Thriving cities, challenged schools: teacher strikes highlight districts’ credit issues

Source: Helen Cregger, Denise Rappmund, Naomi Richman, Leonard Jones, Alexandra S. Parker, Moody’s, Sector In-Depth, September 17, 2019
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Given enrollment declines, high housing prices, tighter labor markets and a growing proportion of legacy fixed costs, meeting teacher pay and staffing demands will continue to challenge districts, especially those with more constrained finances.

Infographic: Pension liabilities continue to trouble Illinois, Kentucky, Connecticut, New Jersey and others

Source: Moody’s Investors Service, October 3, 2019

Adjusted net pension liabilities (ANPL) declined in states’ fiscal year 2018 reporting due to healthy investment returns in fiscal 2017, though unfunded pension liabilities remain high for some states.

Pension liabilities continue to trouble Illinois, Kentucky, Connecticut, New Jersey and others

Related:
Medians – Adjusted net pension liabilities spike in advance of moderate declines
Source: Pisei Chea, Marcia Van Wagner, Timothy Blake, Nicholas Samuels, Emily Raimes, Tenzing T Lama, Moody’s, Sector In-Depth, August 27, 2019
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Adjusted net pension liabilities (ANPL) spiked in states’ fiscal year 2017 reporting due to poor investment returns in fiscal 2016, according to our state pension medians data. States typically report their pension funding levels with a one-year lag. Thus, favorable investment returns in fiscal 2017-18 will lead to a decline in pension liabilities in fiscal 2018-19 reporting.

Adjustments to Pension and OPEB Data Reported by GASB Issuers, Including US States and Local Governments Methodology
Source: Moody’s, Cross Sector Methodology, October 7, 2019

Credit FAQ: How S&P Global Ratings Will Implement Pension And OPEB Guidance In U.S. Public Finance State And Local Government Credit Analysis
Source: S&P, October 7, 2019
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On Oct. 7, 2019, S&P Global Ratings published “Guidance: Assessing U.S. Public Finance Pension And Other Postemployment Benefit Obligations For GO Debt, Local Government GO Ratings, And State Ratings Methodology.” Here, we answer the most frequently asked questions from investors and other market participants.

Elsewhere, we have also provided an overview on our approach to U.S. state and local government pensions within the context of our three government criteria: See “Credit FAQ: Quick Start Guide To S&P Global Ratings’ Approach To U.S. State And Local Government Pensions,” published May 13, 2019.

U.S. State Pension Reforms Partly Mitigate The Effects Of The Next Recession Primary Credit
Source: Carol H Spain, S&P, September 26, 2019
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Table of Contents:
• Average State Funding Levels Plateau With Notable Exceptions
• Many States Continue With Pension Reforms, Avoiding Backward Measures
• Most States Still Fall Short Of Minimum Funding Progress
• Despite Reforms Despite Improved Assumptions, Plans Remain Vulnerable To Market Volatility
• Demographics Influence The Funded Ratio And Budgetary Vulnerability
• Pension Costs Remain Affordable For Most States, With Notable Exceptions
• Policy Decisions, Not Markets, Will Likely Pose Greatest Future Risks
• Survey Methodology
• Related Research

Despite investment gains in 2018, U.S. states have made relatively slow progress since the Great Recession in improving funded ratios, with S&P Global Ratings’ most recent survey data indicating that the average weighted pension status across state plans was 72.5% compared with 83% in 2007. However, looking at the funded ratios alone falls short of understanding whether or not states have made progress toward improving the overall pension funding picture. Indeed, poor investment returns in select years and maturing pension plan populations have stunted state funding progress. Also, in the years immediately following the Great Recession, many states had reduced plan contributions as a short-term means of balancing budgets, resulting in funding setbacks from which many have yet to recover.

