Gerawan Farming settles 2013 labor charge with UFW
By Robert Rodriguez, October 24, 2016, Fresno Bee
Gerawan Farming, the United Farm Workers union and the Agricultural Labor Relations Board have entered into a settlement agreement over a 2013 charge that the Fresno County farming company violated state labor law. The Fresno County tree fruit grower has been at odds with the union over representing its workers. In 2013, the grower was accused by the UFW of not supplying accurate employee contact information to the union. A second and third complaint were later filed, accusing the grower of the same problem. The ALRB investigated the allegations and concluded Gerawan had violated the state Agricultural Labor Relations Act by not supplying accurate employee contact information. (read article)
California: Minimum wage hike, state-run retirement savings plan
By Mark Gruenberg, October 21, 2016, People’s World
A big minimum wage hike that will benefit one-third of the state’s workers and a state-run retirement savings plan that forces companies without pension plans or 401(k)s to enroll workers in retirement accounts head the list of California pro-worker legislation passed this year. The measures are important as the Golden State, which is home to one of every eight people in the U.S., is often a trend-setter for the rest of the country. And the California Labor Federation’s legislative success there shows what can aid workers when they join together to elect pro-worker governors and legislators. They’re also continuing to do so. Despite lopsided pro-worker majorities in the state Assembly and the state Senate, they’re not veto-proof, and the state fed wants to make them that way. (read article)
Why business groups aren’t fighting California’s tobacco and income tax hike initiatives
By Liam Dillon, October 20, 2016, San Diego Union Tribune
Four years ago, business leaders financed a multimillion-dollar campaign to oppose an initiative to raise income taxes on California’s highest earners. The same year, the California Chamber of Commerce was featured prominently in television advertisements against a ballot measure to increase the cigarette tax. Now, with new versions of both the income and tobacco taxes on the statewide ballot, money from the business community isn’t there and neither is the same level of opposition. Instead, many business groups are reluctantly resigned to an extension of the higher income tax rates and, in some cases, are even promoting the cigarette tax hike. (read article)
California’s largest state worker union to vote on strike
By Adam Ashton, October 19, 2016, McClatchy Washington Bureau
State government’s largest union is edging closer to a strike. SEIU Local 1000 President Yvonne Walker has called for a strike vote of the union’s 95,000 members beginning next week, according to a statement on the union website. The union is trying to get a bigger raise than the 2.96 percent pay hike Gov. Jerry Brown’s administration is offering. Brown’s proposal would raise SEIU salaries by 12 percent over four years, but also require its members to begin paying a contribution toward their retiree health care costs. “We still believe the state can do better,” Walker wrote in a message to SEIU members. Walker wrote to union members that SEIU has been in negotiations with the state for the past six months. In July, union leadership voted to authorize a strike vote. The next step toward a strike would be a vote by union members. (read article)
Can Teachers Unions Bargain for Better — or Fewer — Charter Schools?
By Rachel M. Cohen, October 18, 2016, The American Prospect
In cities across the country, teachers unions have been strategizing ways to broaden the demands they bring to the negotiating table. Organizing under the banner of “bargaining for the common good,” educators and their community allies have started to challenge a legal regime that for too many years left unions solely focused on wages and benefits. One window of opportunity that teacher unions are exploring is charter authorizing—the process of opening, closing, and monitoring charter schools. Though laws vary from state to state, 90 percent of the nation’s roughly 1,000 charter authorizers are local school districts. (read article)
Labor unions, tech firms step up political spending, far more than 2012
By Gina Hall, October 18, 2016, Orlando Business Journal
Labor unions and Silicon Valley have stepped up spending in Washington, D.C. at a remarkable rate during the past year. Labor unions contributed almost $110 million in election spending from January 2015 through August 2016. That marks a 38 percent increase from $78 million at the same point in the 2012 election, and double the 2008 total during the same time frame, according to The Wall Street Journal. The union donations are largely headed to the Clinton campaign and to races that would give Democrats a majority in the Senate. Almost every major union is contributing to the cause. The AFL-CIO spent $11.4 million funding outside political groups so far this election cycle, compared to $5 million at this point in the 2012 election, according to the nonpartisan Center for Responsive Politics. The National Education Association has spent $14 million, up from $7.7 million in 2012. (read article)
Labor Leaders Support the Dakota Access Pipeline—But This Native Union Member Doesn’t
By Brooke Anderson, October 18, 2016, YES! Magazine
As clashes over the construction of the Dakota Access pipeline continue in North Dakota, a related battle is brewing in the halls of organized labor. In a statement issued September 15, the nation’s largest federation of trade unions threw in its support for the controversial oil pipeline. Thousands of people, including members of over 200 tribes, have been camped at the construction site for months to stop the pipeline, which would move 500,000 barrels of crude oil a day across four states, threatening the water supply of the Standing Rock Sioux Reservation. As the controversy heated up, four unions representing pipeline workers denounced the water protectors, claiming they were illegal protesters who were committing dangerous actions while Illegally occupying private land. The AFL-CIO, which represents 55 unions and 12.5 million members, quickly followed suit. (read article)
