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PUBLIC SECTOR EMPLOYEE ORGANIZATIONS NEED TO CAREFULLY CHOOSE THEIR MESSAGE IF THEY HOPE TO KEEP THEIR CURRENT PENSION BENEFITS
As the movement for pension reform gains momentum in Sacramento and throughout California public employee organizations need to carefully look at their message, much of which has not changed in many years. First, public sector employees should be sure that their message or argument is accurate. Next, does that message make sense to the voter? In other words, will that argument persuade the voter to vote against drastic pension reform measures? Public employees should stay away from some of the mythical arguments that national and international unions have traditionally made. These arguments have become a part of the very fuel of the pension reform movement. Here are a few of the classics that, believe it or not, I have recently heard from union leaders:
Old School Union: Public Employees Are Taxpayers Too and Basically Pay for Themselves.
Try It This Way: Public Employees Provide the Essential Services to Keep Our Communities Running.
The old school union argument enrages pension reform activists. Of course most public employees pay taxes, just like everyone else. But the fact is tax revenue generated by public employees only pays for a fraction of their cost. Depending on the study, tax revenue generated from public employees only covers between 8% and slightly over 10% of their costs. It takes many private sector taxpayers to pay for one public sector employee. The old school union argument misses the point entirely. The focus should not be on the actual taxes paid by public sector employees. Rather, the focus must be on the value of the services provided by those employees. For example, most communities would not be desirable places to live without services such as police, fire, parks and road repair. A community without a high level of these services begins to look like a third world country.
Old School Union: Payment of Pension Benefits Stimulate the Economy to Such a Degree That California’s Economy Will Fail Without Them.
Try It This Way: Pension benefits are an investment in the future of our communities.
According to the California Public Retirement System expenditure of pension benefits by CalPERS retirees generates about 26 billion dollars in economic activity in California. That represents less than one half of one percent of California’s overall 1.2 trillion dollar economy. The economic footprint of pension benefit expenditures by CalPERS retirees is inconsequential to California’s overall economy in a pure economic sense. However, public sector employee organizations must focus on a different type of benefit that stable pension benefits provide the community. Stable and attractive pension benefits attract a high quality, committed employee. California public employee organizations need to focus on the overall benefit to the community and not boil it down to economic analysis. Stable pension benefits are the foundation to a stable workforce. In many ways, 1.9 trillion dollar California economy is not possible with a relatively inexpensive stable public sector workforce to support it.
Old School Union: Public Employees Could Easily Make a Lot More Money Working in the Private Sector.
Try It This Way: Public Sector Employees Have Chosen the Path of Public Service, are Valuable, and Should be Recognized.
While historically public sector jobs tended to pay lower salaries than their private sector counterparts recent studies show that is no longer the case. Over the last fifteen years public sector base salaries have increased dramatically, in some cases more than 100%. Those gains have far out distanced their private sector counterparts. Today, in many jobs the public sector employee actually makes more money than a similarly situated private sector employee. What public sector employees have done is make a choice of public service. Many public sector jobs take extensive training and years of experience to master. A community as a whole benefits from this experience. By making a commitment to public service, the public sector employee has undoubtedly sacrificed career opportunities that existed in strong economic times. And those times with return. The skill, expertise and experience of the public sector employee should be recognized and respected by their private sector counterparts.
Old School Union: We’ve Earned It. The Rich Taxpayer Is Just Going to Have to Figure out a Way to Pay.
Try It This Way: The Payment of Wages and Benefits To Quality Public Sector Employees is an Investment in Our Community’s Future.
Believe it or not, the “just tax the rich” argument is still commonly made around the union boardroom and enrages pension reform activists. Again, the focus of the union’s argument should be the value the public employees provides to its industry and the community as a whole. For example, teachers’ unions should focus on school reform and ways of making our schools more effective educational institutions. The primary tool for reform in the schools is a highly skilled, motivated teacher. That teacher will make the real difference in the classroom.
How Do the Big Teacher’s Unions Get Away With It?
