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Post by macrockett on Jan 24, 2010 22:59:33 GMT -6
Lets see how this ends...
JANUARY 24, 2010, 7:44 P.M. ET
Oregon Tax Vote Shows States' Plight
By JOEL MILLMAN
PORTLAND, Ore.—Voters in this state will consider two new tax-increase measures on Tuesday, the culmination of a battle that has unfolded in the state against the backdrop of low state revenue and high unemployment.
The twin ballot measures are serving as a gauge of anti-business populism and highlight a nationwide debate over whether to fix state budgets by targeting the affluent. But they are also fueling resentment of "tax and spend" legislators, as well as public-employee unions whose members are enjoying job security at a time when thousands have lost their jobs.
Passage of Measure 66 would increase Oregon's personal-income-tax rate by almost 2% for the state's richest taxpayers. Measure 67 calls for a increasing the state's minimum corporate income tax, currently $10 a year.
Oregon's Democrat-controlled state Legislature crafted the measures to raise $733 million to cover a state budget shortfall. Opponents call the effort unfair, charging that it was concocted via focus group to tap voter anger against "rich" corporations by a legislature too dysfunctional to fix Oregon's unbalanced finances.
On the "yes" side is a coalition of teachers unions and other public-sector employees, joined by many charities who say they fear massive cuts to schools, hospitals and antipoverty programs if the measures don't pass.
The counterargument: Legislators don't need the extra tax revenue to protect state jobs, but to restore public-employee pension-fund balances hammered when stock markets crashed.
On the "no" side are business groups and antitax activists. One prominent opponent is Nike Inc. founder and chairman Phil Knight, who dubbed Measures 66 and 67 "Oregon's Assisted Suicide Law II" in a recent letter to the Oregonian, the state's largest daily newspaper.
Both sides have plenty of ammunition, and both largely agree that Measures 66 and 67 are before the voters now only because in 2003 Oregonians rejected state tax reform that would have raised taxes across the board. That vote caused schools to shut down a month early and made Oregon the butt of ridicule in a week's worth of Doonesbury comics.
The debate over the tax measures has been strident at times. "No" campaigners raise the specter of failing small businesses—from the corner bakery to family-owned dairies—if taxes are raised. "Yes" advocates point to the $10 minimum corporate income tax—unchanged since 1931—which they argue lets hundreds of large corporations pay practically nothing each year, including many companies whose headquarters lie out of state.
Big numbers are being wielded on both sides. For example, one "yes" organization released data that said two-thirds of corporations doing business in Oregon pay just $10 a year in income taxes, adding that "last year the average family of four paid $3,100 in taxes. That's more than 300 corporations combined!"
Meanwhile, the group calling itself Oregonians Against Job-Killing Taxes accuses Measure 67 of lashing "suffering, profitless businesses" with new taxes of "up to $100,000" a year, a formula its economists predict will cause the additional loss of 70,000 jobs in Oregon, where unemployment tops 11%.
Measure 67 proposes to tax gross revenue of corporations that don't report a profit. However, few, if any, businesses would see an increase of $100,000 under the measure, Oregon's Legislative Revenue Office reports. The same state agency calculated that more than 97% of Oregon businesses would face an increase of $150 a year, or see no change at all.
"Yes" activists have also been blurry with the facts regarding whether most of the $733 million being raised by the two measures will come from out of state.
Some in the audience thought that implied P&G had been paying just the $10 minimum corporate income tax. A spokeswoman for P&G says the $10 corporate minimum is levied only on companies that don't show a profit. P&G, she says, pays corporate income tax at the rate of 6.6%.
Mr. Novick's adversary was Lake Oswego investor and attorney Bob Wiggins, representing Oregonians Against Job-Killing Taxes. Mr. Wiggins scored points reminding voters that a "yes" vote would raise personal income taxes in Oregon to 11%, "the highest rate in the U.S." which will force businesses from the state, he said.
Mr. Novick's rebuttal: Corporations are just as likely to leave over quality-of-life considerations, such as failing schools unable to educate a proper work force. "Vermont has higher taxes than Oregon, but a lower unemployment rate," he argued.
Write to Joel Millman at joel.millman@wsj.com
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Post by macrockett on Jan 26, 2010 21:23:11 GMT -6
Here is some irony for you. The main argument put forth by politicians in their dislike for individual retirement accounts replacing social security was risk (advocated by Bush and others in his first term i think). Do you remember? Ok, do you realize that the retirement accounts for our public employees, police, fire, muni, teachers, universities, judges are defined benefit plans that invest in a variety of asset classes: stocks, bonds, real estate, etc. Ok ya got that? Do you also know that those defined benefit plans are a contractual obligation backed by your tax dollars, i.e. you and I are at risk for the retirement benefits of these public employees? The gist is, they can take all the risk they want and you are paying for it! Two examples: One a very big one, the other? Well it isn't as large, but it hits home. First the story in the LA Times:
It's official: CalPERS loses $500 million on New York apartment deal
January 25, 2010 | 10:37 am
The California Public Employees' Retirement System officially has lost a $500-million stake in the biggest deal ever in the U.S. for a single piece of residential property.
The owners of Stuyvesant Town and Peter Cooper Village, a complex of 56 buildings with 11,000 rental units near the East River in Manahattan, have agreed to turn the property over to creditors after defaulting on $4.4 billion in debt.
Coopervillage CalPERS had committed 26.5% of the partnership led by Tishman Speyer Properties and Black Rock Inc., one of the fund's real estate investment advisors. "This was one of our investments when the real estate market was peaking during 2005 and 2006," said Clark McKinley, a CalPERS spokesman. "Performance was negatively affected by the aftershock of the market collapse." CalPERS wrote its Stuyvesant stake down to zero in March, said Chief Investment Officer Joseph Dear. "There were negotiations about how it terminates, but we didn't expect to receive any value on that." The loss in the New York City apartment market was the most spectacular blowup in what had been a horrendous 2009 for the $200-billion CalPERS. The fund's real estate portfolio dropped by 47.5%, spurring CalPERS to terminate its relationships with some real estate advisors and to write down many of its holdings to market values. CalPERS had originally projected that the $5.4-billion deal would net it a 13.5% return over seven years. The decision by investors to turn the Stuyvesant Town-Cooper Village property over to creditors was first reported by the Wall Street Journal. -- Marc Lifsher -------------------------------------------------------------------------------------- As an aside, at one point, Calpers was down almost $60 Billion last year on their investments. Can you imagine if the stock market hadn't recovered? CalPERS expected to report losing nearly one-quarter of investment portfolio
PENSIONS
The estimated $56.8-billion drop at the U.S.' largest pension fund, the second annual loss in a row, would have a huge effect on what state and local governments must shell out to support retirees.
July 21, 2009|Marc Lifsher
SACRAMENTO — California's huge government pension fund is expected to report today a whopping annual loss of an estimated $56.8 billion, almost a quarter of its investment portfolio. The loss at the California Public Employees' Retirement System for the fiscal year ended June 30 is the second in a row for the country's largest fund. A year ago, CalPERS reported an $8.5-billion loss, as the severe recession began to take hold. --------------------------------------------------------------------- Now, read about Illinois' own pension problems here:
www.civicfed.org/iifs/blog/moody%E2%80%99s-highlights-illinois-pension-problems-------------------------------------------------------------------------- Finally, look at this document: Naperville's budget. You will see that the fire and police pensions each lost about $10 million
www.naperville.il.us/emplibrary/FY10AnnualOperatingBudget.pdf------------------------ We as tax payers are on the hook for federal, state and local pensioners, yet we get no benefit from their retirement benefits! Many also receive retirement health benefits as well.
