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Monday, December 19, 2011

Dept. of Labor: Public School Teachers Are Highest Paid State Workers; Compensation Doubles the Average in Private Industry

By Terence P. Jeffrey December 14, 2011
( - Public school teachers receive greater average hourly compensation in wages and benefits than any other group of state and local government workers and receive more than twice as much in average hourly wages and benefits as workers in private industry, according to a new report from the Bureau of Labor Statistics.

Public primary, secondary and special education teachers are paid an average of $56.59 per hour in combined wages and benefits, BLS said in the report released last week.

That is slightly more than twice the $28.24 in average hourly wages and benefits paid to workers in private industry.

In fact, according the BLS, the $28.24 in average hourly wages and benefits that private-industry workers now earn in the United States is less than the overall national average for hourly wages and benefits of $30.11.

That is because the overall national average compensation is dragged upwards from the private-industry average by the much higher wages and benefits paid to state and local government workers—who take in an average of $40.76 per hour, according to BLS.

The BLS report only calculated and published the average hourly wages and benefits for workers in nonfarm private industry and state and local governments. It did not include federal government workers.

While no category of state and local government worker earned more in average hourly wages and benefits than public school teachers, the report listed a few subcategories among private-sector workers who did earn more in average hourly wages and benefits than public school teachers.

These included, for example, managers in private utilities businesses, who averaged $56.94 in hourly wages and benefits; managers in professional and goods-producing businesses who averaged $59.63 in hourly wages and benefits; and workers in aircraft manufacturing, who averaged $61.66 in hourly benefits and wages.

The BLS determines the average hourly wages and benefits of American workers by surveying employers. It defines the number of hours a teacher works by the number of hours the teacherʼs employer says the teacher is required to be at the site of the job. BLS used the same methodology to determine the number of hours worked by other salaried employees. Because teachers have extended vacation periods when they are not required to be at school, they tend to work fewer hours, as calculated by BLS, than many other types of workers, including other types of government workers.

For example, in BLS's most recent National Compensation Survey, the agency determined that public primary, secondary and special education teachers worked an average of 1,405 hours in a year. Overall, state and local government workers worked an average of 1,823 hours in a year.

On the high end, government computer software engineers worked an average of 2,124 hours in a year. On the low end, government transportation attendants worked an average of 1,170 hours per year. Government bus drivers worked an average of 1,399 per year—not quite as long as the average for school teachers.

By contrast, according to BLS, private school primary, secondary and special ed teachers worked an average of 1,560 hours per year—or an average of 155 hours more than their public school counterparts.

According to the BLS report, private school teachers were not compensated as highly as public school teachers. When private school primary, secondary and special ed teachers were added to the pool with public teachers, average hourly wages and benefits for teachers dropped from $56.59 to $53.87. The report did not publish the disaggregated average compensation for private school teachers alone.

The $56.59 average hourly compensation for an American public primary, secondary and special education teachers includes $39.69 in wages and $16.90 in benefits, BLS reported.

For each hour at work, according to BLS, the average American public school teacher is paid $4.78 in retirement and savings benefits alone.

The average private sector worker, according to BLS, is paid $1.02 per hour in retirement and savings benefits--or less than one-fourth the average hourly retirement and savings benefits paid to public school teachers.

Saturday, December 17, 2011

A Gift of Light

Republicans delay a phase-out of Thomas Edison's bulbs.

Christmas is known as the season of lights, so perhaps it's fitting that Republicans did a modest service on behalf of the incandescent light bulb in the budget negotiations. An omnibus rider will delay for one year the de facto ban on the old-fashioned Edison that was part of the 2007 energy bill.
The Energy Department won't be allowed to enforce the efficiency standards that were due to take effect weeks from now and would prohibit the manufacture or import of 100-watt bulbs, and then phase out nearly all of them in later years in favor of compact fluorescents. Imagine that: Letting adults make the trade-offs among cost, efficiency and personal preferences for themselves, without Washington mediation.
The green movement claims to speak on behalf of consumers who don't know the light bulb ban is for their own good—if only they were more enlightened, as it were. But consumers aren't cooperating. Millions of Americans hate the new bulbs, the headache-inducing quality of the light, their delay, their price.
The light bulb police—not to mention the light bulb industry suddenly banned from selling cheaper products—say government must enforce innovation. But the iPhone wasn't created because the government regulated out of existence rotary phones and switchboards. Wait until Congress decides to outlaw the internal combustion engine.
The political problem is that, unfortunately, the GOP rider may have no practical consequence because the efficiency standards are still on the books. So stores like Home Depot and Ikea will have to start clearing the shelves of the old bulbs anyway. At least Democrats made a concession, and perhaps the reprieve will lead to a full repeal in a new Presidency. Meantime, stock up on the old bulbs while you still can.
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

