A Labor Day Update on the California Economy

Labor Day 2016 continues to show improving conditions within California’s economy.  The Legislature has just concluded a session that is being described as one of the most progressive ever for environmental and labor union policies. And Governor Brown is looking at over 700 new laws on his desk. His signature or veto will directly impact the fate of our job growth for years to come.

California Economy Continues Transformation

The revised June job numbers show that since the recovery began in February 2010, our state has regained  2.3 million nonfarm jobs.  Our seasonally adjusted unemployment rate of 5.4% while higher marginally from prior months, put us at levels not seen since before the recession in the summer of 2007.  We see the benefits of this every day. New cars are on the road. New housing and home renovations are underway. The malls and restaurants are busy. It should and does feel good.

But the Governor and policymakers are entrusted with the responsibility to look deeper at the numbers to  prepare for the future. This shows that the pace of the recovery in California remains low by historical patterns, reflecting conditions in the country as a whole. Real GDP has grown at an average annual rate of 2.7% since the recovery began, below the 4% growth seen during 1987-2000 and higher levels experienced in years before.  Nonfarm jobs which had been expanding at an annual rate of 3.0% in 2014 and 2015, have slowed to an annualized rate of 2.2% in the first half of 2016.

To put our low current growth rates into historic perspective, California in February 1975 was also in an economic recovery period, again under Governor Jerry Brown.  In the following 76 months, the state created 2.4 million jobs, representing a 32% increase.  The 2.3 million jobs—virtually the same number—created in the 76 months since February 2010 are at only 16%.

In their latest projections, both Department of Finance and Legislative Analyst expect jobs growth to slow further in the coming years, with Finance showing 1.0% by 2018 and 2019 and LAO around 1.5%.  These differences are small but important.  For the state budget, they translate into a projected deficit by 2019-20 in the case of the Finance numbers, or an $11 billion surplus in the case of LAO’s.

For many Californians, these are more than just mere numbers.  They mean the difference between having the opportunity at a job that will help their household afford the growing cost of living in our state, or continued reliance on state programs for their basic needs.  The types of jobs being created are equally important—whether they offer the paths to upward mobility and whether future generations will continue to experience a California better than those in the past.

Middle Class Wage Jobs Impacted the Most

The key to California’s past promise as a land of upward economic opportunity lay in the diversity of our workforce and our jobs.  No matter their background, the wide range of jobs at differing wage levels gave workers especially Latinos and African-Americans the opportunities to move up in life, gain skills, and compete for jobs producing income sufficient to own a home, educate their children, and save for retirement.  The state budget focused on these aspirations through investments in roads and other infrastructure and in affordable education and skills training regardless of an individual’s educational level. State policies served to promote housing supply rather than escalating housing costs.  Affordable energy was seen as a competitive edge for middle class jobs, not as a public policy priority to be phased out as quickly as possible.

The upward path has narrowed for many as the recovery has restructured the economy to jobs creation primarily in the higher and lower wage industries.  Middle class jobs in manufacturing remain 183,000 below the pre-recession high in 2007; construction jobs are off 140,000.  In contrast, lower-paying Individual & Family Services jobs—primarily state supported, minimum wage In-Home Supportive Services jobs—are up nearly 200,000.

Population Still Growing Faster than Jobs . . . Contributing to Poverty

The good news on our  2.3 million jobs gained since 2010 still mostly serve to rebuild those lost during the recession. Comparing to the pre-recession highs, real growth in the economy shows a net gain of 950,000 nonfarm jobs and 1.1 million additional persons employed.  Population in this period grew much faster—total population by 2.7 million and as the state aged, working age population by 3.4 million.

One of the most immediate consequences of this slower jobs growth has been a steep drop in the labor force participation rate.  While this rate now appears to be stabilizing at around 62% of the working age population, it is doing so near the historic lows previously seen in 1976.  The California rate also remains below the national average, in spite of the state having a relatively younger population and higher pressures to continue working into retirement age due to the state’s significantly higher costs of living.

On a numbers level, California is still short about 1 million jobs and 1 million persons employed to achieve the same population based levels that existed prior to the recession.

On an individual level, this slower jobs growth translates into relatively fewer persons per household being employed than prior to the recession, a factor that directly translates into lower household income, consequent higher poverty levels, and a lower household ability to afford the state’s high housing costs and other high costs of living.

Our Economic Growth Engine is the Bay Area

Economic growth within California remains highly focused within the Bay Area.  With just under 20% of the state’s population, the Bay Area alone contains:

  • 45% of net nonfarm job gains since the pre-recession high
  • 52% of net job gains since the pre-recession high in Professional & Business Services, the primary growth industry for higher wage jobs
  • 45% of net employment gains since the pre-recession high
  • 27% of total personal income, and 32% of the net increase in total personal income 2007-2014
  • 40% of state personal income tax paid, and 52% of the net increase in tax paid 2007-2014 

    The staggering job growth occurring in the Bay Area appears to statistically overshadow the deteriorating business climate that is seen in the rest of the state’s economy as a result of unrelenting expansion of regulation, fees, and taxes since 2000.  

     

A California economy without the Bay Area would look considerably different:

  • Instead of 2.3 million, created only 1.6 million nonfarm jobs since February 2010, or less than the 1.8 million jobs created in this period by Texas — a state with a population 13% smaller than California outside the Bay Area.
  • Instead of 5.9%, a June unemployment rate of 6.3% (seasonally unadjusted) — tied for the 6th highest rate in the nation.
  • Instead of 16.4%, a 2014 poverty rate of 17.9% vs. the US average of 15.5% — California outside the Bay Area is home to 91% of the net increase in persons living in poverty 2007-2014.
  • Instead of $49,985, a 2014 per capita income of $45,292 — below the US average of $46,030.

Even within the portions of California outside the Bay Area, significant differences exist between the interior and coastal regions.  Among the nation’s 387 top metropolitan areas (MSAs), 8 California MSAs ranked in the areas with 10 highest unemployment rates in June.  Ten California MSAs were in the highest 20.

Challenge for Labor Day 2017:  Broaden Economic Growth for All Californians

The Governor, the Legislature and all Californians are rightfully proud of our return to being the 6th largest economy in the world as measured by GDP.  This is a testament to the economic resilience of Californians and the enormous ingenuity, determination and drive coming from California employers large, medium and small.

Distribution of this growth remains heavily uneven as the state continues to splinter into a two-tier economy and risks evolving into a two-tier society.  The economic divide growing between the Bay Area and the rest of the state should be no surprise.  The Bay Area industries leading this growth are the least regulated in the state, and challenges to their continued growth comes less from market forces and technological barriers, and more from governments and competitors that want to rein them in with the same 19th Century regulatory models applied to the rest of the economy.

The remainder of the state’s economy, instead, has been subjected to an unrelenting expansion of regulation, fees, and taxes since 2000.  The low level of jobs growth is in large part a reflection of the increasing costs of doing business in this state and the increasing costs and restrictions associated with providing jobs.  As businesses have had to shift spending and investments to regulatory compliance rather than efficiency and capacity, the jobs creation rate along with the business creation rate itself have declined.

California has never depended on a single industry to meet the economic aspirations of its people.  We cannot.  We are too diverse.  We have some of the highest rates of educational attainment in the country, but also the nation’s highest percentage—17.9%–of adults with less than a high school education.  The hollowing out of middle class wage jobs—in particular middle class wage jobs that have been the hardest hit by the state’s growing regulations—limits the upward mobility options for much of our population.  The high cost of housing and the increased barriers to commuting caused by the condition of our roads has also reduced the mobility of labor and restricted the ability of many to access jobs even where they are being created.

The 2016 legislative session just completed with major new laws focused on the transformation of our energy sector and our whole economy through new climate change policies. The foundation of these policies is based on the argument that  “green jobs” creation will replace and surpass the hundreds and hundreds of thousands of good paying middle class jobs that will be phased out in our energy and manufacturing sectors. Currently, after 4 decades of compounding regulations, green jobs in California still comprise at most 2% of our jobs under the most generous of estimates.  It is now up to the oversight of the Legislature to determine how much and how fast we are willing to impact the other 98% on which our workers and our households depend.

These are the challenges that are now in front of our state policymakers. Will we see policies that accept the current growth trends and simply attempt to make the current failures more tolerable? Will we see policies that instead of reforming housing policies to reduce the costs for all, will at best alleviate costs for a very few? Will we see policies that assume unemployment and underemployment are now a permanent feature of our state rather than reforms to create growth engines in other parts of the state?

We hope 2017 will bring a broader discussion on the economy we can offer to future generations.

About the Author: Rob Lapsley is president of the California Business Roundtable, a nonpartisan organization comprised of the senior executive leadership of the state’s major companies employing over half a million Californians. Before he was named president in 2011, he was vice president and state political director for CalChamber. He served in the US State Department as special assistant to the US ambassador to Spain during the Iraq War. He was chief of staff to California secretary of state Bill Jones and served as undersecretary of state from 1995 to 2001. He has served on the PPIC Statewide Survey Advisory Committee since 2011.

Union In The News – Weekly Highlights

CEQA remains immune to reform
By Editorial Staff, September 6, 2016, OCRegister
The California Environmental Quality Act was adopted in 1970 to ensure that new developments would not cause unacceptable damage to the environment, but too often it has been used as a cudgel to prevent perfectly sound projects for reasons that have nothing to do with the environment. A report from law firm Holland & Knight published in July illustrates just how the law is really being used. (read article)

As Minneapolis nurses strike, unions join arms with Democratic officials in Labor Day events
By Patrick Martin, September 6, 2016, World Socialist Web Site
Labor Day 2016 began with a major struggle by the American working class, as nearly 5,000 nurses in the Minneapolis-St. The hospital management provoked the walkout by demanding the gutting of healthcare for the nurses, who themselves play a critical role in providing health services for hundreds of thousands of patients. The strike began despite desperate efforts the nurses’ union, the Minnesota Nurses Association, to prevent it. (read article)

Clinton Champions Unions on Labor Day
By Mitch McAndrew, September 6, 2016, Daily Iowan
For the second year in a row, Hillary Clinton spent her Labor Day supporting labor unions. The Democratic presidential hopeful voiced her support for organized labor on Monday night to a crowd full of union members and supporters, both local and national, at the 49th-Annual Salute to Labor in the Quad Cities. Flanked by union leaders and Illinois Democrats, including Illinois Senate candidate Tammy Duckworth and longtime Sen. Dick Durbin, Clinton pledged to defend unions by stymying attempts to roll back collective bargaining, standing up to unfair trade deals such as the TPP, stopping pension cuts, and fighting right-to-work laws. (read article)

8 ways employees can thrive while labor unions decline

By Douglas P. McCormick, September 5, 2016, PBS NewsHour
Labor Day represents an opportunity to celebrate the accomplishments of the labor movement on behalf of the American worker.However, Labor Day is also an appropriate time to consider how this collective bargaining model will fare in tomorrow’s dynamic economy and labor markets. The truth is that while we should celebrate the enormous accomplishments of the labor movement, the way workers should promote their interests has changed. While collective bargaining used to produce large gains for workers, entrepreneurship is now a worker’s most powerful tool for long-term career success and financial prosperity. (read article)

Police union tells Chicago cops to avoid overtime over Labor Day Weekend
By Bill Kissinger, September 5, 2016, World Socialist Web Site
As Chicago struggles with a growing violence problem, the head of the police union is telling his members to avoid overtime for the Labor Day weekend. The union says the move is meant to give officers more time with their families, but some critics see it as a way for police to make a point at the expense of the people living in violent neighborhoods. It is turning into a war of words between the powerful police union president and one of Chicago’s most respected religious leaders, and it all comes on the heels of Chicago recording its 492nd homicide of the year, more than New York and Los Angeles combined. (read article)

Organized labor’s different look this Labor Day
By Joe Garofoli, September 4, 2016, San Francisco Chronicle 
This year’s post-Labor Day sprint to election day will look a little different for organized labor in California than during past presidential elections. Their political enemies have changed — they’re often Democrats now — and unions are more focused on their long-term future than trying to stave off an existential threat. Four years ago, California’s top unions, led by $21 million from the California Teachers Association, poured tens of millions into defeating Proposition 32, which would have banned unions from receiving automatic paycheck deductions from their members. This year, the 2.1 million-member California Labor Federation, an umbrella group representing 1,200 affiliated unions, is expected to spend less than $10 million, most of it focused on maintaining a grip on power in Sacramento by taking on moderate Democrats and their funders. (read article)

The SEIU wants $15 per hour for everyone… except SEIU employees
By Jazz Shaw, September 3, 2016, Hot Air
As we’ve all learned by now, the SEIU is very invested in the idea of making sure that workers around the country all receive a “living wage” no matter their occupation. Part and parcel of this effort is the Fight for 15, setting a goal of a $15 per hour minimum wage for all workers. Or perhaps we should say… almost all of them. The Wall Street Journal seems to take particular pleasure in pointing out that the SEIU hires numerous stage actors around the country to show up at employers like McDonald’s and carry protest signs, pointing out how unfair their labor practices are. But do these astroturf “protesters” get paid $15 per hour? Er… no. And some of them aren’t happy about it. (read article)

Judge orders N.J. teachers union to court over benefit talks
By Dustin Racioppi, August 31, 2016, NorthJersey.com
Mercer County Superior Court Judge Mary Jacobson on Wednesday ordered the New Jersey Education Association to appear next week to explain why key members missed meetings on health care plans that the administration says could save taxpayers $70 million the next two years. The lead plaintiff, Attorney General Christopher Porrino, had requested “emergent relief” by the court Tuesday so the state can set employee health care rates before the open enrollment period begins Oct. 3. Without the rates, Porrino’s office argued in court papers, “school employees will be unable to make informed decisions about which health benefits plan to choose.” (read article)

The Latest: Massive California parks bond proposal dies
By Associated Press, August 31, 2016, San Diego Union Tribune
An effort to send more than $3 billion in bonds to state and local parks in California has died at the tail end of the legislative session. Senate President Pro Tem Kevin de Leon on Wednesday opted not to let a proposal advance that would have asked voters to approve the funds to build and restore parks and to address a backlog in maintenance at state parks. De Leon authored legislation that laid the groundwork for the last major investment in local parks. A review by The Associated Press found that fewer than half the parks funded by that program are unbuilt a decade later. (read article)

Labor Leader To Wisconsin Unions: Women’s Issues Are Labor Issues
By Shawn Johnson, August 30, 2016, Wisconsin Public Radio
A national labor leader told union members Tuesday in Madison that women’s issues are labor issues, saying unions are positioned to help women with the election of Democratic presidential nominee Hillary Clinton. National AFL-CIO Secretary-Treasurer Liz Shuler told leaders attending the state AFL-CIO’s unity conference that as more women become the primary breadwinners in their families, they’re finding they have little or no say over how they spend their time. She said a lot of factors are driving that, from employers who make unpredictable schedules to high day care costs to a lack of access to paid sick leave. (read article)

Crop of university ‘anti-union’ university websites sparks criticism from proponents of graduate assistant unions.
By Colleen Flaherty, August 30, 2016, Inside Higher Ed.
The National Labor Relations Board ruled last week that graduate student workers at private institutions may now form unions. But they need to vote to unionize first. In the meantime, a handful of institutions, including those with active graduate assistant union campaigns, have either launched or updated websites that they term information, but that are attracting criticism as being “anti-union.” Others say universities have an obligation to inform students of the drawbacks to unionization — not just the benefits. (read article)

California Needs Infrastructure, and Unions Should be Helping

“Infrastructure” is a perennial topic that enters and leaves California’s public consciousness in the following manner: A politician says “we must rebuild our crumbling infrastructure,” journalists report it, almost nothing is done, and the infrastructure continues to crumble. The talking point is made. Check the box. Repeat. Decades pass.

If you’ve driven west on Interstate 580 from California’s central valley into the San Francisco Bay Area, “infrastructure” becomes more than a hard-to-pronounce, sort of awkward sounding four syllable word that emanates from the mouths of politicians every election cycle. Because the divots, pot-holes, fissures and bumps on Interstate 580 west are impossible to ignore. The road is literally falling apart.

It isn’t enough to marvel at how Californians tolerate this negligence. Because it harms our quality of life. Today the failure is measured in terms of how many cars and trucks require far more frequent maintenance to repair their battered suspensions because we can’t fix our roads. Today it’s short showers and annoying light switches that turn off automatically because we won’t build new water and power infrastructure. But tomorrow it could be a catastrophe, as entire regions are potentially denied water, power or transportation, because over time, less and less viable infrastructure became critical to supporting more and more people.

Why? Why have California’s policymakers paid lip service to infrastructure for the last 20-30 years, all the while watching it crumble? Here are three reasons:

(1) Environmentalists provide the moral cover for neglect. There isn’t a road, a bridge, a power plant, a port upgrade, new housing, a water treatment plant – not one scratch in the ground that isn’t bitterly contested by the environmentalist lobby. Powerful environmentalist organizations, often receiving government funds, with opportunistic trial lawyers populating their boards of directors, have an incentive to tie every possible infrastructure investment up in knots. While some environmental oversight is necessary, the challenge of complying with every environmentalist objection deters all but the wealthiest corporations, and creates costly delays that last for decades.

(2) Many corporate special interests benefit from neglect. Corporations who own existing sources of supply can charge higher prices and generate higher profits. Utilities are the obvious examples of this – ever since “decoupling” legislation was passed in California, the only way utilities can generate higher profits is to raise unit costs, since unit output and profit percentages are fixed by law. So if water costs $2.00 per CCU instead of $0.25, or if electricity costs $0.50 per KWH instead of $0.05, utility companies make a killing for their shareholders. Similarly, owners of land that has finally been approved for development, or quarries that got operating permits before the regulations made them prohibitive, are able to sell their inventory at fantastic markups.