Yet it is too risky for us to opt out of social security...imagine that!
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Post by macrockett on Jan 31, 2010 7:55:46 GMT -6
The most recent report on Illinois Pensions came out January 19, 2010. The message is blunt. www.illinoispolicy.org/uploads/files/PFFABrief.pdfOn Friday, the Commercial Club of Chicago came out with a full page ad in the Tribune referring to the following website: www.illinoisisbroke.comOh and look, we made Reuters on the above story. A real feather in the State's cap. www.reuters.com/article/idUSTRE60R6QB20100128As i said to our own School Board, last fall, in my recommendations concerning our own fiscal mess, "don't rely on the state," it is all coming to fruition in spades. The state is now delaying virtually every payment it is required to make. Regarding 204, the exposure in over $30 million per year. This includes ADK, special needs, transportation, and general student subsidies. |
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Post by insider on Jan 31, 2010 13:44:47 GMT -6
Plainfield schools may cut 200 jobs www.suburbanchicagonews.com/heraldnews/news/2011664,Plainfield-schools-may-cut-200-jobs_jo12610.article January 27, 2010 By MIKE LOOMIS For Sun-Times Media PLAINFIELD — Plainfield schools need to cut more than 200 jobs under a plan unveiled Monday by Superintendent John Harper. Harper proposed the cuts as part of a deficit reduction plan to eliminate the district's $16 million deficit. The district is required by the state to balance its budget by 2012. To make that deadline, 222 teaching, administrative and support staff positions will have to go, Harper told the school board. Since 80 percent of the district's cost goes to paying its staff, "it's inescapable to reduce a deficit this large without impacting people," Harper said. He said the job cuts would save about $10 million, with another $11 million in savings coming from operational cost cuts. The proposal aims to save $21 million — $6 million beyond the current deficit — BECAUSE THE DISTRICT MUST ANTICIPATE MORE LOSSES IN STATE AID IN COMING YEARS. "The problem is way beyond our control," board President Rod Westfall said of the economic factors that impact schools. "This affects all of us very deeply." The meeting drew about 250 people. Parents, like Heather Drake, who has two kids in district schools, told the board to keep looking for other areas to save money before doing away with teaching jobs in the fine arts or those that provide gifted students with extra instruction in reading. Others had concerns about class size. The board will vote on the deficit reduction plan at a special meeting set for 7:30 p.m. Thursday at Plainfield Central High School. List of proposed cuts Proposed cuts and measures that would start July 1: • Eliminate the fifth-grade band program. This year, 927 students play. • Restructure the middle school Encore program, eliminating 20.5 positions. There is no plan to eliminate any of the classes. • End the full-release mentor program. Three mentors are mentoring about 100 first- and second-year teachers. • Eliminate summer school for students in K-8, cutting $221,921. • Cut departmental and building budgets by 20 percent. • Increase high school summer school fees by 20 percent, adding $43,384. Current fees are $180 for district students and $280 for out-of-district students. • Increase extracurricular/athletic fees from $39 per middle school student to $50 and $61 per high school student to $120, bringing in $249,683. • Reduce coaches and stipends for extracurriculars and athletics, cutting $652,726. • Eliminate P.E. classes for kindergartners. • End Reading Recovery program that serves about 440 first-graders, affecting 29 teachers. • Create own therapeutic program at Plainfield Academy for about 16 students who are sent to other private programs, at a savings of $1 million. |
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Post by macrockett on Jan 31, 2010 14:36:17 GMT -6
Plainfield schools may cut 200 jobs www.suburbanchicagonews.com/heraldnews/news/2011664,Plainfield-schools-may-cut-200-jobs_jo12610.article January 27, 2010 By MIKE LOOMIS For Sun-Times Media PLAINFIELD — Plainfield schools need to cut more than 200 jobs under a plan unveiled Monday by Superintendent John Harper. Harper proposed the cuts as part of a deficit reduction plan to eliminate the district's $16 million deficit. The district is required by the state to balance its budget by 2012. To make that deadline, 222 teaching, administrative and support staff positions will have to go, Harper told the school board. Since 80 percent of the district's cost goes to paying its staff, "it's inescapable to reduce a deficit this large without impacting people," Harper said.He said the job cuts would save about $10 million, with another $11 million in savings coming from operational cost cuts. The proposal aims to save $21 million — $6 million beyond the current deficit — BECAUSE THE DISTRICT MUST ANTICIPATE MORE LOSSES IN STATE AID IN COMING YEARS. "The problem is way beyond our control," board President Rod Westfall said of the economic factors that impact schools. "This affects all of us very deeply."The meeting drew about 250 people. Parents, like Heather Drake, who has two kids in district schools, told the board to keep looking for other areas to save money before doing away with teaching jobs in the fine arts or those that provide gifted students with extra instruction in reading. Others had concerns about class size. The board will vote on the deficit reduction plan at a special meeting set for 7:30 p.m. Thursday at Plainfield Central High School. List of proposed cuts Proposed cuts and measures that would start July 1: • Eliminate the fifth-grade band program. This year, 927 students play. • Restructure the middle school Encore program, eliminating 20.5 positions. There is no plan to eliminate any of the classes. • End the full-release mentor program. Three mentors are mentoring about 100 first- and second-year teachers. • Eliminate summer school for students in K-8, cutting $221,921. • Cut departmental and building budgets by 20 percent. • Increase high school summer school fees by 20 percent, adding $43,384. Current fees are $180 for district students and $280 for out-of-district students. • Increase extracurricular/athletic fees from $39 per middle school student to $50 and $61 per high school student to $120, bringing in $249,683. • Reduce coaches and stipends for extracurriculars and athletics, cutting $652,726. • Eliminate P.E. classes for kindergartners. • End Reading Recovery program that serves about 440 first-graders, affecting 29 teachers. • Create own therapeutic program at Plainfield Academy for about 16 students who are sent to other private programs, at a savings of $1 million. Thanks for posting this story insider. "Since 80 percent of the district's cost goes to paying its staff, "it's inescapable to reduce a deficit this large without impacting people," Harper said."
"The proposal aims to save $21 million — $6 million beyond the current deficit — BECAUSE THE DISTRICT MUST ANTICIPATE MORE LOSSES IN STATE AID IN COMING YEARS. "
"The problem is way beyond our control," board President Rod Westfall said of the economic factors that impact schools. "This affects all of us very deeply."
I'm afraid this is just beginning and these three quotes are going to be heard over and over in virtually every state and school district in the country. As for Illinois, here is an independent analysis of the State's FY 2010 Budget, presented by the Civic Federation (dated 1/22/2010): civicfed.org/sites/default/files/FY2010%20State%20of%20Illinois%20Enacted%20Budget.pdf |
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Post by macrockett on Feb 2, 2010 12:31:04 GMT -6
www.washingtonpost.com/wp-dyn/content/article/2010/01/31/AR2010013101872_pf.htmlUnion officials are disturbingly inflexible toward charter schools
Monday, February 1, 2010; A16
IT IS HARD to square the words of American Federation of Teachers (AFT) President Randi Weingarten with the actions of many of her union's officials. Even as Ms. Weingarten issues stirring calls for new ways of thinking, labor leaders in places such as New York use their political muscle to block important reforms. Perhaps they don't think that she means business, or maybe they don't care; either way, it is the interests of students that are being harmed.