Monday, December 12, 2011

Monarch Fire Board Fires New Chief in Contentious Meeting

BY PHILLIP O'CONNOR • > 314-340-8321 | Posted: Sunday, December 11, 2011 12:00 am

CHESTERFIELD • A divided Monarch Fire Protection District board on Saturday hired Thomas J. Vineyard as its new chief. Vineyard is now chief of the Mid-County Fire Protection District. His one-year contract at Monarch takes effect Jan. 2 and calls for a salary of $127,500.

The vote came in the middle of a contentious meeting that included calls for two of the three board members, Kim Evans and Steve Swyers, to resign. The board has been in turmoil in recent months, in part over a suit by two female district employees that alleged a hostile work environment. The district recently lost an appeal of a verdict that awarded each of the women $200,000.

Last month, the board voted to dismiss four high-ranking officers over the matter. On Thursday, one of those officers, Fred Goodson, committed suicide, a point of anger for many of those who spoke Saturday morning. Some alleged his death was related to his dismissal, a charge that Evans, the board president, called "ridiculous."

Evans opened the meeting with a prepared statement in which she noted that Goodson's death upset everyone and that "a good deal of misinformation" had circulated about recent events.

She criticized a group of residents that includes former board member Richard Gans for making personal accusations and trying to intimidate the board. The group, Monarch Concerned Taxypayers, issued a release saying Goodson's death "is not lost upon us in light of how he was treated by those on the Monarch Board."

In her statement, Evans lashed back. "We will not engage in political attacks related to the untimely and unfortunate death of a former employee."

Evans said the board took actions necessary to correct violations that a jury had determined existed.

"The board cannot and will not tolerate an abusive working environment," she said.

She blamed Gans and other former board members for not doing anything when workplace problems surfaced years ago. Failure to take action then led to the four men recently losing their jobs, she said.

Gans, who was defeated by Swyers in a re-election bid in April, and about a half dozen others spoke during the often-tense public comment part of the meeting. Several accused Evans and Swyers of being corrupt, union-controlled and wreaking havoc on the district, and called for them to resign. 

Others criticized the recent dismissals of the four officers, saying the dismissals were unfair, badly handled and could result in more litigation for the district. At one point, a speaker told Swyers to wipe a smile from his face.

"This is not a joke," the man said. "You don't need to smile when you're called corrupt because that's what you are."

Later, Swyers addressed the audience of about three dozen and told them he was an honest man with no agenda. As for being a "union puppet," he said, "I don't know what that means, quite candidly. I'm my own man."

He said he has no plans to resign.

At the November meeting where the firings were approved, board member Robin Harris attended by telephone but was not allowed to vote. At Saturday's meeting, Harris said he recently spoke with retired Monarch Fire Marshal Dave Nichols who told him that a firefighter from an adjoining district told him in October that four senior staff were going to be let go.

Harris said that would have been before the conclusion of the court case purported to be the cause of the firings and before he had taken part in any discussions on the subject. Reached at home, Nichols confirmed Harris' account, but declined to comment further.

Harris said: "I want to know how union members knew of final, future board decisions more than one month before the full Monarch board had even addressed the issue?"

At that point, Harris also called for Evans and Swyers to resign to cheers and applause.

Like Swyers, Evans said she has no plans to resign. After the meeting, a visibly shaken Evans briefly sat alone in a break room.

Evans and Swyers voted to hire Vineyard. Harris opposed the hiring, saying Vineyard did not meet the education or experience qualifications set by the board, was not a paramedic and had run a much smaller department that did not respond to water, airborne or confined-space rescues, services that Monarch provides.

"Mr. Vineyard does not even possess the qualifications we require to hire an entry-level paramedic/firefighter, and yet the two of you are suggesting he should become our next chief," Harris said.

The Mid-County district has about 20 employees and serves Greendale, Hanley Hills, Hillsdale, Pagedale, St. Louis County, Vinita Park, Vinita Terrace and Wellston. The Monarch District includes five firehouses, a maintenance facility, training center and headquarters, and employs about 125 people. The district serves Ballwin, Chesterfield, Clarkson Valley, Creve Coeur, Maryland Heights and Wildwood.

Vineyard will receive the same fringe benefits as other full-time district employees, plus a vehicle.