(3) Public sector unions also benefit from infrastructure neglect. Taxpayer funds that ought to be paying to construct and upgrade roads and bridges end up being allocated instead to pay government workers higher salaries and fund generous pensions. These unions also benefit from the legislated and entirely artificial scarcity that drives up prices for land and homes, because it increases property tax revenue. And of course, every additional environmentalist inspired regulation and code means more unionized government inspectors and enforcement officers can be hired. Government over-management and mismanagement always benefits public sector unions.

So where is California’s private sector labor movement when it comes to infrastructure? Here is a quote from the California Labor Federation’s website, under “Advocacy / Key Issues.” Revealingly, this is number ten of ten on their “issues” page:

“Invest in California’s Infrastructure: We must have a comprehensive strategy for making investments in infrastructure and a sustainable, equitable way to finance them. We need to restore our public transportation systems, modernize our rail system and rebuild our roads and waterways. We must double our efforts to build high speed rail in California.”

Apart from “high speed rail,” a project that fails to justify itself under any rational cost/benefit analysis, this all sounds good. But where’s the follow up?

When scoping meetings are held to approve infrastructure projects, whether it is widening a highway, approving a new subdivision, repairing a bridge, or building the Temperance Flat or Sites reservoirs, where are the unions? Why aren’t hundreds of them showing up two hours early to these meetings, elbowing the environmentalist trial lawyers and their zealous puppets out of the room? Why aren’t they packing the out-of-control California Air Resources Board meetings to show solidarity with the workers in dairies, agriculture, manufacturing, mining and timber, trucking, and countless other industries who employ hundreds of thousands of Californians?

Instead California’s labor unions typically resort to “greenmail,” a tactic that goes as follows: Pick a project that the environmentalist lobby doesn’t actually object to, then sue the developer on environmentalist grounds until they concede to enact a project labor agreement, than drop the lawsuit.

Is this the best they can do?

California’s private sector labor movement should consider how environmentalism, married with the special interests of monopolistic corporations, allied with government labor whose agenda is utterly different than their own, have destroyed literally millions of good jobs in this state. They should consider how close California is to becoming an authoritarian wasteland, where land, water, energy, housing and transportation are cynically rationed by this alliance of oligarchs and elitists. They need to wake up and fight for their core principles – the welfare of workers and their families.

An essential point that union leaders and their members ought to understand is the cost of building infrastructure in California is prohibitive for reasons that go far beyond paying a prevailing wage, or even the cost of hiring a few extra employees on a project to comply with union work rules. The costs are prohibitive because oligarchs and elitists have colluded to make every element of a project more expensive – the land, power, materials, transportation, staging, permits, and time-delays. The compounding effect of these pernicious barriers have enriched oligarchs, government workers, and the trial lawyers representing the environmentalists. They’ve made the rest of us poorer, and they’re the real reason we don’t have more good jobs.

To take one dramatic example, consider the Carlsbad desalination plant, which – not even including distribution pipes to move the water into the municipal supply – was built at at a capital cost of $12,733 per acre foot of annual capacity. Compare that to the Sorek desalination plant, completed in Israel in 2013 at a capital cost of $4,111 per acre foot of annual capacity, less than one-third as much! This was accomplished in a nation where labor is not cheap, nor is the government a paragon of free market deregulation. This is not an isolated case.

It is a crime against all Californians that other developed nations can build infrastructure for less than one-third what it costs here, and that other states in the U.S. can build infrastructure for less than half what it costs in California. Labor costs occupy a dwindling percentage of what infrastructure projects cost, which means that unions should start lobbying aggressively for infrastructure investment, instead of playing petty greenmail games. They may not win every project labor agreement battle. But they will win the war to create millions of good new jobs, and change California from a land of authoritarian scarcity back into a land of opportunity and abundance.

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Ed Ring is the president of the California Policy Center.

RELATED ARTICLES

California’s Misguided Water Conservation Priorities, August 17, 2016

Government Unions Benefit from the Asset Bubble that Harms Workers, July 19, 2016

How Gov’t Unions and Crony Capitalists Exploit Global Warming Concerns, June 21, 2016

The Alternative to Crony Capitalism and Phony Shortages, June 15, 2016

Government Unions and the Financialization of America, May 24, 2016

California’s Economically Illiterate Legislature, April 5, 2016

Practical Reforms to “Right-Size” Government Unions, March 29, 2016

Investing in Infrastructure to Lower the Cost of Living, March 14, 2016

The Future of Unions in the Post-Scalia Era, February 16, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

Why Aren’t Unions Fighting California’s Bullet Train Boondoggle?, November 24, 2015

When Will Unions Fight to Lower the Cost of Living?, October 27, 2015

Why Pension Reform is Inevitable, and How Reforms Can Benefit the Economy, July 21, 2015

Libertarians, Government Unions, and Infrastructure Development, May 5, 2015

Desalination Plants vs. Bullet Trains and Pensions, April 7, 2015

Raise the Minimum Wage, or Lower the Cost of Living?, March 31, 2015

The Abundance Choice, December 24, 2014

An Economic Win-Win For California – Lower the Cost of Living, December 3, 2014

How to Create Affordable Abundance in California, July 1, 2014

California’s Green Bantustans, May 21, 2014

Sacramento and Unions: Addicted to Our Cash

In November, we will be asked to reject or approve “The California Children’s Education and Health Care Protection Act of 2016.” If approved by a majority of the voters, this ballot measure, Proposition 55, will extend to December 31, 2030 the “temporary” income tax surcharges on upper income Californians that were authorized in November of 2012 when 55% of the voters approved Proposition 30.

Prop 30 was designed to prevent “devastating” cuts to the State’s educational budget by establishing a seven year “soak the rich” income tax surcharge (2012 to 2018) and a four year quarter of a cent increase in our sales tax (2013 to 2016).

According to Legislative Analyst, this 12 year extension of the ‘temporary” income surcharges will increase state revenues by $4 billion to $9 billion a year from 2019 through 2030, depending on the economy and, importantly, the stock market.  This year’s budget assumed $7 billion from these income tax surcharges. 

But this is not the only “revenue enhancement” scheme that is being cooked up by our friends in Sacramento and the campaign funding leadership of the public sector unions.

State Senator Bob Hertzberg (D-Van Nuys) is pushing to extend the sales tax to include services.  This so called “reform” would generate “roughly $10 billion in its first year and increasing amounts thereafter.”  According to a chart prepared by the California Board of Equalization, the State has identified 15 industries and 487,000 firms that have the potential to generate $111 billion in sales tax revenue.  This includes lawyers, accountants, and other value added service providers.

State Senator Bob Hertzberg (D-Van Nuys) is pushing to extend sales tax to include those services provided by service providers like lawyers and accountants.

 

According to a report by State Controller Betty Yee and her Council of Economic Advisors on Tax Reform, another revenue enhancement is the “split roll” where commercial and industrial properties would be assessed at their fair market value.  At a 1% property tax rate, annual “revenue gains would likely surpass $5 billion and may add up to more than $10.2 billion.”  However, the split roll will require the approval of the voters since it involves amending Proposition 13, the third rail of California politics.

The folks in Sacramento and their cronies in the transportation lobby are also beating the drums for an increase our gas tax, already the highest in the nation when you factor in the impact of the “cap & trade” fees.  This proposed increase is estimated to be in the range of $2 billion to $4 billion a year.  This money would help fund efforts of the California Department of Transportation to repair the State’s highways, roads, bridges, and other related infrastructure.

At the same time, the State is swiping $1 billion a year from CalTrans, a bloated agency where 3,500 surplus employees are costing the State, its taxpayers, and our roads over $500 million a year.

Our good friend Hertzberg is also pushing a bill (SB 1298) that would allow stormwater / urban runoff to be considered as wastewater, thereby allowing the County of Los Angeles to levy $20 billion in fees without the approval of the voters.  This would result in an increase in our real estate taxes of 8%.

Proposition 30 has done an admirable job of making up revenue shortfall over the last five years.  Since 2012, the State’s General Fund revenues have increased by almost $34 billion (39%) while overall revenues, including special funds, has increased to almost $171 billion, a bump of more than 40%.

Now that income and sales tax revenues have rebounded to record levels, Proposition 55 and the 12 year extension of the “temporary” income tax surcharges represents just another revenue grab by the State, the California Teachers Association, the hospital lobby, and the SEIU (Service International Employees Union) that deserves to be rejected by the voters in November.

And while a “soak the rich” tax has a certain appeal, we need to be careful not to kill the golden goose.  If only a small percentage of the upper income taxpayers and their profitable corporations and the small businesses they control decide to relocate or not invest in our economy, many of our fellow citizens will be without good manufacturing or value added service oriented jobs.

We need to send a message to the fiscally irresponsible scoundrels in Sacramento, their cronies, and the campaign funding leaders of the public sector unions that we are not their ATM.  After all, we are doing more than our fair share as we have the highest income tax rate, the highest sales tax, and the highest gas prices in the country.

About the Author: Jack Humphreville is a LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

Long Beach Resident Alleges City is Paying for Political Campaigns

Editor’s Note: The following was mailed to the California Policy Center office. It address the issue of release time in Long Beach, and is particularly interesting because it is from a retired LAPD chief of police, Stephen Downing.

“Good day,
The attached will be published as a column in the Long Beach Beachcomber this Friday. I provide this copy in the event you may like to consider publishing the story to your subscribers – of which I am one.
Thanks,
Stephen Downing
Long Beach Resident and Retired LAPD deputy chief of police”

 *   *   *

August 16, 2016

Mr. Pat West
City Manager
City of Long Beach
333 West Ocean Blvd. #13
Long Beach, CA  90802

Over the past five years the City of Long Beach has paid out a total of $1,200,387 to a city employee who has not worked a single day for the benefit of the Long Beach taxpayer – but has instead been allowed to work full time for a private corporation that supports, plans and finances political campaigns – a direct and egregious violation of taxpayers rights.

Under California law, local governments are strictly prohibited from engaging in political advocacy using public resources. Local governments may make public statements of an informational nature, provided they are factual and impartial. Statements that are not factual, or that are not impartial are prohibited both by our state and federal Constitutions.

The Free Speech clauses of the federal and state Constitutions prohibit the use of governmentally compelled monetary contributions (including taxes) to support or oppose political campaigns since “such contributions are a form of speech, and compelled speech offends the First Amendment.” Smith v. U.C. Regents (1995) 4 Cal.4th 843, 852.

Moreover, “use of the public treasury to mount an election campaign which attempts to influence the resolution of issues which our Constitution leaves to the ‘free election’ of the people (see Const., art. II A 2) … presents a serious threat to the integrity of the electoral process.” Stanson v Mott (1976) 17 Cal.3d 206 218.

According to compensation records provided to Transparent California by the City of Long Beach the full time president of the Long Beach Police Officer’s Association (POA) has been compensated with funds from the city treasury totaling $1,200,387 over the past five years.

In addition to conducting employee organization representation activity with the City of Long Beach during the five year period (for which release time is separately provided through the legal requirements of the Meyer-Milias Brown Act) the POA president has also devoted his taxpayer-paid time to advocate for, direct and manage the planning, execution, supervision and distribution of monies from the LBPOA PAC to endorse and support a wide variety of political campaigns including those of the current Long Beach Mayor, City Attorney, City Prosecutor, a majority of the sitting members of the Long Beach City Council, Kamala Harris for U.S. Senate, Patrick O’Donnell, Al Martsuchi and Mike Gipson for California Assembly seats, Betty Yee for State Controller, Jackie Lacey for District Attorney, Kim Nguyen, Susan Jung Townsend and Debra Archuleta for Superior Court judgeships, Felton Williams and Jon Meyr for School Board positions – as well as expending city-paid time for planning sessions with elected and non-elected city officials while allocating almost 300,000 from the LBPOA PAC to support the officeholder-controlled, special interest PAC-funded, mailbox-stuffing campaign that urged a YES vote on Measures A & B – a local measure that increased the Long Beach sales tax to the second highest local sales tax in the Nation.

It is a serious breach of the public trust when government officials spend public funds to create an advantage for one side of a political campaign. We have informed the Howard Jarvis Taxpayers Association about this activity.

As you may know, HJTA has successfully sued individual officials in similar circumstances for an accounting and personal reimbursement of mishandled public funds.

In order to avoid litigation over this matter, we demand that the Government of the City of Long Beach immediately cease using public funds to support the political activity of the LB POA president and restrict his release time – as well as the POA’s entire board of directors – to membership job related representation activity permitted and mandated by the Meyer-Milias Brown Act.

If we receive written confirmation from the City of Long Beach prior to adoption of the 2017 city budget that these demands have been met, we will take no further action.

Sincerely,

Stephen Downing
Long Beach Resident and Taxpayer

Cc:  Howard Jarvis Taxpayers Association, Legal Department
Robert Garcia, Mayor, Long Beach
Members of the Long Beach City Council
Editor: Press Telegram
Editor: Grunion Gazette
Editor: Long Beach Post
Editor: Long Beach Report
Editor: Los Angeles Times
Editor: Orange County Register
Editor: Voice of O.C.
ABC 7 News
NBC 4 News
KCAL9/CBS2 News

Union In The News – Weekly Highlights

California Farmworker Overtime Changes Cheered By Union
By Drew Bollea, August 29, 2016, CBS Sacramento
Statewide rules regarding farmworkers’ overtime pay passed in the legislature on Monday. Assembly Bill 1066 reshapes the pay structure for farm laborers. While many farmworkers are celebrating a victory, others, including politicians, farmers, and farmworkers aren’t so sure.  “We’re asking for equality eventually. It starts today,” said Assemblywoman Lorena Gonzalez (D-San Diego). She presented AB1066. A similar version of the bill was defeated by two votes in June. This time, the bill passed 44-37 and includes a phasing in of the payment for smaller farms over several years. (read article)

As Union Membership Declines, Organized Labor Focuses on Nonunion Workers
By Mariam Baksh, August 30, 2016, The American Prospect
In an election season dominated by populist appeals, globalization and trade deals like the Trans-Pacific Partnership have come under fire for offshoring the manufacturing jobs that helped create a healthy American middle class. But there has been less attention to another factor that has contributed to the increase in income inequality: The dramatic decline in union membership since the late 1970s. (read article)

Election Reveals Limits Of Hawaii’s Biggest Labor Union
By Nathan Eagle, August 30, 2016, Honolulu Civil Beat
The state’s largest labor union backed a slate of Democratic candidates heading into the Aug. 13 primary election, shelling out thousands of dollars in contributions and providing extra bodies to do campaign grunt work. The Hawaii Government Employees Association, which represents more than 42,000 state and county workers, endorsed the winner in most races. But a closer look at the results shows the union had far greater success keeping incumbents in power — which constituted the vast majority of the 74 endorsements it announced in June — than in its rare attempts to remove a Democrat from office or influence who should fill an empty seat. (read article)

Cleveland Metropolitan School District, teachers union reach tentative labor agreement to avert strike
By Scott Suttell, August 30, 2016, Crain’s Cleveland Business 
There’s labor peace, for now, for the Cleveland Metropolitan School District. On Aug. 16, the union gave notice of its intention to strike starting the evening of Sept. 1. In a joint news release issued Tuesday morning, Aug. 30, the Cleveland Teachers Union and the school district announced they had reached a tentative agreement for a collective bargaining agreement. The agreement now will be sent to union members and the school board for ratification. (read article)

California Doubles Down On Green Economy, But Kicks Cap-And-Trade Down The Road
By Dean Kuipers, August 26, 2016, The Huffington Post
California doubled down on its green economy Wednesday as the legislature passed a pair of bills that set ambitious new targets for reducing greenhouse gas emissions. The new goals are being hailed by environmentalists for providing the certainty needed to ramp up clean-tech investment. Governor Jerry Brown announced in a press conference that opponents of the new targets were “vanquished.” Indeed, there had hardly been a squeak from the oil industry or anyone else. (read article)

Chase Brexton union vote to be certified next week, unless health system objects

By Scott Dance, August 26, 2016, The Baltimore Sun
A vote by Chase Brexton Health Care workers to unionize will become official next week unless the clinic’s leaders raise concerns about the election before then, the National Labor Relations Board said Friday. The employees, expressing concern over what they said are long workdays, heavy patient loads and limited training opportunities, voted 87-9 Thursday to join the 1199 SEIU United Healthcare Workers East labor union. Chase Brexton leaders opposed the unionization effort and sought to delay the election, accusing some of their managers of encouraging subordinates to vote in favor of joining the union. The labor board rejected a motion that could have blocked the vote, a spokeswoman said. (read article)

Labor Day signals need for labor reform
By Richard Berman, August 25, 2016, The Detroit News
On Labor Day, millions of Americans will celebrate the contributions of working men and women. Now a grand occasion for backyard barbecues, the holiday was dreamed up in the late 19th century by America’s labor movement to honor the “social and economic achievements of American workers.” But that same labor movement is now turning its back on employees. According to a recent Rasmussen poll of likely U.S. voters, only 20 percent of Americans believe that labor leaders “do a good job representing union members.” Almost 60 percent of voters also claim that most union bosses are “out of touch” with most of their members. (read article)

Big Labor Tries To Eliminate Right-To-Work By Lawsuit
By George Leef, August 25, 2016, Forbes
If the judge is on your side, you can win a case despite pathetic arguments. So if the cost of losing is near zero and the possible gain from winning is huge, why not launch a suit and see what happens? That’s the thinking behind a case challenging Idaho’s Right to Work (RTW) statute on the grounds that the state is taking property that belongs to labor unions when it allows workers to keep their jobs even if they don’t pay the dues demanded by the union. The theory of the suit is that Idaho’s law (and, logically, all other state RTW laws) is unconstitutional because it violates the Fifth Amendment’s provision that private property cannot be taken for public use unless just compensation is paid. (read article)

Labor Dept. issues new pro-union rule for contractors
By Sean Higgins, August 24, 2016, Washington Examiner
The Labor Department finalized a new rule Wednesday requiring all federal contractors to disclose any past violations of labor law when bidding for a project. In effect, any company that has had run-ins with unions or labor law enforcement agencies will find themselves at the back of the list. The rule is the latest pro-union regulation issued by the Obama administration, which has aggressively sought to use new federal rules to aid its union allies. (read article)

How construction unions helped kill Gov. Brown’s plan to fight the housing crisis
By Roland Li, August 23, 2016, San Francisco Business Times
It was the boldest California housing policy proposal in years: Allow any residential project that complies with local zoning and sets aside as few as five percent of its units as affordable to be built “as of right,” removing review from local municipalities. The idea was to fast-track approvals and reduce the cost of building as the state struggles with a crushing housing crisis. But after three months of debate and widespread opposition, the proposal by Gov. Jerry Brown, meant to boost the state’s housing production in the face of record-high housing prices, appears to be dead. (read article)

In long-awaited decision, labor board says graduate students can unionize at private universities
By Andrew Joseph, August 23, 2016, STAT News
Private universities will need to recognize graduate students who conduct research and help teach classes as employees and therefore accept the unions that they form, the National Labor Relations Board ruled Tuesday. In a 3-1 decision, the board ruled that undergraduate and graduate student assistants and research assistants are statutory employees and are therefore covered by the National Labor Relations Act. The decision opens the door for the students and research assistants at private universities to band together to negotiate issues like pay, benefits, workload, and class size. (read article)

How Government Unions are Hypocrites that Betray the Public

Government unions are not unions in any traditional sense of the word. They elect the bosses they “negotiate” with. They are paid through compulsory taxes rather than via a company that has to earn a profit in the competitive market. And they operate the machinery of government which allows them extraordinary latitude to intimidate any business interests who may challenge their agenda.

