Archive for the ‘Pension Reform’ Category

How NOT to do pension reform

July 25, 2012

Riverside County, California recently finalized changes to their public pensions, hoping to put them on sound financial footing. Looking at $4.7 billion in obligations, and annual pension expenditures that would consume half of the total county budget by 2020, county supervisors felt it necessary to act.

The recent reforms will reduce pension costs by $360 million through mid-2016. In exchange for pension changes, county supervisors struck a deal with union reps – to increase salaries and benefits by $731 million – and that does not count an additional $40 million in new CalPERS expenses in just the next four years.

According to a recent county Human Resources analysis, “The county saved $2.5 million in the fiscal year that ended June 30. And the county faces a modest net cost of $5.1 million in the current year. But the county will have to absorb cost increases of $59.7 million in 2013-14, $119.6 million in 2014-15 and $188.3 million in 2015-16.”

Those increases come largely from raises and cost-of-living increases and are new expenses for a county that has lost almost $300 million in tax revenue since 2007. In fact, the county laid off 229 employees this year alone to balance the budget and still faces more potential job cuts in the months ahead.

Pension costs have reached a crisis point all over this country and elected officials everywhere are faced with addressing them. Unfortunately, Riverside County chose a short-term Band-Aid approach, trading small cuts now for large increases later. They kicked the can down the road a mere 4 years – with no ability to pay the increasing costs except for perhaps a good dose of wishful thinking.


Retire, collect $500,000 in pension, go back to work

January 2, 2012

Taxpayers in Philadelphia are stuck with hefty bills because of sky-high pension benefits for people who retire for a weekend, then come right back to work.  City Councilwoman Marian Tasco retired Friday, collected almost a half a million dollars in pension benefits and returns to work today, when she will be sworn in to serve a seventh term.  She will be joined by  Ronald Donatucci, who will collect $366,797 when he returns to work after a week-long retirement and they both join colleagues who have previously done the same thing.

The city offers a “Deferred Retirement Option Plan” that allows workers to collect a salary AND build up pension money during the last four years of their employment. Touted as revenue-neutral when it originally passed, Philly’s DROP program has cost the city a quarter of a billion dollars in just 10 years. Mayor Nutter has vowed to “work tirelessly” to abolish the program but right now, just shy of 400 people have signed up for it, declaring they are within their last 4 years of work.

This fall, the Philadelphia city council voted to override the mayor’s veto of a bill that preserves the program – a bill sponsored by none other than Marian Tasco. The city council has also raised taxes two years in a row and now the best solution they appear to have come up with is simply stall for time while more and more people move through the system, collect 6-figure payouts and go right back to work.

Citizens are starting to catch on. Four retiring council members are DROP participants while one incumbent lost his re-election bid in part because of his participation in this giant albatross of a program.   What were they thinking?!

New Hampshire gears up for pension reform

December 1, 2011

Facing a $4 billion unfunded liability in its retirement system, New Hampshire is getting ready to introduce pension reform measures in the 2012 session.  As they gear up, the Speaker of the NH House, William O’Brien, invited “National pension reform leader” Dan Liljenquist to address a special committee.

The New Hampshire “Union Leader”, well-known for their political punditry, covered Senator Liljenquist’s presentation.  They write:

The 2008 stock market crash was a disaster for the once fully funded Utah state retirement system, but it set the stage to change the system from a defined benefit to a defined contribution system.

The main architect of the change, Utah state Sen. Dan Liljenquist, briefed the New Hampshire House Special Committee on Public Employee Pensions Reform Tuesday. He talked about changes made to Utah’s system as New Hampshire lawmakers decide if reforms enacted this year and several years ago will be enough to put its system on solid ground.

A special legislative committee released a report last month recommending two retirement systems, one for current workers, and one for those hired after the new plan goes into effect.

Some lawmakers want to pass a law this spring switching all new public workers into a 401(k) plan meant for public employees.

The plan would be a defined contribution plan, where the level of money going into the plan is pre-determined. A defined benefit plan delivers a set of promised benefits in retirement no matter how the financial winds change over time.