Friday, December 9, 2011

Obama Administration Welcoming Islamic Group to Washington for Discussion on ‘Tolerance’

December 9, 2011

( – The Obama administration says a meeting in Washington next week seeks to make progress in combating religious intolerance, but critics say the U.S. is pandering to an ideological agenda aimed at restricting speech critical of Islam.

According to the State Department the aim is to find ways to combat religious hate without compromising freedom of expression. Detractors are skeptical that this can be done, and they suspect that free speech will end up the loser.

Among those criticizing the event are GOP presidential candidate Newt Gingrich, the Traditional Values Coalition, and scholars at the Hudson Institute’s Center for Religious Freedom.

The State Department-hosted meeting is the latest step in a process stemming from a resolution on “combating intolerance based on religion,” adopted by consensus at the U.N. Human Rights Council (HRC) last March.

The move marked the first time in more than a decade that the U.N.’s top human rights body did not pass an annual “defamation of religion” resolution, sponsored by the bloc of Islamic states, the Organization of Islamic Cooperation (OIC).

Many rights advocacy groups regard the OIC campaign as an attempt to outlaw valid discussion of Islamic teachings – to extend to democratic societies the type of blasphemy provisions enforced in some Islamic states.
The new resolution, known as “resolution 16/18,” called on countries to combat “intolerance, negative stereotyping and stigmatization” based on religion, without seeking to criminalize speech – except in cases of “incitement to imminent violence.”

The administration characterized it as a significant breakthrough: “[T]he Council took an important step away from the deeply problematic concept of defamation of religion by adopting a constructive new resolution that promotes tolerance for all religious beliefs, promotes education and dialogue and is consistent with U.S. laws and universal values.”

Some human rights and religious freedom advocacy groups opposed to the “religious defamation” drive also praised the development.

Others were skeptical, noting that the OIC had watched its defamation resolutions receive less and less support each year and may view resolution 16/18 as an alternative route towards achieving the same end.

OIC leaders themselves did not help to allay these suspicions, stressing that the Islamic bloc had not abandoned its agenda of “protecting” Islam and insisting that the “religious defamation” campaign was not dead.

On the sidelines of a first meeting held to advance resolution 16/18, in Istanbul last July, Pakistan’s U.N. ambassador Zamir Akram said that the OIC would not compromise on three things – anything said or done against the Qur’an, anything said or done against Mohammed, and discrimination against the Muslim community. (Akram represents a government overseeing some of the Islamic world’s most controversial blasphemy laws, where “blaspheming” the Qur’an or Mohammed carries the death penalty.)

At that Istanbul meeting, co-chairs Secretary of State Hillary Clinton and OIC Secretary-General Ekmeleddin Ihsanoglu issued a statement urging countries “to take effective measures, as set forth in Resolution 16/18, consistent with their obligations under international human rights law, to address and combat intolerance, discrimination, and violence based on religion or belief.”

Next week’s gathering in Washington is a follow-up to the one in Istanbul, and it aims at “implementation.”

From the OIC’s viewpoint, resolution 16/18 is clearly part of the defamation campaign: “Washington plans to host a meeting on resolution opposing defamation of religions,” the OIC’s official news agency reported last August.

Ambassador-at-large for international religious freedom Suzan Johnson Cook says the meeting will bring together international organizations, including the OIC, European Union, Arab League and African Union, as well as law enforcement and justice officials representing some 30 foreign governments.

The meeting will “discuss best practices for two of the recommended actions from resolution 16/18: engagement with members of minority religious communities and enforcement of laws that prohibit acts of discrimination on the basis of religion or belief,” she said.

The State Department would afterwards submit a report on “best practices identified during these sessions” to the U.N. High Commissioner for Human Rights and for public distribution.