Among the informed, these assertions are beyond serious debate. Even supporters of government unions acknowledge them – just not on the record. But to inform the public, it is probably too abstract to question the legitimacy of government unions because they “elect their own bosses,” “use taxpayers money instead of earned profits,” or “control the bureaucracy.” Perhaps instead it is better to explain how union control of government harms people in their everyday lives.

To that end, here is a partial list of how the actions of government unions contradict their rhetoric, and betray the public they are supposed to serve:

(1) Demonizing “Profits.” From the classroom teacher to the professionally prepared press release, the rhetoric of government unions promotes the idea that “corporate profits” are unjust. The academic focus from primary school through public universities is invariably swayed, thanks to government unions, to challenge the capitalist system. Yet without profits there are no tax revenues. Governments survive financially because corporations make profits. Government unions support legislation that has made California the toughest state in the U.S. to do business. The impact: Brainwashed youth, and fewer successful companies offering fewer good jobs.

(2)  Demonizing “Millionaires and Billionaires.” Government union rhetoric frequently resorts to accusing anyone who wants to expose their destructive hypocrisy as funded by “millionaires and billionaires,” as if that should automatically nullify their arguments. These unions have carefully nurtured a public hostility and resentment towards individual wealth. The problem, however, is that almost anyone who retires after a full career in public service is a millionaire – often many times over. The average full career pension for California’s state and local government workers is over $70,000 per year. The ordinary private sector worker would have to save at least $1.5 million to generate a $70,000 annuity for the rest of their life – with no guarantees. The impact: Higher taxes and reduced services to support government worker pensions that make them all millionaires, leaving the rest of us behind to pay for it.

(3) Defending “Working Families.” That is one of the mantras of the government unions. Fighting for the “working families.” But how does this work in reality? California is one of the hardest states to practice a profession or trade. Certifications and licenses require prohibitive amounts of time and money, excluding the most deserving, aspiring citizens. Workman’s Compensation insurance rates are among the highest in the U.S., making it much harder for small companies to compete and grow their businesses. Crippling regulations. Absurdly time consuming and expensive permitting processes. The impact: Reduced upward mobility, far less opportunities for low income entrepreneurs.

(4) Always “For the Children.” The level of hypocrisy here almost defies description. Government unions have imposed their agenda on education, turning public schools into propaganda mills, indoctrinating students to believe their success or failure in life is primarily determined by whether or not they have “privilege,” and whether or not the state provides sufficient benefits, instead of teaching them the skills they will need to succeed in life on their own. Government unions have defeated any meaningful attempts to hold teachers accountable, or allow principals and superintendents to effectively manage. What they have done to California’s rising generation of students can be accurately characterized as child abuse. The impact: A generation of Californians who are unprepared to assume the responsibilities of adulthood.

(5) Respect for “Contracts.” The selective moral outrage mustered by government unions when it comes to “contracts” is exemplified by their response to pension reformers who want to lower the pension benefit formulas – just for work to be performed in the future. Because back in 1999, these same unions lobbied successfully to raise pension benefit formulas not just from then on, but back to the day each active government worker began their career. According to the same body of California contract law, they claim these retroactive benefit increases were justified, yet they fight – and win – in court whenever anyone tries to decrease these same benefits only from now on. The impact: Taxpayers are condemned to bail out these financially unsustainable pensions.

(6)  Fighting “Big Money in Politics.” The problem with this ersatz fight by government unions is simple: In state and local elections in California, nobody spends as much money as government unions. Just government unions, just in California, collect and spend over $1.0 billion per year in dues. About one-third of that, nearly $700 million every election cycle, is spend explicitly on politics and lobbying. An equal share probably goes to public education campaigns designed to promote the government union agenda. There is no special interest anywhere with the means, much less the desire, to challenge these unions. They are active in every political contest, no matter how small or how big, with access to as much cash as they need. The impact: Unions are the “big money in politics,” and their interests trump the public interest.

(7) Fighting “Big Business.” By now it should be clear enough – “big business” has no interest in challenging government unions. They collude instead, in a partnership where the government unions – who control legislation that will either favor or thwart business interests – are the dominant partner. And why shouldn’t big business partner with government unions? When oppressive regulations drive innovative competitors out of business, the monopolistic established corporations have the financial resources to comply. Why not let excessive government regulations destroy the competition? The impact: Less innovation, fewer new jobs, higher prices to consumers.

(8) Fighting “Wall Street.” This is the most ridiculous claim of all by government unions. Because when government unions successfully negotiate pay, benefit and hiring decisions that cause government deficits, Wall Street firms make billions underwriting new bond issues. And when government unions negotiate pension benefit enhancements, the union controlled pension funds invest even more money with Wall Street firms including hedge funds and private equity funds. Government is Wall Street’s biggest customer. The Wall Street influenced policies that have destroyed the ability of ordinary Americans to save for retirement or buy an affordable home have been a boon to the super rich and the pension funds. The impact: The government union alliance with Wall Street is a major factor in the hollowing out of America’s middle class.

The fact that most Californians still don’t understand the difference between government unions and private sector unions should come as no surprise. Government unions have spent literally billions of dollars over the past decades, hiring the best professional public relations talent in the world, to convince Californians they are on their side. But they’re not. Quite the contrary. Their hypocrisy is only matched by their corrosive impact on our economy, our freedom, and our democracy.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

Government Unions Benefit from the Asset Bubble that Harms Workers, July 19, 2016

Government Unions and the Financialization of America, May 24, 2016

The Hypocrisy of Public Sector Unions, March 15, 2016

Public Unions ARE the Political “Establishment,” February 23, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

Moral Values That Underlie Opposition to Government Unions, October 13, 2015

How Government Unions Are Destroying America, September 22, 2015

Deceptive and Misleading Claims – How Government Unions Fool the Public, September 8, 2015

The Ideology of Public Sector Unions vs. Private Sector Unions, February 20, 2012

The Differences Between Public and Private Sector Unions, May 13, 2011

California Business Community Should Not Enable High Cost Government

The business community is in a very tough position in California.  The California Legislature is completely controlled by the Democratic Party and its pro-labor base.

The California Republican Party and Republicans candidates are their most natural allies but Republicans are only viable in a relatively small minority of legislative races.

The result is that the California business community must build alliances with the pro-labor Democrats and foster good relationships with the Democratic leadership and their power base—the state’s public employee unions.

The rise of the so-called “moderate Democrat” is perhaps the best manifestation, which is essentially a Democrat that tends to vote pro-business on some select issues, and pro-labor on many other issues, particularly those that relate to public employee compensation.   

But the real danger here is that the California Business Community finds itself in the precarious position of actually enabling “high cost government,” characterized by higher taxes and a deteriorating business climate.

Big business will almost always oppose a tax increase that impacts them directly, but they tend to stay neutral or even support tax increases on other taxpayer classes such as small businesses and individuals.

Prop. 30 from 2012 is a perfect example.  The measure temporarily increased income taxes on individuals and businesses earning over $250,000 per year, and also included a ¼ sales tax hike with the $6-8 billion in annual revenues going to education.

The business community did not like it but they tolerated it because the state was in a difficult financial position, and the tax was supposed to be temporary.  Certain segments of the business community, particularly small business, still strongly opposed Prop. 30 (and oppose Prop. 55 as well) because their members are directly impacted and less able to shoulder the brunt of the tax increase.

Prop. 55 on the November 2016 ballot seeks to extend the Prop. 30 tax increases for another 12 years, and is projected to raise nearly double the revenue, $8-11 billion annually.

Prop. 55 on the November 2016 ballot seeks to extend the “temporary” Prop. 30 tax increases for another 12 years

Big business in California has not mobilized a campaign to defeat Prop. 55 despite the fact that it represents a “broken promise” and is essentially a permanent tax increase.

The California Chamber of Commerce and Cal-Tax have voted to oppose the measure, but have not committed significant resources because Prop. 55 primarily impacts small business and individual taxpayers.

The California Business Roundtable continues to be neutral but is scheduled to reconsider its position in mid-September.  Many local chambers of commerce have also stayed off Prop. 55 because they have a large number of representatives of the education community on their boards.

Another consideration is that the business community may not see a path to victory, short of spending in excess of $10 million or more, and they still may not win.  Prop. 55 is supposedly polling above 60%, but still likely vulnerable if a major opposition campaign is mounted given that Prop. 30 only passed with a 55% Yes vote.

I believe that it is in the California business community’s interest to strongly oppose any major tax increase because proponents of higher taxation in California will keep coming back for more, albeit with a bigger war chest and more determination.

The reality is that the cost California government is growing at an unsustainable pace due to the inability of the California Democrat Legislature, as well as most locally elected officials, to adequately control public employee benefit costs, particularly pension and health care.

For example, state and local debt is already at all-time highs despite record revenues, with total debt for public employee compensation costs estimated to be in excess of $1.3 trillion as of 2013, and likely is closer to $2 trillion in 2016.  Calpers debt has increased by more than 50% since 2014, jumping to an estimated $150 billion in 2016 due to heavy investment losses and things are not projected to get any better.

Something is very wrong here—the state has amassed record revenues, but public spending and debt is still climbing at unsustainable rates of 10-25% per year.   And next to nothing is being reinvested in California in the form of roads and improved infrastructure.

These facts may not be altogether clear to anyone who has not studied the fiscal condition of state and local governments in California, and who has intimate knowledge of the state’s public employee unions.

I would encourage the California business community to become more serious about controlling the cost of government because even if the immediate tax increase at hand (Prop. 55 and others) does not directly impact your members this time around, next time it will, particularly once the more favorable revenue options are exhausted.

Over the long-term, California’s approach to taxation has been to max out every tax revenue source available to it, and that’s why we have the highest income taxes (13.3%), the highest sales taxes (9.5%), the highest gas taxes, and the list goes on and on.

The most important fact to recognize is that there will literally be no end to the amount of tax increases, and their negative economic impacts, that the public employee unions and hospitals interest will “need” to fund public sector costs that are rising far in excess of the ability of taxpayers and the state’s economy to pay for them.

To stem this trend, a strong public case will need to be presented to voters about the accelerated decline of the business climate in California, and its consequences for the state’s future.

The only alternative to fighting an ever increasing state tax burden is to continue to raise taxes higher and higher on a shrinking economic base, something the Democrats appear to be completely at peace with, but something that is disastrous for the future of the state’s economy and its residents.

At some point in the not so distant future, the only choice the California business community will have is to flee California for greener pastures as the more than 10,000 businesses have done in recent years.

About the AuthorDavid Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

Status Quo Stands as Supreme Court Stays Out of Education Fights

The state’s teachers’ unions had a good day at the hands of the California Supreme Court yesterday but then so did the state’s taxpayers.

The state Supreme Court upheld an Appellate Court decision in the Vergara case, which concerns constitutional protections of students involving teacher tenure, retention and dismissal. Student plaintiffs claimed that they, along with many students in lower economic communities, suffered from dealing with hard-to-fire, unqualified teachers who were retained under the union supported seniority system.

The court chose not to hear the case thus upholding an Appellate Court decision that overturned a Los Angeles County Superior Court judge who had ruled in favor of the students, claiming after weeks of trial, that the harm done to minority students “shocks the conscience.”

As Los Angeles Unified School Board member Monica Garcia stated in a release following the decision, “The California Supreme Court’s refusal to review Veraga v California is a lost opportunity for both students and quality educators in Los Angeles and across our great state.”

Los Angeles Unified School Board member Monica Garcia believes that the refusal of the California Supreme Court to review the Vergara vs. California case only serves to disadvantage students and quality educators.

 

The 4-3 vote turning down a hearing on the Vergara case comes close behind the United States Supreme Court rejection of an appeal in the Friedrichs vs. California Teachers Association case on a tied 4-4 vote. Friedrichs challenged the teachers unions’ dues collections rules. Had Friedrich’s prevailed the great money arsenal CTA uses to push its agenda would likely have been diminished.

By the narrowest of margins then, in two cases, the education status quo stays in place. Not a good thing for minority students or independent minded teachers.

It was also by the narrow 4-3 margin that the California Supreme Court refused to interfere with the state’s education funding system in the case of Campaign for Quality Education vs. California. Brought by public school education advocates who want more money spent on schools, the plaintiffs argued that the state constitution guaranteed quality education, which could only be achieved by a changed school funding system and increased funding for education.

In this case however, no court supported the plaintiffs. Both the Superior Court and Appellate Court rejected their argument before being turned aside by the state Supreme Court.

The Appellate Court decision made it clear that if judges decided what level of funding would satisfy an undefined “quality education” the court would be intruding on Legislative apportionment powers, “which we decline to do,” wrote the majority.

Allowing judges to settle what constitutes an appropriate level of education is fraught with undemocratic dangers, not the least of which would assuredly jeopardize taxpayers.

About the Author: Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee. This article originally appeared in Fox & Hounds and appears here with permission.

Union In The News – Weekly Highlights

California Senate Bill Benefits Taxpayer-Financed Union Slush Fund
By Katy Grimes, August 23, 2016, Canada Free Press
The Labor-Management Cooperation Act of 1978 is rearing its ugly head once again in the California Legislature, as it roars to the end of the 2015-16 session. Senate Bill 954 by Sen. Robert Hertzberg, D-Van Nuys, would redefine what benefits employers can pay into as part of their obligation to pay workers on public works projects the prevailing wage. Specifically, the bill qualifies certain prevailing wage benefit payments, but only if they are made by an employer “obligated under a collective bargaining agreement.” (read article)

Labor board rules student assistants can form union
By Sean Higgings, August 23, 2016, Washington Examiner
The National Labor Relations Board, the main federal labor law enforcement agency, ruled Tuesday that student assistants are employees covered by the National Labor Relations Act and therefore eligible to form a union. The ruling could have a profound impact on higher education, as student assistants are widely used at private colleges and universities in lieu of traditional teachers. The labor board ruled 3-1 in a case called Columbia University that student assistants are statutory employees covered by the National Labor Relations Act. (read article)

NLRB: State of Michigan workers union broke law with own employees
By Paul Egan, August 23, 2016, Detroit Free Press
A union representing state workers broke federal labor laws in actions it took against its own employees, including illegal firings and discipline and refusals to turn over information, the National Labor Relations Board has ruled. The federal board, in a 2-1 ruling, ordered the 4,500-member MSEA and Moore to stop violating the Labor Relations Act, reinstate central office employees who were wrongfully fired, and restore back wages, pay, benefits and seniority. (read article)

California teachers’ unions win in big case
By The Washing Post (AP), August 22, 2016, NOLA.com
The California Supreme Court on Monday (Aug. 22) declined to hear a case challenging the state’s laws on teacher tenure, dismissal and layoffs, a decision that leaves the laws in place and hands a major victory to teachers’ unions. It was a new civil rights argument against teacher tenure laws, and at first it seemed successful. After a 10-week trial in 2014, the trial court sided with the plaintiffs, whose lawyers described the California case as the first in a series of state-by-state legal challenges to tenure laws. But in April, an appeals court overturned the lower court’s decision, finding that though “deplorable staffing decisions” have harmed poor and minority children in the state’s public schools, those decisions are the fault of principals and other administrators — not the result of the laws themselves.” (read article)

Right-to-work law would help business, workers, unions
By Ariel Gordon, August 22, 2016, Forbes 
Although many labor unions were created with a noble purpose, over the last few decades some unions have done less to protect their members and more to enrich themselves. Unions increasingly spend less time bargaining and fall victim to increasing amounts of corruption. Many unions are spending more and more time – and worker dues – lobbying for political causes that their members may disagree with. (read article)