The New Hampshire Retirement System is a defined benefit plan.

Senator Liljenquist was also interviewed by a local blogger.

As Senator Liljenquist is fond of saying, these are not partisan issues – these are reality issues. And “reality is not negotiable.” That is why Rhode Island – a Democrat-dominated state – has joined Utah and other states in reforming their pension programs. RI Treasurer, Gina Raimondo, was the architect behind that state’s reforms and spent months consulting with Senator Liljenquist on Utah’s model. Both Raimondo and Liljenquist spoke this week to the Harvard Kennedy School of Government on their reforms. Pension reform will be a top priority for multiple states in the 2012 legislative session.

State Policy Network, 2011

August 25, 2011

The nationwide State Policy Network – made up of free market think tanks from every state – convened their annual convention in Seattle Tuesday evening. Bringing over 600 attendees from all over the country, the conference is offering 4 tracks – Leadership, Communications, Development and Policy.

Today’s communication track included classes on Facebook and how to maximize it’s usage. The luncheon included the first annual presentation of the Unsung Hero award by the Vernon K Krieble Foundation. The award – which came with a $25,000 check – was presented to Oregon activist Steve Schopp. The keynote speaker was Kevan Kjar, w gave a fascinating presentation on “Winning the Story War.” I’m sure you know what I mean – how do you make your message compelling? The need to sharpen the message seems especially pertinent for think tanks who love to churn out policy papers but struggle gettng their message across.

The afternoon communications track included a discssion on “Translatng Policy Into Action, or at Least English.” Dovetailing nicely with the lunch session, the presenters talked about the power of using social media – Facebook, Twitter, Google+, Linked-In, YouTube – all of it. One of my favorite lines from Todd Wynn, vice-president of Cascade Policy Institute, was “Plagiarize yourself.” Write something once, then re-package it a number of ways. Have a long research paper? Go ahead and turn that paper into blog posts that you then tweet about, convert it to an op-ed piece, create a YouTube video, then tweak again and turn parts of it into an email you send to supporters. Good stuff.

The conference continues Thursday when one of the keynote speakers will be Utah Senator Dan Liljenquist speaking on pension reform.

Daily Fix, June 23

June 23, 2011

*The GRAMA working group held their final meeting and has government recommendations ready to present to the governor. In my opinion, we agreed on far more than we disagreed on. Now we’ll see what happens during the next session. Trib, Fox 13, KSL

*The Hatch make-over into Tea Party candidate continues to garner national attention, as does the effort to stack the March 2012 caucuses. Former Utah GOP chair Dave Hansen said “We have a field staff of 15 to 20 people that are working very hard with existing delegate lists, past delegate lists, party caucus attendees from the past and also recruiting from various organizations and business interests. We’re not trying to necessarily convert people. If they’re for us, great. If they’re not, we’re going to replace them.” I’m guessing there are some delegates already working to make sure they are NOT replaced. Roll Call

*Bob Bernick had a great post on about Saturday’s convention and the cracks in party unity. Check it out.

*In San Francisco, the average retired city employee’s pension is now greater than the average San Fran worker’s wage. So far, efforts at pension reform have flamed out but a new push is underway to look at capping pensions and preventing spiking. SF Gate

*Meanwhile, New Jersey saw over 8000 protestors complaining about pension reforms. Union leaders claim is a “war for survival” but refuse to face the cold hard facts. This year alone, the gap between promised benefits and actual funds grew by $8 billion (almost the entire budget for the state of Utah.) The total unfunded liability? Over $120 billion. Kudos to Christie and the NJ legislature for doing what needed to be done. DNews, NJ Statehouse

*If you’re counting on Social Security, don’t. That world – and the money – is gone, says Thomas Sowell. In fact, he says the way “Social Security was set up was so financially shaky that anyone who set up a similar retirement scheme in the private sector could be sent to federal prison for fraud.” DNews