‘Americans never signed on to submit their sovereignty to the U.N.’
The administration argues that the way to find a middle road between combating religious hate speech and upholding free speech is to use the tools of education, public debate and interfaith dialogue rather than legal prescriptions.
Naming and shaming is also part of the arsenal, with Clinton at the Istanbul meeting speaking of using “some old-fashioned techniques of peer pressure and shaming.”
Also in Istanbul, U.S. permanent representative to the HRC, Eileen Chamberlain Donahoe, gave an OIC publication an example of the type of action regarded as effective, citing the administration’s condemnation of Florida pastor Terry Jones’ Qur’an-burning demonstration.
“When you have the president, the secretary of state and public figures jointly condemning that, it will be more effective than throwing that pastor in jail,” the OIC Journal quoted Donahoe as saying. “I believe the same is true for the hateful [Mohammed] cartoons. We should all be joining together in conveying our disgust with such intolerance.”
Critics question the wisdom of partnering with an organization with a troubling agenda. They also wonder why the administration is cooperating with an OIC effort to give legal teeth to what is a non-binding resolution.
“President Obama should put a stop to this nonsense and declare that in free societies all views and religions are subject to contradiction and critique – and the OIC must learn to tolerate that,” Hudson Institute Center for Religious Freedom director Nina Shea and senior fellow Paul Marshall in a Wall Street Journal op-ed this week.
Former House speaker and Republican presidential hopeful Gingrich also voiced concern.
“Just days after chastising Israel for ‘unfair’ treatment of women, Secretary of State Hillary Clinton will welcome a Saudi-based Islamist group, the Organization of Islamic Cooperation (OIC) to Washington for a conference on ‘tolerance,’” he wrote in a Human Events column on Wednesday. “Far from a tolerant organization, however, a primary mission of the OIC is to restrict free speech critical of Islam.”
The Traditional Values Coalition has requested permission to be admitted as an observer to next week’s meeting, and says the State Department has so far refused.
In a letter to Clinton Thursday repeating the request, TVC President Andrea Lafferty wrote that not allowing the organization to observe would only “lead to the conclusion that the objective of this meeting is not religious liberty and toleration, but rather a concert designed to chill, contain, and curb religious liberties and free speech.”
“Why is it that the U.S. Constitution must come second when representatives from Islamic counties such as Saudi Arabia and Pakistan demand we must curb our religious liberties and free speech?” Lafferty asked in a statement.
“Americans never signed on to submit their sovereignty to the United Nations, nor should they be expected to submit to the will of Islamic countries whose human rights record against women, Christians, and other persecuted minorities continues to shock the world.”

Friday, December 2, 2011

Municipal 'Millionaires'

NEW YORK POST - December 1, 2011

Gov. Cuomo, under enormous pressure from public-employee unions and Democrats in the Legislature to extend New York’s “millionaires’ tax,” is considering at least some higher taxes on higher incomes. The big irony here is that much of the money raised from any “millionaire” tax hikes would go to fund the growing phenomenon of public-sector millionaires.
How’s that? Well, most dictionaries define a millionaire as someone with wealth (i.e., assets) of $1 million. By that definition, many New York teachers and the vast majority of police and firefighters are millionaires, because the “net present value” of their retirement benefits is well in excess of $1 million.
That is, if they had to fund their retirements from their own savings, they’d have to set aside seven figures today.
Few who don’t work for the government sector have comparable assets. Over the last several decades, the private sector has moved increasingly to the 401(k)-style “defined contribution” model, which yields a retirement nest egg based on what both employers and employees have contributed to individual accounts.
Public-sector workers, on the other hand, still rely on “defined benefit” pensions, which provide a guaranteed stream of income based on career longevity and late-career peak salaries.
A New York City public-school teacher earning $100,000 can retire at 55 with a pension of $60,000. A private-sector worker would need $1.2 million to buy an annuity with the same yield and starting at the same (relatively young) age, according to the online pension calculator developed by the Manhattan Institute’s Empire Center.
It would take an even larger nest egg to replicate the pension income of city police officers, who typically retire in their 40s. According to data posted at SeeThroughNY, an Empire Center Web site, the average newly retired city cop collects a pension of $58,563 — plus a $12,000 annual supplement.
(Of course, public-sector workers also receive lavish health-care retirement benefits.)
Few private-sector workers have anything close to $1 million socked away in their retirement accounts. According to the Federal Reserve, the average worker in his late 50s has a balance of $85,600 in his retirement account, and a net worth of $222,300 overall.
To be sure, most public employees do contribute a small portion of their salaries to their pension funds, but the state and city contribute many times more. By contrast, private employers and employees more commonly do a one-to-one match.
And private-sector workers assume all the risk of these investments, while public-sector workers enjoy generous rates of guaranteed return. As former New York City Schools Chancellor Joel Klein quipped when he discovered his city pension offers a guaranteed 8 percent annual return, “Who but Bernie Madoff guarantees” such a return “permanently?”
Let me be clear: Many public-sector employees — especially frontline employees like teachers, cops and firefighters — have difficult, important and often dangerous jobs. They deserve to be well-compensated. And, for the most part, they are. After six years, police and firefighters can earn more than $90,000, excluding overtime.
Another irony: Salaries for public employees — math and science teachers, for example — could be raised if so much of their compensation wasn’t backloaded in pension costs.
In the popular 1950s TV show “The Millionaire,” a fictional character would hand out checks for a million dollars. Over the last few decades, we’ve developed a public-sector retirement system that basically does the same. It’s a system New York’s beleaguered taxpayers can simply no longer afford.
City pension costs have jumped from about 4 percent of city tax revenues to 20 percent over the past decade, crowding out other vital public investments. If New York is to avoid the fate of cities like Central Falls, RI, which have been driven into bankruptcy and are slashing promised retiree benefits, we must begin to fix the system now. Ideally, for new employees, by switching to the same type of “defined-contribution” retirement system now used by virtually everyone in the private sector.
There simply aren’t enough private-sector “millionaires” to support all the new public-sector millionaires being created every day.
Lawrence Mone is president of the Manhattan Institute for Policy Research.
NEW YORK POST is a registered trademark of NYP Holdings, Inc.

