Report:  Public Sector Unions Not to Blame for Deficits

Tuesday, November 22, 2011

UCS News Service - November 2011

A new report seriously undermines the rationale for balancing state budgets by going after public sector workers.

Budget crises in states across the country are being used to justify attacks on public employees, their unions, wages and benefits. But the new report, from the University of California Berkeley Labor Center, finds that the growing state budget squeeze is mainly the result of the bursting of the housing bubble and the ensuing decline in real estate prices—not public sector wages and benefits.

The report—The Wrong Target: Public Sector Unions and State Budget Deficits, by Sylvia A. Allegretto, Ken Jacobs and Laurel Lucia—finds that strong public sector unions don’t add up to higher deficits or bloated pay and compensation packages. According to the study, almost every argument against public sector workers is demonstrably false.

In the 10 most highly unionized states, for example, the report found the average share of the budget spent on compensation was 19.6 percent, just slightly higher than the 18.7 percent in the 10 least unionized states. “The claim that public sector unionization leads to greater deficits does not withstand scrutiny,” the study concludes.

And despite oft-repeated attacks on “bloated” government, the report showed that “The public sector workforce has not been growing relative to the population” in union and non-union states alike. “There is no correlation between the share of public workers in unions and the size of the public sector workforce,” says the report. “This belies the notion that public sector unions are increasing the demand for their product.”

For states to address their budget deficits, “the most important factors are national economic growth and a resolution to the housing crisis,” the report concludes. “Solutions that focus on cutting state and local budgets can be expected to further weaken the economy. Federal aid to the states is essential to maintain the public infrastructure while the economy rebounds. Federal action is also needed to address the housing crisis, which continues to provide a drag on the economy and on state and local revenues.”

Jobless Rate Stagnating at 9.1 Percent

Friday, November 18, 2011

UCS News Service

TheU.S. unemployment rate in September held at 9.1 percent for the third straight month, the Department of Labor reported Oct. 7.

Of about 100,000 new jobs “created” over the month—nowhere near enough to keep pace with the expanding labor force of 150 million—45,000 were in fact those of returning Verizon strikers. Economists say payrolls have to expand by 150,000 positions a month just to keep the jobless rate from rising.

Private employment increased 137,000 during September, a bump up from August’s 42,000, but government payrolls fell 34,000 as employment at the local government level fell 35,000 and the Postal Service shed 5,000 positions.

It offers little hope for the millions of workers looking for fulltime jobs, but the holiday shopping season traditionally opens up a huge number of temporary retail and related positions.

Postal Workers Rally to ‘Save America’s Postal Service’

Wednesday, November 16, 2011

UCS News Serivce

Postal workers and their supporters held rallies at nearly 500 locations nationwide on Sept. 27 to “Save America’s Postal Service.”

The rallies, which were held in every congressional district, were designed to tell the American people the real cause of the Postal Service’s financial crisis and to build support for H.R. 1351, which would restore financial stability to the USPS. They also opposed a bill that would strip union rights and dismantle collective bargaining agreements between USPS management and postal unions. Immediately following the rallies, three postal unions—the American Postal Workers Union, The National Association of Letter Carriers and the National Postal Mail Handlers Union - launched a new television ad campaign targeting unfair financial burdens imposed on the Postal Service by Congress. The ad exposes “the real reason the USPS is facing a crisis that is jeopardizing the nation’s mail system,” according to the unions. “The postal service is recording financial losses,” according to the ad, “but not for reasons you might think.”

The USPS carries an extraordinary financial burden that no other government agency or company bears, the ad notes. A 2006 law, the Postal Accountability and Enhancement Act, requires the Postal Service to pre-fund the healthcare benefits of future retirees. It forces the agency to pre-fund a 75-year liability in just 10 years, and costs the USPS more than $5.5 billion annually.  This mandate, the unions say, is the reason the Postal Service is threatening to close thousands of post offices, eliminate hundreds of mail processing facilities, end Saturday mail delivery, and lay off 120,000 workers. In addition, the Postal Service is required to overpay billions more into federal accounts.

“Congress created this problem, and Congress can fix it,” the ad concludes. The ad will run until the end of November on CNN, MSNBC and FOX News.
From medical prescriptions to important financial documents, packages, catalogues and newspapers, the U.S. Postal Service is the center of a $1.2 trillion industry that employs 8 million people, including printers, mailers, publishers and other businesses that depend on the Postal Service.

Cities: repeal landmark pension legislation

Thursday, November 10, 2011

Calpensions
By Ed Mendel

CARSON-A League of California Cities representative urged a legislative committee on Nov. 1st, to repeal two decade-old bills allowing local governments to negotiate higher pensions, saying the benefits are “too rich” and “unsustainable.”

The legislation backed by CalPERS created a range of more generous formulas said to have ratcheted up pensions during labor negotiations as employer “chased the richest contract” to remain competitive. 

“We think it’s important to repeal SB-100 and AB 616 because we think they have generated pensions that are unsustainable and very difficult to explain to the larger public that we serve,” Rod Gould, Santa Monica city manager, told the committee yesterday.

He said the cities would like to see CalPERS and other large retirement systems “offering additional formula choices that maybe aren’t quite as lucrative as those that are currently available but provide more choices to be bargained locally.”

The two-house committee held the first of three hearing on pension reform planned before the Legislature reconvenes in January. A plan is expected to emerge from bills pending in the Legislature and Governor Brown"s 12 point Pension Reform plan. 

California group moves to put pension overhaul on 2012 ballot

Chronicling civil-service life for California state workers
THE SACRAMENTO BEE

November 2, 2011

California group moves to put pension overhaul on 2012 ballot

California’s current and future state and local employees would pay more for their pensions under two ballot initiative proposals submitted to the state attorney general today with the intent of putting one of them to a statewide vote next year.