How Do the Big Teacher’s Unions Get Away With Such High Dues?
As a California public school student through high school, son of a public school employee, and a long time coach at a public school for fifteen years, I have seen how hard the majority of teachers work, despite the obstacles they are forced to deal with on a daily basis. As a labor attorney, I am shocked at that these same dedicated and intelligent teachers have tolerated and continue to tolerate being represented by a union that takes from them much more than what it gives them.
Over the past couple of years, and especially since last March when I have taken a more active role in helping to represent the Horizon Certificated Employees Association (HCEA), a public charter school teachers association, I have started looking into what the traditional, “big” teachers unions offer their members, and at what price.
The standard union dues for a full time teacher in California is about $650/year for the state association and another $175 for the national association. The local association keeps another $100-$300. The part-time dues are lower proportionally. That comes out to over $100 per month since most teachers are paid on a ten month contract.
What do these teachers get for these high dues? Surely they must get an attorney to represent them if they are being investigated for discipline or have a professional labor negotiator working for them to negotiate their contract or handle workplace grievances and problems? No. For the most part, teachers use a system of stewards (fellow teachers) to “represent” other teachers as they go through the disciplinary process. When it comes to bargaining, teachers typically have a negotiations team that spends hours undergoing training from the state association to negotiate for themselves. To be fair, the state associations do provide some level of professional support, but far less than the huge dues would suggest.
For comparison, Goyette & Associates represents a large number of police, fire and general employee public employee associations. Each of these associations’ members gets professional representation at the earliest stages of discipline and we are actively working with each group on their contract issues and negotiations. Even the public safety unit with the highest rate of usage pays only 60-70% of what teachers pay in union dues.
Surely, the political arm of the state and national teacher associations must justify the huge dues? Die-hard members may make this argument, but the reality is that only a small portion of union dues actually get to political campaigns. Most dues goes to the huge administrative overhead of these massive organizations. Certainly, California teachers’ unions have a big voice in state politics, but that does not clinch the argument that teachers ought to pay such high fees for that voice. In the alternative framework below, a local teachers association can use the money currently earmarked for the state and national groups and use most of it for local politics, or send it to the big unions for politics – but by choice.
There is another way of doing this.
A local California teachers association with 800 members currently brings in about $800,000 in dues. Of that, almost $700,000 goes to their state and national associations. The other $100,000 is used by the local association to cover meeting expense, a small local office and maybe staff, and other costs. Usually, one of the biggest “discretional” expenses is travel and registration fee expenses to attend conferences and trainings put on by the state and federal associations.
What’s the alternative? Decertification…”fire” the big union.
What if instead of the budget picture painted above, the local association could keep that $700,000 in dues each year? The local association would still keep its rights to collectively bargain a contract with the school district, but it would have the freedom to decide how much and to whom ALL of its membership dues were spent.
An “independent” teachers association with these 800 teachers could take the $700,000 and do a lot of things…this is just one possibility: 1) Use $240,000 and hire a law firm to provide the teacher members with professional representation at every step of the disciplinary process and to hire a professional labor negotiator; 2) Return $200,000 to the members ($200/year); 3) Set aside the other $260,000 for a combination of public relations, local politics and state/national politics. For the politics/PR piece, think about the impact this teachers association would have in a local school board election (the group that approves their contract) if they spent even a portion of that $260,000 on a local election. Also, if the membership felt strongly about the political actions of the state and/or national associations that they formerly belonged to, they could simply send them a check for whatever amount they wanted to support their activities – I doubt that the money would not be accepted.
But Decertification has to be nearly impossible to accomplish? Not true. The process is actually simple and straightforward, though there are some critical timelines that must be met and each step has to be properly taken. The reality is that there are decertifications taking place throughout California of big unions in all layers of public services. The biggest obstacle to teacher taking charge of their labor organizations and dues is their ignorance of the alternatives to the status quo.
CalPERS increases the cost of terminating participation for employers
The CalPERS, Terminated Agency Pool lacks the ability to get more money from employers and taxpayers if investments expected to fund roughly 67% of pension costs fall short.
