Tag: Pension

Pay Day

Bloomberg today has an astounding report on how workers have been able to abuse compensation systems in various states:

Nine years ago, California Democrat Gray Davis became the first U.S. governor in 82 years to be recalled by voters. The state’s 20 million taxpayers still bear the cost of his four years and 10 months on the job.

Davis escalated salaries and benefits for 164,000 state workers, including a 34 percent raise for prison guards, the first of a series of steps in which he and successors saddled California with a legacy of dysfunction. Today, the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime.

Payroll data compiled by Bloomberg on 1.4 million public employees in the 12 most populous states show that California has set a pattern of lax management, inefficient operations and out-of-control costs. From coast to coast, states are cutting funding for schools, public safety and the poor as they struggle with fallout left by politicians who made pay-and-pension promises that taxpayers couldn’t afford.

It’s not just California. Pension managers are among the worst. In Texas, the head of the Teacher Retirement System was paid over a million dollars last year. Psychiatrists are making $300,000 per year. They even have a few police officers netting nearly $200,000 in compensation.

Look, I think state workers should be paid reasonably. And, on balance, they are. Cato’s research has shown that while federal employee compensation is massively in excess of industry standards, state employees are closer (although with generous benefits and greater job security). But the system of overtime, unused leave and pension spiking, combined with a basic lack of supervision, have created a situation where certain individuals can collect gigantic salaries. In California, one psychiatrist claimed he was working 17 hours a day and pulled in $822,302 in 2011.

You really need to read the whole thing. We are talking about billions and billions of dollars here. From states that are having to slash extant services to feed the pension and perks beast. It’s a disgrace. And everyone — from conservative who hate government spending to liberals who want government spending to help people — should be up in arms about it.

Spending Restraint

Nicely done, assholes:

On Friday afternoon, within half an hour of one another, both the House and Senate voted to reauthorize the nation’s federal transportation funding programs. They then immediately fled town, which is understandable because the legislation is atrocious.

For starters, the bill spends $6 billion bailing out college students by extending the artificially low 3.4 percent interest rate on some subsidized college student loans. The change will save the average student only $7 per month, and the rates will do nothing to drive down the cost of college.

The bill also reauthorizes the Highway Trust Fund, but at higher levels of spending than the related gas tax that is supposed to fund it. To pay the difference, members of Congress did not raise the gas tax — instead, they chose to raid private pensions and flood insurance policies.

What they did was cut employer contribuions to pensions so the money could be taxed and the increased insurance fees for both pensions and flood insurance. This is their version of paygo, raising both spending and taxes. I suppose it’s better than simply piling on more debt. But this isn’t exactly what we had in mind. Letting student loan rate rise, cutting highway spending and cutting flood insurance would have accomplished the same thing, only with much smaller government.

California Squeezing

Turns out the unions suffered another defeat Tuesday night:

The most significant election on Tuesday wasn’t in Wisconsin.

It was in San Jose and San Diego, where nearly 70% of citizens voted for public-sector union pension reforms, introduced by Democrats, that could save their cash-strapped cities billions of dollars.

California voters rallying behind pension reforms introduced by mayors shows the sea change in the politics of public-sector unions. Connect the dots between Scott Walker’s decisive defeat of the recall effort spurred by his rollback of collective bargaining and the push by Democrats and Republicans to restore a semblance of fiscal responsibility and you’ll see this once controversial idea is beginning to garner bipartisan support.

The union is suing, incidentally.

This is part of a nationwide shift toward reigning in public pensions. Let’s be clear: the public doesn’t want public employees to go without pensions or to be deprived. What they realize is that We. Are. Out. Of. Money. And we simply can not afford the hundreds of billions in future liabilities these pension plans are racking up. We can not afford to have people retire after 30 or even as little as 20 years and then be paid their maximum salary plus wage growth forever.

Note also: it was Democrats who introduced these changes, just as Democrats have introduced such changes in Massachusetts and Democrat Tom Barrett, in the Wisconsin recall, dropped the union benefits issue from his platform. The Democrats know that this must be done. And they’re fine with it being done … as long as they do it. But when Republicans do the same thing, it’s too big of an opportunity to scream blue murder for them to admit that it’s the right thing.

(As a contrast, the new French government wants to lower the retirement age. French socialists: making Democrats look smart.)