Unions bet big on the Senate
By Gigi Douban, October 18, 2016, Marketplace.org
There’s been big spending by labor unions in this election — and even more in the last couple weeks. The powerful AFL-CIO has spent millions on 2016. Of course, labor unions have long supported Democrats, but this year they’re looking beyond the presidential race to the Senate and even farther down the ballot. Union reps are already in battleground states from Ohio to Wisconsin doing what they do best: knocking on doors, making calls, handing out leaflets at factories. And over the coming weeks, voters in those states can expect an even bigger push. (read article)
Four East Bay construction unions oppose project approvals in bid for developer concessions
By Roland Li, October 18, 2016, San Francisco Business Times
Members from four East Bay construction labor unions have united in an attempt to block at least five approved Oakland projects unless developers agree to implement local hiring requirements, commit to paying union wages and provide other concessions. The new group, East Bay Residents for Responsible Development, won a victory on Tuesday as the Oakland City Council is set to delay a vote for a second time on an appeal of developer Wood Partners’ 262-unit housing project at 226 13th St., according to multiple sources. Construction unions are frequently allied with developers and depend on project approvals to stay employed. But members of the new group feel that the region’s economic boom hasn’t benefitted them. The group has over 100 members who see developers shipping in workers from outside the Bay Area and paying wages that they say aren’t enough to live in the region. (read article)
CTU Delegates Overwhelmingly Support Tentative Labor Agreement
By Matt Masterson, October 18, 2016, Chicago Tonight
The Chicago Teachers Union’s House of Delegates on Wednesday evening overwhelmingly recommended a tentative labor agreement with Chicago Public Schools, paving the way for the union’s full membership to issue a binding vote on the deal next week. Nearly 500 CTU delegates participated in a non-binding advisory vote Wednesday at the River North Holiday Inn. Of those, approximately 350 stood in favor of the labor contract, according to union President Karen Lewis. “We have a completely bona fide process,” she told media following the vote, “and there’s always discussion, there’s always people that have completely different points of view, but the key is that we acknowledge that.” With Wednesday’s recommendation, the contract will now be reviewed and voted on by the union’s full membership for final approval. That will take place inside CPS schools on secret ballots Oct. 27 and 28. (read article)
Labor Unions Step Up Presidential-Election Spending
By Brody Mullins, October 18, 2016, The Wall Street Journal
U.S. labor unions are plowing money into the 2016 elections at an unprecedented rate, largely in an effort to help elect Hillary Clinton and give Democrats a majority in the Senate. According to the most recent campaign-finance filings, unions spent about $108 million on the elections from January 2015 through the end of August, a 38% jump from $78 million during the same period leading up to the 2012 election, and nearly double their 2008 total in the same period. Nearly 85% of their spending this year has supported Democrats. Almost every large union is spending more than has been seen in modern elections, financing rallies, canvassing efforts and ad campaigns to bolster Democrats. (read article)
During the 2004 Presidential election there were allegations of voter fraud; the 2000 Presidential election was alleged to have been “stolen” by the Republicans. If you go further back in history, you can point to evidence the Democratic machine in Chicago manipulated election results to throw the 1960 Presidential election victory to Kennedy. A close reading of American history would reveal election fraud as a challenge to our democracy from the very beginning, and in every decade since then. It’s no surprise that we’re discussing it again.
What is a surprise is the opportunities for voter fraud, in this age of biometric identification technology and total information awareness, are actually greater than ever. Using California as an example, here are some of the reasons why:
Voters are not required to present a verifiable photo identification when they vote, and if they wish, voters don’t even have to show up at the polling place, they can vote by mail. Voting by mail causes a variety of problems – first, it precludes anyone showing an identification, and second, it prolongs vote counts after the election as workers tabulate the ballots. And the greater the number of ballots requiring post-election, manual counting, the more opportunities there are for political operatives who have infiltrated our election workforce to manipulate results. And because voting by mail is done outside of the controlled environment of the voting booth at the polling place, there is even less guarantee that these ballots are not filled out by someone other than the person supposedly voting.
And as reported by the Election Integrity Project in 2013, “California Suspends A Critical Method To Prevent Voter Fraud,” buried in the 2013 budget bill was suspension of the requirement that signatures on provisional ballot envelopes be compared against the voters’ registration signatures to determine voter eligibility. Should anyone doubt that election integrity is a bipartisan problem in 2016, consider this article, and this one, among a host of such online reports that allege ballot fraud erased a Bernie Sanders June 2016 primary victory in California.