California lawmakers revive farmworker overtime bill
By Jonathan J. Hooper, August 22, 2016, San Diego Union-Tribune 
California’s state Senate on Monday revived a bill that would make the state the first in the United States to give farmworkers the same overtime pay as people who work in other industries, a last-ditch effort to reverse a nearly 80-year-old practice of exempting field hands from wage rules. Hourly workers in California are generally entitled to pay at one-and-a-half times the hourly rate after they have worked eight hours in a day or 40 hours in a week. But for agricultural workers, the threshold required to get overtime pay is 10 hours a day or 60 hours a week. (read article)

Some Labor Unions Refuse to Join Establishment Praise of Clinton
By Michael Sainato, August 22, 2016, Observer
During the Democratic primaries, unions that held member votes over support of a particular candidate almost invariably chose Sen. Bernie Sanders, while unions that made an endorsement based on the decision of its leadership mostly supported Hillary Clinton. As a result of Clinton’s troubling political record on behalf of the labor movement, several unions have refused to either switch their initial endorsement from Sanders to Clinton, or make any endorsement for president this election. (read article)

Appeals court upholds NLRB actions in labor dispute
By Lydia Wheeler,  August 19, 2016, The Hill
The nation’s second most powerful court on Friday sided with the National Labor Relations Board (NLRB) in a case challenging actions the board took against a company that tried to keep employees from joining a union. The U.S. Court of Appeals for the D.C. Circuit said it found no basis to disturb the NLRB’s “well-reasoned decisions” and denied Ozburn-Hessey Logistics’s petition for review. NLRB found that the Ozburb-Hessey committed multiple unfair labor practices during the months leading up to the 2011 union representation election, which the union won by a one-vote margin. (read article)

Talks stall on $400 million in California affordable housing
By Juliet Williams & Alison Noon, August 18, 2016, Albany Times Union
California’s Assembly speaker conceded defeat Thursday on negotiations over a plan to inject $400 million into affordable housing projects, a deal that was included in the $122 billion budget compromise legislative leaders negotiated with Gov. Jerry Brown this spring. The funding was contingent on lawmakers approving Brown’s controversial “by right” housing proposal to speed approval for developments that include affordable units. The proposal would give automatic approval to projects that meet existing zoning requirements and set aside at least one-fifth of the units for low-income residents. (read article)

Minimum Wage Hikes Mean Major Job Losses
By Michael J. Webert, August 18, 2016, Daily Caller
California, New York, Seattle and Washington D.C. are some of the jurisdictions where the minimum wage has been increased to $15 an hour. Advocates of increasing the minimum wage claim that this proposal is the best means for lifting workers in low skilled positions out of poverty. However, mandating employers increase wages will likely have the opposite effect — decreased economic opportunity. Reducing employment opportunities likely isn’t a concern of the labor union supported “Fight for $15” campaign. While labor groups ostensibly advocate for the $15 minimum wage as a means to reduce poverty, in reality they are waging this campaign to inflate their membership rolls. (read article)

Employers Beware: NLRB Likely To Drop More Pro-Union Rulings By End Of August
By Daniel Fisher, August 17, 2016, Forbes
The National Labor Relations Board may hand down some big decisions in favor of labor unions before the expiration of Board Member Kent Hirozawa’s term on Aug. 27, including a “clear successor” rule making it easier to impose union contracts on the buyers of companies and a decision in favor of Columbia University graduate students seeking to form a union. (read article)

CTU Prepping Teachers for ‘Strong Possibility’ of Strike

By Matt Masterson, August 17, 2016, Chicago Tonight
The Chicago Teachers Union is “likely to strike” this fall, according to an email distributed to teachers this week advertising a daylong strike training session this weekend. The email – sent to teachers by CTU with the subject line “Sat. 8/20: Prepare to strike with Labor Notes” – offers to connect teachers with other public sector unions in order to better leverage their “combined power.”Lewis says contract talks are stuck on the desire by CPS to end the pension pick up. For three decades, the district has paid 7 percent of the 9 percent employee contribution to the teacher pension system. (read article)

California Supreme Court Strikes Down Vergara Appeal

Here’s an axiom of California politics. When it’s the teachers union against everyone – that’s right, everyone else – the teachers union wins. Yesterday’s decision by the California Supreme Court to not hear the Vergara case is just the latest example.

Prior to losing on appeal, which brought the case to the attention of the State Supreme Court, the original Vergara ruling upheld the argument of the plaintiff, which was that union supported work rules have a disproportionate negative effect on poor and minority students. As reported in the Los Angeles Times in June 2014:

“Los Angeles Superior Court Judge Rolf M. Treu tentatively ruled Tuesday that key job protections for California teachers violated students’ rights to equal educational opportunity. Treu struck down state laws that grant teachers tenure after two years, require seniority-based layoffs and govern the process to dismiss teachers. He ruled that those laws disproportionately harmed poor and minority students… [writing:]

‘All sides to this litigation agree that competent teachers are a critical, if not the most important, component of success of a child’s in-school educational experience. All sides also agree that grossly ineffective teachers substantially undermine the ability of that child to succeed in school. Evidence has been elicited in this trial of the specific effect of grossly ineffective teachers on students. The evidence is compelling. Indeed, it shocks the conscience.'”

And the evidence was indeed compelling. Watch these closing arguments in the case, and note that the plaintiff’s attorney used the testimony of the expert witnesses called by the defense attorneys to support his arguments!

But it isn’t just the union’s hand-picked experts who are against the teachers unions, when they reveal under cross-examination that union work rules indeed harm students, and disproportionately harm low-income and minority students. It’s every interest group, every stakeholder. Why, for example, would a teacher want to work in an environment where you come in and you care about students and you’re talented and you work very hard to get through to all of your students and get good educational results, and in the classroom right next to you somebody just shows up every day and doesn’t do anything? They make as much money as you do, and if they stick around, they get increases every year just like you will. If they are incompetent, they will not be fired. And if there’s a layoff, if they’ve been on the job one year longer than you, they’ll stay and you’ll go.

No wonder there’s a teacher shortage. Consider these statistics that measure teacher sentiments regarding the work rules that were challenged by the Vergara plaintiffs:

  • Teacher effectiveness should be a factor in granting tenure:
    72% of teachers agree, 93% of principals agree.
  • Students’ interests would be better served if it were easier to dismiss ineffective teachers:
    62% of teachers agree, 89% of principals agree.
  • Students’ interests would be better served if layoff decisions took teacher effectiveness into account:
    67% of teachers agree, 83% of principals agree.

Then there’s the social agenda of the teachers union. Their social agenda, in essence, is to indoctrinate California’s students – most of whom are people of color, and millions of whom are members of recent immigrant families – into believing they live in a racist, sexist nation, where they are condemned to lives of discrimination and thwarted achievement, when precisely the opposite is the reality. In reality, America is the most tolerant nation in world history, rejecting sexism and racism, and has provided opportunities to people of all backgrounds in measures that dwarf all other nations and cultures. But not according to the teachers union.

But this is California, and what the teachers union wants, the teachers union gets.

One small encouraging sign is the fact that two of the three dissenting justices are Brown appointees. The fight is bipartisan. It’s disappointing that judges appointed by Wilson and Schwarzenegger ruled against the plaintiffs, and it is possible that part of their motivation was judicial restraint, i.e., to not legislate from the bench.

Which leaves the legislature to change these rules that are destroying public education in California – jobs for life after two years, nearly impossible to fire incompetents, and seniority over merit in layoffs. Virtually any honest legislator in Sacramento will admit, off the record, that they don’t agree with the agenda of the teachers union. Plenty of retired democrats, including Gloria Romero, former Senate Majority Leader, and Antonio Villaraigosa, former Mayor of Los Angeles, have leveled withering criticism at the teachers union. But active politicians are targeted for political destruction if they stand up to the union machine, and they toe the line.

Parents, students, judges, legislators, and teachers themselves are all subordinates of the teachers union. It will take an extraordinary combination of bipartisan cooperation and raw political courage to change the status quo. But let’s be clear – the teachers union has won again, and everyone, everyone, was on the other side.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED ARTICLES

Calif. Justices Won’t Hear Appeal in ‘Vergara’ Teacher Tenure Case
Ben Hancock, August 22, 2016, The Recorder

State Court Upholds California Teacher Tenure Laws
By Hillel Aron, August 22, 2016, LA Weekly

Vergara ends — California Supreme Court refuses to take up teacher tenure case
By Sarah Fovot, August 22, 2016, LA School Report

Two denials of review, five separate statements, in education cases
August 22, 2016, At the Lectern: Practicing before the California Supreme Court

 

High Speed Rail Is ‘On Track’ to Incur Billions in Overruns

Editor’s Note: This article by Jon Coupal provides an update on what has to be one of the biggest con jobs ever perpetrated on California’s voters – “High Speed Rail” that will never make a profit, will never move significant numbers of people, will not even be “high speed” in many sections of track, cannot integrate with other rail assets (different track gauge), and is going to cost at least $50 billion more than they said it would. So why are we still doing this project? One significant reason is the political support it gets from organized labor. Rather than fight for projects that would actually improve the lives of millions of Californians, such as better roads, refurbished bridges, upgraded ports, new power stations, and sorely needed water infrastructure, California’s labor movement backs high speed rail. And the reason they do that is because they don’t want to fight the powerful environmentalist lobby. This is a failure of vision and it is a failure of courage. And it is difficult to overstate how much this fails the ordinary working families that organized labor purports to support above all else. Read on.

High-speed rail continues to be an expensive, sick joke for California. Under the current plan, it is no longer “high-speed” and projected costs, which seem to change almost daily, appear to be doubling.

In the latest news, the nascent California high-speed rail system is running $50 million over budget for a two mile stretch in Fresno.

Let that sink in for a moment.

$50 million, over budget, for just a two mile stretch.

Let’s see, HSR has a $50,000,000 cost over run on 2 miles of a 32 mile job. Does that mean we can expect total cost overrun of $25 million per mile times 32 miles or $800,000,000?

Better yet, let’s extrapolate that to the entire project. You know, the one sold to voters. According to High Speed Rail Authority itself, over 800 miles of track are needed. So, at $25 million of cost overruns per mile, that works out to $20,000,000,000. That’s $20 billion in cost overruns!

In just 3 years, from the original passage of Proposition 1A authorizing about $10 billion in High Speed Rail bonds, the estimated cost for high-speed rail had gone from $40 billion to $98 billion, the amount that independent expert analysis had predicted prior to the bond’s being approved.

Responding to public outrage, the High-Speed Rail Authority came up with a plan costing “only” $68 billion. The new “blended” system would combine high and low speed rail, doubling the travel times as well as ticket prices.

Fearing a voter revolt, the High-Speed Rail Authority rushed to break ground, hoping that once they dug a hole, the pet project of Gov. Brown and the majority of Sacramento lawmakers, who receive backing from construction contractors and labor unions that expect to be the primary beneficiaries of billions of dollars of public spending, would be safe from outside interference.

By beginning a first segment between Merced and Fresno, the rail authority engaged in the classic Willie Brown strategy. The former Assembly Speaker, in a moment of candor, once told the San Francisco Chronicle, “In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”

Constant cost overruns and a lack of accountability plague California’s infrastructure projects. Perhaps, as a public service, it should be required that Brown’s words be reprinted in every ballot summary for every construction bond placed before the voters.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Union In The News – Weekly Highlights

In Show of Force, Fight for 15 Plots Its Political Path
By Justin Miller, August 16, 2016, San Francisco Chronicle
The Fight for 15’s first-ever national convention convened in Richmond, Virginia, this past weekend attracted diverse groups of low-wage workers from across the country in a stunning demonstration of the movement’s continued strength and ambition. While the Service Employees International Union has bankrolled this ambitious worker organizing project (to the tune of tens of millions of dollars and counting) with hopes that it will one day pay dividends by enrolling thousands of new dues-paying union members, the group is also hoping the Fight for 15 will help to transform the nation’s 64 million low-wage workers into a formidable, cohesive voting bloc. (read article)

Cleveland teacher strike would start just before Labor Day
By Patrick O’Donnell, August 16, 2016, Cleveland.com
The Cleveland Teachers Union will go on strike the Friday before Labor Day, unless it and the district can reach a new contract, the union announced today. Union leaders decided Monday night to issue the 10-day notice of a strike that is required by law, after three days of negotiations last week failed to bring an agreement. The strike would officially start at 6 p.m. on Thursday, Sept. 1. That would make the Friday before the three-day Labor Day holiday the first school day affected. “It is our hope that the CMSD (Cleveland Municipal School District) and the Mayor will commit to using the next two weeks to resolve the contract,” union President David Quolke said in a written statement. (read article)

The New Landscape of Labor
By Steven Malanga, August 14, 2016, City-Journal 
It’s been a rough recovery for American labor. In the aftermath of the 2007 financial meltdown and the deep recession that followed it, unions have bled more than 1.3 million members. The Great Recession and the underwhelming Obama recovery have, in other words, reshaped the map of labor in the United States. Private unions began to rally somewhat in 2012 but thus far have regained only 42 percent of the members they lost. (read article)

City manager hits police union with unfair labor practices charge
By Chris Wetterich, August 13, 2016, Cincinnati Business Courier 
In a sign of escalating tensions between Cincinnati’s administration and the Fraternal Order of Police, City Manager Harry Black filed an unfair labor practices complaint against the union with the State Employee Relations Board on Friday, sources have told the Business Courier. The city manager’s complaint is in response to the FOP’s attempts to get Mayor John Cranley and the Cincinnati City Council to pass legislation that makes it clear the city’s elected officials will approve raises negotiated by Black of no less than 5 percent this year, 5 percent in 2017 and 4 percent in 2018. (read article)

California desperately needs affordable housing — but also a new blueprint for building it
By Michael Hiltzik, August 12, 2016, Los Angeles Times
A dollar buys less in California than in almost any other state, and housing costs are a major reason. So it’s proper that Gov. Jerry Brown proposed a solution to the crisis. But it’s unfortunate that his plan plays right into the concerns that many in the environmental and civic planning communities have with the governor, including his apparent willingness to sideline far-reaching policies for short-term or narrow gains. (read article)

Labor Dept. Pays $7M To Resolve Union OT Saga
By Brian Amaral, August 12, 2016, Law360
The federal agency that enforces the nation’s wage laws has agreed to pay $7 million to settle longtime claims that it failed to pay overtime to thousands of its own employees, the American Federation of Government Employees Local 12 said Friday.  The U.S. Department of Labor’s settlement resolves allegations dating to 2006, when the AFGE first filed the grievance. The dispute had been in arbitration when it settled. “This is the agency that goes around fining all the private employers for doing the same thing that it just ended up paying $7 million to make go away,” said the union’s attorney Keith Kauffman of Snider & Associates LLC. (read article)

Longshoremen vote to start labor-contract talks with West Coast ports
By Riley McDermid, August 12, 2016, San Francisco Business Times
More than 100 union dockworker delegates voted Thursday to discuss a contract extension with their West Coast port employer group, avoiding another crippling slowdown of the region’s ports, including the Port of Oakland. In a statement given to the Wall Street Journal, the president of the International Longshore and Warehouse Union said members were now interested in speaking to the Pacific Maritime Association about extending their contract. (read article)

Major labor union behind push for $15 minimum

By Sean Higgins, August 12, 2016, Washington Examiner 
Advocates for a $15 federal minimum wage will be holding a major rally in Richmond on Saturday, culminating in a march to the Virginia capitol. Mary Kay Henry, president of the Service Employees International Union, will kick off the event with a speech Friday. Federal filings with the Labor Department show that SEIU gave $5 million in 2015 and $3.8 million in 2014 to the Fast Food Workers Committee, the organization that runs Fight for $15, the activist group pushing the issue. (read article)

Nuclear fans want California Legislature to vote on Diablo Canyon
By David R. Baker, August 12, 2016, San Francisco Chronicle
Angered by Pacific Gas and Electric Co.’s plan to close California’s last atomic plant, Diablo Canyon, nuclear-power advocates now want the state Legislature to decide the facility’s fate. In a letter sent Thursday to Gov. Jerry Brown, supporters of the plant near San Luis Obispo argue that shutting it down would sabotage California’s fight against global warming. The Legislature, they insist, should choose whether to keep it open. But in their letter to Brown, nuclear advocates say the commission is the wrong forum for such an important decision. “Legislators should have the chance to weigh the evidence here — it should not be jammed through the CPUC,” said Michael Shellenberger, one of the letter’s authors, who formed the Save Diablo Canyon coalition early this year to rally support for the plant. (read article)

Union Bosses Are Out Of Touch, Vast Majority Of US Voters Say
By Ted Goodman, August 11, 2016, Daily Caller
A new Rasmussen Survey found that just 20 percent of likely U.S. voters think that most organized labor leaders do a good job representing union members. The survey shows that an overwhelming majority of voters, including current and past union members, believe that the majority of union leaders are out of touch with their rank and file membership. Fifty-seven percent responded that most union leaders are out of touch with most of their membership, and 24 percent were undecided. (read article)

The unions’ phony fight for $15
By Glenn Spencer, August 9, 2016, Richmond Times
Since 2012, a group calling itself “Fight for $15” has staged street theater protests in cities around the country.  Debate over the subject is certainly fair, but there is more than meets the eye to this group. While cleverly packaged as a genuine grassroots movement, the campaign is — in reality — a front organized and funded by the Service Employees International Union (SEIU), the country’s largest labor union. In fact, according to U.S. Department of Labor reports, the SEIU has spent roughly $55 million on these activities. (read article)

Florida’s state teachers union pays 43 employees at least $100K
By William Patrick, August 9th, 2016, Watchdog.org
The Florida Education Association paid 43 officers and employees over six-figures in 2014-15. A new year also means another round of dues for the state teachers union. The Florida Education Association is the largest labor union in Florida. It’s an affiliate of national powerhouses American Federation of Teachers and National Education Association, and it has dozens of local affiliates under its statewide banner. The FEA promises to provide its 128,264 members “a voice on the job, strength in numbers and protection.” But representation comes at a price. Nearly half of the state union’s collected dues are paid to its own leaders and employees in the form of compensation and benefits. (read article)

Average "Full Career" CalPERS Retirement Package Worth $70,000 Per Year

“‘What makes the ‘$100,000 Club’ some magic number denoting abuse other than the claims of anti-pension zealots?’ said Dave Low, chairman of Californians for Retirement Security, a coalition of 1.6 million public workers and retirees.”