The United Federation of Teachers (UFT), the AFT affiliate that represents teachers in New York City, led the opposition to legislation favored by Gov. David A. Paterson (D) that would have lifted the state's cap on charter schools. Mr. Paterson, backed by New York Mayor Michael Bloomberg, had hoped to better position the state for up to $700 million in federal education dollars. The Obama administration has made clear that states that deny parents choice in where their children go to school by limiting the growth of these increasingly popular independent public schools will be penalized in the national competition for $4.35 billion in Race to the Top funds.
UFT officials were willing to lift the cap but -- saying more accountability and transparency are needed -- insisted on restrictions apt to have discouraged growth. The Democratic-controlled legislature stalemated, leaving the state's charter schools capped at 200 and the waiting lists for admission growing. Failure to lift the cap -- along with the union's refusal to immediately eliminate a ban against using student test data in teacher tenure decisions -- may well doom New York's Race to the Top application. If Education Secretary Arne Duncan is serious about Race to the Top being a game-changer, he can start by tossing out New York's bid and challenging it to do better. What's most discouraging is what the actions say about the willingness of teachers unions to embrace change. The recalcitrance in New York is not an isolated instance as evidenced, for example, by the refusal of union officials to sign on to the District's application for federal money. Washington Teachers' Union President George Parker objected to a new system of teacher evaluations that uses student test scores as a major factor. We have cheered Ms. Weingarten for her willingness to speak out in favor of reforms such as performance pay or better due process; she appears more forward-thinking than her counterparts in the National Education Association. But statesmanlike words mean little if not matched by action in the trenches.
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Post by macrockett on Feb 8, 2010 9:31:50 GMT -6
This was a story in the WSJ January 22. At the time, I didn't have time to post it. Public Employee Unions Are Sinking California
Months after closing its last budget gap, the Golden State is $20 billion in the red.
By STEVEN GREENHUT
SacramentoAn old friend of mine has a saying, "Even the worm learns." Prod one several hundred times, he says, and it will learn to avoid the prodder. As California enters its annual budget drama, I can't help but wonder if the wisdom of the elected politicians here in the state capital equals that of the earthworm.
The state is in a precarious position, with a 12.3% unemployment rate (more than two points higher than the national average) and a budget $20 billion in the red (only months after the last budget fix closed a large deficit). Productive Californians are leaving for states with less-punishing regulatory and tax regimes. Yet so far there isn't a broad consensus to do much about those who have prodded the state into its current position: public employee unions that drive costs up and fight to block spending cuts.
Earlier this month, Gov. Arnold Schwarzenegger proposed a budget that calls for a $6.9 billion handout from Washington (unlikely to be forthcoming) and vows to protect current education funding, 40% of the state's budget. He does want to eliminate the Calworks welfare-to-work program and enact a 5% pay cut for state employees. These are reasonable ideas, but also politically unlikely.As the Sacramento Bee's veteran columnist Dan Walters recently put it, the governor's budget is "disconnected from economic and political reality." Mr. Walters suspects what will happen next: "Most likely, [the governor] and lawmakers will, to use his own phrase, 'kick the can down the road' with some more accounting tricks and other gimmicks, and dump the mess on whoever is ill-fated to become governor a year hence."Mr. Walters' Jan. 10 column was fittingly titled, "Schwarzenegger Reverts to Fantasy with Budget Proposal." Shortly before releasing his budget, the governor and Democratic state Senate President Pro Tem Darrell Steinberg held a self-congratulatory news conference. Mr. Steinberg used the spotlight to bemoan what he deemed to be unfair attacks on California. Mr. Schwarzenegger told a hokey story about his pet pig and pony working together to break into the dog's food. It was an example, he said, of how "last year, we here in this room did some great things working together." Meanwhile, activists are fast at work. For example, the Bay Area Council, a moderate business organization, is pushing for a constitutional convention to reshape California's textbook-sized constitution. The council's aim is to ditch a constitutional provision that requires a two-thirds vote in the legislature to pass budgets. Other reforms being proposed include a plan to institute a part-time legislature and another plan to require legislators to pass drug tests. None of these ideas will ratchet down state spending.To do that California needs to take on its public employee unions.Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.
Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state's pensions funds have been fully funded (which they haven't been).A 2008 state commission pegged California's unfunded pension liability at $63.5 billion, which will be amortized over several decades. That liability, released before the precipitous drop in stock-market and real-estate values, certainly will soar.One idea gaining traction is to create a two-tier pension system to offer lesser benefits to new employees. That's a good start, but it would still leave tens of thousands of state employees in line to receive lucrative benefits that the state must find future revenues to pay for. Another is to enact paycheck protections that require union officials to get permission from their members before spending union dues on politics (something that would undercut union power).My hope is that these and other reforms find support in unlikely places. Former Assembly Speaker Willie Brown, a well-known liberal voice, recently wrote this in the San Francisco Chronicle: "The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians—pushed by our friends in labor—gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . t some point, someone is going to have to get honest about the fact." WOW, WILLIE BROWN SAID THAT? NOW YOU KNOW YOU ARE IN SERIOUS TROUBLE, AS HE WAS ONE OF THE ARCHITECTS OF THIS LARGESS! State Treasurer Bill Lockyer, another prominent liberal Democrat, told a legislative hearing in October that public employee pensions would "bankrupt" the state. And the chief actuary for the California Public Employees Retirement System has called the current pension situation "unsustainable."As the state careens toward insolvency, these remarks are the first sign that some people are learning the lesson of the earthworm.Mr. Greenhut is director of the Pacific Research Institute's journalism center and author of the new book "Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation" (The Forum Press). -------------------------------------------------------- Why worry about CA's problems? There problem is our problem. It is happening right here in Illinois, right now. The result will be the same. So watch CA. They are right ahead of us. Implosion to follow. If you care about your children, and their future, you should start devoting time to lobbying for them by holding your elected officials accountable for everyone's future, rather than themselves and special interests.
I am not a fan of Sarah Palin or House minority leader John Boehner, but this weekend both characterized the debt accumulating at the Federal level "generational theft." I agree with that statement and believe the term applies to the debt of Illinois as well. |
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Post by doctorwho on Feb 8, 2010 10:16:31 GMT -6
This was a story in the WSJ January 22. At the time, I didn't have time to post it. Public Employee Unions Are Sinking California
Months after closing its last budget gap, the Golden State is $20 billion in the red.
By STEVEN GREENHUT
SacramentoAn old friend of mine has a saying, "Even the worm learns." Prod one several hundred times, he says, and it will learn to avoid the prodder. As California enters its annual budget drama, I can't help but wonder if the wisdom of the elected politicians here in the state capital equals that of the earthworm.
The state is in a precarious position, with a 12.3% unemployment rate (more than two points higher than the national average) and a budget $20 billion in the red (only months after the last budget fix closed a large deficit). Productive Californians are leaving for states with less-punishing regulatory and tax regimes. Yet so far there isn't a broad consensus to do much about those who have prodded the state into its current position: public employee unions that drive costs up and fight to block spending cuts.
