State Budgets and Public Employees
http://thedianerehmshow.org/shows/2011-01-05/state-budgets-and-public-employees
State and local government workers have reason to feel somewhat besieged. Declining revenues in many states have compelled politicians to take a hard look at expenses, and increasingly, the focus has been on salary and benefit packages promised to public employees. Research suggests that compared to the private sector, some state and local workers do earn more, but critics argue targeting public employees' wage and benefit packages and their collective bargaining power is an easy way to side step more basic issues such as the need for economic growth. Join us for a discussion of state budgets and public sector employees.
Guests
Lee Saunders
Secretary-Treasurer, American Federation of State, County, and Municipal Employees,
David Leonhardt
columnist, New York Times
Kim Rueben
public finance economist, The Urban Institute, Washington, D.C.
Fred Siegel
senior fellow, Center for State and Local Leadership at the Manhattan Institute
Comments
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One of your speakers spoke about holding teachers accountable for their students' academic progress. While teachers do need to be evaluated, it MUST be remembered that teachers are only one part of what makes a child educated. They may be the largest single factor, but they are not the only one. If one could demonstrate that a teacher is responsible for 100% of a student's progress, then an evaluation based on performance makes sense. However, the student's parents (or lack thereof) are another major factor, and the administration, resources, and so on in the system are others.
My wife teaches Second Grade and loves it. Most of the parents of her students are great. Some ignore their kids, while others are "helicopter parents," second-guessing the teacher and the administration at every turn.
In addition, while the over number of students may have decreased, the number with special needs has increased, as have the reporting requirements and many other things that place additional burdens on teachers.
On another topic: at least one of the speakers said in essence, "soak the rich." The top 5% of income pay over 50% of income taxes in the US, and the bottom 50% pay less than 5% - in fact, many in the bottom 50% pay no income tax and receive money from the US. It would be impossible for the top 5% to support the other 95%, but that seems to be the only thing that would make some people happy.
@ avintageyear - So when there is this 10% cut across the board in salaries, how do these people who are now cut in salaries make their ends meet? A 10% cut to a salary of $50k is substantial ($5k). It is the difference in keeping benefits, paying a mortgage, etc.
On a different note, how can you compare cuts to how social security is administered to a flat cut to salaries. Somehow, I don't see how if you are really owed $400k how you would not get it. Also, if you are in your vintage years as your name states, the cuts should not impact you as I'm sure it would not be a cut to everyone already collecting social security. For those of us still paying into it, well, we take that hit.
I put it down to a “I got your back” attitude. I have found this while working in both the private and public sectors. I have seen horrible abuses, unearned privileges, tolerated both places simply because unethical behavior and performance is tolerated by the group that protects each other’s abuses. God help the one with integrity, who stands on their own, they are doomed. It is simply a matter of poor ethics currently present in the American culture and they reside in both the public and private sector. You need to focus on this if you truly want to address our economies problems: we have lost our honor.
Things occur in cycles, these abuses will be visited upon our children and if not too damaging, will be reversed, however those doing the abuse will escape unscathed; the reward is leaving this world with your integrity intact, because No One gets out with their wallet. What do you value, your integrity or screwing someone over for a temporary reward that does not last. Know thyself.
i work for the state and i work very hard. i think that the perception that state employees are incompetent is unfair. we are required to work within a bureaucracy that doesn't always provide the fastest or easiest response to public needs. the bureaucracy is supposed to protect tax dollars usually but sometimes doesn't. regardless i am mandated by the requirements of my job to follow this set of rules put forth by the legislators, often to address specific concerns laid forth by public/tax payer pressure. there is often some good in these rules but there is also a lot of waste, fraud and inefficiency in this system. address the waste, fraud and inefficiencies of the bureaucracy and you might just find much of the money you seek.
unfortunately, the waste and fraud in this system often benefits private sector contracts with powerful lobbies…
I hate to burst the bubble of the Ohio municipal employees who believe that they are underpaid compared to their industry peers. As a tax accountant who has prepared returns for individuals who are federal, Ohio state and local employees for 30+ years, I can tell you that they, like so many private employees, always make the comparison only to the highest paid of the peers, not the the median. For the most part, federal and state employees make about the same in hourly wages, but the benefits are much better for the government employees. In Ohio, non-teacher government workers participate in PERS, the Ohio retirment plan. After 30 years of employment, they can retire at 2/3 pay. In addition, they have subsidized health insurance for life. The only place you will find a comparable benefit package is in the automobile and aerospace industries.
