Here are a few article qoutes and links that I think are instructive:
A. It is time for all Senators and State Representatives to do what is right, instead of being scared of or beholden to the government employee unions. This article chronicles several attempts to control costs that have been derailed by the public sector unions.
“Michigan has the ninth-most heavily unionized state and local government workforces among the states. In a recent article about the rise of public-sector unionism, New York professors Fred Siegel and Dan DiSalvo described how government employee unions are "bankrupting states and municipalities" because they "achieve influence on both sides of the bargaining table by making campaign contributions and organizing get-out-the-vote drives to elect politicians who then control the negotiations over their pay, benefits, and work rules.
In Michigan, one can add preventing the legislature from adopting reasonable public employee pay and pension reforms to that list.” Analysis: Government Employee Political Clout Obstructs Budget Reform, April 13, 2010
B. Here is some insight into what is happening with SEIU, one of the strongest government employee unions in the country and how they are extracting wealth from taxpayers and redistributing it to government workers.
“It is no coincidence that under Stern’s tenure the number of government union members surpassed the number of private sector union members for the first time in our nation’s history. There are two reasons for this: 1) Unions kill private sector jobs, and unionized companies earn profits 15% lower than those of comparable non-union firms. This makes unionized firms less competitive, which is why unionized manufacturing jobs fell 75% between 1977 and 2008, while non-union manufacturing INCREASED 6% over that same time. 2) Government union jobs face no competition. Public sector unionization has exploded in the past decade as leaders like Stern realized politics paid much better than the free market. Under Stern’s leadership, SEIU has become the nation’s second largest government union with over half of its membership drawing a paycheck on the taxpayers dime.” Morning Bell: Andy Stern’s America The Foundry: Conservative Policy News. April 13, 2010
C. More political payback from Obama for the unions' support in the 2008 elections. Elections to approve a new union would only require a majority of those voting, in contrast to prior law which required a majority of workers affected. Rule change aids union workers in airline, rail industries, from The Detroit News, May 11, 2010
D. Responsible contractor" provisions must be rejected, whether they be in federal law, state law or local municipality policies, as they drive up taxpayer costs, the last thing we need now with stretched public budgets. A "responsible contractor" policy allows bidders that provide higher pay and richer benefits for their workers to get an advantage in winning government contracts. In practice, the plan would favor firms whose workers are members of unions. Editorial: Fed contracts should favor best price, not unions, from the Detroit News, March 16, 2010
E. “The government class enjoys higher salaries, richer benefits and far better job security than the citizens they are supposed to be serving. . . . The 'public servants' have become the masters over taxpayers.” Good times still roll for government employees, from the Detroit Free Press .
F. We will not have a sustainable long-term budget plan without addressing public employee wage and benefit issues. The legislature, meanwhile, was not able to get the 2/3 vote needed in the State Senate to rescind the 3% raise for unionized state employees. With no Democrat support in the Senate, the Senate could not send the measure to the Democrat controlled House of Representatives, where it would have been even harder to get the necessary 2/3 vote. If we can’t even block pay raises to public sector union employees, is there hope to get cuts? State pay issue will get worse, from the Detroit News, April 2, 2010
G. “Public Labor Union claims of $700 million in concessions by state employees are a comparison of itself to itself. It pales in comparison to the sacrifices made by private sector taxpayers in Michigan that are being asked to foot the bill for their unrealistic benefit and pay levels. They have been shielded and protected from reality for far too long and it is a luxury that taxpayers in this state can no longer afford.” $700 Million in Concessions By State Workers? Really? Where Did That Number Come From? From the NFIB, March 18, 2010.
H. “State Sen. Nancy Cassis has introduced legislation in Lansing that would allow localities to set up what might be called “right-to-work zones. . . Among nearly all private-sector workers, labor relations are governed by federal law: the National Labor Relations Act. The NLRA is fairly exhaustive, and the courts have consistently interpreted it as “occupying the field” of private-sector labor relations, leaving very little room for states to act. But there’s one big exception carved out of federal labor law: States can regulate union membership and agency fees. This is where state right-to-work laws come into play.
“Right-to-work” prohibits unions and employers from signing contracts that force workers to join or financially support a union, leaving union membership and support to the conscience of individual workers.”
This local approach to Right-to-Work could be the means to bit by bit improve the image of the state as anti-business/anti-jobs, and make the state more competitive. Local Right-to-Work: Yes we can! Well, maybe. If we set it up just right..., October 28, 2009.
