Category Archives: Public Sector

America's Looming Pension Shock

Source: Mark Funkhouser, Governing, June 14, 2012

The poverty rate for people over age 65 dropped dramatically over the last several decades. Today it is the lowest of any age group, at about 9 percent. The aged vote, and so they drove the creation of a system of programs that lifted them out of poverty. That system has virtually disintegrated, but we have not yet felt the shock. We will….

And while many public-sector workers are seeing their pensions being cut back dramatically, about half of private-sector workers have no pension at all. Tens of thousands of older workers are taking Social Security early — foregoing a substantial portion of their maximum benefit — because they’ve lost their jobs and cannot find employment.

The net result of all this is a looming crisis for state and local governments, both because of the declines in tax revenue resulting from lower incomes as well as the fact that poor people put far more demands on government services than the non-poor. In addition, the creation of a vast new class of formerly middle-class, now poor, elderly will bring with it significant political and social instability.

Civil Service Reform: Lessons from Georgia and Indiana

Source: Heather Kerrigan, Governing, June 13, 2012

Several states this year are changing how public employees are hired and fired. They may be able to learn a thing or two from states that already have…. Does reform increase the cronyism that civil service protections are meant to prevent? Or does it increase performance and productivity by making the hiring process more flexible?…While Sarvis gives civil service reform in the Peach State a generally positive review, Dr. Paul Battaglio, associate professor of public affairs at the University of Texas-Dallas, paints a more negative picture. In a 2006 survey of more than 250 Georgia human resource professionals, Battaglio found that most “felt [at-will employment] created a less-trusting environment. They felt they could no longer trust their managers and supervisors, and they found the environment was less motivational,” he says. Motivation, typically required for productivity, is often cited as an argument in favor of civil service reform. But Battaglio says there’s no evidence that at-will employment increases productivity and performance…
Related:
Civil Service Reform Passes in 3 States
Source: Melissa Maynard, Stateline.org, June 12, 2012

State and Local Public Retirement Systems

Source: Jennifer Burnett, Council of State Governments, Capitol Facts and Figures, May 2012

From the summary:
In recent years, state policymakers have been bombarded with warnings about the sustainability of their public pension systems. A Pew Center on the States 2010 report warned that there was a $1 trillion gap between what states had set aside for pensions and the real price tag for those benefits. But after years of bad news, things are starting to look up. 2010 was the first year that public pension systems have shown positive earnings since 2007, just before financial markets – and public pension assets – took a dive. Those retirement systems saw a $722.2 billion loss in 2009 and a $178.8 billion loss in 2008.
See also:
Table: State and Local Public Employee Retirement Systems

NCPERS 2012 Public Fund Study

Source: National Conference on Public Employee Retirement Systems and Cobalt Community Research, 2012

In April and May 2012, the National Conference on Public Employee Retirement Systems (NCPERS) undertook the most comprehensive study to date addressing retirement issues for this segment of the public sector. In partnership with Cobalt Community Research, NCPERS has collected and analyzed the most current data available on member funds’ fiscal condition funds and steps they are taking to ensure fiscal and operational integrity.

The 2012 NCPERS Public Fund Study includes responses from 147 state and local government pension funds with a total number of active and retired memberships surpassing 7.5 million and assets exceeding 1.2 trillion. The majority – percent – were local pension funds, while 16 percent were state pension funds.

The study finds that public funds continue to respond to changes in the economic, political and social landscape by adopting substantial organizational and operational changes to ensure long‐term sustainability for their stakeholders. Efforts include increasing age and service requirements, increasing member contributions, stronger operational practices and more diligent oversight.

Public vs. Private Sector Cuts: A State-by-State Breakdown

Source: Mike Maciag, Governing, June 4, 2012

Nearly all states coped with sizable private sector job losses during the recession along with now-sluggish growth. How these private sector cuts have carried over to the public sector, though, has varied greatly across the country.

While public payrolls generally downsized in recent years, a Governing analysis of Labor Department data finds state and local government reductions being applied unevenly so far, with employment growing or remaining roughly unchanged in about half of states since the start of the recession. Private sector employment, by contrast, increased in only five states

Best Places to Work Snapshot: Satisfaction with Pay

Source: Partnership for Public Service, Snapshots, May 2012

From the abstract:
Recent studies comparing public- and private-sector pay are contradictory, with some concluding that federal workers earn more than their private-sector counterparts and others claiming they earn less money. The latest report from the nonpartisan Congressional Budget Office found that highly educated federal employees are underpaid relative to their counterparts in the private sector, and that federal employees with less education tend to be overcompensated. But what do federal employees themselves think about their pay and how does pay affect their job satisfaction?

The Partnership for Public Service set out to understand these questions as part of its Best Places to Work in the Federal Government® analysis, which is based on data from the Office of Personnel Management’s (OPM) 2011 Federal Employee Viewpoint Survey.

ERISA Failures and the Erosion of Workers' Rights: The Urgent Need to Protect Private Practice & Public Workers' Pensions and Benefits

Source: James P. Allen, Jr. & Richard A. Bales, Albany Law Review, Volume 75 Issue 1, 2011/2012

On March 11, 2011, Governor Scott Walker of Wisconsin signed into law a bill that eliminated most collective bargaining rights for the state’s public-sector workers. Many other cash-strapped states followed Wisconsin’s lead and introduced or enacted similar restraints on the rights of their workers. Thousands of public workers, whose only means of protecting their rights rested in their ability to collectively bargain, suddenly found their retirement benefits in jeopardy. This truth highlighted the lack of protections for public worker benefits similar to those of the private sector. However, the Employee Retirement Income Security Act, enacted for that purpose, has failed to secure these benefits. This article seeks to provide a broad overview of the crisis facing the pension and benefits system in the United States and offers some possible solutions. More importantly, the goal is to spur discourse on the urgent need to protect the benefits of all workers, public and private.

Containing Health-Care Costs: Proven Strategies for Success in the Public Sector

Source: Shayne Kavanagh, Government Finance Review, Vol. 28 no. 2, April 2012
(subscription required)

GFOA research has identified four techniques that have the potential to contain costs while preserving the value of the benefit for employees: onsite clinics; employee wellness programs; consumer-directed health care; and value-based insurance design.

Are Dues Check-Off and Agency Shop in the Public Interest?

Source: Joseph Slater and Daniel DiSalvo, Public Sector Inc., Online Debates, April 2012

In 2011, Republican-majority legislatures in Wisconsin and Ohio passed, and governors in both states signed, legislation reforming government labor relations. Among the specific provisions, the measures sought to restrict collective bargaining for most public workers and eliminate government’s collection of union dues. A pitched battle has ensued, most notably in Wisconsin where Governor Scott Walker faces a recall election that some say will set the tone for November’s presidential contest. This debate will examine the arguments for and against “dues check-off” and “agency shop” legal provisions that benefit public-sector unions. These provisions, under which the government automatically withholds union dues from the salaries of both union and non-union public employees, have been the focal point of debate in Wisconsin and across the country.

The Funding of State and Local Pensions: 2011-2015

Source: Alicia H. Munnell, Jean-Pierre Aubry, Joshua Hurwitz, Madeline Medenica and Laura Quinby, Center for Retirement Research at Boston College, SLP#24, May 2012

From the summary:
The brief’s key findings are:
– During 2011, the funded status of public plans slipped from 76 percent to 75 percent.
– This decline reflected slow asset growth due to actuarial smoothing, which was partly mitigated by an unexpected reduction in liability growth.
– Going forward, the funded ratio is projected to remain steady next year and then gradually improve as the market meltdown is phased out of the calculations.