I agree with the panelist who said that putting the heat on the public sector is just a diversion from the fact that we let off the Wall St. crooks who are making more money than ever. Part of this whole thing is the class warfare that tries to divert the country from the fact that the rich are in charge and will continue to rape and pillage the working and middle class to feed their appetite for luxuries.
Its almost embarrassing to live in America these days. We've become a country specializing in inequality, unfairness, power and control.
Criticizing public unions is also mistaken, of course there have been corrupt unions, but without unions workers just have to accept the crumbs that billion dollar corporations in the private sector deign to give them while they're looking for even cheaper workers over seas. And yes public sector unions are in a different and better environment, so maybe they can get a fairer wage for their employees while the private sector continues its campaign to wreck unions so workers don't have any representation at all.
Who was it that said Marx was wrong about Capitalism?
I am a retired state employee who endured years of underpayment compared to private sector employees - now I find that I was supposedly getting fabulous pay and benefits. The whole idea that my benefits and pay were "generous" is laughable. Through the looking glass. Up is down and down is up. The tea party people who think we are overpaid belong at the tea party with the Red Queen and all the other folks on the other side of the looking glass.
Hello Diane!
I am so excited about this topic your show is what journalism should be! In my family if you are not in public service you are not doing your part. My father has put more years than he has been alive into the Military and Fire Department here in Reno, and my mother has kids who have written their entrance letters to USC about their experiences in her classroom. I want to be teacher myself! If you want to slap the hand of those educating your children, taking you to the ER, and paving your roads go ahead, you will see what happens. GOOD public service is necessary for government and life in America and if you cut it or take it away you are only hurting yourself. Yes we do need to clean up the public sector, but we have a lot to clean up in this country not just public enterprise. I agree with the email about cutting the salary of those who hold salaries comparable to Bernie Maydoff, just ask him how awful it is to work for the public now, lisence plates must be very difficult to make.
Tory Vogler 19 Reno
I love teaching and only retired because the work load was getting too heavy. We were expected to create new classes without materials year after year, because the state kept changing the curriculum and didn’t provide money for new materials . If there had been no union there would have been not way for teachers to point out the curriculum needed help. If teachers are supposed to be so important than why aren’t they involved in the whole system.
Next and I know that we are talking budgets and pensions, but no one to date has discussed the unbelievable amount of money spent on testing. Plus who says that the results are valid . Our educations system is being run by two or three companies who write and grade the TESTS. This is a very expensive process. One year we in the schools were actually asked to erase the tests and use them again. My point is that when testing was done at the local level we had better results and it was a lot cheaper.
I am retired State of Missouri employee, not yet eligible for pension, must wait until age 68. Employees are subject to annual performance evaluation with expectation of improvement that can result in termination. The caller who asserted otherwise also makes observation that a government entitiy must at least "break even." This is reflective of a huge problem faced by the public, yet to be fully realized -- we'll get a good start today with the installment of a reactionary House.
God help us if the mentality that there will be no taxes, certainly I should not pay taxes, increase taxes ?? are you kidding? Restore pre-Bush-administration rates of taxation? Institute the DEATH TAX (the Paris Hilton tax, more accurately) to pre-Bush levels?? Those same people advocating continuation of low/no taxes cannot see past the end of their nose to what the impact in loss of services, infrastructure, employment will follow. They will be first to complain about not receiving instant service, crumbling roads, dirty public buildings, closed rest areas, closed state parks. Perhaps their conscience will be troubled by implementation of "death panels" to decide if the indigent are worthy of publicly-funded organ transplants. ...