Monday, November 28, 2011

Question endures: Are Too Many Paying Nothing at all in Taxes?

Are too many paying nothing at all? Issue is getting a hard look.

The Kansas City Star
Posted on Mon, Nov. 28, 2011

It’s a standard line in Republican presidential candidate Michele Bachmann’s stump speech.
“We live in a world where only 53 percent of Americans pay federal income tax, 47 percent pay nothing,” the Minnesota congresswoman recently said in Iowa.
Bachmann’s figures are roughly correct: By most estimates, 46 percent of American households had no federal income tax liability this year, either because they didn’t make enough money or their credits, exemptions and deductions exceeded their tax bill. Some filers without an income tax bill even got refund checks from Uncle Sam.
Other Republicans and conservatives have echoed her concerns, suggesting tax reform that could include a required minimum payment from almost everyone.
“The poor need jobs, and they also need to share some of the responsibility,” Republican Sen. Orrin Hatch of Utah said last July.
Sen. Roy Blunt, a Missouri Republican, also insists it’s a mistake to allow some taxpayers to pay no federal income levy. “I do think you value what you pay for,” Blunt said. “Whether that’s a copay at the doctor’s office, or actually having a stake in the income tax system.”
But Democrats and some liberal groups contend the GOP’s federal income tax claims are misleading. Even Americans who don’t pay income taxes pay a bucketful of other taxes and fees, they point out.
“All Americans pay taxes,” Citizens for Tax Justice, a liberal public interest group, noted recently. “Everyone who works pays federal payroll taxes. Everyone who drives pays federal and state gas taxes. State sales taxes affect everyone who shops, and state and local property taxes affect everyone who owns or rents a home. … Most states have income taxes.”
The argument over the federal tax structure is expected to move to the center of the presidential campaign next year. It’s already part of the debate over the federal deficit, and GOP candidate Herman Cain rose in the polls after proposing major cuts in federal income taxes and a new national sales tax as part of his 9-9-9 proposal.
Republicans want to reform taxes for a variety of reasons, of course — lower tax rates, for example, would spur job creation, they say — but many also think requiring an income tax payment from everyone would make the system more fair.
But some who study the tax code are worried that major federal tax reform could upset the delicate balance among all the taxes Americans pay, potentially making the tax system less fair. That’s particularly true because states and cities also are discussing major changes in the way they collect the money needed to run their branches of government.
Among the states seriously rethinking their tax codes are Missouri and Kansas.
“There are substantial threats at both the federal and state level that, in combination, would really do a number on middle- and low-income families,” said Matthew Gardner of the Institute on Taxation and Economic Policy.
The growing segment of taxpayers with no federal income tax liability is the product of many years of changes in federal law aimed at specific groups, particularly the poor, the elderly and young families with children. The expansion of popular programs such as the child tax credit and the earned income tax credit have not only eliminated income tax bills for millions of Americans, but — because the credits are refundable — they’ve actually meant government checks for millions of Americans who pay no taxes to begin with.
And that angers some groups.
“Exempting huge portions of the population from the primary source for the federal government’s discretionary budget effectively disguises the burdens it places on our economy,” said Andrew Moylan of the National Taxpayers Union.
But the credits and exemptions have made the federal tax system progressive: The more you earn, the more you pay, both in actual dollar amounts and as a percentage of your income. The top 1 percent of earners paid 37 percent of all federal income taxes in 2009, studies show.
That picture changes, though, when state and local taxes are added into the mix. In Kansas City, the Census Bureau reports, a family with two wage earners and one child, making $25,000, paid almost 13 percent of their income in state and local taxes in 2009. However, the same size family earning $150,000 paid just 9.6 percent of their income in state and local taxes, the study showed.
Because it has a flat 1 percent earnings tax, a state income tax and relatively high sales taxes, the state and local tax burden in Kansas City is considered regressive — that is, lower earners pay more taxes as a percentage of income.
“Nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy,” the Institute on Taxation and Ecomomic Policy concluded in 2009.
As a result, the combined tax burden — federal, state, and local — only slightly tilts in favor of the poor and middle class, Citizens for Tax Justice recently concluded. “The tax system as a whole, including all the types of taxes that people pay, is just barely progressive,” it said.
Even some conservative economists maintain that the tax burden is flatter than some believe.
“Everybody does pay taxes,” said David Stokes of the Missouri-based Show-Me Institute, although he added “it’s a bad thing” that some federal taxpayers escape any income tax liability because it encourages them to support income tax increases for others.
Mayor Sly James’ Municipal Revenue Commission, now examining Kansas City’s tax structure, is expected to take a look at the fairness of the local tax burden.
It isn’t clear whether the argument at the local or federal level will have a dramatic impact on the income-for-sales tax swap now under discussion in Missouri, or the state income tax phase-out proposal widely expected in Kansas next year. Several groups have announced plans to organize opposition to the Missouri ballot measure, while the group proposing the swap has started gathering petition signatures to put the change on the ballot.
But plans for federal tax reform are likely to go forward in the 2012 presidential election year, from such candidates as Bachmann, Cain and others — regardless of the picture at the state and local level.
“To accomplish a fairer, flatter and simpler tax system will take a complete reform of the tax system,” Bachmann is telling her Iowa audiences. “It means abolishing what we currently have and starting over again.”
© 2011 Kansas City Star and wire service sources. All Rights Reserved.

