Category Archives: Public Sector

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
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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.

Global Pensions Asset Study 2014

Source: Towers Watson, January 2014

From the abstract:
This is a study of the 13 largest pension markets in the world and accounts for more than 85% of global pension assets. The countries included are Australia, Canada, Brazil, France, Germany, Hong Kong, Ireland, Japan, Netherlands, South Africa, Switzerland, the UK and the US. The study also analyses seven countries in greater depth by excluding the six smallest markets (Brazil, France, Germany, Ireland, Hong Kong and South Africa).

The analysis includes:
• Asset size, including growth statistics, comparison of asset size with GDP and liabilities
• Asset allocation
• Defined benefit and defined contribution share of pension assets
• Public and private sector share of pension assets.

3 Ways to Keep Public Employees from Leaving

Source: Katherine Barrett & Richard Greene, Governing, February 2014

The turnover rate among young state employees is rising. Raising pay might be a way to change that, but it’s not a practical one…

The overall upward movement in the turnover rate is one of the findings of the State Government Workforce Project (SGWP), an effort we’re involved in with Professor Sally Selden of Lynchburg College, under the auspices of the National Association of State Personnel Executives. Some of the numbers from that study are indicative of what’s happening all around the country. In Montana, the state employee turnover rate reached a low of just under 9 percent in 2009; it was up to 12.5 percent in 2012. In Georgia, turnover in fiscal 2013 was 17.9 percent; it had been 13.6 percent in fiscal 2009. And in Louisiana, voluntary turnover has been rising—from 12.8 percent in fiscal 2011 to 18.9 percent just two years later….

…Part of the turnover problem may be the improving economy. As the unemployment rate has been edging downward, the private sector has opportunities for people who might otherwise work for the states. The public sector is particularly vulnerable for a number of reasons, not least because many states can’t keep up with the private sector in terms of pay. …There’s also a rather alarming morale issue in the states. Declines in benefits like pension plans and health care have hurt, and so have pay freezes or furloughs. Purposeful reductions in workforce frequently mean that one person is doing the job of two. That’s not only wearing on employees, it also makes it harder for them to feel the heady rush of success. Four of five state HR representatives report that employee morale is worse than it was before the recession, according to preliminary SGWP data….

Forget Technology; Denver Turns to Its Employees to Fix Problems

Source: J.B. Wogan, Governing, February 2014

Instead of looking for better results through data analytics, new technology or paid consultants, Denver looks to its own employees for simple, straightforward reforms. …

…In Denver city government, this is what an innovator looks like: White-haired, dressed in light blue scrubs and wearing a pair of sneakers, Tara Morse works as an animal care supervisor. Each day, she conducts about a dozen examinations of new dogs and cats that arrive at the Denver Animal Shelter. Not long ago, Morse came up with a simple idea to save her agency about $75,000 a year.

When pets get reclaimed by their owners, they’re usually collected in fewer than 15 days. After that, the owners rarely turn up. Yet city and county policy dictated that the agency hold animals for 30 days before trying to place them in another home. The longer they stayed, the more their health deteriorated. And as their health worsened, their chances of being adopted dropped as well. Morse recommended a new policy of 15 days. The result was just what Morse had predicted: cheaper, more effective care.

Morse was putting to use skills she learned at the Denver Peak Academy, a city-run training program, housed within the mayor’s budget office, that teaches municipal employees analytical methods to improve their daily work. Graduates apply those lessons toward improvements within their home agencies….

Cities throughout the country are creating offices tasked with spurring innovation. But the Peak Academy represents a different strain. Instead of looking for better results through data analytics, new technology or paid consultants, Denver is turning to its ground-level employees for simple, straightforward reforms. More than a suggestion box, the academy provides a structured ongoing process for soliciting new ideas and making sure they happen….

The Health of State and Local Pensions

Source: David Tobenkin, NARFE Magazine, January 2014

There are lessons to be learned for Feds in the condition of other government plans.

The Great Recession was not kind to state and local pension funds.

These plans take contributions by employers and employees and professionally invest them in stocks, bonds, and other financial products. Similar to the situation of all investors, many state and local pension funds lost ground in funding their obligations, and a number of small localities actually declared bankruptcies and curtailed, or attempted to curtail, benefits to government workers and retirees. Meanwhile, some plans weathered not only the Great Recession but also maintained strong funding levels during the previous market crash in the early 2000s.

While federal employees’ Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) pension plans have a different funding mechanism, observers say there are lessons to be learned from the challenges and successes of state and local funds. NARFE magazine writer David Tobenkin asked pension fund experts about state and local government pension fund developments. …

Essay: Resolving the Public Pension ‘Crisis’

Source: Jack Michael Beermann, Boston University School of Law, Public Law Research Paper No. 14-5, November 11, 2013

From the abstract:
The high profile bankruptcy filing by the City of Detroit, Michigan, has brought to the fore the relationship between pension underfunding and the financial difficulties faced by an increasing number of municipalities and states in the United States. The problem is likely to continue to grow with more municipalities finding it necessary to explore the bankruptcy option or otherwise attempt to reduce pension and other obligations to employees and retirees. This essay is an effort to provoke discussion of the normative issues surrounding pension reform, mainly concerning how public employees and retirees should be treated in municipal bankruptcy. Should pension claimants be treated like any other unsecured creditor, or any other person who suffers when the regulatory background is altered, or is there a case for treating them as victims of a fiscal disaster beyond their control? Is pension reform just one more step in the evolution of the labor market that has made it much more difficult for lower skilled workers to achieve a middle class lifestyle? If so, how should the law react? The essay also includes some discussion of the fascinating federalism issues raised by the potential clash between state law protecting pension rights and federal bankruptcy standards. Should a federal bankruptcy court respect the decision of a state court, that the use of federal bankruptcy to reduce pension obligations would violate state constitutional protection of pension rights? This may be the most interesting federalism dispute in decades.