The willingness of our elders to sacrifice to do what is right for fellow citizens and for future citizens is apparently lost in greed. We cannot serve both God and money. Proponents of the greed doctrine might be sorry for a very very very long time.
Jay,
Avintageyear is the name of my company, when I registered for this comment board I thought I had to make up a username, didn't think I could use my real name. We are in our early 50s and are still working, still paying in to SS. $400,000 is my estimate based on all our contributions since we began working in high school 37 years ago assuming a tiny average annual compounded return of 2%.
I don't see how you CAN'T compare cuts in SS to cuts in public sector salaries/benefits/pensions. The whole reason things like this are being discussed at all is because both social security and public salaries/benefits/pensions are paid out of public monies and at the moment (and for the forseeable future), the country is broke.
I live in Washington DC and have many friends with govt jobs, benefits, pensions, and plenty of job security. Most have not had to look for a job in 20+ years. None of them are "rich," none of them want to take cuts in anything, but all agree that pay/benefit/pension cuts beat losing their jobs any day. My husband and I are both in the private sector, my husband just went back to work last month, his 7th job in 10 years (God love him). Our income has gone steadily down these last 10 yrs, due both to inflation (gas, utilities, insurance, property taxes mostly) and actual salary cuts.
I think the real reality for the vast majority in this country-- whether public or private sector employees-- is that the last 10 years have taken a terrible toll financially and the VAST majority is struggling bigtime.
How did we get here as a nation? That's another topic to be endlessly debated, but here's what I do know: we're here now. And something has to and will eventually be done about it. And if we're going to talk about cutting SS benefits and asking people in retirement/old age to sacrifice, then we should be asking EVERYone to sacrifice.
By the way, I'm a hardcore Democrat.
ML
PS: I urge you to hunt down that THIS AMERICAN LIFE story on Barbados/Jamaica. The first half was actually about NY state, the history of their budget issues/shortfalls going back to the 70s, the second half was about Barbados/Jamaica. It was pretty compelling, IMO.
ML
During the Great Depression the Federal Gov. reduced the pensions going to retired U.S. Military personnel. The gov. said they would make up the difference when times got better, but they never did. In the 1970's the federal gov. was sued, but won the case and the retired people lost. So the idea that a federal, state or local civil servant can't have their pension reduced, modified or eliminated are mistaken.
I worked for the State of MI for 15 yrs. I am permanently disabled in no small part because of the job. I worked when I was sick and injured, broke a knee on the job and now it must be replaced. I came into work after getting hit by a car running a light on a Fri and was at my desk on Mon. I did not get a raise for the last several yrs I worked and was put off medically about 2 wks before we were to get a lump sum amt that I earned in lieu of those raises, not a lot of money but I earned it and was not given it because I was no longer on the job. I continue to recieve SSD but was also awarded lifetime long term disability which was stopped unjustly after 12 yrs because a new insurance contractor decided it could get rid of me. Had the process been fair, that might be one thing but I was made to see a dr who did not have my records, did not pretend to do an exam and I found out later, had a seriously violent criminal record (beating a woman about the head with a claw hammer) and had served prison time. I've since found out he is not board certified and was expelled from his internship. He has a valid license in MI. The contractor gets a bonus for doing this and resort to any means possible. I was also made to see a dr who is not a MD and I was forced to undergo hrs of testing after I was hurt and have had 3 surgeries since and am maimed for life. This guy has been spanked in US District court for using bad methods, etc, in order to certify a retarded man for the death penalty. I have no legal rights because I was a public employee. The state is not covered by ERISA laws, etc, and have not been held to account for records tampering, etc. I have proof of this and am still in legal limbo for over 5 yrs.