However, in recent years, many states have made conservative changes to actuarial methods and assumptions that, while hindering actuarial funding ratios, show a more realistic assessment of market risk tolerance for states, thus better enabling them to make funding progress. We have also witnessed that many states have learned lessons from funding discipline mistakes over the past ten years and better understand sources of pension liability and costs, and have therefore demonstrated a commitment to actuarially based funding. In this sense, states may be better prepared heading into the next recession despite weaker funded ratios. Yet, in our view, despite some progress, many plans’ current contributions, discount rate assumptions, and investment allocations still fall short of fully mitigating the market volatility that increasingly appears to lie ahead….

Intergovernmental Costs of Political Gridlock: Local Government Cash Flow Smoothing during State Budgetary Delays

Source: Lang (Kate) Yang, Public Finance Review, OnlineFirst, Published October 4, 2019
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From the abstract:
Political gridlock in state legislature often leads to a failure in adopting a budget by the start of a fiscal year. This article examines the intergovernmental implication of late state budgets, specifically the cash management problem faced by localities during the stalemate. Without legislative appropriations, the state government could delay expected transfers and payments to localities. Late intergovernmental transfers may force localities to smooth out cash flow for continued service provision through short-term borrowing. Using municipal bond market data, this article finds that when the state budget is late, the average locality’s likelihood of issuing short-term debt increases by 61 percent among those with end-of-fiscal-year short-term debt outstanding experience, and the amount of debt issuance increases by 76 percent. As short-term debt carries interest costs, state’s political gridlock and policy inactions impose direct costs on local governments.

Can Standardized Financial Data Help Government Save Money

Source: Ben Miller, Government Technology, October 5, 2019

A pair of states and the feds are moving to require local governments to submit financial data in a machine-readable format. Here’s how it could help cities.

…. Florida’s governor signed a bill last year that puts the state on a path to requiring its local governments to submit their financial information to the state in eXtensible Business Reporting Language, or XBRL, by September 2022. A similar bill sits on the desk of California’s governor, and U.S. legislators are considering two bills that could push along standardization at the federal level. ….

Testing a Path Model of Organizational Justice and Correctional Staff Job Stress Among Southern Correctional Staff

Source: Eric G. Lambert, Linda D. Keena, Stacy H. Haynes, David May, Rosemary Ricciardelli, Matthew Leone, Criminal Justice and Behavior, Volume 46 Issue 10, October 2019
(subscription required)

From the abstract:
Job stress has many negative effects on correctional staff. We proposed and tested a path model of transactional, procedural, and distributive justice’s direct and indirect effects on the job stress of 322 surveyed correctional staff, including 219 correctional officers, at a maximum security Southern prison. Findings indicated that procedural, distributive, and transactional justice affected job stress. Specifically, the proposed path model was supported, such that procedural justice had an indirect effect on job stress through distributive justice, and transactional and distributive justice had direct, negative effects on job stress. Transactional justice also had indirect effects on job stress through procedural and distributive justice. Taken together, the results suggest that organizational justice plays an important role in reducing correctional staff job stress.

Workers Are Falling Ill, Even Dying, After Making Kitchen Countertops

Source: Nell Greenfieldboyce, NPR, Morning Edition, October 2, 2019

Artificial stone used to make kitchen and bathroom countertops has been linked to cases of death and irreversible lung injury in workers who cut, grind and polish this increasingly popular material.

The fear is that thousands of workers in the United States who create countertops out of what’s known as “engineered stone” may be inhaling dangerous amounts of lung-damaging silica dust, because engineered stone is mostly made of the mineral silica…… While all this silica isn’t a concern once the countertop is installed in a kitchen or bathroom, it is a potential problem for the businesses that cut slabs of this artificial stone to the right shape for customers…..

….In 2016, OSHA issued new workplace limits on how much silica could be in the air. This controversial new rule reduced the permissible exposure level to half of what it had been. Safety experts hailed the new, tighter limit as an important step forward; the previous regulations had been based on decades-old science, they said. But many industry groups opposed it. A year later, the incoming Trump administration ended the safety agency’s national emphasis program for silica. That program would have allowed OSHA to target the countertop fabrication industry for special inspections, says Michaels. …. Without that program, says Michaels, OSHA is limited in what it can legally do. OSHA can investigate a workplace injury or a complaint. But these workers, some of whom are undocumented immigrants with few employment options, are unlikely to complain…..