That coupled with the increased number of agencies exploring the idea of terminating their participation in CalPERS lead the Board of Directors to approve a sharp increase in the cost of terminating pension plans.
Currently the Terminated Agency Pool is responsible for the pensions of 4700 members of 118 terminated plans. Two years ago the terminated pool had assets of $144m, liabilities of $60m and annual pension payments of $54m.
A 3.8 percent bond-based earning rate will be assumed when calculating the money an employer must set aside to offset future obligations, down from the 7.75 percent used when forecasting earnings, drastically increasing the cost of termination.
The new 3.8 percent earning rate will increase the terminated pool’s liabilities from $60m to $92m.
Movement to End Collective Bargaining in CA Gains Momentum
The Sacramento Bee recently reported that a group, looking to abolish collective bargaining rights for all of California’s public sector employees, filed three ballot initiatives this week. The group is called the California Center for Public Policy and arrears to be led by a UC Santa Barbara economic lecturer named Lanny Ebenstein. Mr. Ebenstein’s group has started fundraising to begin a signature campaign to get the initiatives before the voters.
The three initiatives are focused on both public sector employees and retirees. The first measure would ban recognition of all public sector labor unions to prevent government from collectively bargaining with them. The second measure would impose a higher tax burden on pensions paid through CalPERS or CalSTERS for retirees who earn an annual pension of over $100,000.00 per year. The Third measure would raise the retirement age of state employees to 65 and, and public safety workers to age 58.
The most troubling aspect of the news was the initial reaction from representatives of public employee groups. Steve Maviglio, of a group called Californian’s for Retirement Security, responded by saying “these will end up in the same trash bin as the proposal to require Christmas music in public schools. These proposals are wildly out of synch with California; fortunately there is a $15 million dollar gap between dumb ideas and the ballot box.”
Let’s hope Mr. Maviglio’s comments are not shared by a majority of public sector employee organizations throughout the State. Californians and members of public sector employee organizations should take these measures very seriously. Many voters, especially those who work in the private sector would view positively some, if not all of the element s of the measures. Union recalcitrants, inflexibility and lack of creativity is exactly the posture that lead to the abolition of collective bargaining in other states, including Wisconsin. The public sector employee union can no longer used tried and true methods like strikes, picketing, or PR smear campaigns to meet their objectives. The world out there is much more complicated now and requires an entirely different and smarter approach. The public sector employee unions need to position themselves as partners with a solution and regain the trust and respect of the citizens of California. Mr. Ebenstein is quoted in the Sac BEE article by saying, “[g]overnment does not exist to provide compensation and pensions for government workers. Government exists to provide good public services at a reasonable cost.” A vast, vast majority of California voters would agree with this statement. Unions need to incorporate this message in their strategy and convince the public that the good public service Ebenstein references depends upon hiring and keeping skilled and motivated government workers. Remember, the California private sector employees out number public employees over 25 to 1 at the ballot box. California’s public sector employee organizations would be wise to take seriously the three initiatives filed by Mr. Ebenstien and similar ones that have already been filed or will be filed in the coming months.
If you would like more information from us, regarding how you can craft a message of cooperation and partnership, please contact Jennifer at the Firm.
CALIFORNIA PUBLIC SECTOR UNIONS NEED TO FOLLOW WHAT IS GOING ON IN WISCONSIN
California public sector employee organizations need to closely follow how things are unfolding in the State of Wisconsin. Recently, Wisconsin Governor Scott Walker proposed the passage of a plan to have Wisconsin public sector employees pay a greater share of their pension costs and healthcare coverage. The governor’s proposal comes in the face of a projected 3.6 billion dollar budget shortfall and is designed to avoid widespread layoffs. The governor also proposed the elimination of collective bargaining rights for Wisconsin public sector employees.