“Seventy percent of voters think it’s time,” said Dan Pellissier, president of California Pension Reform, referring to public opinion polls on public pensions.
His group, which includes a former chairman of the California Republican Party, Duf Sundheim, former GOP Assemblyman Roger Niello, Marcia Fritz, president of the Citrus Heights-based president of the California Foundation for Fiscal Responsibility, and Schwarzenegger finance director Mike Genest, is filing the measures for an official ballot title and summary today, less than a week after Democratic Gov. Jerry Brown rolled out a pension October 27th.

Once the measures are labeled, summarized and packaged with fiscal impact analyses from the state’s Department of Finance and the Legislative Analyst’s Office, the pension reform group will conduct polling, select one proposal and launch a signature collection campaign to get it on the November 2012 ballot.

“We admire the governor’s tenacity, but we have little faith that the Legislature will adopt anything of substance,” Pellissier said in an interview with The Bee. “And we fill in some of the gaps” in the governor’s proposal.

The largest, say critics of Brown’s plan, is that the governor’s plan only makes current costs cheaper and skips the more difficult task of paying down down the unfunded liabilities that pension systems have built up in the last decade. Estimate on how the spread between the funds’ assets and their obligations vary widely. The worst-case scenarios peg the obligations at $500 billion for California’s three largest public pension funds.

California Pension Reform’s first ballot proposal, dubbed the “Government Employee Pension Reform Act of 2012, Option NO.1,” prohibits pension funds from incurring new debts or unfunded liabilities. “Defined contribution plans would be the most likely option” for new workers, according to the proposal’s language, “though defined benefits and annuities underwritten by third parties would be allowed.”

The plan caps employer contributions for new employees’ retirement accounts at 6 percent of base pay for non-safety workers and 9 percent for safety employees such as police and firefighters. Employees would have to make up the difference.

Current employees and employers would split contributions equally under Option NO.1 unless the value of a fund’s assets fell below 80 percent of its obligations. Then the 6 percent and 9 percent employer contribution caps would kick in for everyone until the fund’s asset values regained the 80 percent funding threshold. (This provision is also part of the second ballot initiative proposal.)

New employees who don’t participate in Social Security—public safety workers and teachers—would receive a guaranteed “replacement benefit” equal to the Social Security payment they would otherwise earn. Most would have to wait until 67 to receive the full benefit, just like Social Security. Full-career public safety workers would receive their full benefit at age 60, up from the current age of 50 OR 55.

Brown’s plan doesn’t nail down the full retirement age for police, firefighters and other public safety workers. Brown’s Labor Secretary, Marty Morganstern, said during a conference call with reporters last week that the administration hadn’t settled on an age.

Option NO.1 from the pension reform group also mandates that current and future employees’ pensions be calculated on a three-year average of an individual’s highest base wages. Brown’s plan includes that same anti-spiking provision, but restricts it to new hires.

Public employee unions and many legal experts believe that unilaterally downgrading any detail of pensions promised to current employees violates state and federal laws that protect property rights and contracts.

Pellissier said there’s wiggle room.

“We’ve spent a tremendous amount of money on legal fees. There’s a good legal case for changing benefits that are earned in the future,” Pellissier said. “We’re not going to spend a minute arguing about it. We’ll let the court decide. Tell it to the judge.”

Option NO.1 includes other provisions in Brown’s plan or versions of them, including a ban on retroactive benefit increases and a provision that prevents felons from collecting full government pensions if their crimes were connected with their public duties.

Like Brown’s plan, both proposals call for government employers and their employees to equally share the cost of retirement benefits. But the reform group’s plan puts a bigger burden on employees if their fund’s assets equal less than 80 percent of its obligations. If that happens, the government’s cost would be capped at 6 percent of an employee’s base pay while the worker’s contributions would increase to make up the difference until the fund recovers.

Unlike Brown’s proposal, neither of the reform group’s plans address “double dipping” that allows retirees to return to work and collect both a pension and a government paycheck. Nor do today’s proposals ban “pension holidays” that allow government employers to skip pension payments when their pension funds have more in assets than obligations.

Brown also wants to lengthen how long employees have to work to qualify for the state’s retiree health benefit subsidy. California Pension Reform’s proposals stick to pension policies.

“Government Employee Pension Reform Act of 2012, Option NO.2” is “a lot like the governor’s proposal,” Pellissier said, particularly its mandatory “hybrid” pension for new hires.

Hybrids combine a smaller defined benefit with a professionally-managed 401(k)-style defined contribution and Social Security. Option NO.2 provides a larger defined benefit component for employees who don’t participate in Social Security.

The federal government adopted a hybrid retirement plan for its employees in 1987. The policy benefits employers by cutting their contribution costs and making the expense somewhat more predictable. Employees bear the losses when defined contribution investments fall short.

The Option NO.2 hybrid intends to provide new hires with 75 percent of their working income after a full career. For safety workers, that would translate into 30 years ending at age 58, Pellissier said.

A full career for all other employees hired in the future would be 35 years, ending at age 67, the same as Social Security and Brown’s hybrid plan. Workers could retire five years earlier with a lesser benefit.

Ohio Voters Protect Worker Rights

Tuesday, November 08, 2011

OHIO - Ohioans overwhelmingly voted to repeal Senate Bill 5 - Governor John Kasich’s attack on middle class jobs that was designed to destroy collective bargaining rights in Ohio. “From the very beginning of the jobs crisis, anti-worker politicians like Governor Kasich have used our poor economy to push a cynical political agenda that favors the richest 1 percent at the expense of the 99%” said AFL-CIO President Richard Trumka.