*Speaking of money and the lack thereof, Eric Cantor walked out of talks on the nation’s debt when Biden, on behalf of the Democrats, demanded that taxes be raised. In a statement released by his office, Cantor said “the Democrats continue to insist that any deal must include tax increases. There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation.” The Hill

*Al Gore suggests population control as a way to combat global warming and decrease our carbon footprint. Eyeroll. KSL

*And finally, Jimmer is King – a Sacramento King, that is. KSL

Daily Fix, June 20

June 20, 2011

*On Wednesday, the American Legislative Exchange Council (ALEC) will release their 4th annual “Rich States, Poor States” and for the 4th year in a row, Utah is ranked #1. Written by Dr Art Laffer, Steve Moore and Jonathan Williams, there is a special shout-out to Utah state Senator Dan Liljenquist for his work on pension reform. The move from defined benefit to defined contribution is now the national model. Deseret News

*Continuing the rosy outlook, today Governor Gary Herbert announced 200 new jobs will be coming to Utah via IM Flash and an additional 500 via EMC Corporation. Fingers crossed that the upswing continues. Daily Herald

*Entrepreneur and tea-partier David Kirkham was profiled in the DNews. Did you know his cars start at $100K and that’s without the engine? Sen Orrin Hatch is on speed-dial. They talk several times a day as Hatch tries to hang on to his seat.

*Speaking of Senator Hatch, a recent Deseret News/KSL poll shows he’s in trouble. Big, big trouble. Dan Jones (Hatch’s pollster) found that only 38% think Hatch should be re-elected because of his seniority. A whopping 59% say it’s time for someone new. If that wasn’t bad enough, that number comes from a pool of registered voters, not just Republicans and certainly not Republican delegates. Ouch. (Unless you’re part of the 60% who is ready for new blood….)In other interesting findings, a Hatch/Matheson match-up in the general is a draw, a Chaffetz/Matheson general election has Chaffetz slightly ahead and a Hatch/Chaffetz primary has Hatch slightly ahead. Tossing a 3rd candidate in the mix could really make things interesting…. Deseret News And you gotta love the picture…..

*Saturday’s GOP convention saw chair Thomas Wright re-elected, then a new vice-chair (Lowell Nelson) and new secretary (Drew Chamberlain). Interestingly, the two new officers are also involved in a lawsuit against the state party. Can you be both plaintiff and defendant? In the other news of the convention (besides that it lasted seven freaking hours), was that the non-binding resolution asking the legislature to repeal HB 116 passed by a narrow margin. DNews , SL Trib, Fox 13, Daily Herald

*Sen Dianne Feinstein and Sen Tom Coburn agreed on one issue recently, but to no avail. Both favor ending ethanol subsidies. However, a recent Senate vote to end the subsidies went down in flames 40-59. Why? According to an editorial in the LA Times, it was “devotion to rigid party orthodoxy [which] trumps common sense even on those rare occasions when Democrats and Republicans widely agree. That’s grim news for anybody hoping for problem-solving by Congress.”

Meet Adolf Christie

June 16, 2011

Governor Chris Christie knows the money is gone, the state is bankrupt (even if some people refuse to admit it) and that major reforms need to happen. So, when he works on pension reform with the Democrats in the NJ legislature, this is the response…..


Daily Fix, Feb 28

February 28, 2011

Medicaid reform, pension reform, hairstyle reform. Turns out it’s Dan Liljenquist day on the Daily Fix.

*The National Governor’s Association met last week and one major topic of discussion was Medicaid reform, specifically block grants. Wisconsin governor Scott Walker said “I’d love to have a block grant so we can make adaptation state by state.” Mississippi’s Haley Barbour told reporters he would take a capped blocked grant in return for true flexibility. Utah’s Senate Bill 180 is Utah’s Medicaid reform bill and is based on a block granting process. It is expected to pass without difficulty. Politico