I. “Place the blame for the loss of the much-needed [Race to the Top] grants squarely on the Michigan Education Association. It sabotaged the state's application at every step. . . . But real change in Michigan's public schools will only come when parents and others concerned about the future of the state decide they've had enough of the Michigan Education Association's obstructionism. “ MEA's sabotage kept Michigan out of Race to Top finalists, From The Detroit News, March 7, 2010.
Showing posts with label MEA. Show all posts
Showing posts with label MEA. Show all posts
Wednesday, May 12, 2010
Reform of MPSERS Retirement System Necessary – But Only Wisely
Governor Granholm proposed changes to the Michigan Public School Employee Retirement System (MPSERS) in her budget proposal. With the contribution rate public schools and community colleges needing to pay going up to 19.41% for the coming school year, it is obvious that the system is unsustainable. Changes must be made to keep the program actuarially sound, and yet affordable by the education system.
Governor Granholm’s proposal was aimed to create cost savings to help balance the budget, but also contained a sweetener to entice long tenured employees to retire (and allow lower cost new employees to be hired) by raising the multiplier of 1.5% to 1.6%, for a 6.6% increase. The multiplier is multiplied by the number of service years credited to the employee. For example, with 30 years of service, and if the highest 3-year average salary were $60,000, at a multiplier of 1.5, the retirement payments would be 1.5% x 30 x $60,000 = $27,000 per year, while at 1.6% they would be $28,800.
The Senate chose not to include the sweetener in Senate Bill 1227, while adopting the bulk of the Governor’s proposal. Significant savings would result. On the other hand, the Democrat controlled House of Representatives amended the bill to send back to the Senate the bill increasing the sweetener from 1.5% to 1.7% or a 13.3% increase, plus a plethora of additional sweeteners.
The worst change made in the House is changing the lifetime health coverage to a constitutionally protected fringe benefit, which it is not now classified. The Michigan Capitol Confidential estimated the added burden to the State would be a new $25.9 Billion liability for the taxpayers.
When the State is having trouble adopting a balanced budget, does it make sense to be adding to the State’s costs and liabilities? Well, to the Michigan Education Association bankrolled and controlled House Democrats, apparently it does.
I say “NO, IT DOES NOT!”
With the bill thrown into a free conference committee, the Senate Republicans would be better off coming out with no bill than a poor one, just to get something agreed upon. With the state the state is in, we cannot afford to saddle the taxpayers with even more costs and liabilities.
Governor Granholm’s proposal was aimed to create cost savings to help balance the budget, but also contained a sweetener to entice long tenured employees to retire (and allow lower cost new employees to be hired) by raising the multiplier of 1.5% to 1.6%, for a 6.6% increase. The multiplier is multiplied by the number of service years credited to the employee. For example, with 30 years of service, and if the highest 3-year average salary were $60,000, at a multiplier of 1.5, the retirement payments would be 1.5% x 30 x $60,000 = $27,000 per year, while at 1.6% they would be $28,800.
The Senate chose not to include the sweetener in Senate Bill 1227, while adopting the bulk of the Governor’s proposal. Significant savings would result. On the other hand, the Democrat controlled House of Representatives amended the bill to send back to the Senate the bill increasing the sweetener from 1.5% to 1.7% or a 13.3% increase, plus a plethora of additional sweeteners.
The worst change made in the House is changing the lifetime health coverage to a constitutionally protected fringe benefit, which it is not now classified. The Michigan Capitol Confidential estimated the added burden to the State would be a new $25.9 Billion liability for the taxpayers.
When the State is having trouble adopting a balanced budget, does it make sense to be adding to the State’s costs and liabilities? Well, to the Michigan Education Association bankrolled and controlled House Democrats, apparently it does.
I say “NO, IT DOES NOT!”
With the bill thrown into a free conference committee, the Senate Republicans would be better off coming out with no bill than a poor one, just to get something agreed upon. With the state the state is in, we cannot afford to saddle the taxpayers with even more costs and liabilities.
Sources:
Tuesday, October 20, 2009
Controlling Public School Employee Benefit Costs
The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.
Idea 20 : Cap school employee health benefits and/or enroll them in health savings accounts.
Idea 14: Consolidate health care coverage for all public employees in Michigan in a single insurance pool.
Idea 19: Transition newly hired Michigan teachers to a defined contribution retirement system or 401(k).
