them for any and all ills of public education, and characterizing them as resistant to change. These attacks have metastasized: formerly the rhetoric of conservatives who one might expect to hate unions, “taking on” teachers unions has become a popular activity for a number of prominent Democrats. At a time when education reform and health care reform are at the center of our national policy agenda, it is curious that there is so much blame and animosity focused on teachers unions, while nursing and other health care unions continue their work relatively unmolested by mainstream politicians. …

The Changing Size Distribution of U.S. Trade Unions and Its Description by Pareto’s Distribution

Source: John Pencavel, Industrial and Labor Relations Review, Vol. 67 No. 1, January 2014
(subscription required)

From the abstract:
The size distribution of trade unions in the United States and changes in this distribution are documented. Because the most profound changes are taking place among very large unions, these are subject to special analysis by invoking Pareto’s distribution–a new application of this distribution. Extensions to trade union wealth and to Britain are broached. The role of the public sector in these changes receives particular attention. A simple model helps account both for the logarithmic distribution of union membership and for the contrasting experiences of public- and private-sector unions since the 1970s.

Pension Politics: Public Employee Retirement System Reform in Four States

Source: Patrick McGuinn, Brookings Institution, Brown Center on Education Policy, February 2014

From the summary:
….Pension Politics: Public Employee Retirement System Reform in Four States by Patrick McGuinn provides actionable policy recommendations for those states that are looking to enact such reforms. McGuinn examines recent pension reform efforts in four states with diverse political climates. Two of the states (Utah and Rhode Island) succeeded in passing significant structural changes to their pension systems, while the others (New Jersey and Illinois) enacted more limited, less innovative changes. McGuinn highlights what activities have and have not been successful in producing meaningful reform, and details a number of recommendations for other states seeking to successfully improve their underfunded pension systems. Key recommendations include:
– Avoid turning pension reform into an ideological issue
– Enlist a credible and visible reform champion (having a Democrat lead the effort goes a long way towards countering the charge that reforms are merely a conservative attack on labor)
– Clearly communicate the reality of their state’s pension liability and demonstrate pensions’ impact on taxes and other state spending priorities, such as education
– Sell the benefits of pension reform to state workers (as ultimately in the best interests of pension participants, relative to a system that can’t meet its obligations)
– Sell the benefits of pension reform to school reformers
– Anticipate and plan for legal challenges …

2014 Facts: State and Municipal Bankruptcy, Municipal Bonds, State and Local Pensions

Source: NGA – National Governors Association, NCSL – National Conference of State Legislatures, CSG – The Council of State Governments, NACo – National Association of Counties, NLC – National League of Cities, USCM – The U.S. Conference of Mayors, ICMA – International City/County Management Association, NASBO – National Association of State Budget Officers, NASACT – National Association of State Auditors, Comptrollers and Treasurers, GFOA – Government Finance Officers Association, NASRA – National Association of State Retirement Administrators, February 2014

Since Detroit declared bankruptcy in 2013, many have questioned the overall financial condition of state and local governments, particularly concerning bankruptcy, bonds, and pensions. What are the facts? ICMA joined with the national organizations representing the nation’s governors, state legislatures, and state and local officials to release, “2014 Facts: State and Municipal Bankruptcy, Municipal Bonds, State and Local Pensions.”

Did you know that:
– Only 14 localities, or one out of every 1,525 eligible jurisdictions, have sought bankruptcy protection over the past five years?
– Only 12 states specifically authorize Chapter IX filings for their general-purpose local governments?
– That states, counties, and other localities invested $3.2 trillion in infrastructure through long-term tax-exempt municipal bonds between 2003 and 2012, compared with $1.3 trillion provided by the federal government in support of public works?

This quick reference provides links to research reports about states and local government fiscal issues, pension plans, and municipal bonds.