By the way, to the Ohio people, Chris DeRose, who runs public employees retirement there, did this in MI and under his regime, lots of disabled state workers were denied benefits and I once went to a benefits board session where he laughed at and made fun of workers hurt on the job. The system was corrupt in MI under his regime and I am sure front line grunts in OH are not having fun under him. I am wondering why he went to OH, as I understand it the DeRoses are a privileged bunch in Lansing and have had it handed to them on a silver platter. Perhaps he got caught at something in his old job...
As a labor lawyer for many public employee unions I know there is a wide variance in compensation and benefits of public employees. It is totally inaccurate to make any sweeping assumptions about public employee compensation. But then, accuracy would require nuance, and thought.
As the public tires of alarmism over terrorists and we grow weary of blanket smears of immigrants, public employees provide an easy new target for the "divide and conquer" crowd. Who will be next?
I'd guess labor lawyers.
(Sorry, I couldn't resist.)
*
I worked 17 years for a city municipality. I noticed two main things. 1) The number of residents who were unaware of what services the city provided as well as what department handled them. 2) The disparity in wage between those in charge and the actual workers.
Administrators made 2-5 times that of workers. They don't do twice the work. Leadership is necessary. But, how many leaders do we need? And at what cost?
Admin negotiated the contract with the employee union. The workers fulfilled their end. Why are these contracts less binding than the contracts promising huge bonuses to those who bankrupted their companies and dumped the economy on its head?
Public Works employees maintain and repair the roads, water lines, sewer lines, and storm sewers. Our homes have fresh clean water with a twist of a knob and is rid of waste and smell in a flush. We expect clear and smooth paved roads. In our 'civilized' nation we have come to expect these conveniences and give it little thought until its not there.
These under appreciated positions make our lives and communities better. Administrators are the ones making the cuts. They are not about to cut their jobs. Cost / benefit ratio, it'd be more economical to let two administrators go and save four or more of the employees that actually provide a service. The support staff that keeps things orderly and running are the people who will be cut.
I think as financiers and consumers of these benefits we need to be aware how the funds are collected, distributed, the cost/benefit ratio, as well as hold accountable those in-trusted to disperse them. Its time to get involved.
places like New Jersey and New York lose 44 cents or 21 cents on every dollar they are taxed federally to red states such as New Mexico (which makes 99 cents on every dollar) and Alabama that makes 69 cents over every dollar in taxes paid)
why are we pretending like it is the fault of public services when the public services of states with few public services and unions are bieng paid for by New york, massachusetts and california.
this is easily looked up in the census bureau's taxfoundation.org website
The wealthy need to see that it is in their benefit to pay a fair share of the cost to live in a first class, free country.
If you are rich think of what you have to lose if the USA slips to lower services and quality of life.
It is ironic that while the working people fight amongst themselves on where they will need to cut and sacrifice, it is the richest people who have the most to lose when services drop, the country falls behind, and values are given up on.
The rich ought to buy an insurance to protect America and the American Way.
www.OOPSortunity.com
www.1u1us.com
Your guests were unanimous in calling for alternatives, yet none were offered.
I recommend that you and your research staff examine the success of the State Bank of N.D. You can begin here, www.webofdebt.com/articles. You may also want to have as a guest on your show the brilliant Dr. Ellen Hodgson Brown, author of, "The Web of Debt", and 10 other books.
The fundamental constraint for States and the Federal Government is the absence of sovereignty over our capacity to create credit. That sovereign function, now, is in the hands of commercial banks and financial institutions with the authority to use their reserves to create credit.
Banks are allowed to take our ten dollars and save one in reserve while lending the other 9 at interest. That 9 is deposited and the cycle begins anew. In the real world billions in credit can be created with just 1 billion in deposits.
For publicly owned banks there is no need for appropriations or borrowing. The funds with which to capitalize a publicly owned bank already exist in contingency accounts, etc. States need only transfer a share of their funds, now in commercial banks, to capitalize a publicly owned bank.