We are finally seeing the defusing of the fiscal time bomb that has been hanging over us for a decade.. If we ever get some movement on Social Security and Medicare, there may actually be hope for this country.

Update: Miguelito points out that the San Diego provision was strongly opposed by Democrats. And it bears remembering that Jerry Brown opposes reform and Michigan is currently in a big union fight. Most of the Democrats are still in the union pocket. But there are cracks in the facade. That Tom Barrett dropped the union benefits issue was it was a ten-pound maggot tells you they can read the writing on the wall.

Scott Walker, Real Job Creator

For those 25 million out of work, relief is about 1 week away. Although nobody will be watching (let’s see, do I want to watch the Packer/Saints game or Obama stumble through yet another attempt at a big government solution to something it was never suited for? Tough call) a cutting edge sure to please the sycophantic easily impressed WH press corps jobs proposal will be presented, thumb? Meet hole in dyke. With a shovel in one hand and a shiny new costly stimulus plan in the other, we will be introduced to the results of all that brain storming between bike rides on his new Schwinn and all the gopher killing golfing. But no sooner did he secure some air time when this was announced, something people really want to see.

Michele Bachmann and Sarah Palin have decided to have a pillow fight, in lingerie, on September 8th. The event just happens to coincide with Obama’s jobs plan speech. Coincidental like. Purely accidental.

Asked for comment, Obama said, “f*ck you.”

Giving the president an early boost Wis. governor Scott Walker has already grabbed some bull horns, and managed to get rid of some dead wood in the process:

Pity Ginny Fleck. She is a 69-year-old German teacher in the Green Bay Public School District who has decided to retire as a result of Wisconsin governor Scott Walker’s requirement that teachers now pay in to their pension accounts.

According to the state Department of Public Instruction, Fleck’s total compensation package was $88,292 last year ($58,750 in salary, the rest in benefits.) She estimates Walker’s reforms will cost her $8,000 this year — so her compensation package would only be around $80,000 — an apparent slap in the face for a teacher nearing 70 years old. According to this Associated Press article, Fleck has decided a salary of zero would be preferable to taking eighty grand of Walker’s blood money.

In retiring, Fleck has joined with nearly 5,000 other public-school employees in hanging it up this year. That is nearly twice the number of retirements Wisconsin school districts traditionally see in any given school year — 2,527 called it quits in 2010. That’s 5,000 teachers who have decided, in the words of a famous Pearl Jam song, that they would rather starve than eat Scott Walker’s bread.

It should be noted that this old biddy will not be starving or earning zero in salary, she will have a nice fat cushy pension to keep her warm at night. A pension which she was paying zero dollars into for all these years but now with Walker spurred changes, teachers will have to actually contribute some of their own money into their pension, oh, the outrage. What has caused all these altruistic doing it for the children and not the money teachers to say ,”What? the gravy train is over? see ya” is that now they will have to pay 5.8% of their monthly salary into their own pension plan and 12.6% into their own healthcare (still a bargain, wait till Obamacare kicks in).

Another thing to consider and something that affected me personally, walking away from working and retiring is easy to do with a pension to fall back on. Wisc. teachers use the highest 3 years salary to calculate pensions, they can max out at 70% (for me it was 90%). 70% for doing nothing vs. 100% (minus these new changes that will reduce the monthly payout)for continuing to work, depending on your financial situation, not such a tough call after all.

All these new openings for teaching positions will spur the Wisc. economy and reduce unemployment (two people paying taxes into the system, one still working and one retired) but where before there was one teacher doing one job, now there is one teacher at that job and one ex teacher drawing a pension sitting at home. Whether that is a net gain for productive output, probably a wash.

I will probably Tivo Obama’s job speech, not missing NFL, and I hope the smartest president in history and all those ivy league pinheaded academicians on the WH payroll can come up with something remotely in line with free market capitalism/private sector job growth, but more than likely this will be another petulant “killing my buzz” attack on those that have so far impeded his progress and more expensive debt growing big government “been there/done that” stuff of the past.

Getting A Bigger Table

Making due with less, that is the new reality. Governmental agencies, from the little municipalities and townships all the way up to Washington, have adopted the mantra of austerity, for the simple fact that there are not enough dollars coming in to pay for obligations going out. And one of the biggest drags on maintaining fiscal solvency is paying and perking its public employees.