Earlier this month, Gov. Arnold Schwarzenegger proposed a budget that calls for a $6.9 billion handout from Washington (unlikely to be forthcoming) and vows to protect current education funding, 40% of the state's budget. He does want to eliminate the Calworks welfare-to-work program and enact a 5% pay cut for state employees. These are reasonable ideas, but also politically unlikely.As the Sacramento Bee's veteran columnist Dan Walters recently put it, the governor's budget is "disconnected from economic and political reality." Mr. Walters suspects what will happen next: "Most likely, [the governor] and lawmakers will, to use his own phrase, 'kick the can down the road' with some more accounting tricks and other gimmicks, and dump the mess on whoever is ill-fated to become governor a year hence."Mr. Walters' Jan. 10 column was fittingly titled, "Schwarzenegger Reverts to Fantasy with Budget Proposal." Shortly before releasing his budget, the governor and Democratic state Senate President Pro Tem Darrell Steinberg held a self-congratulatory news conference. Mr. Steinberg used the spotlight to bemoan what he deemed to be unfair attacks on California. Mr. Schwarzenegger told a hokey story about his pet pig and pony working together to break into the dog's food. It was an example, he said, of how "last year, we here in this room did some great things working together." Meanwhile, activists are fast at work. For example, the Bay Area Council, a moderate business organization, is pushing for a constitutional convention to reshape California's textbook-sized constitution. The council's aim is to ditch a constitutional provision that requires a two-thirds vote in the legislature to pass budgets. Other reforms being proposed include a plan to institute a part-time legislature and another plan to require legislators to pass drug tests. None of these ideas will ratchet down state spending.To do that California needs to take on its public employee unions.Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.
Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state's pensions funds have been fully funded (which they haven't been).A 2008 state commission pegged California's unfunded pension liability at $63.5 billion, which will be amortized over several decades. That liability, released before the precipitous drop in stock-market and real-estate values, certainly will soar.One idea gaining traction is to create a two-tier pension system to offer lesser benefits to new employees. That's a good start, but it would still leave tens of thousands of state employees in line to receive lucrative benefits that the state must find future revenues to pay for. Another is to enact paycheck protections that require union officials to get permission from their members before spending union dues on politics (something that would undercut union power).My hope is that these and other reforms find support in unlikely places. Former Assembly Speaker Willie Brown, a well-known liberal voice, recently wrote this in the San Francisco Chronicle: "The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians—pushed by our friends in labor—gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . t some point, someone is going to have to get honest about the fact." WOW, WILLIE BROWN SAID THAT? NOW YOU KNOW YOU ARE IN SERIOUS TROUBLE, AS HE WAS ONE OF THE ARCHITECTS OF THIS LARGESS! State Treasurer Bill Lockyer, another prominent liberal Democrat, told a legislative hearing in October that public employee pensions would "bankrupt" the state. And the chief actuary for the California Public Employees Retirement System has called the current pension situation "unsustainable."As the state careens toward insolvency, these remarks are the first sign that some people are learning the lesson of the earthworm.Mr. Greenhut is director of the Pacific Research Institute's journalism center and author of the new book "Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation" (The Forum Press). -------------------------------------------------------- Why worry about CA's problems? There problem is our problem. It is happening right here in Illinois, right now. The result will be the same. So watch CA. They are right ahead of us. Implosion to follow. If you care about your children, and their future, you should start devoting time to lobbying for them by holding your elected officials accountable for everyone's future, rather than themselves and special interests.
I am not a fan of Sarah Palin or House minority leader John Boehner, but this weekend both characterized the debt accumulating at the Federal level "generational theft." I agree with that statement and believe the term applies to the debt of Illinois as well.what I really want to understsand is how in the hell did public pensions get to be 90% of the last years salary ? Private pensions- when we still used to have them before they were withdrawn - never reached much more than 30-40% max- and was designed to work with Social Security to aid in one's retirement - not pay for it ! I know the unions have contracts - but those of us in the private sector had verbal agreements at the very least and witten company policies - yet courts upheld when many of us after 25 years or more of service saw their pensions turned into pitiful cash accumulation accounts worth 10% maybe of the old penson plan. Courts said we paid nothing into the pensions ( in reality) therefore we owned nothing. Can public employee pension plans be altered also ? |
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Post by macrockett on Feb 8, 2010 11:09:32 GMT -6
You start with a large pool of money and incumbents who need re-election and, therefore, a loyal constituency, make promises you can not keep, do so in an opaque environment. When everyone in the private sector begins to wake up, it is too late. The private sector promises are contractual. Pensions promises can be changed prospectively in the private sector, just as they can in the public sector, the later being part of the constitution of the state and statutory promises. The difference is in the language of the contract v the law. In Illinois, re public pensions, case law states: "Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired." Di Falco v. Board of Trustees, 521 N.E.2d 923 (1988)(holding that contractual relationship is governed by terms of pension code at the time the employee becomes a member of the retirement system); People ex rel., Sklodowski v. State, 695 N.E.2d 374 (Ill. 1998)(holding that underfunding claim alleging failure to make required contributions was not actionable since state constitutional provision was intended to create contractual right to benefits, without freezing politically sensitive area of pension financing). Another thing you have to distinguish between are pension v health care promises. In sum, not a subject that can be summarized in a paragraph or two. ;-) You can see state by state what the law is for public sector pensions: www.ncpers.org/Files/News/03152007RetireBenefitProtections.pdfThat document was compiled by this organization: www.ncpers.org/AboutUs/Overview.asp (note the dollar figure) I suspect you will become more familiar with this org over the next decade. |
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Post by macrockett on Feb 10, 2010 22:14:01 GMT -6
If there was ever an article about unions/government employees that exemplifies the point I have been trying to make, this is it. The same author wrote the Jan 22 WSJ article posted above with all the red in it for emphasis. reason.com/archives/2010/01/12/class-war
Reason Magazine
Steven Greenhut from the February 2010 issue
In April 2008, The Orange County Register published a bombshell of an investigation about a license plate program for California government workers and their families. Drivers of nearly 1 million cars and light trucks—out of a total 22 million vehicles registered statewide—were protected by a “shield” in the state records system between their license plate numbers and their home addresses. There were, the newspaper found, great practical benefits to this secrecy.
“Vehicles with protected license plates can run through dozens of intersections controlled by red light cameras with impunity,” the Register’s Jennifer Muir reported. “Parking citations issued to vehicles with protected plates are often dismissed because the process necessary to pierce the shield is too cumbersome. Some patrol officers let drivers with protected plates off with a warning because the plates signal that drivers are ‘one of their own’ or related to someone who is.”The plate program started in 1978 with the seemingly unobjectionable purpose of protecting the personal addresses of officials who deal directly with criminals. Police argued that the bad guys could call the Department of Motor Vehicles (DMV), get addresses for officers, and use the information to harm them or their family members. There was no rash of such incidents, only the possibility that they could take place. So police and their families were granted confidentiality. Then the program expanded from one set of government workers to another. Eventually parole officers, retired parking enforcers, DMV desk clerks, county supervisors, social workers, and other categories of employees from 1,800 state agencies were given the special protections too. Meanwhile, the original intent of the shield had become obsolete: The DMV long ago abandoned the practice of giving out personal information about any driver. What was left was not a protection but a perk.Yes, rank has its privileges, and it’s clear that government workers have a rank above the rest of us. Ordinarily, if one out of every 22 California drivers had a license to drive any way he chose, there would be demands for more police power to protect Californians from the potential carnage. But until the newspaper series, law enforcement officials and legislators had remained mum. The reason, of course, is that the scofflaws are law enforcement officials and legislators. Here is how brazen they’ve become: A few days after the newspaper investigation caused a buzz in Sacramento, lawmakers voted to expand the driver record protections to even more government employees. An Assembly committee, on a bipartisan 13-to-0 vote, agreed to extend the program to veterinarians, firefighters, and code officers. “I don’t want to say no to the firefighters and veterinarians that are doing these things that need to be protected,” Assemblyman Mike Duvall (R-Yorba Linda) explained.Exempting themselves from traffic laws in the name of a threat that no longer exists is bad enough, but what government workers do to the rest of us on a daily basis makes ticket dodging look like child’s play. Often under veils of illegal secrecy, public-sector unions and their political allies are systematically looting the public treasury with gold-plated pensions, jeopardizing the finances of state and local governments around the country, removing themselves from legal accountability, and doing it all in the name of humble working men and women just looking for their fair share. Government employees have turned themselves into a coddled class that lives better than its private-sector counterpart, and with more impunity. The public’s servants have become our masters. Good Enough for Government Work There was a time when government work offered lower salaries than comparable jobs in the private sector but more security and somewhat better benefits. These days, government workers fare better than private-sector workers in almost every area—pay, benefits, time off, and job security. And not just in California.