This quote from a government union spokesperson, and others, were dutifully collected as part of Orange County Register reporter Teri Sforza’s eminently balanced reporting on the latest pension data, in her August 8th article entitled “The ‘100K Club’ – public retirees with pensions over $100,000 – are a growing group.”

In the article, Sforza’s team evaluated data released by Transparent California on 2015 CalPERS pensions, and reported the number of pensioners receiving $100,000 or more per year was 3.5% of total retirees, up from 2.9% in 2013. That truly does seem like a low percentage, but it ignores two key factors, (1) the total retiree pool includes people who only worked a few years and barely vested a pension, and (2) the total retiree pool includes people who worked many decades, sometimes 30 or 40 years or more, but they only worked part-time during their lengthy careers.

So if you restrict your pool of participants to those who worked a full career, and retired within the last 10 years, what percentage of those retirees would belong to the $100,000 club? As it turns out, there are 75,279 CalPERS retirees who worked more than 25 years and less than 35 years, retiring after 2006. And as it turns out, 9,763 of them, or 13%, are receiving pensions in excess of $100,000 per year.

Moreover, CalPERS doesn’t report the value of retirement health benefits and other retirement benefits, which almost certainly exceed $10,000 per year. If you make this reasonable assumption, you now have 14,901 CalPERS retirees, or 19% of our 75,279 pool of full career retirees, receiving a retirement package worth over $100,000 per year. Worth noting – we didn’t have the data necessary to screen the part-timers out of this pool. If we did, the numbers would be higher.

So if you use the appropriate denominator, the “$100 Club” isn’t 3.5% of the pie, it’s 19%, but so what? It’s still not a very big slice. Here’s where the flip-side of “full career pension” comes into play. Most people don’t work 25-35 years in public service. But most of them do vest their pension benefits, which can be vested in as little as five years. What happens when someone quits after five years, and only goes on to collect, say, a $20,000 per year pension? Someone else is hired, they work five years, and they also qualify to eventually collect a $20,000 per year pension. Then someone else, and then someone else – until you have three or four (or more) people who are all going to receive a $20,000 per year pension – for a job that one person could have performed if they’d stayed with the agency for a full career.

This is a critical point to understand. The significance of “full career” pensions is this: The taxpayer will fund pensions at that level of generosity, even if the benefit is split among multiple partial career participants – people who presumably worked elsewhere (where they also saved for retirement) during the majority of their careers. Should you expect a $100,000 per year pension if you only worked for five years? Of course not. But that’s what taxpayers are funding – whether it goes to one person, or to five people who worked a few years each to collectively fill one person’s full-career position in government.

This is why, when you are considering whether or not pensions are fair and affordable, the full career average pension is the only relevant measure. So what is the full career average?

For CalPERS in 2015, participants with between 25 and 34 years of work who retired in the last ten years, on average, received a pension of $60,277.  Add to that the value of their retirement health benefits and other retirement benefits and the average was probably closer to $70,000 per year.

Just for comparison, for Orange County (OCERS) retirees in 2015, participants with between 25 and 34 years of work who retired in the last ten years, on average, received a pension of $73,628.  Add to that the value of their retirement health benefits and other retirement benefits – information which OCERS also refuses to provide – and the average was probably over $80,000 per year. As for the OCERS “$100,000 Club”? Within the pool of full career retirees as described, and accounting for retirement health benefits, 31% of them were members. Nearly one in three.

Public sector spokespersons frequently point out that public employees don’t get Social Security. Actually, about half of them do get Social Security, but never mind that detail. Because the maximum Social Security benefit, which one must wait until they are 68 years old to receive, is a whopping $31,668 per year.

Calling critics of this double standard “anti-pension zealots” is lazy rhetoric. The problem with defined benefits is not that they exist. The problem is that we have set up a system where public employees operate under a set of retirement benefit formulas and incentives that are roughly four times better than what private sector workers can expect. Yet these private sector workers pay the taxes to fund these pensions and bail them out when the investment returns falter.

 *   *   *

Ed Ring is the president of the California Policy Center.

When Black Kids Don't Matter

Can’t understand why the National Association for the Advancement of Colored People and the Movement for Black Lives have issued proclamations opposing the expansion of school choice and Parent Power for the very black families for which they proclaim to care? The answer can be found in the annual financial statements of the National Education Association and the American Federation of Teachers, the nation’s two largest teachers’ unions.

Over the past five years, the Big Two unions have worked zealously to co-opt black and other minority-oriented groups. Having been on the defensive against school reformers for most of the past decade, NEA and AFT used their considerable coffers to subsidize organizations in exchange for support for their agenda. For the most part, it hasn’t worked out nearly as well as the unions have expected. The $300,000 NEA and AFT gave to Al Sharpton’s National Action Network in 2014-2015, for example, hasn’t stopped the controversial civil rights activist from being a strong supporter for expanding public charter schools, while outfits such as the Leadership Conference for Civil and Human Rights have sparred with the Big Two over federal accountability rules contained over the now-abolished No Child Left Behind Act.

Yet the Big Two’s vast spending has managed to gain it some allies. One of the biggest: NAACP, which has long ago abandoned its admirable leading role on civil rights and school reform that included spearheading litigation that led to the U.S. Supreme Court’s abolition of Jim Crow segregation in Brown v. Board of Education. Between 2010-2011 and 2014-2015, NEA and AFT increased its contributions to NAACP and its affiliates by a six-fold (from $25,000 to $151,700); the outfit collected $380,500 from the two unions within that period.

For these paltry sums over that period (especially when compared to what National Action Network has received in one year alone), NAACP has repaid the Big Two with almost complete adherence to their agenda. This includes last week’s passage of the resolution calling for a moratorium on expanding charter schools, the most-popular option for black families otherwise forced to attend failure mills in their communities. Even with numerous polls showing strong support among black families for charters and other forms of school choice, overwhelming evidence that high-quality charters are successful in improving student achievement, and support for choice among some of NAACP’s own affiliates, the old-school civil rights groups has been all too willing to join common cause with those who don’t have the interests of black children at heart.

But the NAACP’s allegiance to NEA and AFT isn’t just about money. Among the influential members of NAACP’s 64 member board: Hazel Dukes, whose long (and often infamous) tenure as head of its Empire State affiliate included teaming up with the AFT’s United Federation of Teachers in an unsuccessful effort to stop the Big Apple from renting space in half-empty traditional school buildings to charter schools. Dukes is also notorious for accusing parents of charter school students of “doing the business of slave masters”.

 

Hazel Dukes, President of the NAACP in New York, has long been notorious for both slandering charter schools and inhibiting their growth throughout the state

 

Another top NAACP board member is Adora Obi Nweze, the president of the group’s Florida branch, which joined the NEA’s and AFT’s Florida affiliate in its unsuccessful suit to end that state’s school choice program. Last year, the Florida NAACP convinced the national association to pass a resolution reaffirming its longstanding opposition to vouchers and other forms of choice.

The strong ties alone between Dukes (who remains NAACP’s most-influential board member) and AFT alone, along with the presence of Baby Boomer teachers in the outfits membership,  all but ensures that the concerns of black families are secondary to traditionalist interests. Even if Dukes and Nweze weren’t on the board, NAACP would be more than a tad willing to go along with NEA’s and AFT’s agenda. This is because the association’s board has strong ties to the unions that make up AFL-CIO, the labor confederation in which AFT (along with more than a few NEA affiliates) is an influential member. This includes James Settles, Jr.,  a vice president of the United Auto Workers; Robin Williams (an apparatchik with the United Food and Commercial Workers International); and William Lucy of the American Federation of State County and Municipal Employees, a key AFT ally.

But as noted earlier, NAACP is one of the few old-school civil rights groups on which NEA and AFT can count on as a reliable ally. So the Big Two have had to cultivate new alliances though a strategy of wrapping themselves in the language of social justice. This includes working to co-opt activists within the criminal justice reform and Black Lives Matter movements.

Certainly the Big Two unions are using their coffers to win at least some of those activists over. But it isn’t just a matter of money. As any civil rights-oriented school reformer can tell you, NEA and AFT have learned long ago that extending helping hands, from meeting spaces to using fax machines to simply endorsing a platform, goes a long way in winning alliances. This is something reformers, more-concerned with policymaking and institution-building, have never understood.

 

Adora Obi Nweze, President of the Florida branch NAACP, has been actively trying to eliminate school choice programs within the state of Florida.

 

That many in the school reform movement have either been reluctant or outright hostile about working with Black Lives Matter and criminal justice reform activists on addressing issues that are tied to schools (including overuse of harsh school discipline and the penchant of traditional districts to refer children to juvenile courts), has also made it easy for NEA and AFT to win over some activists.

This partially-successful co-opting by NEA and AFT can be seen in the manifesto issued by Movement for Black Lives this week (which hasn’t been championed by such leading lights within the Black Lives Matter and criminal justice reform movements as Deray McKesson). The declaration itself was written not by the Black Lives Matter activists within the coalition, but largely by two of NEA’s and AFT’s prime vassals.

One of the coauthors, Alliance to Reclaim Our Schools, has long been a front for the Big Two. Besides counting NEA and AFT among its members, the coalition includes vassals such as the Schott Foundation for Public Education (which collected $725,000 from the two unions between 2013-2014 and 2014-2015), and Center for Popular Democracy (a recipient of $1 million in teachers’ union money in that same period whose board includes AFT President Rhonda (Randi) Weingarten on its board). Another coauthor, Philadelphia Student Union, has been one of AFT’s lead groups in its effort to oppose systemic reform and school choice in the City of Brotherly Love; it collected $20,000 from AFT in 2013-2014.

Given the presence of these groups, along with the presence of Alliance for Educational Justice (another group backed by AFT), it is little wonder why so much of the “manifesto” focuses on opposing choice and Parent Power, as well as calling for districts to stop hiring recruits trained by Teach For America, the teacher quality reform outfit that has long been the bane of the Big Two’s existence. [This is even before you consider that, unlike NEA and AFT, Teach For America has actually recruited more black men and women into teaching, as well as supported the work of Black Lives Matter activists such as McKesson and Brittany Packnett (a Teach For America staffer).] The manifesto proclaims to raise questions about the role of black families and communities in shaping the schools that serve their children. But because it merely consists of NEA and AFT talking points, it spends more time making laughable claims about “privatization” of education even though most children still attend traditional public schools.

The fingerprints of NEA and AFT can also be seen in what Movement for Black Lives either ignores or barely touches on: Zip Code Education policies such as zoned schooling and restrictions on intra-district choice that force black families to send their kids to dropout factories that put them on the path to poverty and prison. The overuse of out-of-school suspensions, referrals to juvenile justice systems and other forms of harsh traditional school discipline that all but a few NEA and AFT affiliates strongly support. The near-lifetime employment rules through tenure and teacher dismissal policies defended by NEA and AFT that deny high-quality teaching to black children. The traditional district bureaucracies, often influenced by NEA and AFT locals through campaign donations, that do everything possible to oppose Parent Trigger measures and other tools that give black families lead decision making roles in the schools that serve their children.

Certainly no one should expect NEA and AFT to care about the lives and futures of black children and their families. They have long ago proven that their concerns are elsewhere. But there is no reason why NAACP and Movement for Black Lives are siding with the Big Two in perpetuating the educational genocide that has enslaved and destroyed the minds and futures of the black children for which they are supposed to be concerned. In the process, both (along with the reform movement itself) have wasted an important opportunity to reshape systemic reform in a way that puts black children and families at the center. What a shame.

About the Author: RiShawn Biddle is Editor and Publisher of Dropout Nation — the leading commentary Web site on education reform — a columnist for Rare and The American Spectator, award-winning editorialist, speechwriter, communications consultant and education policy advisor. More importantly, he is a tireless advocate for improving the quality of K-12 education for every child. The co-author of A Byte at the Apple: Rethinking Education Data for the Post-NCLB Era, Biddle combines journalism, research and advocacy to bring insight on the nation’s education crisis and rally families and others to reform American public education. This article originally appeared in Dropout Nation and is republished here with permission from the author.

An Attempt to Get Public Financing of Campaigns Through the Back Door

Sen. Ben Allen’s SB 1107 wants to allow public funding of campaigns, something voters prohibited years ago. A long time acquaintance of mine, David Keating who now runs the Center for Competitive Politics in Washington, D.C. had an opinion piece in yesterday’s Orange County Register blasting the attempt by Sen. Allen to overturn a vote of the people with what Keating says is an unconstitutional bill. The voters outlawed public financing of campaigns with Proposition 73 in 1988. As someone who signed the ballot argument in favor of Proposition 73, I agree with Keating’s assessment. If legislators want public financing, legislators can’t do it on their own—they have to ask the voters.

Allen and supporters of SB 1107 claim that they are following the rules of the proposition that allow for legislative changes that “further the purposes” of the initiative. However, as Keating argues in his piece, “How can a bill “further [the] purpose” of the law banning tax-funded campaigns by allowing for tax-financed campaigns? The answer is: It can’t.”

Senator Ben Allen believes that public financing of campaigns will eliminate the role of special interests in the election process.

As Keating rightly points out, the California Constitution only allows a vote of the people to amend a previous initiative passed by the voters.

The public financing piece of Proposition 73 was a critical distinction between that effort to reform the Political Reform Act and a like measure that appeared on the same ballot. Proposition 68 would have allowed public financing in certain circumstances. The voters said yes to both measures but they were stronger for the proposition that carried the public financing ban. Proposition 73 received 58% of the vote; Proposition 68 got 52%. The law governing initiatives allowed for the initiative with the higher vote total to take effect.

In the ballot argument I signed along with Dan Stanford, former chairman of the Fair Political Practices Commission, we stated that the measure “flatly prohibited candidates’ use of any tax money in order to campaign for office.”

We added:

Keeping government spending under control is hard enough. Imagine how much harder it will be to keep politicians from spending more tax money on the most important thing in their lives—getting elected and re-elected.

I admit over the years I have wondered if the political contribution limits detailed in Prop 73 are the best way to further the democratic process. The argument for no limits and immediate reporting has appeal.

I have also considered if public funding on a major scale would ever take hold. Critics who see dominant interests controlling elections argue that public funding is the only solution to eliminate all interests. Some have wondered if business, frustrated with the dominance of labor unions in Sacramento, would ever consider supporting the public financing option?

The problem is these arguments run afoul of the First Amendment and the right to speak on crucial issues. Likewise, the argument we made in the ballot booklet 28 years ago is still valid: public spending would grow for campaigns at the expense of services funded by the state budget.

Regardless of any academic debate on public financing, one thing is clear—if the legislature wants public financing they can’t do it by legislative fiat, they have to go to the voters.

About the Author: Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee. This article originally appeared in Fox & Hounds and appears here with permission.