There is a movement afoot in Atlanta to move new hire es from a defined benefit plan to a defined contribution plan, that caterwauling you hear is from the employees who are not thrilled about being separated from the tit

Atlanta’s City Council is expected to vote as early as Thursday on one of the most sweeping overhauls of public-employee retirement benefits attempted by a large U.S. city in recent years, as cities and states across the country race to close big budget gaps.

The legislation, if passed, would set the stage for eventually eliminating the city’s current pension system entirely. That would shore up its budget and potentially bolster similar efforts by other municipal governments. Many pension changes undertaken by other cities have focused largely on asking public employees to kick in greater contributions to their retirement funds or reconfiguring benefits.

Faced with a $1.5 billion shortfall in benefit payments owed to current and retired employees, Atlanta Mayor Kasim Reed is backing legislation to phase out pensions, which offer defined benefits, and replace them with a 401(k)-type plan, in which the city instead pays defined contributions. The new plan would also have city employees join Social Security for the first time.

For the purposes of full disclosure it should be noted that I receive a pension from the state of California, it is not what you would consider obscene, I left way before it entered that realm because I valued my time over that of a bigger payoff.

Some background is in order. It use to be that working for the government, being a civil service employee was an attractive position, not for the pay which was always meager but for the benefits. And probably the biggest benefit was the ability to secure a pension after a prescribed amount of years of service. It first originated in the military but later spread to other civil service positions. If it is not already obvious, the beauty of getting a pension is that you never had to worry about it’s vitality and health, when you retired it would be there for you.

But in the last 20 years or so, unions have upped the ante. They manipulated the formulas through their collective bargaining powers and put and even bigger drag on the municipality for pension maintenance. This can be done in a number of ways. Specific contributions can be massaged, how much if anything the employee contributes. The formulas can also be jiggered. When Arnold was running for governor here in California, the incumbent, Gray Davis, was in a pickle and was willing to bargain with union bosses for their support in the upcoming election. He gave my agency a new pension formula, 3% at 50 (meaning that for every year of service the employee would get 3% of his highest one year salary, so he did 30 years then he would be guaranteed 90% of his salary for life). This was absolutely unheard of at the time (we were the only one in the nation that had this, over the years other agencies in other states have duplicated this coupe) but desperate times called for desperate measures and he gave up the farm for a little security, which ultimately did not help him anyway.

Atlanta is trying to move all new employees over to a 401K plan, meaning that the employee can deduct a certain amount out of his paycheck each month tax free into a retirement account, that account which would be managed by the employee, he would have to decide asset allocation, stocks, bonds, treasuries, or money market funds. The employee would also be placed into the social security system, paying FICA taxes each month as well. With a 401K plan (unknown at this time whether Atlanta would provide matching funds, doubtful) the ultimate payoff depends on how well the money was invested, nothing would be guaranteed.

The unions are spitting mad over this:

The highest-profile fight came in Wisconsin, where Republican Gov. Scott Walker signed a law forcing public employees to contribute 5.8% of their salaries to their pensions and pay at least 12.6% of their health care premiums. They will have reduced ability to bargain for wages.

On Monday in Florida, the state’s 140,000-member teachers union filed suit against Gov. Rick Scott, also a Republican, to block a law requiring public employees to contribute 3% of their salaries to their retirement plans.

This is what I mean when I described past manipulations. Through collective bargaining the percentages the employee had to pay into both his pension and medical insurance has become smaller and smaller to the point where many don’t pay anything, totally ridiculous. So now, when asked to pay something, they scream like stuck pigs.

Realizing the folly and insolvency of the program years ago, I planned my finances so that if the state went bankrupt tomorrow and I was told that my pension was no longer viable, I would still be fine. I knew it would not be around forever, it couldn’t, that is the reality. Another reality is that the whole idea of pensions has to be rethought. I would expect those in the military to be left alone, they deserve every penny they get, but for everyone else? Pensions are a thing of the past, unless formulas can be worked out so that employee contributions alone (no state obligations) can make them work. If the unions don’t want their precious pensions taken away then they better stop their yammering about the unfairness of them having to pay pennies on the dollar for their future welfare.