Category Archives: State & Local Finance

Behind the teacher strikes that have roiled five states – Why non-union states have seen the most unrest

Source: The Economist, May 5, 2018

From a block away, the striking teachers camped out around Arizona’s capitol at first looked like a solid sea of red, the colour of their T-shirts and tents. On closer inspection, they distinguished themselves the way the teachers have always distinguished their classrooms—with handmade signs. Leah Falcon (“Arizona exports: Cotton, copper, teachers”), who teaches middle-school maths, said she was “fighting because my kids deserve better than 34 students in a class.” Megan Marohn (“Arizona Spending per Student: $9,000. Per Inmate: $24,000”) is a classroom aide and lifelong Republican who frets that Arizona’s Republican legislature and governor “put the value of corporations above students”. Jay Bertelsen (“Christian Non-Union Conservative Teacher Fighting for Funding”) has taught computer science outside Tucson for 25 years; his children qualify for Arizona’s state-subsidised health care for poor families.

Grievances such as these have motivated teacher strikes in five states. They look likely to continue—galvanising public-sector workers in states where Democrats hope to make gains in this autumn’s midterm elections. ….

States waste hundreds of thousands on drug testing for welfare, but have little to show for it

Source: Amanda Michelle Gomez, Josh Israel, ThinkProgress, May 7, 2018

We got the questionnaires used to screen people for tests, and they are deeply flawed. …. In 2017, states spent more than $490,000 to drug-test 2,541 people who had applied for Temporary Assistance for Needy Families (TANF) benefits, which yielded just 301 positive tests. ….

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.

Wind farms bring windfalls to local governments across US

Source: Francis A Mamo, Swami Venkataraman, Lesley Ritter, Mark McIntire, Rachel Cortez, Leonard Jones, Alexandra S. Parker, Moody’s, Sector In-Depth, May 8, 2018
(subscription required)

The proliferation of wind farms in the US has propelled tax base growth and generated new tax revenue for local governments, particularly in rural areas with abundant wind resources.

For governments and corporates, marijuana brings possible gains and pressures

Source: Kenneth Kurtz, Grayson Nichols, Michael Yake, Linda Montag, Michael Levesque, Kevin Cassidy, Inga Smolyar, Peter H. Abdill, Alejandro Olivo, Moody’s, Sector In-Depth, May 8, 2018
(subscription required)

Ongoing legalization in some US states and likely legalization in Canada nationwide would be slightly beneficial for local government revenues, while alcoholic beverage, tobacco, consumer products and pharmaceutical companies would likely gain if they innovatively expand into the market.

Improving Economic Development Incentives

Source: Timothy Bartik, W.E. Upjohn Institute, 2018

From the Pew Charitable Trusts’ summary:
State and local governments commonly use economic development incentives such as tax credits and exemptions to try to boost their economies by encouraging businesses to relocate or expand within their borders. But such incentives can represent major budget commitments, costing these governments tens of billions of dollars every year. To make the best decisions about which policies to pursue, policymakers need reliable, high-quality tools and methods for evaluating their incentives and ensuring that they yield the intended results.

New research by Timothy J. Bartik of the W.E. Upjohn Institute for Employment Research offers practical guidance. In a recently released report, “Improving Economic Development Incentives,” the institute’s senior economist examines how policy design choices influence the economic impact of incentives and draws some conclusions to help state and local leaders assess and improve their policies.

Ohio State University – salary information

Source: Ohio State University, Office of Human Resources, 2018

From the press release:
The Ohio State University is breaking new ground for transparency among public universities in Ohio by making all non-student employee salaries available to the public in an online, searchable web-based application. ….

…. In calendar year 2017, 42,670 faculty and staff received $2.5 billion in total earnings – representing a one-year employee headcount increase of 1,855 (4.5 percent) and a 6.4 percent increase over the 2016 $2.35 billion payroll budget. The 2017 median annual base salary stood at $48,173, compared to $47,661 in 2016 – a 1.1 percent increase.

Two types of data are available on the Human Resources website: Users may enter a name, department, title or salary range to search for base salary information in the web-based application. A second option is available to download Excel spreadsheets of total employee earnings for calendar year 2017, which includes bonuses, overtime, deferred compensation, and vacation and sick leave payouts in addition to base salary. The data will be updated throughout the calendar year…..

Georgia Bus Drivers Joined the School Uprising and Paid a Price

Source: Rachel M. Cohen, The Intercept, April 22, 2018
The red-state school uprising is spreading to educators around the country, with teachers in Colorado and Arizona now planning walkouts to demand better treatment from state and county governments. But the widespread public support that has helped carry the teachers to victories so far has been less present for blue-collar workers following in their footsteps. In Georgia, bus drivers who organized their own work stoppage last week were met with public condemnation and immediate firings.

On Thursday, the same day that the votes in favor of a walkout were tallied in Arizona, nearly 400 school bus drivers in DeKalb County, Georgia, stayed home from work, staging a “sickout” to protest their low salaries and meager benefits.  

Whether the school bus drivers can succeed in winning their demands and maintaining broad popular support remains to be seen, but the protest provides an important test case on whether these teacher movements will lead to a broader working-class uprising or stay limited to organizing among a narrower band of white-collar professionals. The bus drivers are not building their case around the idea that their unique talents merit greater monetary reward, but that they simply need and deserve to be treated more fairly…..

…..While the teachers strikes in West Virginia, Oklahoma, and Arizona have boasted the vocal support of local school boards and superintendents, the school district leadership in DeKalb County has offered no such solidarity to the school bus drivers. In fact, seven bus drivers were fired on Thursday, identified as “sickout ringleaders.”….

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….