Six years ago, RedState.com published a report entitled “How Unions or Their Allies Could be Stealing November’s Election Right Now,” alleging massive, systemic, union-orchestrated fraud has been implemented across the U.S. Whether or not this is true, or true at the scale being alleged, should not deter any concerned citizen from considering these charges, because they expose serious weaknesses that challenge the integrity of our voting process. Here are some of the allegations:
The SEIU and others funded the “Secretary of State Project” in 2005, pouring money into races to elect “reform minded” Secretaries of State in battleground states. In nine states since then they have successfully elected their candidates. Since the Secretary of State oversees elections, who sits in that position can potentially have a corrupting influence on election outcomes when there are recounts – or when there is a high percentage of mailed absentee ballots. In California, the employees who count and verify ballots are members of the SEIU. Is this appropriate? Are these people disinterested parties to election outcomes?
The report went on to claim the SEIU has been attempting to manipulate the electoral system across the United States, engaging in actions ranging from submitting forged initiative signatures, to invalid voter registrations, to hacking into voter machines, to destroying evidence of hacked machines. The report discusses how fake IDs are being used to exploit lax voter registration procedures, that illegal immigrants are being signed up as “permanent absentee voters,” and that early voter “rallies” are being held where voters are instructed, as a group, how to mark their mail-in ballots.
Is all of this true? Are unions such as the SEIU the biggest players, engaging in electoral manipulation that eclipses any potential manipulation by the other side? One thing is certain, they certainly have the financial power to do this. Unions, who compel employees to join their ranks and pay them mandatory dues, exercise financial clout that can overwhelm most other special interests, particularly when most other special interests are either terrified of unions or working with them. It is naive to dismiss the idea that big labor, big business, and big government would not have a common interest in colluding to squelch competition by emerging entrepreneurs and disruptive technologies.
Whether or not unions fraudulently manipulate our election results, they certainly buy them. Any reforms to improve the integrity of our elections or impose yet another restriction on campaign finance must first address this fact – unions compel millions of American workers to become members, impose upon them mandatory dues, and use this illegitimately acquired wealth to exercise far too much influence on our democracy.
With all the state and local taxes on the November ballot, one would think that government at all levels in California was starved for revenue. But even a cursory review of the Golden State’s “tax machine” reveals that the tax burden is already too heavy for many to bear. California has the highest income rate in America (likely to be extended for another 12 years) and the highest state sales tax rate. And despite Prop 13, our per capita property tax collections ranks no lower than 14th in the nation.
In the June primary, voters already passed 29 out of 40 local tax increases. But those taxes register as barely a blip compared to the earthquake confronting voters in less than three weeks. According to the California Taxpayers Association, there are 228 local tax measures representing a cumulative tax increase of more than $3 billion per year, along with 193 bonds (more than $30 billion’s worth) that would dramatically increase annual property taxes.
After the June primary, this column observed that the high rate of passage reflected not so much a love for higher taxes as it did the fact that the tax raisers have become experts at gaming the system to pass tax and bond measures. Highly paid political consultants tell local officials not to publicize tax elections to the entire community, but to target only their supporters. This means running stealth elections, communicating (in the case of school bonds) with only administrators and construction firms who are always more than willing to finance political campaigns and, of course, public employee unions who never met a tax they didn’t like.
The strategies that the pro-taxers employ to extract money from an unsuspecting citizenry are endless. For example, many school boards, cities and counties do all they can to time elections so that potential opponents have inadequate time to mobilize. The ultimate goal is to prevent an opposition argument from even appearing in the ballot pamphlet. On countless occasions, taxpayer advocates have been blindsided by proposed tax increases because they were only afforded a few precious days to submit an argument. And when it is too late, there are few legal remedies.
The ultimate insult to taxpayers, of course, is when local governments use public dollars to engage in political advocacy to influence an election. In theory, it is illegal for officials to use public resources (including public funds) to urge a vote for or against a political issue. But, in practice, it happens all the time. Two weeks ago, both the Howard Jarvis Taxpayers Association and the Central Coast Taxpayers Association filed a complaint with the Fair Political Practices Commission alleging campaign reporting violations of the Political Reform Act by the County of San Luis Obispo, the San Luis Obispo Council of Governments (SLOCOG) and the Yes on Measure J Committee, a group pushing a local transportation tax. These government entities have spent nearly a quarter of a million taxpayer dollars on promotional materials and government employee and contractor compensation supporting Measure J.
As the November election draws near, the complaints about government interference in elections have ramped up dramatically. In Sacramento, the Sacramento City Unified School District used “robocalls” to contact thousands of parents with “important information” about the benefits of a parcel tax as well as statewide Proposition 55. According to the Sacramento Bee, the district sent the scripted messages recorded by five district trustees through its automated telephone message distribution system, explaining how the two tax measures would raise money for school programs and services that otherwise could be slashed. (This despite the fact that education spending in California has exploded since 2010).
Such communications are neither information nor balanced. They are always one-sided puff pieces designed solely to extract yes votes from uninformed voters.
California voters need to be alert to the lies, distortions and illegal expenditures of taxpayer dollars when considering any request for higher taxes. Yes, government services require public dollars. But before voting yes on any tax increase, ask yourself why is it that other states have markedly better public services without the high price tag.