The governor’s proposal resulted in a massive public employee demonstration at the Wisconsin capital. Public schools were closed on Wednesday because so many teachers called in sick to attend the protest. The move by the Wisconsin governor and legislature is a significant shift for Wisconsin and should alarm public employee unions in all other states because Wisconsin, which first passed comprehensive collective bargaining laws in 1959 is considered the birthplace of public sector employee unions representing non-federal public employees.
The Wisconsin governor’s proposal represents a new approach to dealing with government budget problems. For years Wisconsin and most other local and other state governments, especially California, have dealt with budget shortfalls by trimming expenses where possible in a series of short term fixes such as furloughs, compensation deferrals, and the like. Moreover, governments have deferred budget problems to the next fiscal year. The new era appears to be one of direct action without apologies. For the first time, maybe in decades, governors such as Scott Walker appear to have public support. Walker said that while he appreciated the concerns of the public employees, he said taxpayers, “need to be heard as well”. Walker commented that the private sector has been devastated by the recession and that, by comparison, the seven percent (7%) wage reduction to Wisconsin public employees is a minor form of pain compared to what most private sector employees have been forced to endure.
Leaders of California public sector employee unions should take note. The longstanding assumption, especially in public safety, that the public will support them is misplaced and in many cases flat out wrong. California’s public sector employee organizations need to disregard the same old stale arguments they have been making for years for this simple reason: the private sector taxpaying public no longer cares. California’s public sector employee organizations need to be progressive, forward thinking, and creative. They should focus on telling their story as an indispensable service to California. The strategy of public employee unions in California over the next year will be critical as to whether California faces a similar effort to eliminate collective bargaining rights for public sector employees, which will likely come in the form of a ballot initiative.
Presentation on Bargaining in Tough Economic Times
If your union, association or bargaining unit has been struggling you are not alone. However, if you’ve lost your shirt at the bargaining table over the last few years, you are probably not represented by G&A.
Our Labor specialists have devised a tactical bargaining strategy combining diplomacy and concessions to acheive unpresidented gains. If you are your Borad would like to learn how G&A has been successful in our Association’s negotiations.
Click the following link to view our presentation on the web.
http://www.authorstream.com/Presentation/goyettemarketing-794456-bargaining-tough-economic-times/
If you would like to learn more, to receive a more comprehensive pesonalized training, or are not curreently represented by a team who is making progress, email Jennifer now and discover how you can be succesful tomorrow.
GOVERNMENT AS USUAL IN SACRAMENTO COUNTY
Sacramento County has given us yet another piece of evidence that certain elected officials and managers of California government entities have devolved into nothing more than their own personal existence justification system. Over the last three years we have repeatedly seen government managers go to extraordinary lengths to protect themselves and their friends.
On Wednesday, May 26, 2010, the Sacramento Bee reported that during 2009, the number of Sacramento County’s highest paid employees significantly increased. Yes, that’s right, increased. During the worst fiscal crisis in Sacramento County’s history the number of Sacramento County employees making over $100,000.00 a year in base salary increased. Remember, for the last three years Sacramento County has had budget deficets over $100 million.
Sacramento County officials were quick to defend themselves by saying that the salary increase were the result of collective bargaining agreements they have no control over. However, what is clear is Sacramento County leaders and most government officials do not want that control. They do not want to make hard decisions that are necessary in today’s economic climate. Government officials are quick to slap a band-aid on the severed artery by furloughing employees, laying off some of the lowest paid employees and attempting to freeze wage or benefit increases. Government leaders hold on from one pay period to the next, use smoke and mirrors to pay their bills, all while fending off difficult questions as to why they are making the decisions they make. Here is what drives them: Sacramento County officials and most government leaders first and foremost want to protect themselves and their closest allies and friends. In Sacramento County’s case that starts with supervisors and goes to the County Administrator’s office. They refuse to recognize the obvious solution which is significant parts of their governmental empires have to permanently go away. A massive restructuring of California government must occur so that these government entities can provide the basic, fundamental, and indispensable services they are required to provide.
I for one want more government workers on the streets doing the actual work and less bureaucrats thinking of ways to justify their existence. Some form of real leadership needs to arise arises in California state and local governments for it’s fiscal problems to be fixed.