Now Is a Good Time for Working People to Get Involved in Politics: An Interview with Liliana Rivera Baiman

Source: Meagan Day, Jacobin, September 27, 2019

Liliana Rivera Baiman is a member of the Democratic Socialists of America (DSA), a working mother, an immigrant, and a community and union organizer who’s running for city council in Columbus, Ohio.

Jacobin’s Meagan Day spoke to Baiman about the power of a city council to fight for workers and unions, Baiman’s experience growing up in a co-op village in Mexico, how the labor movement activated her politically, and what working-class people deserve…..

20 Young People Explain How They Identify Politically and Why

Source: Teen Vogue, Across the Aisle, October 1, 2019

We aren’t born political animals. Figuring out a political belief system is something that takes time, and it’s a process deeply influenced by how our families talk (or don’t talk) about politics; the environments and historical moments in which we grow up; and the information we consume. Teen Vogue surveyed 20 people between ages 16-24 about how they identify politically and why. Here’s what they had to say.
Related:
Gen Z Is The Most Progressive — and Least Partisan — Generation
Source: Lauren Young, Teen Vogue, Across the Aisle, October 2, 2019

…..But in the decade since 2008, younger voters across the ideological spectrum have become more liberal and Generation Z is among the most progressive and diverse in the country’s history. On issues like sexism, racism, homophobia, and bigotry, research suggests that Generation Z has adapted a worldview that embraces more diverse viewpoints. As the country gears up for the 2020 elections, this shift by the Gen Z voters who, along with millennials, outvoted older generations in both the 2016 presidential election and the 2018 midterms, would seem to be a definitive boost for Democrats. But there is another important way Gen Z is setting themselves apart from previous generations and making their mark on 2020.

According to a Pew Research Center report prior to the 2016 election, 50% of young adults self-identified as political independents, although they were much more likely than older generations to hold liberal views on a variety of social and political issues. A poll conducted by the nonpartisan Center for Information and Research on Civic Learning and Engagement (CIRCLE) among voters ages 18–24 shortly before the 2018 midterms found that while 56.4% of young people “chose to affiliate with” either the Democratic or Republican political parties, one-third, or 33.1%, identified as Independents — nearly as many as the 35.5% of young people who identified as Democrats and significantly more than the 20.9% who identified as Republicans…..

Tired of Two Parties? Here Are Seven Alternatives
Libertarians and Working Families and Prohibition, Oh My!
Source: Emily Bloch, Teen Vogue, Across the Aisle, October 2, 2019

….As the 2020 presidential election kicks into high gear, with debate bingo cards and drinking games making the rounds, it’s easy to feel like there are only two sides: Democrat or Republican.

The reality is that even though the donkey and elephant are the two major players, there are dozens of political parties throughout the country — from the Green Party to more obscure alternatives like the Mountain Party.

What may keep them from the spotlight shone on the two major political parties? Money, infrastructure, and access to the ballot.

….

Moving Upward and Onward: Income Mobility at Historically Black Colleges and Universities

Source: Rutgers Center for Minority Serving Institutions (CMSI), September 2019

From the press release:
More students experience upward mobility at Historically Black Colleges and Universities (HBCUs) than Predominantly White Institutions (PWIs) asserts a new report published by the Rutgers Center for Minority Serving Institutions (CMSI). The report entitled, Moving Upward and Onward: Income Mobility at Historically Black Colleges and Universities, examines the intergenerational income mobility of recent HBCU graduates and explores upward mobility variations and economic stratification based on institution type.

The report begins with a foreword by Dillard University President Walter Kimbrough, which provides an important narrative on how HBCUs have routinely supported low-income and Pell Grant-eligible students. Kimbrough situates the value of these storied institutions within the historical context of higher education. According to the report, HBCUs enroll far more low-income students than PWIs. More specifically, the report claims that nearly one-quarter of HBCU students are low-income and more than half of all HBCU students come from households in the bottom 40% of the U.S. income distribution.