According to a 2007 analysis of data from the U.S. Bureau of Labor Statistics by the Asbury Park Press, “the average federal worker made $59,864 in 2005, compared with the average salary of $40,505 in the private sector.” Across comparable jobs, the federal government paid higher salaries than the private sector three times out of four, the paper found. As Heritage Foundation legal analyst James Sherk explained to the Press, “The government doesn’t have to worry about going bankrupt, and there isn’t much competition.”
In February 2008, before the recession made the disparity much worse, The New York Times reported that “George W. Bush is in line to be the first president since World War II to preside over an economy in which federal government employment rose more rapidly than employment in the private sector.” The Obama administration has extended the hiring binge, with executive branch employment (excluding the Postal Service and the Defense Department) slated to grow by 2 percent in 2010—and more than 15 percent if you count temporary Census workers.
The average federal salary (including benefits) is set to grow from $72,800 in 2008 to $75,419 in 2010, CBS reported. But the real action isn’t in what government employees are being paid today; it’s in what they’re being promised for tomorrow. Public pensions have swollen to unrecognizable proportions during the last decade. In June 2005, BusinessWeek reported that “more than 14 million public servants and 6 million retirees are owed $2.37 trillion by more than 2,000 different states, cities and agencies,” numbers that have risen since then. State and local pension payouts, the magazine found, had increased 50 percent in just five years.
These huge pension increases have eaten away at public finances, most spectacularly in California, where a bipartisan bill that passed virtually without debate unleashed the odious “3 percent at 50” retirement plan in 1999. Under this plan, at age 50 many categories of public employees are eligible for 3 percent of their final year’s pay multiplied by the number of years they’ve worked. So if a police officer starts working at age 20, he can retire at 50 with 90 percent of his final salary until he dies, and then his spouse receives that money for the rest of her life. Even during the economic crisis, “3 percent at 50” and the forces behind it have only become more entrenched.
In the midst of California’s 2008–09 fiscal meltdown, with the impact of deluxe public pensions making daily headlines, the city of Fullerton nevertheless sought to retroactively increase the defined-benefit retirement plan for its city employees by a jaw-dropping 25 percent. What’s more, the Fullerton City Council negotiated the increase in closed session, outside public view. Under California’s open meetings law, known as the Brown Act, even legitimate closed-session items such as contract negotiations are supposed to be advertised so that the public has a clear idea of what’s being discussed. But the Fullerton agenda for that night only vaguely referred to labor negotiations.
Four of the five council members—two Republicans and two Democrats—seemed to support the deal. But Republican Shawn Nelson, a principled advocate for limited government, didn’t appreciate the way the council was obscuring not only the legitimately secret details of the negotiations but the basic subject matter. He called me at the Register (where I worked at the time) and, without revealing details of the closed session, shared his concerns about the way the public had not been alerted. After I wrote about the secret, fiscally reckless deal, the recriminations came down in a hurry: on Shawn Nelson.
Not surprisingly, the liberal council members were furious that the public had been informed about what was going on. But some conservative Republicans, including a prominent state senator, Dick Ackerman of Irvine, were angry as well, because Nelson’s willingness to talk embarrassed a Republican councilman whom the GOP was backing for re-election. When I later bumped into Ackerman at the Republican National Convention in St. Paul, he laid into me about Nelson’s supposed violation of the Brown Act. Some officials and bloggers actually called for Nelson to be prosecuted. Local union mouthpieces and fellow council members portrayed the whistleblower as a common criminal, even though he was merely acting in the spirit of the open meetings law and showing the kind of fiscal responsibility you would hope to see in public officials.
In its embarrassment, the city council voted against the deal at the last minute, but only after council members publicly chastised Nelson, accused me of libel, and vowed to come back for more when the timing was right. One Republican councilman couldn’t figure out what the fuss was all about, given that the council enhances public employee pay and pensions all the time.
Pension Tsunami Although Americans may have a vague sense that the nation has run up a great deal of debt, the public employee benefit problem is not well known. Yet the wave of benefit promises is poised to wash away state and local government budgets and large portions of the incomes of most Americans. Most of these benefits are vested, meaning that they have the standing of a legal contract. They cannot be reduced. And the government employees’ allies, such as California’s legislative Democrats, are cleverly blocking some of the more obvious exit strategies.
For instance, when the city of Vallejo went bankrupt after coughing up 75 percent of its budget to police and firefighters, the state Assembly introduced legislation that would allow cities to go bankrupt only if they get approval from a commission. Such a commission would of course be dominated by union-friendly members. The result: Cities would be stuck making good on contracts they cannot afford to fulfill.
When the economy was booming, these structural problems could be hidden. But not now. As debt loads become unsustainable, you can expect cuts in services, tax increases, pension-obligation bonds, or some combination of the three.
In California unfunded pension and health care liabilities for state workers top $100 billion, and the annual pension contribution has shot up from $320 million to $7.3 billion in less than a decade. In New York state, local governments may have to triple their annual pension contributions during the next six years, from $2.6 billion to $8 billion, according to the state comptroller.
That money will come from taxpayers. The average private-sector worker, who enjoys a lower salary and far lower retirement benefits than New York or California government workers, will have to work longer, retire later, and pay more so that his public-employee neighbors can enjoy the lifestyle to which they have become accustomed. The taxpayers will also have to deal with worsening public services, since there will be less money to pay for things that might actually benefit the public.
In July 2009, Orange County, California, Sheriff Sandra Hutchens proposed more than $20 million in budget cuts to close the gap caused by falling tax revenue. Her department slashed 40 percent of its command staff, cut a total of about 30 positions, and made changes that affected about 200 positions through reassignments, demotions, new overtime rules, and other maneuvers. “These are services that we believe are quite important to maintaining public safety, that we’re just not going to be able to continue,” department spokesman John MacDonald told the Los Angeles Times.
The sheriff failed to identify another reason for the tight budget: In 2001 the Orange County Board of Supervisors had passed a retroactive pension increase for sheriff’s deputies. That policy nearly doubled pension costs from 2000 to 2009, when pension contributions totaled nearly $95 million—20 percent of the sheriff’s budget. So the sheriff decries an economic downturn that is costing her department about $20 million, but she doesn’t mention that a previous pension increase is costing her department more than double that amount. It’s safe to say that had the pension increase not passed, the department would have money to keep officers on the streets and to avoid the cuts the sheriff claims are threatening public safety.
Chief’s Disease One would think that a “3 percent at 50” retirement would be a good enough deal for most people. Most workers in the private sector would probably jump at such an opportunity. But many public safety officials aren’t satisfied with a system that allows them to retire with 90 percent or more of their final year’s pay at young ages. They feel compelled to game the system in ways that stretch or break the law.