All three of these ideas attempt to control costs of benefits, yet in ways that do not infringe on the results of years of collective bargaining between the teachers’ unions and the local school districts.
The typical employee share of the health insurance cost is 5 to 10 percent, compared with an average of 25% in the private sector. With statewide school health insurance expenses of $1.93 billion in 2008, increasing the percentage to that of the private sector would save more than $290 million a year. Moving all school employees to high-deductible Health Savings Account plans would save even more -- as much as $450 million in the first year and $26 billion through 2021, according to a Mackinac Center for Public Policy analysis.
An alternative approach to controlling rising health care costs would be to create a health insurance pool for all public employees which is believed would cut administrative costs and provide a larger number of customers to negotiate lower rates. This was a Republican idea which was going nowhere until House Speaker Andy Dillon (D) came out publicly this summer in favor of such an approach. See the Hays Group 2005 Report on the Feasibility and Cost-Effectiveness of a Consolidated State-wide Health Benefits System for Michigan Public School Employees.
Dillon’s white paper estimated that pooling health insurance would save up to $900 million a year, versus an estimate by the American Federation of Teachers and International Union of Operating Engineers in 2005 of only $156 million to $223 million a year for teachers (or a 7 percent savings). Applying the 7 percent savings across all government and school employees amounts to more than $500 million a year. Whichever estimate is correct, and it is impossible to say ahead of time which will be more correct, as the savings will depend on the details of the proposals enacted, the savings appear worthwhile to achieve.
A second expensive benefit is the teachers’ retirement plan.
The Michigan Public School Employees' Retirement System (MPSERS) provides pension and other post-employment benefits to more than 160,000 retirees and beneficiaries. There are 715 participating employers, including K-12 districts, public school academies, district libraries, tax supported community colleges, and seven universities. Under the current “defined benefit” plan, each of which is required to contribute the full actuarial funding contribution amount to fund pension benefits for its employees. (1.5% times the years of service times the highest three year average compensation, plus qualified retirees get health insurance coverage.) As the investment yield rises and falls, and estimates of retirees’ health care costs fluctuate, the actuaries calculate the contribution necessary to fully fund the plan, with a current rate of almost 17% of each employee’s wages (and projected to rise even higher).
The recommendation is to switch to a “defined contribution” plan, where the employer would contribute a set amount each year, and the ultimate benefit the employee would receive would depend on how well the investment of the contributions do. In short, the risk of market variation is shifted to the employee. The contribution rate might also be somewhat less than current and forecasted contribution rates.
The Citizens Research Council of Michigan in July, 2009 said in Michigan State and Local Government Retirement Systems, page 51:
“Transitioning newly hired Michigan teachers to a defined contribution retirement system would provide a much-needed structural reform to the state budget and prevent long-term legacy costs that are unsustainable for the Michigan education system and state budget. . . .
However, the transition from closing a defined benefit plan to new entrants, and placing all new hires in a defined contribution plan, normally requires ongoing contributions to both plans that may entail an increase in overall pension contributions for a number of years, so careful actuarial and budget analysis is critical to informed decision-making.”
The problem with high and rising MPSERS contribution rates is nothing new, with the Citizens Research Council forecasting significant funding difficulties in its 2004 report Financing Michigan Retired Teacher Pension and Health Care Benefits, A step in the right direction since then has been switching to a more actuarially sound “graded premium” plan for the retirees' health benefits. Under this change, retirees are required to contribute to the health insurance cost on a sliding scale based on the number of years of service, as compared with needing to contribute only 10% once vested after 10 years of service regardless of whether the years of service accrued were 10 or 35.
Nonetheless, the burden of the current plan is far above what private industry carries; in other words, the benefits are far richer than private sector employees enjoy.
The Michigan Education Association, the state's largest teachers and school employee union, already runs its own health insurance pool through the Michigan Education Special Services Association, which covers more than half of public school and community college employees. The MEA opposes any increase in the teachers’ share of the cost, the pooling of the health care plans, and transition to a contributory retirements system.
As much as we all like individual teachers, we must push for every efficiency in government that we can, in light of the scarce dollars we have to spend. Increasing the school funding by raising taxes in the face of an economic downturn to continue unsustainable benefit programs for teachers is not only politically unpalatable, but also counterproductive in encouraging job growth in Michigan.
Comments?
Idea 20 : Cap school employee health benefits and/or enroll them in health savings accounts.
Idea 14: Consolidate health care coverage for all public employees in Michigan in a single insurance pool.