Union In The News – Weekly Highlights

Bill limiting campaign money to tax board amended to call for study
By Patrick McGreevy, August 9, 2016, Los Angeles Times
Faced with strong opposition from a member of the Board of Equalization, state Sen. Jerry Hill (D-San Mateo) has for a second time amended a bill that would have imposed tough new campaign contribution limits on board members to avoid conflicts of interest. The new bill simply calls for a study of possible new limits. Hill introduced SB 816 after The Times reported that donors were circumventing a $250 contribution limit to board members by funneling the money through political action committees or giving several donations — 45 from employees at one tax firm — of $249 each. Hill’s bill originally would have prohibited any contributions from firms and individuals with business before the board. (read article)

Former Union President admits to embezzling nearly $300,000 from local he ran.
By Associated Press, August 9, 2016, MyStateLine.com
A Rockford man has pleaded guilty in federal court to embezzling nearly $300,000 from the union of which he was President, Local 6 of the International Union of Bricklayers and Allied Craftworkers. In a written plea agreement, 49-year-old David Fleury admitted to committing the thefts over a four-year period up until May, 2015. Fleury as President was in charge of running daily operations, and was able to process an additional 153 salary checks and electronic deposits totaling $284,286 to be paid to him. Prosecutors say that in the plea agreement, Fleury admitted he used the embezzled funds to pay for personal expenses, for gambling at casinos, and for vacations. (read article)

Grand Jury Investigating Powerful, Clinton-Supporting Union for Allegedly Threatening Foes
By Jillian Kay Melchior, August 8, 2016, Heat Street
Pennsylvania’s attorney general is investigating whether Philadelphia’s most powerful union, a prominent backer of Hillary Clinton, has engaged in threats and intimidation against its foes. As the Philadelphia Inquirer noted, the allegations of Local 98 intimidation and threats are hardly new. As of 2013, the Center for Union Facts had tallied multiple complaints filed against Philadelphia electricians’ union members, including allegations of “coercive statements,” “harassment,” “threatening statements” and “violence/assault.” And as early as the 1990s, the National Labor Relations Board said the union’s leaders were “masters when it comes to unlawful… conduct, intimidation, and coercion.” (read article)

CPS proposes $5.4 billion budget, teacher pact similar to earlier submission
By Juan Perez Jr. & Marian Renault, August 8, 2016, Chicago Tribune
Chicago Public Schools on Monday unveiled a $5.4 billion operating budget proposal that assumes the Chicago Teachers Union will accept a contract similar to one a CTU bargaining team soundly rejected earlier this year. CTU President Karen Lewis was quick to say the district is wrong to think her union will come around on the contract offer from January. (read article)

FBI raids IBEW union hall, labor leader John Dougherty’s home
By Daniel Craig, August 5, 2016, Philly Voice
Federal authorities on Friday morning descended on multiple locations in Philadelphia, including the offices of IBEW Local 98 and the home of labor leader John Dougherty. The FBI said agents were at the electricians union hall at 17th and Spring Garden streets in Spring Garden for an “ongoing investigation.” Federal agents searched Dougherty’s home in November 2006 as a part of a tax-fraud investigation into electrical contractor Donald “Gus” Dougherty, a longtime friend who is of no relation to the union leader. Gus Dougherty later pleaded guilty to 99 charges, including doing $115,600 of electrical work on Johnny Doc’s home for free. (read article)

Grocery strike averted: Workers reach tentative deal with Ralphs and Albertsons
By Shan Li, August 4, 2016, Los Angeles Times
Southern California grocery workers have reached a tentative labor agreement with the Ralphs and Albertsons chains. The move averts the immediate threat of a strike that could have roiled some of the region’s largest supermarket chains. Ralphs spokeswoman Kendra Doyel said the company had proposed pay increases and changes to its pension and healthcare plans. She did not provide specifics on the deal. (read article)

Proposed labor contracts come with pay increases but total cost is a mystery
By Jan Murphy, August 4, 2016, PennLive.com
The proposed contracts that Gov. Tom Wolf’s administration has reached with the two largest state employee unions include more generous pay increases than the ones they received in their last four-year contracts. What the proposed raises for the approximate 41,000 employees represented by the American Federation of State, County and Municipal Employees Council 13 and Service Employees International Union Local 668 will cost taxpayers remains a mystery for now. The tentative three-year agreements call for a total of five general or step increases that add up to 11.75 percent. (read article)

Nurses Union Has a Cure for Big Labor’s Disconnect from Membership
By Connor D. Wolf, August 4, 2016, InsideSources
The president of a major nurses union detailed Wednesday how having volunteer leaders has helped avoid the problem of becoming disconnected from membership. National Nurses United (NNU) is unique from other national unions in that everyone in a leadership position is a volunteer that works in the medical industry. The unions leaders say they know what their members need because they work alongside them and face the same problems. Labor unions elsewhere often become disconnected from the needs of their members, they say. (read article)

New Jersey lawmaker seeks probe of union contribution threat
By Hilary Russ, August 3, 2016, Reuters
New Jersey Senate President Stephen Sweeney, the state’s top elected Democrat, on Wednesday asked state and federal prosecutors to investigate alleged threats by a labor union that he said amounted to bribery and attempts to corrupt public officials. The New Jersey Education Association (NJEA) threatened to withhold campaign contributions until Sweeney and other lawmakers passed a proposed constitutional amendment that would boost the state’s public pensions, Sweeney said. “These threats clearly cross the line from lobbying to attempted bribery and conspiracy,” he said. (read article)

Portman gets support from another labor union
By Associated Press, August 3, 2016, Dayton Daily News
Republican Sen. Rob Portman won the support of another Ohio labor union Wednesday, fueling GOP optimism about hanging onto the swing-state seat and Senate control in November. The union endorsement also added to Democrats’ concerns about their candidate, former Gov. Ted Strickland. The endorsement from Local 18 of the International Union of Operating Engineers, which backed Strickland for governor in 2006, comes after Portman also announced support from branches of the Teamsters and the Mine Workers, which also switched their allegiance from Strickland. (read article)

San Bernardino County sheriff’s labor union ratifies county contracts
By Joe Nelson, August 2, 2016, San Bernadino County Sun
After more than 18 months of hard-fought negotiating, the San Bernardino County Safety Employees Benefit Association, the union representing sheriff’s deputies and other public safety officials, has entered into two labor contracts with the county. On Tuesday, SEBA announced it ratified two contracts for the ranks of deputy through lieutenant. The new contracts call for, among other things, a three percent raise annually for the next three years, higher starting pay for deputies, an increase in an annual uniform allowance of $1,200, and medical premium subsidy increases. (read article)

Preserving the right to work
By Trey Kovacs & Tyler Kovacs, August 2, 2016, Washington Times
Labor unions are aggressively filing lawsuits against right-to-work laws across the nation. Currently, in Idaho, Indiana, Wisconsin and West Virginia, organized labor is challenging workers’ right to choose whether or not to pay union dues as a condition of employment without risk of penalty. With the untimely death of U.S. Supreme Court Justice Antonin Scalia, some fear right-to-work laws now in effect in 26 states are just one Democratic appointee away from extinction. Right-to-work laws free workers from forced union dues, so losing those rights would be a devastating blow to worker freedom. (read article)

ACLU Joins Unions to Attack California Charter Schools

About 6.2 million students attend California’s K-12 public schools. Of those, over 570,000 are enrolled in public charter schools. Most of these charter schools operate with a degree of management autonomy and teacher accountability that goes well beyond what is permitted by the union work rules that govern traditional public schools. These charter schools themselves are accountable – if they don’t deliver better academic outcomes cost-effectively, they are closed down. They are a laboratory for excellence in education and administration, and they’re working. And their success is a tremendous threat to teachers unions.

Enter the ACLU. In a study released earlier this week, the ACLU said it had identified 253 schools with “exclusionary policies,” and noted “this is just the tip of the iceberg.” The exclusionary policies were (1) exclusion based on academic performance, (2) discrimination against English learners, (3) pre-enrollment essays or interviews, (4) illegal parent/guardian volunteer requirements, (5) requirements that discourage undocumented students.

If you consider the ACLU case on its merits, there isn’t much to argue about. Traditional public schools receive funding to admit all students, and charter public schools must do the same. But the entire premise is flawed: schools should be able to develop unique identities in order to offer a diverse set of educational choices to our diverse student population.

Examples of such diversity are inspiring, and range from the Eagle Academy in Harlem, which is attended almost exclusively by African American young men, or the Detroit International Academy for Young Women. These schools deliver outstanding academic results, they cannot possibly admit everyone who wants to attend, and they are exclusionary.

Some of the premises underlying the ACLU’s case are easily contestable, because they are rooted in a concession to mediocrity that has taken over public schools. Instead of making charter schools change their policies, why not change the rules? For example, why aren’t all public schools engaging in “pre-enrollment essays or interviews”? Why don’t all public schools require parents to volunteer some time at the school?

As for violation No. 2 – our public schools are academically segregated as it is, with the high-achieving students exclusively taking AP courses that relegate their exposure to the rest of the student body to hallways and common areas. Should a charter school focus on attracting top students? And if some of them did, how would that differ from what already occurs with AP courses?

The ACLU’s case with respect to the other violations is, at least, easier to justify on moral grounds. Of course we should be admitting students who don’t speak English as a first language. Of course we have to educate children regardless of their immigration status. But the vast majority of charter schools aren’t trying to exclude these students. Most charter schools are non-profits, with supplemental funding provided by philanthropists with the noblest of intentions. Charter schools are an attempt to deliver educational excellence in communities with some of the worst-performing traditional public schools in the U.S. The ACLU is missing the forest for the trees.

If the ACLU wants to fix public education, it might throw its considerable legal might behind the upcoming final round of the Vergara case, likely to be heard in the California Supreme Court next year. The plaintiffs in this case argued that the right to a quality public education is a civil right, and that students in low-income communities are denied that right through inferior public schools. They specifically challenged three union work rules which they demonstrated had a disproportionately negative impact on education in low-income communities: (1) granting teacher tenure after less than two years of classroom observation, (2) “last-in, first-out” policies whereby seniority trumps merit in layoffs, and (3) dismissal procedures so onerous that incompetent teachers are almost never fired.

Where is the ACLU with respect to Vergara?

The ACLU has a well-earned reputation for impartiality. When it comes to civil rights issues they are as likely to defend someone on the far right as someone on the far left. For this they have earned animosity and respect, depending on whom you ask. But if the ACLU intends to be truly impartial on the civil right to a quality education, at the least it may use its resources to support the plaintiffs in the Vergara case.

As for the ACLU’s salvo against charter schools? The organization should realize that charter school operators are almost invariably motivated by nothing more than providing excellent education to underprivileged students. They should be making it easier for them to do that, not more difficult.

 *   *   *

Ed Ring is the president of the California Policy Center.

Ballot Box Budgeting Wreaks Havoc on California Budget, Beware of Props. 51, 55, and 56

As a professor of public budgeting and someone who has worked their entire career analyzing public budgets, I can say that ballot box budgeting wreaks havoc on the California budget process and taxpayer interests.

Yet it is something that voters are so accustomed to doing that most average voters don’t even know what “ballot box budgeting” is.

In short, ballot box budgeting is the practice of making major budget decisions at the ballot box.  And unlike the normal budget process, these decisions are commonly written into the California Constitution, and not subject to change in any way short of another ballot measure.  

The result is that funds are locked in to being spent for a particular purpose regardless of other budget needs and priorities, and commonly lack the same accountability and oversight that the rest of the California budget is subject to through the legislative process.

There are three measures on the November 2016 ballot that represent ballot box budgeting at its worst, and should be rejected—Proposition 51 School Bonds, Proposition 55 School Funding, and Proposition 56 Tobacco Tax Increase.  There is one other measure, Proposition 64 Marijuana Legalization and Tax, which represents ballot box budgeting, but is less egregious and is worthy of consideration on its policy merits given that marijuana is not currently legal and therefore not taxed at all but should be considered on policy grounds.

The reality is that nearly all initiatives have some type of budget impact, but initiatives that allocate a significant dollar amount of public funds should generally be looked at with great skepticism, particularly those that raise taxes or reallocate existing public funds in some way.

Another common element in ballot box budgeting is a “pay to play” element, characterized by a situation where special interests sponsor a ballot measure that allocates public funds that benefit their private financial interest.   All four initiatives mentioned above have a significant “pay to play” element, that should be considered as well, and viewed with great skepticism.

In generally all such cases, initiatives are sold as being crafted in the “common good” or for the “public interest” but the real motivation is to benefit the private interests that raised the money to quality the measure and run a support campaign.

For example, Prop. 51 authorizes $9 billion in general obligation bonds for construction of K-12 public schools.  The construction of school facilities is done through a process at the local level, with state bond funds providing a state match, but this local process has come under great fire in the media recently, largely due to California Treasurer John Chiang’s efforts.

Treasurer Chiang has stopped short of criticizing Prop. 51 specifically but he has came down hard on the local municipal bond process as being a “pay to play” process that “rips-off taxpayers,” according to Treasurer Chiang’s press release.

Chiang says this “pay to play” process rewards special interests including developers, bondholders, and construction companies who offer to fund local bond campaigns in exchange for lucrative contracts, which are “no bid” contracts in many cases.

 

Treasurer Chiang believes the municipal bond process is designed to “rip off tax-payers”

 

“Not only are these “pay-to-play” arrangements unlawful, they rip off taxpayers and endanger the integrity of school bonds,” Treasurer John Chiang declared, noting that between 2012-15 K-12 school districts issued $43.8 billion in long-term debt.

Without cleaning up this “corrupt” process, Prop. 51 essentially puts $9 billion in public funds at risk for misallocation by school districts and public agencies.  And will subject taxpayers to huge future costs, for spending with questionable public benefits given the process through which these bonds are issued under the current system.

Of course, the same special interests who benefit from this “pay to play” process are the primary proponents of Prop. 51, and are putting up millions of dollars to lock in these lucrative contracts for public bond spending.  A number of local districts are also proposing local bonds on the November 2016 ballot to provide a local match for these highly questionable public projects.

Prop. 55 is the example of another measure which might appear legitimate on its face because it raises money for “schools” and “health programs.”   But should also be rejected on ground of being a terrible case of “ballot box budgeting” and “pay to play” corruption of the state’s initiative process.

Prop. 55 extends the Prop. 30 (2012) income tax increases taxes on individuals and small businesses, which expire at the end of 2017, for another 12 years until 2030.  The effort is being sold as being a legitimate effort to fund schools and health care because Prop. 30 is something that the Governor, Legislature and business community agreed on back in 2012.

But Prop. 55 is not the same as the deal cut back in 2012, and should be rejected.  First, Prop. 55 is much more expensive, nearly twice as expensive as Prop. 30—and represents an $8-11 billion tax increase, as opposed to a $6.5 billion annual hit from Prop. 30.  Secondly, the measure is not “temporary,” and results in a broken promise Governor and Legislature made to voters in 2012—that’s why Governor Brown says he will not endorse Prop. 55.

Lastly, Prop. 55 adds a significant “pay to play” element as well by giving private hospital interests a piece of the action.  Specifically, Prop. 55 locks in another $2 billion in funding for “health programs,” which did not even exist in Prop. 30, and is a pure handout to the hospital interests which have already contributed more than $21 million to the Yes on Prop. 55 Campaign.

Public employee union interests get the bulk of the funds, estimated at $75 billion over 12 years, in salary and benefit spending primarily but the public generally does not view them as being the same type of “special interest” as purely private interests.  Yet, these public employee union interests have put up another $18 million thus far to support Prop. 55, and stand to reap huge rewards for their members and dues increases if Prop. 55 passes.

From a ballot box budgeting perspective, both Prop. 55 and the Prop. 56 $2 per pack tobacco tax increase are terrible budget policy because they lock in significant expenditure of public funds that will be allocated outside of the state’s annual budget process without regard to actual need or other pressing spending priorities.

Prop. 55 locks in $8-11 billion in spending with the bulk going for education, but another $2 billion going to “health care” programs—again not allocated according to need or the accountability standards under the state’s annual budget process which subjects all public spending to annual review.  Prop. 56 locks in another $1-1.4 billion in health care spending that will be allocated outside the state’s budget process.

Voters are encouraged to reject Propositions 51, 55, and 56 on grounds that they are terrible examples of “ballot box budgeting,” in which special interests put up millions of dollars, even tens of millions of dollars, to try to pass “public interest” measures with the expectation of a big payday at taxpayer expense for the years to come.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

Union In The News – Weekly Highlights

California’s Ed Reform Wars
By Rachel M. Cohen, August 2, 2016, The American Prospect
This past April, the California Court of Appeals unanimously struck down the controversial Vergara v. California decision, in which a Los Angeles County Superior Court judge ruled that five longstanding teacher protections—including a two-year probationary period for new teachers and a layoff system based on how many years one’s been teaching—violated students’ constitutional right to an equal education. The lower court judge had argued that these labor protections make it harder to fire bad teachers, and bad teachers significantly undermine a child’s education. In a 3-0 decision, the appellate judges concluded that the labor protections themselves are not responsible for harming students, even if school administrators sometimes implement them injudiciously. (read article)

L.A. Metro’s sales tax proposal will appear on the November ballot
By Laura J. Nelson, August 2, 2016, Los Angeles Times
Los Angeles County voters will be asked in November to approve a half-cent sales tax increase that would continue indefinitely to fund a major expansion of Southern California’s transit network. The Board of Supervisors unanimously agreed Tuesday to add the Metropolitan Transportation Authority’s tax increase proposal to a ballot already crowded with other initiatives. The proposal, approved by Metro’s directors in June, would generate at least $860 million per year to expand the county’s rail network through the San Fernando Valley, the San Gabriel Valley and the Sepulveda Pass. The proposal would raise the county’s base sales rate to 9.5% and push the rate to 10% in some cities, including Santa Monica and Commerce. (read article)

Unions Flex Political Muscle at the DNC — But Uber and Airbnb Lurk
By Justin Miller, August 2, 2016, American Prospect
The labor movement’s agenda was on full display in Philadelphia, as was the Democratic Party’s emerging rift between unions and Silicon Valley. The battle between the labor wing and the Silicon Valley wing of the party will likely escalate in coming years, but for now labor will remain the stronger force. “Sharing economy” giants like Uber and Airbnb are just now dipping their toes into politics—and, for now, mostly at the local level. (read article)

State Public Employee Union Vows To Fight Judge’s Ruling
By Chronicle Staff, July 30, 2016, Sky Valley Chronicle
The Washington Federation of State Employees (WFSE) union, the largest public employee union in the state says it ain’t over till it’s over. In an email to union members dated July 29 union officials said, “It’s not over in the fight to stop the Freedom Foundation from getting your private information. The fight to stop the Freedom Foundation from getting your date of birth and other private information is headed to the State Court of Appeals. We won’t know until early next week if the appeals court will grant a stay delaying the release of information even further.” (read article)

Battle for union vote erupts in Ohio
By Naomi Jagoda, July 30, 2016, The Hill
A battle for the union vote has erupted in the Ohio Senate race, with Republican Rob Portman seeking to make inroads with labor groups traditionally aligned with Democrats. Democrat Ted Strickland, a former Ohio governor, has received the bulk of the union endorsements in the race. But Portman, the incumbent, has recently garnered the support of several labor groups that have backed Strickland in the past. Portman recently received endorsements from the Ohio Conference of Teamsters, which has more than 50,000 members, and the Fraternal Order of Police (FOP) of Ohio, which has more than 25,000 members. Last month, he received the endorsement of the United Mine Workers of America (UMWA). (read article)

California voters disenfranchised by shady union-hospital deal
By Sal Rosselli, July 28, 2016, San Francisco Examiner
California voters have been duped, defrauded and double-crossed — twice — and now they’re being fed an outrageously disingenuous lie to cover it up and explain it away. Earlier this month, a judge blocked an attempt by Oakland-based Service Employees International Union–United Healthcare Workers West (SEIU–UHW) to place on the November ballot an initiative that would have limited the pay of nonprofit hospital executives. Why did the judge block it? Because it’s a bad idea? No. Because it was written incorrectly? No. It’s hard to believe, but the courts blocked the ballot initiative because it violated a secretive, collusive arrangement between SEIU–UHW and the California Hospital Association. (read article)