A large percentage of public safety officials —more than two-thirds of management-level officials at the California Highway Patrol, for instance—come down with something widely known as “Chief’s Disease” about a year before their scheduled retirement. “High-ranking [CHP] officers, nearing the end of their careers, routinely pursued disability claims that awarded them workers’ comp settlements,” John Hill and Dorothy Korber of the Sacramento Bee reported in 2004. “That, in turn, led in many cases to disability retirements. As they collected their disability pensions, some of these former CHP chiefs embarked on rigorous second careers—one as assistant sheriff of Yolo County, for example, another as the security director for San Francisco International Airport.” When Mike Clesceri was mayor of Fullerton (a part-time position filled by a city council member), he also worked as an investigator for the Orange County District Attorney’s Office. As his retirement approached, Clesceri claimed to have an extreme case of acid reflux, which would help him net a tax-free pension of $58,000 a year, plus cost-of-living increases. Even while retired with that alleged disability, Clesceri pursued a local police chief’s job, retained his mayorship, and ran a tough re-election campaign. He even had the time to have his brother-in-law, an attorney, send threatening letters to members of the community who commented on the absurdity of his disability pension. As Clesceri explained in a newspaper column, the disability only applied to his job at the D.A.’s office. The exposure of this abuse ultimately galvanized the public to boot Clesceri off the Fullerton City Council. The problem is most of these situations never get aired publicly. Other state employees go to great lengths to find the highest-paying job they can in their final year, thereby locking in their permanent retirement benefit based on a salary they made only once. Bee reporters Hill and Korber told the story of Sharon McGraw, a Sacramento-area accounting manager for the state who moved from her suburban home to a tiny apartment in the San Francisco Bay area so she could temporarily take a high-paying job that would increase her pension benefit by $18,000 a year. Then there’s the bizarre story of Armando Ruiz, a part-time trustee for the Coast Community College District in Southern California. Ruiz also worked full time as an administrator with the South Orange County Community College District. Ruiz wanted to run for re-election as a trustee and use the “incumbent” label on his ballot, but he also wanted to take advantage of a strange California law that dramatically increases an employee’s pension payout if he retires from two jobs on the same day. “Ruiz ‘retired,’ effective Oct. 31, as a part-time trustee of the Coast district and as a full-time counselor at Irvine Valley College,” Register columnist Frank Mickadeit reported in 2008. “Even though the trustee gig pays just a $9,800 annual stipend, he was able to calculate his state pension as if he had been paid $106K a year for that ‘job’ plus the $106K a year he got for his real job at Irvine. So, based on a $212K salary he never really made, his pension will work out to about $108K a year for life. Otherwise, the pension would have been $59K—$54K for the real job; $5K for the trustee job. Even though Ruiz was officially retired from the Coast district board, he was still listed on Tuesday’s ballot as an incumbent. A cynical person might say that by waiting to ‘retire,’ just days before the election Ruiz knew it would be too late to change the ballots. And incumbents rarely lose such elections.” The only good news from that scam: After Ruiz’s maneuver was exposed, the state legislature repealed the incomprehensible pension-spiking rule. But the pending pension crisis, with its thousands of abuses undetected by outside scrutiny, continues to loom over our heads. The Public Sector Menace In the summer of 2009, various Democratic candidates for California attorney general came before the Police Officers Research Association of California, a union lobbying organization, to ask for its support. According to one attendee (who asked to remain anonymous, given the obvious repercussions for his career), the organization had two basic questions for Assemblymen Ted Lieu (D-Torrance), Alberto Torrico (D-Newark), and Pedro Nava (D–Santa Barbara), each a candidate in the 2010 attorney general race. The first: Did they support the death penalty for cop killers? The second: Would each candidate, as attorney general, make sure the official summary of a state pension reform proposal would be slanted to destroy its chances of passing?In California crafting ballot language is one of the most important jobs of the state’s attorney general. The police union officials reminded the candidates that 90 percent of voters read nothing more than the ballot title and summary, and they emphasized the importance of putting the kibosh to the measure. My source was appalled, not just by the directness of the question but by the eagerness with which the candidates, especially Torrico, answered it. They all promised they would help kill the measure. Public-sector unions have a growing influence in state and federal governments, and in the overall labor movement, but they are a relatively recent phenomenon. Civil service unionization in the federal government wasn’t allowed until President John F. Kennedy issued an executive order legalizing it in 1962. In California it didn’t become legal until 1968. Yet now California may be spearheading the re-unionization of the country.
In a 2003 study of union membership rates, the sociologists Ruth Milkman and Daisy Rooks explained that “California stands out as an exception to the general pattern of the past decade. Against all odds, union density has inched upward in the nation’s most populous state, from 16.1 percent of all wage and salary workers in 1998 to 17.8 percent in 2002.” The study was produced by the University of California Institute for Labor and Employment, itself a testament to union power in the Golden State. Critics call the institute Union University, arguing that the state is funding a left-wing advocacy and research organization that advances union causes. As the Los Angeles Times explained in a 2004 article about the controversy, “For years these programs received the majority of their funding from the budgets of the universities where they are housed. Then in the 2000–01 budget, former Gov. Gray Davis approved $6 million to create the institute encompassing the two centers and charged with carrying out ‘research, education and service involving the world of work, and the public and private policies that govern it.’ ” In the 2003 study, Milkman and Rooks found that union growth in California’s public sector has far outpaced such growth in other states, for an obvious reason: “Organized labor has more political influence in California than in most other states.” In more-recent studies, the Institute for Labor and Employment found that for the first time in five decades, U.S. unionization rates actually increased in 2008. The reason: increases in California, mainly in the government sector. At all levels, state and local government employment grew by 13 percent across the United States from 1994 to 2004. The number of judicial and legal employees increased by 28 percent. The number of public safety workers increased by 21 percent. The number of teachers increased by 22 percent. Michael Hodges’ invaluable Grandfather Economic Report uses the Bureau of Labor Statistics to chart the growth in state and local government employees since 1946. Their number has increased from 3.3 million then to 19.8 million today—a 492 percent increase as the country’s population increased by 115 percent. Since 1999 the number of state and local government employees has increased by 13 percent, compared to a 9 percent increase in the population. The United States had 2.3 state and local government employees per 100 citizens in 1946 and has 6.5 state and local government employees per 100 citizens now. In 1947, Hodges writes, 78 percent of the national income went to the private sector, 16 percent to the federal sector, and 6 percent to the state and local government sector. Now 54 percent of the economy is private, 28 percent goes to the feds, and 18 percent goes to state and local governments. The trend lines are ominous. Bigger government means more government employees. Those employees then become a permanent lobby for continual government growth. The nation may have reached critical mass; the number of government employees at every level may have gotten so high that it is politically impossible to roll back the bureaucracy, rein in the costs, and restore lost freedoms. People who are supposed to serve the public have become a privileged elite that exploits political power for financial gain and special perks. Because of its political power, this interest group has rigged the game so there are few meaningful checks on its demands. Government employees now receive far higher pay, benefits, and pensions than the vast majority of Americans working in the private sector. Even when they are incompetent or abusive, they can be fired only after a long process and only for the most grievous offenses. It’s a two-tier system in which the rulers are making steady gains at the expense of the ruled. The predictable results: Higher taxes, eroded public services, unsustainable levels of debt, and massive roadblocks to reforming even the poorest performing agencies and school systems. If this system is left to grow unchecked, we will end up with a pale imitation of the free society envisioned by the Founders. Steven Greenhut (stevengreenhut@gmail.com), the director of the Pacific Research Institute's Journalism Center, was a columnist for The Orange County Register for 11 years. |
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Post by macrockett on Feb 10, 2010 22:38:09 GMT -6