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.
Dropout Nation recently reported on the American Federation of Teachers’ 2015-2016 financial disclosure to the U.S. Department of Labor. As you would expect, the nation’s second-largest teachers’ union spent big on influencing Democratic presidential nominee Hillary Clinton and her apparatchiks, as well as pouring heavily into what should be like-minded advocacy and nonprofit groups.
But AFT’s big spending doesn’t just end with political campaigns and co-opting minority as well as hardcore progressive groups. The union even spends big on its own staff and operations.
Start with AFT President Rhonda (Randi) Weingarten, whose paychecks put her in the top five percent of the nation’s income earners even as she engages in class warfare rhetoric. The union paid Weingarten $497,311 in 2015-2016, just a couple hundred dollars more than she pulled down in the previous year.
Also well-paid by the union is Loretta Johnson, who serves as its secretary-treasurer; her $358,225 in 2015-2016 was a grand or so higher than in the previous year. Meanwhile Mary Catherine Ricker, the former Saint Paul Federation of Teachers boss who now serves as the union’s number two (and in the process, serving as an obstacle to United Federation of Teachers boss Michael Mulgrew’s ambitions to succeed Weingarten as head of the national union), was paid $311,311, a 5.4 percent increase over her pay in 2014-2015.
Altogether, the AFT’s top three leaders collected $1.2 million last fiscal year, a slight increase over the $1.1 million paid to them by the union in 2014-2015.
Also making bank are AFT’s staffers, though there are slightly fewer of them this time around. Two hundred twenty-two staffers earned more than $100,000 in 2015-2016, seven fewer than the 229 in the previous year. Three out of every five staffers at AFT national headquarters earn six-figure sums. Among the union’s high-paid mandarins: Michelle Ringuette, the former Service Employees International Union staffer who is now Weingarten’s top assistant, made $230,736, while Michael Powell, who serves as Weingarten’s mouthpiece, earned $240,647. Kristor Cowan, the AFT’s chief lobbyist, earned $186,293, while Kombiz Lavasany, another operative who oversees Weingarten’s money manager enemies’ list, earned $184,158.
Supporting these high salaries is an ever-declining rank-and-file base. AFT counts 675,902 full-time rank-and-filers on its roster in 2015-2016, a 3.4 percent decline over the 699,739 members on the roster in the previous fiscal year. [Dropout Nation does not call them members because in nearly every case, AFT and its affiliates use state laws to force teachers to join.] This marks the third straight year of declines and the fifth year of decline within the past six.
The union also experienced a 1.5 percent decrease in the number of half-time rank-and-filers (or school employees making less than $18,000 a year); a seven percent decline in one-quarter rank-and-filers (nurses and state government employees whose unions are affiliated with AFT); and a 2.7 percent decline in the number of one-eighth rank-and-filers. Seems like the union’s once-successful effort to strike affiliation deals with nursing and other government employee unions, an effort that put it in competition with the much-larger Service Employees International Union, has fallen to seed.
Even worse for AFT: Its effort to increase the number of so-called associate members who pay directly into national’s coffers, continues to be in free-fall. AFT counts just 49,984 such members on its rolls in 2015-2016, a 14.5 percent decline over the previous year. This shouldn’t be shocking. After all, AFT cannot provide associate members any real assistance in terms of negotiating teachers’ contracts or addressing work rules. Besides, the associate members can’t even vote in union elections.
As a result of these declines, AFT’s counts just 1.5 million rank-and-filers and voluntary members, a 4.3 percent decrease over the previous year.
The good news for AFT is that the death of U.S. Supreme Court Associate Justice Antonin Scalia earlier this year assured that there was a tie vote on Friedrichs vs. California Teachers Association; his vote would have likely led to the overturn of Abood v. Detroit Board of Education, the five-decade-old ruling that gives AFT the ability to compel teachers pay dues regardless of their desire for membership. As your editor noted two years ago, the end of compulsory dues laws could cost AFT 25 percent of its membership and $36 million in revenue (based on 2012-2013 numbers), a hit for which the union isn’t likely ready to address.
The other good news for AFT is that it hasn’t affected revenue. The $192 million in dues and other agency fees (in the form of a so-called per-capita tax collected from locals and affiliates) generated by the union in 2015-2016 is 21 percent higher than in the previous fiscal year. AFT’s overall revenue of $328 million (including loan proceeds) is unchanged from 2014-2015.
This time around, the union didn’t have to borrow as heavily as it has in previous years to keep operations afloat; it borrowed just $55 million in 2015-2016, half the level of borrowing in the previous year. Overall, the union has borrowed $477 million over the past five years. The union did sell more of its investments in order to make due; the union sold $29 million of its portfolio in 2015-2016, more than double the investment sales in the previous year. Without the loans and investment sales, AFT’s revenues were just $244 million, a 15 percent increase over levels in 2014-2015.