Bad Teachers are Impossible to Fire

by Center for Union Facts on Monday, October 24, 2011 at 10:56am

The Albany Times Union has a must-read report today that demonstrates just how difficult it is to fire a misbehaving educator in New York state. How difficult? Teachers who were late 101 times, downloaded porn on their work computers, and beat students all remained on the job after a costly appeals process. The problem is so bad that many districts don’t even bring cases because of the cost:

according to a state Education Department database obtained by the Times Union through a Freedom of Information request, it appears to be nearly impossible for a school district to fire a tenured public school teacher. The reason is twofold: job protection for unionized teachers is strong and the process for firing bad teachers — called a 3020-a hearing — is so drawn out and costly that most districts can’t afford it. …

Though it has been well-documented that the cases drag on for years and can cost a district hundreds of thousands of dollars — they last an average of 502 days and cost $216,588 — the database shows that 3020-a hearings rarely result in termination. Of the more than 2,000 cases brought in the last five years, just 167 teachers were fired, the vast majority in New York City. Only 38 cases brought by schools districts upstate and on Long Island ended in termination, though a number are still undecided because it takes so long for a case to be completed. Statewide, 593 cases were simply settled and another 164 were withdrawn or consolidated.

Even though the New York City Department of Education employs about half as many teachers as the rest of the districts in the state, it brought twice as many 3020-a cases. The NYCDOE employs 70,000 full-time teachers and brought 1,356 such cases in the last five years, according to the database. On Long Island and in upstate, where there are a combined 132,000 teachers, districts brought just 731 cases.

Emphasis added, because it’s important point out that, over a five year period, only 38 of 132,000 teachers in upstate New York (i.e., teachers outside of New York City) were fired for any reason whatsoever. When people complain about union work rules serving as an impediment to reform, this is the kind of nonsense they’re talking about.