Another article by Steven Greenhut. He works here: liberty.pacificresearch.org/about/default.aspState meddling hamstrings schools
Orange County Register
By: Steven Greenhut
2.5.2010
Orange County Register, February 5, 2010
SACRAMENTO To show the results of union dominance of the public education system, John Stossel, host of Fox News' "Stossel," on a recent show held up a convoluted chart that detailed, in small print, the amazing lengths to which New York school administrators must go to fire an incompetent teacher. The viewer sees a long and detailed chart filled with boxes connected by arrows. Then, Stossel reveals that what he's holding up for the camera is only the beginning, as he lets falls to the floor several more pages that had been hidden, accordion-style, behind the first page of the termination procedures chart.The joke – actually much sadder than funny – is on us, as we realize that there's no way that even the worst teacher can get sacked and that it's basically impossible to reform the public school system as it is currently structured. Yet local, state and federal officials go on proposing reforms that will surely turn the nations' bureaucratic, government-controlled public school systems into models of efficiency and high-performance learning. Many proposals have a point, but trying to reform these unruly systems is like trying to improve a crumbling, crooked old building resting on a cracked foundation by installing new dual-pane windows and nicer carpeting. No one, quite frankly, wants to strike at the root of the problem, which is the existence of a monopoly school system run by the government, financed by tax dollars and dominated by union employees who don't have to please any customers. California's Legislative Analyst's Office, which has a deservedly fine reputation for analyzing budgetary matters, last week released a report, "Education Mandates: Overhauling a Broken System," which jumps into the fray. It identifies a real problem – the proliferation of state mandates that require districts "to perform hundreds of activities even though many of these requirements do not benefit students or educators." The report pins the annual compliance cost for school districts at more than $400 million. Furthermore, because of a voter-approved 1979 initiative, Proposition 4, the state is supposed to reimburse local school districts for the mandates it imposes on them. California owes districts more than $3.6 billion – and the state tends to defer these reimbursements, rather than paying up in a timely manner. "In short," the report explained, "districts are required to perform hundreds of activities – many of dubious merit – without regular pay, resulting in billions of dollars in state debt." Of course, many of these mandates were imposed by the Legislature to improve the often-poor quality of public education across the state and try to assure that all districts were teaching some standardized curricula. But whenever education is politicized (and all public education is political, in that the decisions are made through a political process), this is what will happen. Legislators will pass reforms, many of which are transparent attempts to promote one special-interest group's agenda over another's. You get the good, the bad and the ugly. And all of it is expensive and, ultimately, counterproductive. The LAO report points to a chart evocative of the long, pointless chart Stossel displayed. This "Mandate Determination Process" reveals a convoluted route by which local districts can seek reimbursement from the state. This reimbursement issue is going to become increasingly contentious in these tough budget times. Ironically, on the same day the LAO released its report, the leading Democratic contender for state attorney general, San Francisco District Attorney Kamala Harris, advocated some costly new education mandates during a Senate Public Safety Committee hearing on school truancy. Harris has been particularly aggressive in using law enforcement in her city to battle truancy, implementing a controversial program that prosecutes the parents of truants and subjects them to jail time and fines. She also proposed a statewide database to track truants – a system that would tie a district's state funding to the adoption of such a tracking system. Truancy issues typically are local issues, which prompted a reply from Republican attorney general candidate Tom Harman, a state senator from Huntington Beach: "What I wonder is how creating another statewide bureaucracy to monitor it will keep kids in school. I don't think the state is in any position to create yet another new program – especially regarding an issue traditionally handled by locals." None of this will actually improve the functioning of the school systems. At best, the Harris approach will coerce more people into sending their kids to ill-performing schools, which epitomize the "customer service" approach common in government: Offer poor products and inefficient services, then force people to buy them. Harris' campaign, by the way, boasts her endorsement by a former state superintendent of public instruction, Delaine Eastin, best known for trying to use her authority to shut down home schools, under the theory that home schooling is a form of truancy. Let's hope a Harris victory doesn't signal a return to these dark days of California education policy. Home-school advocates already are fearful that Harris' approach could endanger home-schooled kids. The LAO offers this solution to the mandate issue: "We recommend comprehensively reforming K-14 mandates. If a mandate serves a purpose fundamental to the education system, such as protecting student health or providing essential assessment and oversight data, it should be funded. If not, the mandate should be eliminated." Whom do we thank for that groundbreaking suggestion? Of course, good mandates should stay, and bad ones should go, but in a political process, there's no way of waving a magic wand and making that happen. Maybe the LAO can develop a wall chart with the detailed process the Legislature can follow to attain that unquestionably worthy goal. The state already spends more than 40 percent of its budget on education. There are stacks of mandates and volumes of legislative reforms passed in recent years. The system still stinks. The only solution is competition. Only competitive systems value the customer and create incentives for efficiency and performance. Happy customers are a better sign of success than long flow charts and endless calls for new legislation and reform. Steven Greenhut is director of the Pacific Research Institute's Journalism Center (www.calwatchdog.com). He is scheduled to appear this week on Fox News' "Stossel" show. Check your local cable listings. Greenhut has a book out on the subject of public employees, called "Plunder". Here is a description of the book.
Public employees have become the new American elite. In the past, Government workers earned less money but had slighly better job security and benefits than Americans working in the private sector. These days, government workers not only earn more than other Americans, but they have vastly superior benefits, including pension plans that often allow them to retire as early as age 50 with 100 percent or more of their final year's salary. These pensions often to $100,000 a year and come with cost of living adjustments and free lifetime medical care. Getting a government job and sticking with it is like winning the lottery. This plundering of treasuries, made possible by aggressive union tactics and spinless politicians, results in higher taxes and massive debts that ultimately will be borne by our grandchildren. The current situation is "unsustainable." liberty.pacificresearch.org/events/plunder-how-public-employee-unions-are-raiding-treasuries-controlling-our-lives-and-bankrupting-the-nation |
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Post by macrockett on Feb 10, 2010 22:59:14 GMT -6
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Post by macrockett on Feb 18, 2010 8:36:51 GMT -6
There is no subject that is more important to state government today. Public pensions, as currently structured, are simply crushing states' ability to provide basic services. Any idea that this is simply a funding issue v a structural issue just does not understand the math. Listen to the NJ Governor. www.ft.com/cms/s/0/551a153c-1c1a-11df-86cb-00144feab49a.htmlThe Pew Study: www.pewcenteronthestates.org/report_detail.aspx?id=56695Cato Article: www.cato.org/pubs/journal/cj30n1/cj30n1-5.pdfNew Jersey Governor today on CNBC : www.cnbc.com/id/15840232?video=1416822381&play=1US states face $1,000bn retirement gap
By Nicole Bullock in New York
Published: February 18 2010 05:02 | Last updated: February 18 2010 05:02
US states face a funding gap of at least $1,000bn for the retirement benefits they have promised teachers, firefighters and other public sector employees, threatening already strained budgets, according to research released on Thursday.
The Pew Center on the States found that, at the end of fiscal year 2008, states and localities had set aside $2,350bn to pay for pension, healthcare and other non-pension benefits, such as life assurance, that were estimated to cost $3,350bn.EDITOR’S CHOICE Lex: Fifty Greeces - Feb-10 Chrystia Freeland: Four effects of US pension losses - Oct-12 Former pensions chief on defensive - May-21 US public pensions face $2,000bn deficit - Jan-04 In depth: Pensions crisis - Oct-21 US states borrow to bridge budget gaps - Jan-07 About half of the gap comes from healthcare and other benefits, which are largely funded as they are incurred by retirees.The bad news on state retirement systems comes as governments have been grappling with several years of ballooning budget deficits and as concerns have raged recently about the financial health of individual European countries.