But the bad news is that AFT may still lose revenue. One reason: The abolishing of collective bargaining and forced dues collections in Wisconsin, Tennessee, and Michigan. This has resulted in AFT losing teachers who realize that they don’t have to pay into unions that don’t represent their interests.
Another problem for the union: More of its affiliates and locals are either merging with those of the National Education Association or striking affiliation agreements with it. Membership declines forcing such mergers is one reason. But as seen in California, where the AFT’s United Teachers Los Angeles has struck a joint affiliation deal with NEA, the AFT’s larger locals are realizing that such triangulation gives them stronger influence over education policy at state and local levels.
But the gains for the big locals (who honestly don’t need AFT affiliation anyway) means both lost revenue for AFT as well as the ability to keep locals from straying away from the party line. [There’s also that pesky matter of being forced into a merger with NEA, a matter long-discussed among hard-core traditionalists.] Given the rancor from AFT rank-and-filers over strong-arm moves by national to remove wayward leaders in locals such as Detroit, expect more large locals to strike joint affiliation agreements or even break away from the national union in the near-future.
The consequences of efforts to abolish collective bargaining and joint affiliations by locals don’t just hurt AFT’s ability to use money to preserve influence. It also harms its ability to pay for the high costs of employing so many six-figure staffers.
While benefit costs have barely budged (remaining at $17 million), AFT’s general overhead costs increased by 4.8 percent within the past year. The good news for AFT is that it was able to offset some of those expenses with a 10.8 percent decrease in so-called union administration expenses. Meanwhile AFT’s post-retirement obligations increased by six percent (to $38 million) in the past year.
Luckily for the AFT, its staffers and leaders pay into defined–contribution retirement plans used by the rest of the private and nonprofit sectors. A funny thing given its opposition to efforts by school reformers and others to move away from the virtually-insolvent defined-benefit pensions championed by Weingarten and the union. Hypocrisy is like that sometimes.
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.
“The state shall not have any liability for the payment of the retirement savings benefit earned by program participants pursuant to this title.” – California State Senator Kevin De Leon, August 7, 2016, Sacramento Bee
This quote from Senator De Leon, one of the main proponents of California’s new “Secure Choice” retirement program for private sector workers, says it all. Because De Leon’s comment reveals the breathtaking hypocrisy and stupefying innumeracy of California’s legislature.
Let’s start with hypocrisy.
De Leon is careful to protect private sector taxpayers from having to bail out their new state administered “secure choice” retirement plan, but no such safeguard has ever been seriously contemplated for the state administered pension plans for state and local government workers. These plans, using official numbers, are underfunded by about $250 billion. If you don’t assume California’s 92 state and local government worker pension systems can earn 7.5% per year, they are underfunded by much more – at least a half trillion.
Underfunded government worker pensions are the real reason why Prop. 55 is offered to voters to extend the “temporary” “millionaires tax” till 2030. That will raise about $6 billion per year. Underfunded local government worker pensions are also the reason for 224 local tax increases proposed on this November’s ballot, which if passed will collect another $3.0 billion per year. And it isn’t nearly enough.
The following table, excerpted from a recent California Policy Center study, shows how much California’s state and local government pensions systems have to collect per year based on various rates of return. At the time of the study, the most recent consolidated data available was for 2014. As can be seen – at a rate of return of 7.5% per year, state and local agencies have to put $38.1 billion into the pension funds. And at a rate of return of 6.5% per year, which CalPERS has already announced as their new “risk free” target rate, they have to turn over $52.3 billion per year. How much was actually paid in 2014? Only $30.1 billion.
To summarize, in 2014 the pension funds collected $8.0 billion less than they needed if they think they can earn 7.5% per year. But following CalPERS lead, they’re lowering their projected rate of earnings to 6.5%, which means they were $22.2 billion short. There are 12.8 million households in California. That equates to at least $1,734 in additional taxes per household per year just to keep state and local pensions solvent.
And it gets worse. Because in order to ensure this new “Secure Choice” program doesn’t get into the same financial predicament that California’s government pension systems confront, the “risk free” rate of return they intend to project is not 7.5%, or 6.5%, or even 5.5%. No, they intend to initially invest the funds in Treasury Bills, which currently pay at most 2.5%. In an analysis of Secure Choice’s proposed costs and benefits performed last April, we express what using a truly “risk free” rate of return portends for California’s private sector workers vs. public sector workers. These estimates are based on all participants, public and private, contributing 10% to the fund via withholding.
Public sector: Teachers/Bureaucrats, 30 years work – pension is 75% of final salary.
Public sector: Public Safety, 30 years work – pension is 90% of final salary.
Private sector: “Secure Choice,” 30 years work – pension is 27.6% of final salary.