WikiLeaks reveals DNC holds unions in contempt
By Jeremy Lott, July 28, 2016, The Detroit News
The latest WikiLeaks document dump — containing emails by high-ranking staffers of the Democratic National Committee — caused considerable heartburn for America’s oldest political party. When brainstorming what to do about last week’s Republican National Convention, the DNC’s Rachel Palermo urged her party to “meet with the hotel trades, SEIU, and Fight for 15 about staging a strike.” She said the result could be a “fast food worker strike around the city or just at franchises around the convention.” The aim would not be to improve working conditions, but to bloody Republicans. (read article)

Chicago police union asks cops to not volunteer for overtime on Labor Day weekend
By Don Babwin, July 27, 2016, ABC News
Chicago’s police union is asking officers to not volunteer to work overtime during the Labor Day weekend to protest the “continued disrespect” toward officers and the killings of law enforcement personnel nationwide. The Chicago Police Department typically deploys thousands of officers on overtime to counteract the spike in shootings that usually occurs during long holiday weekends. But in a recent flier sent to rank-and-file officers, the Chicago Fraternal Order of Police Lodge 7 advises against officers volunteering for duty. (read article)

Senate workers will get $1 million in back pay after Labor Department probe
By Mike DeBonis, July 27, 2016, Washington Post
Hundreds of U.S. Senate cafeteria workers will get hefty checks for back pay after a Labor Department investigation found they were underpaid for their work under federal law. The private contractor hired by the Architect of the Capitol to run the Senate food-service operation did not abide by the Service Contract Act, which governs wages paid to employees working under large federal contracts, the probe found. Employees were misclassified into lower-paying jobs and required to perform work before clocking in, the department said in a release. (read article)

National Union Bosses Ignore Member Support For Trump, Endorse Clinton Instead
By Ted Goodman, July 27, 2016, Daily Caller 
Labor leaders voiced their support for Democratic nominee Hillary Clinton at the Democratic National Convention in Philadelphia this week, despite significant support for Republican nominee Donald Trump among labor ranks. Top leaders of the AFL-CIO, the Service Employees International Union, the National Education Association AFSCME, and other labor groups took to the stage at the DNC on Monday, voicing their support for Clinton and blasting Trump. There have been many reports and polls on Trump’s support among union members, and they seem to indicate that while Trump doesn’t have a majority support, he has significantly more than previous Republican candidates. (read article)

NLRB Upholds Union’s Right To Endorse BDS Against Israel
By Alex Kane, July 27, 2016, In These Times
The National Labor Relations Board (NLRB) has upheld a decision to dismiss a complaint against the United Electrical, Radio, and Machine Workers of America (UE) for endorsing a boycott of Israel. The move is a victory for advocates of the boycott, divestment and sanctions (BDS) movement, which targets Israel over alleged human rights abuses against Palestinians. Earlier this year, the NLRB ruled against Shurat HaDin, the Israeli legal center that brought the complaint seeking an injunction against UE’s decision to endorse boycotting Israel. The latest decision was in response to an appeal filed by Shurat HaDin. UE endorsed the call for BDS at its August convention, making it the first national union in the United States to support the boycott. (read article)

As California Supreme Court mulls Vergara appeal, a case on teacher evaluations will be heard this week
By Sarah Favot, July 26, 2016, LA School Report
As the California Supreme Court considers whether to take up an appeal of an appellate court ruling in Vergara v. California, which has been extended to Aug. 22, the advocacy group that brought the landmark case will be in a Northern California courtroom Friday for a hearing on a case involving teacher evaluations. Last year Students Matter filed a lawsuit, Doe v. Antioch, against 13 California school districts, saying collective bargaining agreements in those districts violated the Stull Act by explicitly prohibiting the use of student standardized test scores in assessing teacher performance. (read article)

Why These Union Members and Lifelong Democrats Are Voting Trump
By Patricia Murphy, July 26, 2016, Daily Beast
David Kemper and his wife are union members and lifelong Democrats. But the Kempers and their 20-year-old son, Nicholas, are planning to vote for Donald Trump in November. “Growing up we were very strong Democrats, but the Democrat party left us,” David Kemper said, standing at the back of a Ted Cruz barbecue near the Republican National Convention in Cleveland last week. He had traveled from Minnesota to the RNC to be with Nicholas, who was an alternate Texas delegate for Trump. When the Kempers vote for Trump, they’ll be breaking with the leadership of their national unions, which have both endorsed Hillary Clinton for president. “I’m in the CWA, my wife is American Federation of Teachers, but we felt like the unions have left us, too,” said David Kemper. (read article)

Quality Education Remains Thwarted by Teachers Unions

An article in today’s American Prospect, of all places, offers an in-depth look at just how little progress has actually been made towards restoring quality education to California’s public school students. Because the article appears in a publication that is “dedicated to American liberalism,” and because “American liberalism” depends more than anything else on billions in annual political contributions from government unions, you almost have to read between the lines to realize who the bad guys are.

Nonetheless, “California’s Ed Reform Wars,” by Rachel Cohen, all 3,200 words of it, is a fine piece of work. Read it closely, if you can stomach the facts. The bad guys – a matter of opinion, of course – are the government unions. The victims? California’s students, and the future of this great state.

Covered first is the uncertain fate of the Vergara case, funded by wealthy activists – many of them liberals – in the Silicon Valley. The plaintiffs are public school students whose case was founded on the argument that union work rules, specifically the policies governing tenure, layoff and dismissal policies, cause disproportionate harm to students in low-income communities. During round one, two years ago in a Los Angeles courtroom, reformers were mesmerized by the brilliant closing arguments of the lead attorney for the plaintiffs, along with the ruling by the judge in the case, who emphatically agreed.

That was then. In April of this year, by a 3-0 vote, the California Court of Appeals unanimously struck down the original Vergara v. California decision. The case will now go to the California Supreme Court. Its chances aren’t great.

But shouldn’t elected officials, not the courts, make policy decisions? In a perfect world, that would certainly be true, but in California’s state legislature, as Cohen herself writes, “Following the original Vergara decision, Republican lawmakers introduced a package of three bills to extend the time it would take a teacher to earn tenure, to repeal the “last-in, first-out” statute that makes layoff decisions based on seniority, and to establish an annual teacher evaluation system. These bills, however, got nowhere in the Democratic-controlled statehouse.”

Here’s where the story gets interesting. Because then a democratic Assemblywoman who takes money from government unions, Susan Bonilla, tried to push legislation through that might reform at least some of the employment statutes that protect bad teachers. Cohen writes:

“Bonilla proposed, among other things, giving principals the option of waiting until a teacher’s third or fourth year to grant tenure, and placing poorly performing teachers in a program that would provide increased professional support. If the ineffective teacher received another low performance rating after a year in this program, Bonilla’s legislation would enable schools to fire the teacher through an expedited process.”

Might that be watered down enough? Might that not have a chance? For the children?

Forget it. Despite endorsements including one from the editorial board of the Los Angeles Times, the teachers union issued an “action alert” to their members, calling the bill “an all-out assault” by “corporate millionaires and special interests.” The bill was going to go nowhere in California’s union-controlled legislature. So Bonilla tried again. As Cohen reports:

“In June, Bonilla introduced an amended version of her bill, one that would require new teachers to work for three years before becoming eligible for tenure. Her bill no longer included provisions to create a new teacher evaluation system, to require teachers with poor performance reviews to be laid off before those with less seniority, and to remove many of the dismissal rules that administrators found frustrating.”

Not much left there. Just a bill to marginally extend the probationary period before teachers acquire tenure. But still it was opposed by the unions, and it died in committee by a vote of 9 to 2. The two legislators who voted in favor were due to be termed out and therefore could vote their consciences.

When it comes to government unions, perhaps the teachers union most of all, the lack of support for bipartisan reform is not a mystery. Government unions in California collect and spend over $1.0 billion each year, which gives them the ability to financially dominate any election, anytime, anywhere, whenever they choose. But there’s more to it. These unions use their financial and organizational power to anoint not only politicians, but also bureaucrats, teachers, and anyone in the business community who may have any need to work with the government bureaucracy. They can anoint, or they can target. Best friend or worst enemy? Take your pick.

Liberals know this, but they tolerate the teachers union because along with all that money the union gives their candidates, the union political agenda matches their own – bigger government, more regulations. They don’t understand, unfortunately, that more regulations favor big business and destroy entrepreneurs who deliver the competitive innovations that have improved our lives. And they certainly don’t put enough importance on innovation in education.

Someday liberals may care enough “for the children” to stand up to the teachers union. Don’t hold your breath.

 *   *   *

Ed Ring is the president of the California Policy Center.

The Pension Monster and How Much It’s Costing You to Keep It Fed

Why haven’t Mayor Eric Garcetti and City Council President Herb Wesson followed up on the recommendation by the LA 2020 Commission to “establish a Commission on Retirement Security to review the City’s retirement obligations in order to promote an accurate understanding of the facts” and make “concrete recommendations on how to achieve equilibrium on retirement costs by 2020?”

Why?  Because these two ambitious politicians fear alienating the campaign funding leaders of the City’s unions who do not want a public discussion of the facts surrounding the City’s ever increasing annual contributions to the City’s two massively underfunded pension plans that are forcing the City to scale back on basic services.

Over the last ten years, the City’s contribution to its two pension plans (Los Angeles City Employees Retirement System and the Los Angeles Fire and Police Pension System) has tripled to $1.1 billion, up from $350 million in 2005.  As a result, pension contributions now chew up 20% of the City’s $5.6 billion budget, up from less than 10% in 2005.

 

Are Mayor Eric Garcetti and City Council President Herb Wesson afraid of discussing with union leaders the prospect of LA’s growing unfunded liability?

 

This $750 million increase in pension contributions has forced the City to cut back on basic services such as public safety and the repair and maintenance of our streets, sidewalks, and parks.  The City has even resorted to placing an ill-conceived $1.2 billion bond measure on the November ballot to fund supportive housing for the homeless.

Unfortunately, it is only going to get worse as the City, its pension plans, and their fiscally irresponsible, Garcetti appointed Commissioners are banking on an overly optimistic rate of return of 7½% on the combined investment portfolio of $33 billion.

But the stock and bond markets are not cooperating as demonstrated by this year’s less than 1% return on CalPERS (California Public Employees’ Retirement System) $300 billion investment portfolio.

If the City’s pension funds earned this meager 1% as compared to the targeted 7½%, it would result in an investment shortfall of an estimated $2.7 billion, an amount equal to about half of the City’s annual budget.  This “loss” will increase the unfunded pension liability as of June 30, 2016 to almost $11 billion, representing a funded ratio of an unhealthy 74%.

However, if the investment rate assumption was a more reasonable 6½% as recommended by knowledgeable investors such as Berkshire Hathaway’s Warren Buffett, the unfunded pension liability would jump to over $16 billion, representing a dangerously low funded ratio of 66% and almost three times the City’s annual budget.

Over the next five years, the City’s two pension plans will rack up an additional shortfall of over $5 billion if the rate of return on their investment portfolios is 6½%, a much more likely outcome than the targeted return of 7½%.

But rather than recognizing this combined shortfall of $7.9 billion over the next five years, the City has cooked up a scheme to amortize these losses over a 20 year period, reducing the hit to the City’s budget.

Even with this scheme, the City’s pension contribution is expected to increase by more than 50% over the next five years to $1.7 billion, representing 27% of the City’s projected General Fund budget.

Garcetti and Wesson, along with Budget Committee Chair Paul Krekorian and Personnel Chair Paul Koretz, will tell us they made significant reforms to LAFPP in 2011 and LACERS in 2013 and 2015.  But these cosmetic amendments are nickels and dimes and did not address the overly optimistic investment rate assumption of 7½% and the unsustainable post-retirement medical benefits.

This pension time bomb is a weapon of mass financial destruction where we will burden the next generation of Angelenos with tens of billions of unsustainable debt. This will destroy their standard of living and their environment.

It is time for Garcetti, Wesson, and the members of the City Council to get off their fat asses, put on their big boy pants, and begin to address this problem by establishing an independent, well-funded Committee for Retirement Security.

Only then will we be able to begin the hard task of developing a solution where the City and its future will not be devoured by the pension monster.

Cross-posted at City Watch LA

About the Author: Jack Humphreville is a LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

Union In The News – Weekly Highlights

Raising Minimum Starting Wages to $15 per Hour Would Eliminate Seven Million Jobs
By James Sherk, July 26, 2016, Democracy Now
Prominent Members of Congress have proposed raising the minimum wage to $15 per hour, more than doubling the federal minimum wage. States with lower costs of living would see an even greater real increase. At the state level, the minimum wage would cover one-third of wage and salary workers. The new minimum-wage legislation, including payroll taxes and the employer mandate, would increase the minimum cost of hiring a full-time worker to $18.61 per hour. Businesses would respond to these higher labor costs by reducing employment of affected workers by over one-sixth, thus eliminating approximately seven million full-time-equivalent (FTE) jobs by 2021. Forcing employers to pay starting wages of $15 per hour would make many less skilled workers unemployable. (read article)

Union urges cops to refuse ‘non-mandatory’ Labor Day weekend OT
By Fran Spielman, July 25, 2016, Chicago Sun-Times

The decision to declare Sept. 2, 3, 4 and 5 “FOP Unity Days” was communicated to rank-and-file police officers in a union flier. If a majority of rank-and-file officers follow the directive issued to rank-and-file officers in a union flier, it has the potential to underscore a severe manpower shortage masked by runaway overtime that topped $116 million last year. It could also leave the city woefully short of the officers needed to tamp down violence over the long holiday weekend.“In order to show unity and to protest the continued disrespect of Chicago Police officers and the killing of law enforcement officers across our country, we are requesting FOP members to refrain from volunteering to work for any and all special secondary and other types of non-mandatory overtime employment for the entire Labor Day weekend,” the flier states. (read article)

Labor Unions Use Technology to Grow and Maintain Membership
By Howard M. Bloom, July 25, 2016, The National Law Review
Labor unions today are “tech” savvy, using mobile app and other technology to grow and maintain their memberships. According to a report in the Bloomberg Bureau of National Affairs Daily Labor Report (136 DLR C-1 July 18, 2016), a number of labor unions, including the International Association of Machinists, Communication Workers of America, and Service Employees International Union, are using app technology to inform members of union news, sign political action petitions, access video clips and pictures, read press releases, view union social media accounts, and report workplace violations, all with the goal of reaching and growing their memberships. (read article)

How Union Deals Have Derailed The California High-Speed Railway
By Connor D. Wolf, July 24, 2016, Daily Caller
California’s attempt to connect the state with a high-speed railway system has faced major setbacks thanks in part to union deals. The California High Speed Rail Authority (HSR) began construction in 2014 with the hopes of connecting close to a dozens cities. The project has faced major delays and financial difficulties. The Coalition for Fair Employment in Construction (CFEC) notes the railway is plagued with problems — including union influence. “The approval was made in 2008 and since then they have basically been struggling to get anything beyond an initial amount that was approved,” CFEC Executive Director Eric Christen told The Daily Caller News Foundation. “The problem is that there’s no source of funding. (read article)

Trump’s courtship of union members complicated by Pence
By Tim Devaney, July 24, 2016, The Hill
Republican presidential nominee Donald Trump wants to reach out to blue-collar workers, but his running mate isn’t going to make that easy. Indiana Gov. Mike Pence is a free-trade supporter who has opposed lifting the minimum wage. Neither of those positions is going to help the GOP ticket with labor unions; AFL-CIO President Richard Trumka called Pence the “second worst” vice presidential pick in history. Labor leaders like Trumka are backing presumptive Democratic nominee Hillary Clinton, but Trump believes he can win over rank-and-file union members who are turned off by the Democrat. But that outreach will be complicated by the selection of Pence, labor officials say.  (read article)

Why Black Lives Matter Is Taking On Police Unions
By Adeshina Emmanuel, July 23, 2016, AlterNet
Activists in the movement for black lives are working to lift the veil on one of the most powerful influences in law enforcement: police unions. The focus is no longer just on individual officers; it’s on the institutions that protect and shield them. Organizers protested at the offices of two of the nation’s largest police unions this week as part of a nationwide week of action under the banner #Freedomnow. Protesting organized labor may seem like a surprising move for a radical group. “We’re definitely pro-labor union,” explains Black Youth Project 100 (BYP100) organizer Clarise McCants. “But our message is that the Fraternal Order of Police (FOP) is not just like any union,” she said. “They are a fraternity—and they are the most dangerous fraternity in America.” (read article)

Former VA Labor Union President Sentenced For Pocketing Funds
By Dan Chaison, July 22, 2016, Daily Caller
William Davis, a former local chapter president for the American Federation of Government Employees, was sentenced on Wednesday for embezzling $150,000 in funds. The 56 year-old New York resident will serve 15 months in prison after pleading guilty in federal court to stealing from the union. The AFGE is the largest national labor union, representing 670,000 federal workers. Davis’ chapter, Local 1119, covers 300 employees of the Veterans Affairs Medical Center in Montrose, N.Y. (read article)

Coming Tax Hikes For Government Pensions, How Much Will You Pay?
By Chuck DeVore, July 22, 2016, Forbes
Decades of generous pension increases made to government employees by politicians are looming larger on state and local government balance sheets across America. Days ago, Ted Eliopoulos, head of the California Public Employees’ Retirement System (CalPERS), announced that he earned 0.61 percent in the prior year on a $300-billion-dollar investment fund—California’s worst year since the stock market meltdown in 2009. CalPERS expects to earn 7.5 percent annually on its investments. Last year, the nation’s largest state and local pension fund returned 2.5 percent; the year before, 1 percent. (read article)