CalPERS Long Term Care (LTC) Insurance Update
The CalPERS LTC Fund is in serious financial trouble. The LTC Board has determined that swift action to improve the fiscal health of the Long Term Care Program is imperative.
Two actions will take place immediately, the first being that there will be no open enrollment program, nor will any new policies be issued until the fund conditions improve. The second will be an increase in rates of 15% to 20% for current policy holders next year.
CalPERS will be sending this information to CalPERS members this week.
GOVERNMENT MUST BEGIN TO DISMANTLE ITS MASSIVE BUREAUCRACY
The response of government to its spending habits during this Great Recession is disappointing to say the least. The State of California and local government entities throughout California are grappling with history budget shortfalls. Quarter after quarter financial experts report to these government entities that their tax revenues are falling short of expectations. The government responds with a series of shortsighted actions such as pay cuts and furloughs of its workforce and the reduction of services to some of California’s most needy residents. While these cost saving measures may get the government temporarily through those short term budget periods, they have obliterated the productivity of the employee workforce, aggravated existing social problems while only temporarily solving their financial problems. The leaders of these government entities have lost sight of a fundamental question. That question is as follows: “Why are we here?” Put another way, government leaders for the most part have refused to focus on the fundamental reasons their government entity exists in the first place. What are the indispensable services and protections that each government entity must provide California?
The reason our elected officials have not publically asked these questions, let alone taken action on them, is because to do so would produce a clear but painful solution for California’s elected officials and its managers that run California governments. The solution is clear: Dismantle the massive bureaucracy that strangles government and prevents it from carrying out its mission.
HOW DID WE GET HERE?
There are several reasons the government finds itself in its current financial mess. First, the government has grown to an unsustainable size. Between 1998 and 2008 California State and local governments have grown exponentially. In fact, this ten year period has produced five times faster growth in government than any other previous decade. Governments have added a myriad of programs and specialized jobs. They have also added massive numbers of employees at all levels.
Term limits for California politicians is another significant problem. In another glaring example of why the California ballot initiative process rarely works, the legacy of term limits will be the growth of government without leaders. From the minute a state politician is elected to office he or she immediately begins planning for their next political job. After all, they will only have a limited number of years in their current position. Therefore, politicians are afraid to make tough decisions. They are driven by public perception and polls. In short, they are incapable of being leaders. They are not vested for the long term. They are a group of yes men and women, who never want to be the bad guy, and never want to say no. Consequently, on both sides of the aisle they have said “yes” to a massive buildup in government bureaucracy.
Macro-economics is another very important factor that has led to California’s government malaise. Apparently, California’s leaders have chosen to ignore or simply do not know some basic laws of economics. The economy of the United States and California is driven by consumer spending. According to the Department of Consumer Affairs, almost 70% of the nation’s gross national product is now consumer spending. Compare that with the 1950’s whereover 2/3rds of the GNP was manufacturing. For today’s economy to grow, consumers must always spend in increasing amount of their money. In other words, for the economy to grow consumer spending must grow. Consumers long ago exhausted any surplus income they might have had. For the last 20 years, consumer spending has been driven by the credit market. Whether it be credit cards or home refinancing consumer spending, especially on big ticket items, was only possible because of the credit made available to consumers. Well, as we know, the credit house of cards has collapsed and will not be coming back.
Another significant factor causing government’s current problems was the assumption that the taxpayer could always pay more to government. All government is supported by the taxpayer–the private sector taxpayer. Taxes paid by government employees only support a fraction of government operations. The private sector taxpayer has always funded government. Today, in many sectors, the private sector has been radically reduced if not completely wiped out. In most cases, the taxpayer is not available to bail out government this time.
WHERE DO WE GO FROM HERE?
The starting point for any solution is that government managers and elected officials must ask the fundamental question: Why are we here and what are the fundamental and indispensable services we must provide California? If those managers and officials answer that question honestly they will recognize that large pieces of the bureaucracies they have created simply are not necessary.