There are two reasons for this gigantic disparity. First, public pension funds collect far more than 10% of salary. While the employee rarely pays more than 10% via withholding, the employer – that’s YOU, the taxpayer – typically kicks in another 20% to 40% or more, that is, a two-to-one up to a four-to-one employer matching contribution. Second, to justify the optimistic projections that make such generous pensions appear feasible, public pension funds have assumed a “risk free” rate of return of 7.5% per year.
Which brings us to innumeracy.
During the fiscal year ended 6/30/2015, CalPERS earned a whopping 2.4%. That stellar performance was followed in fiscal year ended 6/30/2016 by a return of 0.6%. It doesn’t take a Ph.D economist to know that California’s pension funds are going to need to greatly increase their annual collections. It only takes horse sense. But even horse sense eludes California’s innumerate lawmakers.
So here’s a modest proposal. Why not freeze the employer contributions into California’s state and local employee pension funds at 20% of salary (that’s a two-to-one match on a 10% contribution via withholding), and then, constrained by those fixed percentages, lower all benefits, for all participants, on a pro-rata basis to restore solvency. Better yet, why not enroll every state and local government employee in the Secure Choice program? Either way, “the state shall not have any liability for the payment of the retirement savings benefit earned by program participants.”
Along with this modest step towards dismantling the excessive privileges of these unionized Nomenklatura who masquerade as California’s public “servants,” why not enroll all state and local government employees in Social Security? Because California’s public servants make far more, on average, than private sector workers, and because Social Security benefits are calibrated to pay relatively less to high income participants, this step will financially stabilize the program.
Senator De Leon, are you listening? When it comes to state administered programs, all of California’s workers, public and private, should get the same deal.
* * *
Ed Ring is the president of the California Policy Center.
Vernon, California is so famous for its history of corruption that it was the municipal star of season two of HBO’s “True Detective” series. Now the tiny L.A. County city can claim another achievement: Vernon is the only California city with more public employees than residents.
Vernon’s 210 residents are served by 271 city employees, according to data on the California state controller’s website.
No. 2 Irwindale is a distant second – though just a 30-minute drive (could be hours – depends on traffic in L.A.’s tortuous downtown) from Vernon. In that East Los Angeles County city, there’s one government employee for every one of Irwindale’s 1,415 residents. San Francisco is the only major city on the Top 10, with one government employee for every 22.7 residents.
Here’s the Top 10:
Public employees in Vernon earn an average of $107,848 (plus benefits of $37,571). That’s much higher than nearby hegemon, Los Angeles, where public employees average $83,356 (plus benefits of $12,620).
Several top Vernon officials earn salaries in excess of $300,000:
Mark Whitworth (City Administrator): $402,335
Daniel Calleros (Police Chief): $361,644
Michael Wilson (Fire Chief): $361,359
Carlos Fandino Jr. (Director of Gas and Electric): $324,354
Andrew Guth (Fire Battalion Chief): $304,243
While many of Vernon’s city employees continue earn six-figure salaries, the average city resident earns far less. Per capita income in 2010 was $19,973. Median household income in 2010 was $38,500 – down dramatically from 2000, when it was over $60,000. According to the 2010 U.S. Census, 5% of the population lived below the federal poverty line. In 2000, it was 0%.
How does the city fund that dramatic gap in income? By taxing utilities for industry in the city. But because Vernon’s utility rates are among the highest in California, many businesses are moving out. That’s going to put pressure on city officials to trim public services – or to capitulate to the logic of history and become part of a neighboring city. How about Bell?
Conor McGarry is a fall Journalism Fellow at California Policy Center. Andrew Heritage contributed data analysis. Source: California state Controller’s Office.
The state government pension crisis: You will be made to care
By Chuck Devore, October 11, 2016, Washington Examiner
California Gov. Jerry Brown just signed SB 1234, a bill that establishes the California Secure Choice Retirement Savings Trust, a state-run retirement fund for 7.5 million Californians. All firms with more than four employees will be forced to participate unless they already offer a retirement plan. Unless they opt out, private sector employees will see 3 percent of their salaries automatically deducted from their paychecks to be held in trust by a panel of politicians and political appointees. What could go wrong? (read article)
California Today: Should You Have More Say Over Megaprojects?