*The NGA also wants the ability to trim Medicaid recipients from their rolls. In recent years, Medicaid has grown into one of largest payers in the health system, accounting for 17% of all hospital spending. In 2000, Medicaid spending was $187 billion nationally. That figure rose to $346 billion in 2009. In Utah, our Medicaid expenses have doubled in the last ten years. Governors across the board are also very worried about 2014, when the implementation of Obamacare will add millions more to Medicaid rolls. The last time there were big changes to the social safety net was in the mid-1990s. Since then, federal social programs have tended to grow, not shrink, including a big expansion of drug benefits signed by President George W. Bush. Wall Street Journal

*Continuing with news about Medicaid reforms, Senator Dan Liljenquist just spent some time with former HHS Secretary Mike Leavitt discussing that very subject. Speculation about other potential topics of conversation abounded at the Washington county Lincoln Day breakfast. According to a Trib article, “what seems to set [Liljenquist] apart is that he is a policy wonk. He is a numbers guy. And he even gets excited about it.” Tribune

*The New York Times recently interviewed Utah state Senator Dan Liljenquist about Utah’s pension reforms. As states face trillions in unfunded pension liabilities, more and more are turning to solutions like Utah passed last year. Those changes moved workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans, also known as defined contribution plans. According to the Times, “The governors of Wisconsin and Ohio, citing dire budget problems, are engaged in bitter showdowns with public-employee unions over wages, pensions and collective bargaining rights.” Utah’s reforms are now considered model legislation across the country. NY Times

*The Wall Street Journal is also covering pension reform today. They discuss Utah and Michigan, who launched hybrid plans for new employees, combining a 401(k)-type component for new hires with a guaranteed benefit for employees already in the system. According to the article, Michigan officials estimate the switch to a hybrid plan will save the state’s public-school system between $2 million and $4 million in fiscal year 2011 and between $200 million and $400 million over 10 years and in Utah, projections are that the state will save $5 million a year for every 1,000 new employees, potentially bringing $180 million in savings by 2018. Wall Street Journal

*SB1000 is a Senate bill getting a fair amount of attention lately. Fox 13 covered it recently and conducted their own unscientific poll on which direction the vote should go. It’s a bill to choose Senator Liljenquist’s grown-up hairstyle. Whatta ya think? George Clooney? Brad Pitt? Leave the same? Fox 13

Wisconsin’s runaway Senators

February 17, 2011

Democrat Wisconsin Senators took off today instead of voting on a bill that would enact pension reforms and place some controls on collective bargaining for unions in their state. With them gone, the Senate lost their quorum and can not proceed the vote.

About 10,000 teachers, nurses, city workers and firefighters gathered at the Capitol to protest the bill today. In fact, 40% of the state’s teachers refused to show up to work yesterday or today and many took their students with them as they protested against reform.

The state’s 170,000 public employees were promised no furloughs or layoffs in exchange for bearing more costs and a change in those collective bargaining agreements. Under the governor’s proposal, public-worker unions could still represent employees, but could not pursue pay increases above those tied to the Consumer Price Index unless approved by a public referendum. Unions also could not force employees to pay dues and would have to hold votes once a year to stay organized. If the measure fails, Mr. Walker expects layoffs of 6000 public employees.

According to a local radio station, the “proposal marks a dramatic shift for the state, which passed a comprehensive collective bargaining law in 1959 and was the birthplace of the national union representing all non-federal public employees. In addition to eliminating collective bargaining rights, the legislation also would make public workers pay half the costs of their pensions and at least 12.6 percent of their health care coverage — increases Walker calls “modest” compared with those in the private sector.”

In spite of the long history of being a union state, voters in November elected Governor Walker, an outspoken conservative, and GOP majorities in both the House and Senate, a clear sign that the public was ready for a change.

“We’re at a point of crisis,” Mr. Walker told reporters. And while he said he appreciated the concerns of the public employees shouting outside his office door, taxpayers “need to be heard as well.” Mr. Walker said the dramatic action is necessary to close the state’s gaping budget hole for the fiscal year starting in July and avoid massive employee layoffs.

The runaways were found holed up in a Best Western in Illinois, presumably out of reach of the Wisconsin Highway Patrol. They have supposedly called CNN with a “list of demands.” Governor Walker calls today’s actions “more theatrics than anything.”

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