…This editorial is intended to help public employers in preparing to switch to pay for performance and in that process to specifically address issues related to a successful transition….
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.
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….
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….
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. …
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.
Source: Good Jobs First, January 2014
From the press release:
State lawmakers who are considering drastic cuts to the retirement benefits of state workers are simultaneously giving away billions of dollars in corporate tax subsidies and loopholes, often in amounts far exceeding the cost of pensions, according to a new report.
Putting State Pension Costs in Context by Good Jobs First examines 10 states where elected officials are threatening to undermine retirement security by cutting the pension benefits of their teachers, firefighters, police officers, and hundreds of thousands of other public employees. The states included in the report are: Arizona; California; Colorado; Florida; Illinois; Louisiana; Michigan; Missouri; Oklahoma; and Pennsylvania.
The findings show that in each state, the revenue lost to corporations through loopholes and tax breaks outpaces the current cost of pension benefits to state employees….
Pennsylvania Pension Fact Sheet
Source: Stephen Herzenberg, Keystone Research Center, February 3, 2014
Source: Governing, 2014
This ongoing series goes back to the basics to help public officials navigate the sometimes-confusing world of GASB, OPEB, DBs and P3s.
Financial Illiteracy: One of Government’s Biggest and Least-Discussed Problems
Failure to understand financial outcomes is more dangerous to states and localities than ever, and there’s a big gap between what public leaders know about finance and what they need to know.
How Accountability and Transparency Are Improving Public Finance
These buzzwords can instill fear and trepidation in even the most progressive and tech-savvy public officials, but open information really does improve how cities operate.
Finance 101 Glossary
Crucial (and complicated) concepts in public money explained.
How Are Pensions Protected State-by-State?
Over the last century, states have adopted the idea that pensions are a form of deferred compensation and, along with that change, has come certain protections.
Learning to Love the Numbers of Government
Governments’ financial statements may seem intimidating to those without number-crunching expertise. But these documents contain important information that public officials need to know. Here’s how to find it.
What Cities Need to Know in the New Credit Ratings Era
As agencies revamp their criteria, seemingly conflicting actions have some scratching their heads.
Is There a Plot Against Pensions?
What may seem like a mathematical quibble has ballooned into an all-out war between two ends of the spectrum with no clear end in sight.
What’s the Point of Rainy Day Funds?
States and localities both save for unseen emergencies and hard times. But when it comes to using the funds, their approach couldn’t be more different.
Retiree Health-Care Benefits: The Next Shoe to Drop?
The rising cost of health care for retirees may force states and localities to make wholesale changes to their pension health plans.
For states throughout the country this year, there’s a common theme: a climate of uncertainty coupled with a sense of genuine opportunity. Amid worries about the federal government’s failure to boost funding for infrastructure, many states are taking steps to produce that funding on their own. Congress seems to have stalled—again—in its efforts to reform the immigration system, but states are enacting bills designed to grant new rights to some of their undocumented residents. And after a period in which higher education programs faced dramatic cuts, states are putting money back into those programs—some of them more efficiently than in the past. Here are 10 big issues states will look to tackle in 2014, and six smaller ones they’ll also address. …
Medicaid … Income Tax Revision … Minimum Wage Laws … Public Pensions … Immigration … Safety Net … Higher Education … Employee Compensation … Transportation Funding … Drones …
Trending: 6 More Issues That Could Be Big
Abortion … Fracking … GMOs … Privacy … Social Impact Bonds … Autonomous Vehicles …
There’s renewed effort to integrate the many public health programs into the overall health system.