Tuesday, November 22, 2011

Government Worker Pensions ARE Wall Street


In an editorial posted in January 2011 entitled “Wall Street & Public Sector Unions,” we identified an irony still lost on the occupy movement’s rank and file – Wall Street is financed by the pension funds of unionized government workers. Every year, taxpayer funded government agencies pour hundreds of billions of dollars into Wall Street investment funds.
Occupy Wall Street? Why not “occupy” Wall Street’s union paymasters, the government employee pension funds?
Here’s a summary of the dynamics between Wall Street, unionized government workers, and the taxpayer:
(1) The government workers provide services vital to the taxpayer, and charge the taxpayer, on average, about 40% of their income (middle class worker, all taxes – state, federal, social security, medicare, property, sales) to receive these services.
(2) The government workers receive, in addition to their normal pay, funded by these taxes, pensions that are, on average, five times better than what taxpayers get from social security (the average government pension is $60K per year with an average retirement age of 55, the average social security benefit is $15K per year with an average retirement age of 65).
(3) The government workers tell the taxpayers – don’t worry – you don’t have to pay additional taxes for us to get these generous pensions, because we’ll invest the money on Wall Street, and Wall Street will earn 7.75% per year on these investments.
(4) Wall Street invests the taxpayer’s money, funneled through the government worker pension funds, demanding a return of 7.75%. To achieve this return, they invest in hedge funds and other manipulative, highly speculative investments. This increases the volatility of the markets, crowds out small investors, and drives down returns for small investors.
To fund government worker pensions, what has happened is the government workers have taken the taxpayer’s money, and essentially lent it back to the taxpayers at a rate of 7.75% – at a time when 30 year mortgages are below 4.0%, the 10 year treasury hovers at around 2.0%, and the rate of GDP growth is at or below 3.0%, which is roughly the rate of inflation.
Taxpayers provide the seed money for pension fund investments, these investments are aggressively managed which undermines the individual retirement investments the taxpayers make for themselves, then when the pension funds ultimately fail to meet their 7.75% targets, the taxpayers are assessed to cover the losses. Triple jeopardy.
Every time another public sector union or government pension fund spokesperson claims that taxpayers do not bear the brunt of funding public sector pensions, read between the lines, and this is the rest of the story.
The truth is contagious.
On November 18th a prominent Southern California blogger of indeterminate political leanings (certainly no rock-ribbed conservative), Will Swaim, published an expose of his own entitled “How the revolutionary California labor movement became Wall Street’s biggest gambler.” Here are some excerpts from Swaim’s inimitable prose:
“CalPERS is to Wall Street what a whale is to a Vegas Casino. A high roller. A player. The biggest swinging male appendage in the room. With $235.8 billion in assets, it is the nation’s largest pension fund, and among the biggest investors in the world. And it’s largely on the expected gains in its Wall Street investments that CalPERS has been able to persuade officials in many California cities and counties that they could pay rising pension benefits to their public employees…”
“It wasn’t always this way. For decades after its 1931 founding as a pension program for state workers, CalPERS—then called the State Employees Retirement System (SERS)—made stodgy, sure-thing bond investments. That changed in 1953 when the legislature allowed SERS to invest in real estate. Thirteen years later, there was another loosening of the restraints on the agency’s investments when state voters passed a union-backed proposition allowing CalPERS to invest a quarter of its portfolio in stocks. In 1984, high on the fumes of the Reagan Revolution, labor pushed Prop. 21, allowing CalPERS to invest anything/everything in Wall Street. CalPERS had become a whale…”
“You can begin to see the confluence of forces that would generate a pension problem when you also consider that, with life-expectancy rising and retirement-age falling, California offered public workers more generous pension benefits. In 1932, that benefit was 1.4 percent per year of service; the percentage increased to 1.6 percent under Gov. Warren, and to 2 percent when Gov. Ronald Reagan took over the Governor’s Mansion in Sacramento. It’s between 2 percent and 3 percent today…”
“CalPERS has a reputation as an activist investor. The organization has insisted on quid pro quos: in exchange for investment cash, it has pushed for caps on executive pay and transparency; has led the way for human rights, environmental and labor standards in emerging markets; and participated in class-action lawsuits against major health insurance companies, including UnitedHealth Group…”
“Leveraging that tradition, the city’s workers could reform their union and its bloated pensions. They could start by demanding that CalPERS invest their pensions in solid/stolid/boring U.S. bonds rather than in the speculative junk that fueled Wall Street’s rapid, unprecedented rise through the 1990s and its post-scriptural crash in 2008. That might—might—mean more modest retirements, of course, but it would certainly end union members’ hypocritical reliance on Wall Street—their affection for gambling when Wall Street inflates their pensions, their hatred of the market when it shapes the contours of their daily work…”

Thursday, November 17, 2011

Lawmakers Pass Sweeping RI Pension System Overhaul

By DAVID KLEPPER (AP) | Posted: Thursday, November 17, 2011 7:33 pm

Little Rhode Island is taking aim at one of the nation's biggest public pension problems and the results could have implications for other states grappling with ever-increasing retirement costs.

State lawmakers on Thursday passed sweeping changes to the pension system that covers state employees, teachers and many municipal workers. The proposal will save billions of dollars by suspending promised pension increases, raising retirement ages and creating a new system that combines pensions with 401(k)-style accounts.

Gov. Lincoln Chafee (CHAY'-fee) says he will sign the legislation.

Public-sector unions call the measure a betrayal and vow to sue the state.