By Mike McPhate, October 11, 2016, New York Times
In most cases, California’s Constitution requires a thumbs-up from voters before issuing bonds for projects like freeway repairs and school gymnasiums. (See, for example, hundreds of revenue initiatives on the Nov. 8 ballot). One type of bond, however, is spared from that test. State law requires no voter approval to issue so-called revenue bonds. Those are bonds supported with revenue generated by the project itself — for example, tolls that help pay off bonds used to build a bridge. That’s where Proposition 53 comes in. The measure, backed by the state Republican Party and numerous groups focused on lowering taxes, proposes extending the voter requirement to revenue bonds for projects that cost more than $2 billion. (read article)
Berkeley nonprofit fails to resolve new contract with labor union
By Ashley Wong, October 11, 2016, Daily Californian
Contract negotiations between the California Professional Employees Union and one of their employers — Berkeley nonprofit Building Opportunities for Self-Sufficiency, or BOSS — remained unresolved after the union refused to sign the new fiscal year contract during an unsuccessful mediation Sept. 27. These discussions have been ongoing since June, though the process began in March. The union’s field representative and campus alumni Christopher Graeber said during the mediation the union was unsatisfied with the negotiations because they wanted the contract to include a request for quarter-year financial reports from BOSS. (read article)
Nevada’s Largest Labor Union Comes Out in Support of Legal Marijuana
By Mike Adams, October 11, 2016, MerryJane.com
The largest labor union in Nevada has come out in support of a proposed ballot measure aimed at legalizing a statewide cannabis industry in a manner similar to what is currently underway in Colorado. On Monday, the Culinary Workers Union Local 226, an organization that looks after the labor interests of around 57,000 workers across the state, announced its support for Ballot Question 2 – a proposal that would allow adults 21 and over to purchase marijuana from retail outlets across the state. The union said it was endorsing the initiative because legal weed would take money out of the black market, create new jobs, and put more wages into pockets of regular, tax paying citizens. (read article)
Former labor union leader says every American aged 18 to 64 should get $1,000 a month from the government
By Kiri Blakely, October 10, 2016, Daily Mail
A former leader for one of the most influential labor unions in the country is speaking out to drum up support for a controversial idea that is beginning to gain ground once again – universal basic income (UBI). Andy Stern, the former head of the Service Employees International Union and author of ‘Lifting the Floor,’ gave a speech on Thursday in Denver in which he advocated giving every American citizen ages 18-64 a $1,000 a month supplemental income. He argues this would be cheaper for the government overall and would give people more discretion with how they spend their money while simultaneously lifting them above the poverty line. (read article)
Proposition 55: Should California extend ‘temporary’ income taxes on top earners?
By Jessica Calefati, October 8, 2016, The Mercury News
Four years after threats of teacher layoffs and massive cuts to social service programs followed Californians to the voting booth, the tax hikes on the wealthy they approved to bail out the state are back on the ballot. But gone is the fierce battle that pitted Gov. Jerry Brown against Republicans, business groups and even a national right-wing fundraising network that funneled millions of dollars in “dark money” into California. This year, the people fighting a 12-year extension of the tax hikes have raised only $3,000 — and the campaign is being run by an obscure public policy professor with no political expertise. (read article)
Teachers union meets with its bargaining unit as talks with CPS continue
By Juan Perez Jr., October 8, 2016, Chicago Tribune
Negotiators for the Chicago Teachers Union and Mayor Rahm Emanuel’s administration met for several hours Saturday at the downtown offices of a top school district labor attorney after the union had sat down with the bargaining unit that will play a key role in determining if a deal can get done before a threatened strike deadline. The CTU met with its 40-member big bargaining unit earlier Saturday at the Lower West Side headquarters of Service Employees International Union Healthcare. CTU officials said the meeting was to review its position on a potential contract. (read article)
Labor unions unleash attack on North Carolina senator
By Greg Gordon, October 7, 2016, Miami Herald
Two of the nation’s biggest labor unions unleashed a $1.8 million ad blitz attacking Republican Sen. Richard Burr of North Carolina Friday, assailing his support for tax breaks for the natural gas industry while he and his wife owned more than $100,000 in energy company shares. In sponsoring the ad, the 2-million-member Service Employees International Union and AFSCME, with 1.6 million members, sought to boost the campaign of Burr’s Democratic rival, former North Carolina state Rep. Deborah Ross, who has led the two-term senator in some polls. (read article)
Labor union fund trustees allege El Camino Paving Inc. refused audit
By Jenie Mallari-Torres, Ooctober 7, 2016, Northern Californian Record
The boards of trustees for several labor union funds allege a California employer has refused to submit to an audit per their bargaining agreement. The Board of Trustees, as trustees of the Laborers Health and Welfare Trust Fund for Northern California, Laborers Vacation-Holiday Trust Fund for Northern California, Laborers Pension Trust Fund for Northern California and Laborers Training and Retraining Trust Fund for Northern California filed a complaint on Sept. 27 in the U.S. District Court for the Northern District of California against El Camino Paving Inc. alleging breach of contract. (read article)
Labor unions backing some Republicans in fight over right-to-work
By Kurt Erickson, October 7, 2016, STLtoday.com