Orin Kramer, chairman of New Jersey’s investment council, told the Financial Times that funding gaps could be three times the Pew estimates. He puts the shortfall for the US public pension system at more than $2,000bn by the end of 2009 with another $1,000bn for healthcare. The research group warned that its calculations were likely to underestimate the problem since the study went up to the end of fiscal year 2008, which is June 30 for most states. It takes in only part of the recession and virtually none of the collapse of the financial markets in the last quarter of 2008. States’ pension funds lost 25 per cent of their value on average in calendar year 2008, Pew found.
Public pension funds also typically do not use mark-to-market accounting, relying instead on actuarial numbers that average out value of assets and liabilities over a number of years - a process known as ”smoothing”. Most states offer defined benefit plans funded by investment, employee and state contributions. For years, many states have failed to make the annual contributions recommended by actuaries even as investment losses and budget deficits reduced savings. Assumptions of 8 per cent annual returns are now under scrutiny. “If states act now, it is a solvable problem, but if they continue to kick the can down the road, it will turn into an unmanageable crisis,” said Susan Urahn, managing director of the Pew Center on the States. “Without reforms, annual costs will continue to climb and begin to crowd out other public services like education, healthcare, public safety and ultimately lead to higher taxes.”
I HAVE MY DOUBTS...SHOW ME THE MATH For fiscal 2008, state pension plans had $2,800bn in long-term liabilities with more than $2,300bn saved. Average funding was 84 per cent. That is above the 80 per cent level recommended by experts, but funding has deteriorated over the last decade. In 2000, more than half of US states had fully funded pensions systems compared with only four – Florida, New York, Washington and Wisconsin – in 2008. Illinois was in the worst position with a funding level of 54 per cent. WHY IS THIS? IMO IT IS THE EXPONENTIAL NATURE OF THE LIABILITY AND HOW IT OUTSTRIPS STATE REVENUE GROWTH. THAT IS STRUCTURAL, NOT FUNDING. IN ADDITION, ASSUMING THE ABILITY TO EARN 8% YEAR AFTER YEAR IS ALSO NOT REALISTIC IN TODAY'S WORLD. Pew identified 19 states’ pension systems that merited “serious concern”.Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. |
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Post by macrockett on Feb 19, 2010 20:24:38 GMT -6
online.wsj.com/article/SB10001424052748703315004575073561669221720.html?mod=WSJ_WSJ_US_News_5#printModeTeacher Seniority Rules Challenged
With Tens of Thousands of Layoffs Looming, Government Officials and Parents Want to Change the 'Last in, First out' System
By BARBARA MARTINEZ Teacher seniority rules are meeting resistance from government officials and parents as a wave of layoffs is hitting public schools and driving newer teachers out of classrooms.
In a majority of the country's school districts, teacher layoffs are handled on a "last in, first out" basis. Critics of seniority rules worry that many effective and talented teachers who have been hired in recent years will lose their jobs.
Unions say that seniority rules are the only objective way to carry out layoffs, and that they protect teachers from the whims and bias of managers, who might fire effective teachers they don't like.
This year, because of cuts in state aid to New York City, the city could be facing a loss of about 8,500 teacher jobs out of a total of 80,000. The last time the nation's largest school system laid off a teacher was 1976. If New York City is forced to lay off some of the more than 30,000 new teachers it has hired in the past five years, it is "going to be catastrophic," said Joel Klein, chancellor of the city's school system. "We're going to be losing a lot of great new teachers that we hired" in recent years, the chancellor said. Mr. Klein added that another problem with "last in, first out" was that because newer teachers earn less than veterans, more teachers will end up losing their jobs.
What Mr. Klein "is really trying to say is, 'I would like to churn the work force by keeping cheaper teachers on the payroll,' " said Michael Mulgrew, president of the United Federation of Teachers, the teachers union in New York. "If we can do our work in a constructive and collaborative way, we can avoid the layoffs. That's where we should be focusing our energy."
Mr. Klein has requested a number of times that the state legislature ban the sole use of seniority in layoff decisions. California's governor made the same request last month. While politicians in these states are unlikely to enact such bans, the movement is gaining traction elsewhere.Last year, Arizona passed a ban, and schools Chancellor Michelle Rhee in Washington, D.C., in addition to letting go some new teachers, laid off some who would otherwise have been protected by union seniority rules. Teachers unions in Arizona and Washington sued over the moves, but they lost their court challenges.
"It is a pent-up issue that has been pushed off and pushed off, and now we have to deal with it," said Tim Daly, president of the New Teacher Project, a nonprofit that helps recruit teachers in mostly urban school districts and opposes seniority-based layoffs. "It's not just that you will lose teachers that you invested a lot in," he said, "these cuts are being made in a quality-blind way." Mr. Daly said some school districts were forced to lay off teacher-of-the-year nominees last year.
About 60,000 school workers were laid off across the country last year, according to the Bureau of Labor Statistics, double the number laid off in 2008 and three times the level in 2007. The total number of public education jobs fell in 2009 for the first time since 1984, according to the BLS. Declining state revenues, which result from the country's economic turmoil and high unemployment, only increase the probability of more large-scale teacher layoffs ahead, said Marguerite Roza, a professor at the University of Washington's College of Education. "We would expect that education jobs will be hit harder in 2010," Ms. Roza said. "Given last year's layoff trends, we should expect even more layoffs this year."
Parents in some school districts are beginning to organize over the issue. In Seattle last year, parents started asking, "Why is my great teacher being laid off while this teacher, who everybody knows is not a good teacher, doesn't get laid off?" said Venus Velazquez, a parent who said she is one of dozens attempting to remove the seniority protection from the next teacher contract.
"We don't want to go back to the '50s or '60s, when people were laid off because of the color of their skin or because a woman was pregnant," said Glenn Bafia, executive director of the Seattle Education Association, a teachers union.
Mr. Bafia said poor-performing Seattle teachers need to be encouraged to leave teaching through an administrative process. "That's the principal's responsibility. If the principal refuses to do their job, that's an issue," he said. When it comes to layoffs, "seniority is the only objective criteria there is out there."
For the unions, the pushback is in some cases coming from people who consider themselves liberal and pro-union. "I consider myself a union supporter, but I don't support the seniority system," said Lynnell Mickelsen of Minneapolis, who is organizing a community group to oppose the main use of seniority in layoffs.
In a shrinking school system, which has resulted in the loss of 1,300 teacher jobs since 2001, "terrific teachers have been laid off, and [some of those remaining] are depressingly, relentlessly mediocre," Ms. Mickelsen said. "People are so frustrated about this."
Lynn Nordgren, president of the Minneapolis teachers union, said the union and the system already work together to remove ineffective teachers, pushing out between 400 and 500 teachers in the past 10 years. With poorly performing teachers already being addressed, "seniority gives us a fair way of saying how do we lay people off in a way that's equitable," she explained.
Ms. Mickelsen isn't buying it: "When it comes to key contract clauses like seniority, the needs of teachers and kids are not the same."
[/color] Write to Barbara Martinez at Barbara.Martinez@wsj.com
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Post by macrockett on Feb 21, 2010 9:55:37 GMT -6
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