Credit created from these deposits, under fractional reserve principles, serve to refinance or liquidate debt, fund infrastructure, etc. States could disperse credit to counties and cities at near zero interest rates, since the publicly owned bank does not need to borrow and there would then be no debt service to liquidate each year. Corporate and individual income tax rates could be significantly reduced or eliminated. All revenue generated by the bank returns to the State Treasury.
Only N. Dakota takes advantage of fractional reserve lending for the public sector. It does so because ND has a publicly owned bank backed by the full faith and credit of the State of ND. This bank has maintained budget surpluses and a return on equity of 20% to 25%.
Your guests were unanimous in calling for alternatives, yet none were offered.
I recommend that you and your research staff examine the success of the State Bank of N.D. You can begin here, www.webofdebt.com/articles. You may also want to have as a guest on your show the brilliant Dr. Ellen Hodgson Brown, author of, "The Web of Debt", and 10 other books.
The fundamental constraint for States and the Federal Government is the absence of sovereignty over our capacity to create credit. That sovereign function, now, is in the hands of commercial banks and financial institutions with the authority to use their reserves to create credit.
Banks are allowed to take our ten dollars and save one in reserve while lending the other 9 at interest. That 9 is deposited and the cycle begins anew. In the real world billions in credit can be created with just 1 billion in deposits.
For publicly owned banks there is no need for appropriations or borrowing. The funds with which to capitalize a publicly owned bank already exist in contingency accounts, etc. States need only transfer a share of their funds, now in commercial banks, to capitalize a publicly owned bank.
Credit created from these deposits, under fractional reserve principles, serve to refinance or liquidate debt, fund infrastructure, etc. States could disperse credit to counties and cities at near zero interest rates, since the publicly owned bank does not need to borrow and there would then be no debt service to liquidate each year. Corporate and individual income tax rates could be significantly reduced or eliminated. All revenue generated by the bank returns to the State Treasury.
Only N. Dakota takes advantage of fractional reserve lending for the public sector. It does so because ND has a publicly owned bank backed by the full faith and credit of the State of ND. This bank has maintained budget surpluses and a return on equity of 20% to 25%.
Lee's comment about the employer (State of WI) not seeming to want to commit to bargaining hit home. We have a new governor who wants to eliminate collective bargaining for state employees. So I've taken a job regulated by a contract which will now be reneged on and in fact have been working under an old contract for the past year and a half. How is that legal? What recourse do I have? None.
I committed to a job at a certain level of pay which was never delivered because contracts were still in negotiation. By the time they were ratified, the two sides had agreed to "flatten" the classification I was hired into so that I would never have a chance to progress and earn more for better performance...that was in 2001. Since then, I have worked under overdue contracts for all the budget cycles. I have been making $12/hour for 10 years and each year my contribution to insurance has gone up. During this contract I have been furloughed 8 days/year.
Public employees have never had increases to recoup what we give up. The employer has been very successful in controlling costs in this way. I don't see how this equals unions having a monopoly or not being accountable for performance.
I find this in my workplace as well. We serve higher education customers and currently "compete" with the private sector to provide service. We could match their prices and their level of service if our hands were untied from bureaucracy. I think this is actually the place where my union and others could gain more credibility and show more accountability to the public we serve. The employer could reward efficiencies and better performance and the union could agree to performance-based pay.
David J. Ores Why is the expense of invasion and occupation of Iraq and Afghanistan NOT part of the USA budget or deficit? Trillions of dollars. And they don't have 1.4 million for organ transplants. Or medicaid. Or schools. Or jobs in the USA. Or roads. Or anything else. How insane is that? And much worse, Americans citizens ...are too dumb to stand up an shout about it. A tragic national embarrassment.
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Liberals are facing an interesting dilemma. They desperately want increased taxation in order to fund their dreams and pensions, but are slowly realizing that increasing taxation will only lead to slower growth and reduced tax revenues. Making others pay for your benefits will never work long term. It's too late to pretend that increasing taxes will ever work again. Are you still a liberal? Why?
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