After Obama, GOP platform moves right on labor issues
By Sean Higgins, July 20, 2016, Washington Examiner
There is not much for labor leaders to like in the Republican Party’s 2016 platform. It is one of the toughest the party has had in the last four decades in terms of calling for union power to be reined in, a direct response to President Obama, one of the most pro-union presidents in decades. The latest platform calls for such reforms as a national right-to-work law to prohibit workers from being forced to join or support a union. It also demands that the National Labor Relations Board, the main federal labor law enforcement agency, be defanged; opposes the Labor Department’s recent move to expand worker overtime requirements; and calls for the repeal of laws that benefit unions in federal contracting. The new version promises to “bring labor law into the 21st century” by getting rid of regulations that it says strangle innovation, shackle employers and employees alike and have no place in the modern economy. (read article)

California transportation workers reject sellout contract
By Isaac Fin, July 20, 2016, World Socialist Website 
In a vote earlier this month, maintenance workers employed by the California Department of Transportation (Caltrans) overwhelming rejected a sellout contract negotiated between the state government and the International Union of Operating Engineers (IUOE). The roughly 12,000 electricians, window cleaners, aqueduct construction workers and truck drivers have been working without a contract since July 1, 2015. The state and IUOE Unit 12 came to an agreement last June, which include a 10 percent pay raise over four years that would translate into a pay decrease after adjusting for inflation and changes in benefits. Union officials have not disclosed the number of workers who voted, but admitted that 67 percent of those voting rejected the contract. The vote also authorized the union to conduct a strike if ongoing negotiations reach an impasse. (read article)

Why construction unions are fighting Gov. Jerry Brown’s plan for more housing
By Liam Dillon, July 20, 2016, Los Angeles Times
A fight over construction worker pay has left Gov. Jerry Brown and a powerful labor group at a stalemate over the governor’s plan to speed up housing development for low-income Californians, leaving uncertainty over whether a final deal can be reached before the end of the legislative session in August. Brown has proposed legislation to streamline approval for housing with units for low-income residents. The State Building and Construction Trades Council, which represents ironworkers, roofers, electrical workers and other construction unions, wants Brown to force home builders to pay construction workers at rates often equivalent to union wages to qualify under the plan, something the governor is resisting. (read article)

California’s unemployment insurance system stuck in a deep hole
By Dan Walters, July 19, 2016, The Sacramento Bee
Throughout his second governorship, Jerry Brown has preached fiscal responsibility – being careful about spending, paying down debt and building up reserves. It has been, in effect, a repudiation of his two immediate predecessors, Democrat Gray Davis and Republican Arnold Schwarzenegger, who squandered revenue windfalls, ran up debt and left their successors with big deficits. Brown has been, however, reticent about a big deficit that’s plagued the state’s system of unemployment compensation and left it very vulnerable to a meltdown in the next recession he says is inevitable. Rather than keep it intact as a prudent hedge against recession, Davis and legislators succumbed to pressure from labor unions and nearly doubled unemployment benefits to a maximum of $450 a week. (read article)

Covered California rates to jump average of 13 percent in 2017
By Victoria Colliver, July 19, 2016, Press-Enterprise
After two years of moderate rate increases, Californians who get their coverage through the state health insurance marketplace will see their 2017 premiums increase by an average of 13.2 percent. That’s more than triple the average 4 percent rate increases that consumers have seen since the state’s Affordable Care Act exchange started offering coverage in 2014. The preliminary rates for Bay Area counties are even higher than the state average, with San Francisco premiums set to increase by nearly 15 percent. “We’ve known for a long time that 2017 will be a transition year,” said Peter Lee, executive director of Covered California, in a media conference call Tuesday morning to announce next year’s rates. Lee blamed two of the biggest plans — Anthem, which sells Blue Cross plans, and Blue Shield of California — for helping to drive the double-digit rate increase. (read article)

Appreciating Police Officers, Challenging Police Unions

In the wake of tragic and deadly attacks on police officers, those of us who have never wavered in our support for the members of law enforcement, but have questioned the role of police unions and have debated issues of policy surrounding law enforcement have an obligation to restate our position. Civil libertarians and fiscal conservatives have disagreements with police unions which were summed up quite well recently by guest columnist Steve Greenhut, writing in the Orange County Register. Here are some of the principal concerns:

Police unionization protects bad officers and stifles reform. Lack of transparency into investigations of police misconduct aids and abets the worst actors. Police unions often support laws designed to extract increased revenue from citizens in the form of excessive fines. The “war on drugs” and militarization of law enforcement can further increase the tension between police and the populations they serve. And, of course, police unions fight relentlessly for increases to compensation and benefits, especially straining the budgets of cities.

To have a balanced discussion on these topics, however, it is necessary to revisit why police work has become more controversial and more expensive. Here are some of the reasons:

(1)  The value of life has never been higher. A century ago, when the life expectancy for Americans was 49, tragic deaths were commonplace. Compared to Americans in 1916, Americans today on average can expect an additional three decades of productive life, and premature death is proportionately more traumatic. This means the premium that police officers deserve for their service is higher than it’s ever been, and should be.

(2)  The expectations we have for law enforcement have never been higher. Along with longer lives, Americans suffer less crime. For nearly forty years, in nearly all categories, crime has steadily diminished. While there remains enough crime to generate a daily barrage of lurid local news reports, we enjoy more safety and security than at any time in history. We are getting this service thanks to our police forces, and better service deserves better pay.

(3)  The complexity of crime has never been higher. Crime itself has become far more sophisticated and menacing, morphing into areas unimaginable even a generation ago – cybercrime, global terrorism, financial crimes, murderous gangs, international criminal networks, foreign espionage, asymmetric threats – the list is big and gets bigger every year. Countering these threats requires more capable, better compensated personnel.

(4)  The statistical risk to police officers, even in the wake of recent tragedies, may remain low, but that could change in an instant. In the event of severe civil unrest or well coordinated terrorist attacks such as we saw in Sept. 2011, hundreds or even thousands of officers could find themselves on the front lines of a cataclysm. Statistics are not necessarily predictive, and police officers live with this knowledge every day.

So how do civil libertarians and fiscal conservatives manage their debates with police unions while conveying their respect for police officers? First, by acknowledging the complexity of the issues. Police should make more money than ever before – the debate should start there, not end there. Police have to be armed to the teeth, because in a free republic, the citizens themselves are armed to the teeth. That’s the choice we made, and unless we want to disarm the citizenry, we can’t disarm the police. These are fundamentals where there should be agreement.

Beyond that, it is necessary to appeal to the patriotism and decency that animates the vast majority of members of law enforcement, and ask them: Please work with us to curb the inherent excesses of police union power. Of course we have to get bad cops off the street. Of course we have to come up with effective non-lethal uses of force. Of course we have to figure out how to fund police departments without levying excessive fines. And of course we have to face a challenging economic future together, where police are partners with the people they serve, not an economically privileged class. Is this possible? One may hope so.

There’s more. If police unions are going to be intimately involved in the politics of law enforcement and the politics of police compensation, and they are, they may as well start getting involved in other causes where their membership may find common cause with civil libertarians and fiscal conservatives. Police officers see first hand how welfare destroys families and how public schools fail our children. So why aren’t they fighting to replace welfare with workfare and why aren’t they fighting to destroy the teachers union? You can say what you will about police unions, but they did NOT turn this nation into a lawless hellhole, quite the opposite. The teachers union DID destroy public education. So help us reduce their influence.

Similarly, police officers need to decide if they really feel like enforcing the myriad environmental harassment laws that are criminalizing everything from installing a window or water heater without a building permit to watering your lawn on the wrong day. The global environmentalist movement – of which California is ground zero – has become fascism masquerading as anti-fascism. It has become neo-colonialism masquerading as concern for indigenous peoples. It was a previously noble movement that has been hijacked by cynical billionaires, monopolistic corporations, and corrupt financial special interests. In its excess today, it has become a despicable scam. Help us to crush these corrupt opportunists before our freedom and prosperity is obliterated.

These thoughts, perhaps, are challenges that civil libertarians and fiscal conservatives might offer up to the police unions of America.

 *   *   *

Ed Ring is the executive director of the California Policy Center.

RELATED POSTS

Public Safety Unions and the Financial Apocalypse, May 17, 2016

The Challenges Facing Conservatives Who Support Public Safety, March 22, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

Pension Reform Requires Mutual Empathy, not Enmity, October 20, 2015

Public Sector Union Reform Requires Mutual Empathy, June 16, 2015

Can Unionized Police Be Held Accountable for Misconduct?, June 23, 2015

Pension Reformers are not “The Enemy” of Public Safety, April 20, 2015

Conservatives, Police Unions, and the Future of Law Enforcement, January 6, 2015

Police Unions in America, December 9, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

How Much Does Professionalism Cost?, March 11, 2014

 

 

 

Union In The News – Weekly Highlights

Diablo Canyon Settlement May Hinge on Cost Allocation
By Patrick Ferguson, July 19, 2016, JD Supra
On June 21, 2016, Pacific Gas and Electric Company (“PG&E”) announced a plan to close down the state’s last remaining nuclear power plant, the 2.3 gigawatt Diablo Canyon plant near San Luis Obispo, by 2026. Diablo Canyon currently produces about 9% of the electricity California uses and supplies the electric needs of more than 3 million people. The Diablo closure plan is set forth in a Joint Proposal agreed to by PG&E, several of the main environmental groups that have long called for Diablo Canyon’s closure, and two of the major labor unions that represent Diablo Canyon’s large workforce. PG&E currently plans to submit the Joint Proposal to the California Public Utilities Commission (“CPUC”) for approval by the end of July. (read article)

Obama Admin Throws Temps to Unions
By Bill McMorris, July 18, 2016, Washington Free Beacon
The Obama administration’s top labor arbiters handed organized labor another major victory that will ease the path to unionization for temporary workers and expand the definition of joint employer. The National Labor Relations Board, which oversees workplace disputes and union elections, overturned a 2004 ruling that said that temp workers could not join collective bargaining units at their placements without the approval of their direct employer. The ruling in Miller & Anderson returns to a 2000 board precedent that allowed temp workers who demonstrated commonality with their directly employed counterparts to join bargaining units without the consent of their agency. (read article)

My Mom Was A Unionized Public School Teacher. That’s Why I’m A Reformer
By Dmitri Mehlhorn, July 18, 2016, Huffington Post
More specifically, teachers are sympathetic to the ideas behind education reform. Teachers believe that tenure is automatic, and that about 10 percent of their colleagues are ineffective. Three-quarters of all teachers and an even higher percentage of highly recognized teachers believe it needs to be easier to dismiss ineffective teachers. A close look shows that many teachers believe in parent engagement and choice. When the chips are down — in other words, when it comes to their own children — public school teachers are much more likely than other parents to send their kids to private schools. (read article)

Labor Board Ruling Could Allow Grad Students to Unionize
By Melanie Trottman & Douglas Belkin, July 17, 2016, Wall Street Journal
The National Labor Relations Board is expected to decide on his status this summer in a ruling that could pave the way for graduate students at private schools across the country to unionize. The National Labor Relations Board has flip-flopped on its categorization of the roughly 535,000 graduate students now enrolled at private colleges. For decades, it held they weren’t employees, then in 2000 declared they were. In 2004, the board reversed itself in a case involving Brown University. Since most of the current board members are Democrats appointed by President Barack Obama, observers expect the board is more likely to side with the students and the union. (read article)

Green Billionaire Joins Infamous Labor Union In Fight To Defeat Trump
By Chris White, July 16, 2016, Daily Caller
Mega-wealthy environmentalist Tom Steyer and a services union with deep pockets announced a $10 million joint effort on Friday to derail Donald Trump’s GOP presidential candidacy. Steyer’s political action committee, NextGen Climate, and the Service Employees International Union (SEIU) are teaming up this election season to defeat Trump and elect his opponent, former Secretary of State Hillary Clinton. Steyer, who made the bulk of his billions as a hedge fund manager with Farallon Capital, railed Thursday against Trump’s pick as running mate, former Indiana Gov. Mike Pence, calling the governor an enemy to the gay and lesbian community. (read article)

Obama’s Big Labor Power Grab Hurts Small Business
By Orrin Hatch, July 15, 2016, U.S. News & World Report
With the Department of Labor’s new “persuader rule,” the Obama administration has put big labor before small business, and the president’s own political agenda before the Constitution. Under this sweeping new unilateral regulation, companies that seek advice from legal counsel or outside consultants on labor-related issues must report these activities publicly. Union organizers, on the other hand, are under no obligation to disclose their relationships with labor lawyers and other experts. In effect, the rule gives unions the upper hand in negotiating labor management contracts by placing costly requirements on companies that seek outside advice during organizing drives. Because this onerous regulation tips the balance of labor relations in favor of unions, the persuader rule is a godsend for union bosses. But it’s a nightmare for America’s job providers, especially small business owners. (read article)

California Voters Double-Crossed By SEIU — For The Second Time
By Sal Rosselli, July 15, 2016, Huffington Post
Earlier this month, a judge blocked an attempt by Oakland-based Service Employees International Union-United Healthcare Workers West (SEIU-UHW) to place on the November ballot an initiative that would have limited the pay of non-profit hospital executives. It’s hard to believe, but the courts blocked the ballot initiative because it violated a secretive, collusive arrangement between SEIU-UHW and the California Hospital Association (CHA). California voters are paying the price for the spectacular collapse of this shady backroom deal. More than 600,000 Californians signed petitions to qualify the measure for the ballot in both 2014 and 2016, only to see it snatched away — once by the union officials who wrote it and now a second time as an unintended consequence of the union’s self-penned gag clause. (read article)

Pence on labor
By Brian Mahoney, July 15, 2016, Politico
The Republican Indiana governor largely tracks the GOP consensus on most labor and employment policy issues, while departing from Trump’s views on trade. Unions won’t likely cheer the choice. Last year Pence signed the repeal of an 80 year-old state law that set a common wage for most state construction projects. “Wages on public projects should be set by the marketplace and not by government bureaucracy,” Pence said. Unions and Democrats who opposed the legislation said repeal would lower construction wages.
Indiana became a right-to-work state under Pence’s Republican predecessor, Mitch Daniels. But Pence’s administration prevailed in defending the law from union lawsuits. (read article)

San Luis Coastal school district will intervene in Diablo Canyon closure
By David Sneed, July 14, 2016, San Luis Obispo Tribune
The San Luis Coastal Unified School District has joined San Luis Obispo County in having an official role in state proceedings related to Diablo Canyon nuclear power plant. The district’s Board of Trustees voted unanimously Thursday afternoon during a special closed meeting to formally intervene in all of Diablo Canyon’s proceedings before the California Public Utilities Commission, including the plant’s closure and the proposed three-year general rate case starting in 2017. “We are intervening to protect the interests of our 7,500 students, our 1,000 employees and the quality of education that we continue to provide in San Luis Coastal Unified School District,” said board member Marilyn Rodger, who read the board’s motion into the record after the closed session meeting. (read article)

Hospital Finance Measure On California Ballot May Stump Voters
By Pauline Bartolone, July 14, 2016, Kaiser Health News
California voters will be asked to weigh in this November on a hospital financing measure so politically and financially complicated that they might be tempted to avoid it altogether. The initiative, Proposition 52, would make permanent the “Hospital Quality Assurance Fee,” which the state collects from private hospitals to bring in additional federal dollars for Medi-Cal, California’s version of the federal Medicaid health care program for the poor. The federal government matches money that California puts up to fund Medi-Cal services. The dollars generated by the fee are used to fund hospital services and children’s health care under Medi-Cal, and the ballot measure would help ensure the money is not diverted by lawmakers for other uses. (read article)

CalPERS Suffers $30.8 Billion Annual Loss
By Chriss W. Street, July 13, 2016, Breitbart News
The California Public Employee Retirement System (CalPERS) is about to report the world’s largest public employee pension suffered an actuarial investment loss of $30.8 billion last year. CalPERS manages the defined pension plan investments and record keeping for 3,007 California state and local government entities. The pension plan is also responsible for paying the pension benefits to 611,078 retirees and will eventually be responsible for paying retirement benefits to another 868,713 active and 335,908 inactive government workers. Despite Governor Jerry Brown last summer demanding CalPERS immediately “lower its investment risk and volatility of returns” by reducing its “assumed” annual investment return from 7.5 percent to 6.5 percent, the CalPERS board voted 7- 3 on November 15, 2015 only to slowly reduce the investment return expectation over the next decade. (read article)

CCSF, faculty union settle labor dispute
By Michael Barba, July 13, 2016, San Francisco Examiner
City College of San Francisco and its faculty union reached a tentative agreement this week on a contract for its educators after a year and a half of contentious negotiations, the union said Wednesday. Both sides signed onto the deal Monday night while meeting with a mediator in an attempt to reach a settlement — a process that had failed before but started again last Friday at the recommendation of a factfinder. According to the American Federation of Teachers Local 2121, the tentative agreement amounts to an about 11.3 percent salary increase for faculty members over a three-year period. That increase is on top of the average 3.7 percent restored to faculty salaries for wage cuts from previous years. (read article)

Labor unions petition OSHA for standard to prevent workplace violence in health care
By Associated Press, July 13, 2016, Safety & Health Magazine
A number of labor unions are calling on OSHA to create a standard aimed at preventing workplace violence in the health care and social services industries. A petition was sent July 12 to Secretary of Labor Thomas Perez from a coalition of unions, including the AFL-CIO, American Federation of Teachers, Communications Workers of America, International Brotherhood of Teamsters, Service Employees International Union and United Steelworkers. It claims OSHA’s current efforts are “insufficient” to protect health care workers, and cites Bureau of Labor Statistics data showing that workers in health care and social assistance experienced 52 percent of workplace violence incidents in 2014. (read article)