Rhode Island needs $7 billion to fully fund its pension fund. Nearly every state is confronting similar problems, caused by escalating pension costs, huge investment losses and recession-induced budget deficits.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Despite jeers and the threat of a lawsuit from public workers, Rhode Island lawmakers on Thursday night approved one of the most far-reaching overhauls to a public pension system in the nation.

The proposal is intended to save billions of dollars in future years by backing away from promised benefits to state and municipal workers in the state-run pension plan. Lawmakers called Thursday's vote one of the most wrenching they've had to cast, though the fight may not be over if unions follow through with promised lawsuits.

"It would certainly be a lot easier to walk away from this reform," said Senate President Teresa Paiva Weed, D-Newport. "However, it is clear that doing nothing only puts our retirees and our active members' benefits at greater risk. We owe it to them, as well as to all other taxpayers, to attack this challenge head on."

A final formal vote expected late Thursday will send the measure to Gov. Lincoln Chafee, who has indicated he will sign it. Chafee, an independent, is one of the original authors of the proposal.

Public workers said they felt betrayed by the heavily Democratic and traditionally labor friendly General Assembly. Some interrupted Thursday's debate with jeers and catcalls.

"They should be ashamed of themselves," said Dean Brockway, a Cranston firefighter with 28 years of experience. "These were Democrats voting to do this. They're trying to solve a 40-year-old problem in one day. They didn't have to do this."

The proposal would suspend pension increases for retirees for five years and then only if pension investments perform well. The bill also raises retirement ages for many workers and creates a benefit plan that mixes pensions with 401(k)-style accounts. The changes wouldn't apply to municipal pension plans, which are typically the result of collective bargaining.

The landmark legislation could have big implications around the nation. Nearly every state is confronting the same problem, caused by escalating pension costs, huge investment losses and recession-induced budget deficits. The Pew Center on the States released a report earlier this year that found that states face a collective gap of $1.26 trillion between what they've promised public workers and what they have set aside to meet those promises.

Rhode Island needs $7 billion to fully fund the pension fund that covers state workers and many municipal employees _ roughly the same amount as the state's entire annual budget. Under the current system, the state must pour more and more into the pension system annually, from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028.

The pension system covers 66,000 active and retired public teachers, state employees, judges and police and firefighters. Their benefits are set by state law and not collective bargaining.

Passage of the bill is a political victory for legislative leaders, Chafee and Treasurer Gina Raimondo, who was the main architect of the legislation. For months, Chafee and Raimondo warned that unless the state reined pension costs, lawmakers would have to raise taxes and slash funds for education and other services.

"Rhode Island has demonstrated to the rest of the country that we are committed to getting our fiscal house in order," Chafee said in a statement issued shortly after the House endorsed the bill.

Leaders of public-sector unions aren't giving up and vow to overturn the legislation in the courts.

"The attorneys are going to make a lot of money," Philip Keefe, president of Local 580, which represents social service, administrative and technical workers. "If this is overturned, it will be you, me and every other taxpayer that is on the hook for billions."

Several lawmakers offered amendments, some of which were designed to soften the bill's changes. None were successful.

The Senate passed the bill 34-2 after a brief debate. Debate in the House went on far longer, as opponents of the bill unsuccessfully offered amendments designed to soften the burden on retirees. Critics warned that the changes would lead to a long and painful court battle.

"What we are about to do is a crime," said Rep. Scott Guthrie, D-Coventry, himself a retired firefighter. "You want this thing to linger around for 10, 15 years? You want to go through 10 years of litigation? You want to spend God knows how much money on legal fees?"

The House passed the bill 57-15.

Several lawmakers said they supported the bill with great reluctance, noting that they were voting to withhold money that retired workers were counting on. Rep. Donna Walsh, D-Charlestown, said it was the "most heart-wrenching, gut-wrenching vote" she has cast in 12 years in the General Assembly.

"It may be necessary, but it certainly is not fair," said Rep. John Savage, R-East Providence. "Can we honestly say to our state workers, to those who educate our children, to those who protect us... that this bill is fair? I don't think so."

The initial proposal from Chafee and Raimondo would have suspended automatic annual cost-of-living pension increases for most public retirees for about 19 years. Lawmakers revised the proposal to award increases every five years but only if pension fund investments meet certain financial targets.

The changes in the legislation would not apply to locally run pension funds, many of which are in even worse shape than the state-run system. Chafee said he will introduce legislation in January to give cities and towns greater authority to curb their pension costs.

Copyright 2011 The Associated Press. All rights reserved.