Idea 19: Transition newly hired Michigan teachers to a defined contribution retirement system or 401(k).
All three of these ideas attempt to control costs of benefits, yet in ways that do not infringe on the results of years of collective bargaining between the teachers’ unions and the local school districts.
The typical employee share of the health insurance cost is 5 to 10 percent, compared with an average of 25% in the private sector. With statewide school health insurance expenses of $1.93 billion in 2008, increasing the percentage to that of the private sector would save more than $290 million a year. Moving all school employees to high-deductible Health Savings Account plans would save even more -- as much as $450 million in the first year and $26 billion through 2021, according to a Mackinac Center for Public Policy analysis.
An alternative approach to controlling rising health care costs would be to create a health insurance pool for all public employees which is believed would cut administrative costs and provide a larger number of customers to negotiate lower rates. This was a Republican idea which was going nowhere until House Speaker Andy Dillon (D) came out publicly this summer in favor of such an approach. See the Hays Group 2005 Report on the Feasibility and Cost-Effectiveness of a Consolidated State-wide Health Benefits System for Michigan Public School Employees.
Dillon’s white paper estimated that pooling health insurance would save up to $900 million a year, versus an estimate by the American Federation of Teachers and International Union of Operating Engineers in 2005 of only $156 million to $223 million a year for teachers (or a 7 percent savings). Applying the 7 percent savings across all government and school employees amounts to more than $500 million a year. Whichever estimate is correct, and it is impossible to say ahead of time which will be more correct, as the savings will depend on the details of the proposals enacted, the savings appear worthwhile to achieve.
A second expensive benefit is the teachers’ retirement plan.
The Michigan Public School Employees' Retirement System (MPSERS) provides pension and other post-employment benefits to more than 160,000 retirees and beneficiaries. There are 715 participating employers, including K-12 districts, public school academies, district libraries, tax supported community colleges, and seven universities. Under the current “defined benefit” plan, each of which is required to contribute the full actuarial funding contribution amount to fund pension benefits for its employees. (1.5% times the years of service times the highest three year average compensation, plus qualified retirees get health insurance coverage.) As the investment yield rises and falls, and estimates of retirees’ health care costs fluctuate, the actuaries calculate the contribution necessary to fully fund the plan, with a current rate of almost 17% of each employee’s wages (and projected to rise even higher).
The recommendation is to switch to a “defined contribution” plan, where the employer would contribute a set amount each year, and the ultimate benefit the employee would receive would depend on how well the investment of the contributions do. In short, the risk of market variation is shifted to the employee. The contribution rate might also be somewhat less than current and forecasted contribution rates.
The Citizens Research Council of Michigan in July, 2009 said in Michigan State and Local Government Retirement Systems, page 51:
“Transitioning newly hired Michigan teachers to a defined contribution retirement system would provide a much-needed structural reform to the state budget and prevent long-term legacy costs that are unsustainable for the Michigan education system and state budget. . . .
However, the transition from closing a defined benefit plan to new entrants, and placing all new hires in a defined contribution plan, normally requires ongoing contributions to both plans that may entail an increase in overall pension contributions for a number of years, so careful actuarial and budget analysis is critical to informed decision-making.”
The problem with high and rising MPSERS contribution rates is nothing new, with the Citizens Research Council forecasting significant funding difficulties in its 2004 report Financing Michigan Retired Teacher Pension and Health Care Benefits, A step in the right direction since then has been switching to a more actuarially sound “graded premium” plan for the retirees' health benefits. Under this change, retirees are required to contribute to the health insurance cost on a sliding scale based on the number of years of service, as compared with needing to contribute only 10% once vested after 10 years of service regardless of whether the years of service accrued were 10 or 35.
Nonetheless, the burden of the current plan is far above what private industry carries; in other words, the benefits are far richer than private sector employees enjoy.
The Michigan Education Association, the state's largest teachers and school employee union, already runs its own health insurance pool through the Michigan Education Special Services Association, which covers more than half of public school and community college employees. The MEA opposes any increase in the teachers’ share of the cost, the pooling of the health care plans, and transition to a contributory retirements system.
As much as we all like individual teachers, we must push for every efficiency in government that we can, in light of the scarce dollars we have to spend. Increasing the school funding by raising taxes in the face of an economic downturn to continue unsustainable benefit programs for teachers is not only politically unpalatable, but also counterproductive in encouraging job growth in Michigan.
Comments?
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