Gearing up for another fight with Republican majorities in the Legislature, the Missouri AFL-CIO unveiled a list of lawmakers it is endorsing in the Nov. 8 election. It includes 13 Republicans in the House and two Republicans in the Senate. The state’s largest labor organization also has sent out nearly 100,000 mailers seeking to boost Democratic U.S. Senate candidate Jason Kander and Democratic candidate for governor Chris Koster, as well as remind voters of its opposition to right-to-work. The push by the AFL-CIO won’t help Democrats come anywhere close to recapturing power in either the House or the Senate. But, it could provide enough support to offset business groups and individuals who have pumped millions of dollars into the campaigns of candidates who support making Missouri a right-to-work state. (read article)
Labor Department ‘Blacklisting Rule’ Weaponizes Frivolous Union Allegations
By Mark Mix, October 6, 2016, Investor’s Business Daily
An internal Labor Department memo leaked to the National Right to Work Legal Defense Foundation demonstrates the extremes to which the Obama administration is willing to go in its final months to assist Big Labor in forcing millions of American workers into union ranks. In August, the Federal Acquisition Regulatory (FAR) Council released the final rule implementing E.O. 13673, Obama’s cynically mislabeled Fair Pay and Safe Workplaces Executive Order. Concocted by Obama bureaucrats seemingly working in consultation with union lawyers, the rule puts intense pressure on federal agencies to blacklist federal contractors for resisting efforts to corral their employees into unions. (read article)
Charter school settles labor complaint, will pay $106,000
By Associated Press, October 6, 2016, Albany Times Union
A Detroit-area charter school operator has agreed to settle an unfair labor complaint by paying $106,000 to seven of eight teachers who were fired. The settlement closes a complaint at the National Labor Relations Board against Hamadeh Educational Services, which runs four schools. The eight teachers worked at Universal Academy in Detroit. They were not members of a union, but acted together to speak out about conditions at the school during the 2015-16 year. They were subsequently fired. The settlement document says Hamadeh will post a notice that says teachers won’t be disciplined for exercising their rights. The eight are being offered their former jobs, but decided not to return. (read article)
Labor unions talk about Right to Work vote
By Duke Carter, October 6, 2016, WSLS
Virginia is currently a right-to-work state and has been since 1947. This November, voters will have to decide if they would like to make Virginia an anti-union state. Members in unions like Volvo or Hubbel in Southwest Virginia said they like having protection against employers. “The union has supported me financially, which giving very little back,” Robert Patterson a union member said. Union leaders said having that protection is vital, it helps them fight employers for better pay. In November that could change, due to state leaders asking voters if Article 1 one of the Constitution of Virginia be amended to prohibit any agreement or combination between an employer and a labor union or labor organization. Supporters said voting yes would encourage future businesses to come to the area. (read article)
The Southern California Laborers’ Union Provides $207,500 in College Scholarships
By Chad Wright, October 5, 2016, Business Wire
he Southern California District Council of Laborers (SCDCL) awards scholarship money to the dependent children of Laborers’ International Union of North America (LIUNA) members in Southern California. Now in its 21st year, the Mike Quevedo, Sr. Scholarship Fund provided $207,500 in scholarship monies to 81 students for the 2016 academic year. The grand total in scholarships awarded for the 2016 year was the highest amount ever awarded in a single year. (read article)
It’s rare to see a California local government rescind a vote. But on October 4, 2016, the San Joaquin County Board of Supervisors voted 5-0 to rescind a controversial and probably illegal vote taken three weeks earlier to satisfy the political demands of construction unions.
On September 13, the board had voted 3-2 to direct staff to negotiate a Project Labor Agreement (PLA) with construction trade unions for a $41 million county hospital expansion. Organizations that defend fair and open bid competition for public contracts were caught by surprise. There was nothing on the September 13, 2016 meeting agenda to indicate board discussion – let alone action – concerning a government-mandated Project Labor Agreement.
But some people seemed to know a vote would happen. Union officials and activists attended the September 13 meeting and called on the Board of Supervisors to negotiate a Project Labor Agreement. At least one Supervisor was ready to make a motion for it even though the proposal was introduced to the board via public comment.
In addition to undermining the public interest, the vote appeared to be illegal. Under the California Ralph M. Brown Act, an elected governing board cannot vote on items without notifying the public in advance that such items will be considered for action. This is a basic principle of open and transparent government.
But having a law and actually enforcing it are sometimes two different things. Frequently the public encounters insurmountable challenges in making California local governments accountable for violating what’s commonly called “the Brown Act.” In this case, opponents of government-mandated Project Labor Agreements needed persistence and determination to confirm the illegal action and get it rectified.
A video record of the meeting posted on the county website after the meeting strangely cut off before the vote, thereby depriving the public of a source to prove what had happened. A reporter who covered the September 13 Board of Supervisors meeting for the local newspaper insisted that the board had not taken a vote to negotiate a Project Labor Agreement. Members of the public trying to obtain draft meeting minutes were frustrated by what seemed to be bureaucratic delays.
Yet there was one reliable witness at the meeting who was paying close attention to the proceedings. This witness was sure that a 3-2 vote had been taken specifically to authorize staff to negotiate a union Project Labor Agreement to include as a bid specification for the San Joaquin General Hospital Phase 2 Acute Care Patient Wing Expansion Project.
Eventually, the county was able to restore the video to completeness and provide the order of the board. It was indeed a vote directing staff to negotiate a Project Labor Agreement with unions, with the agreement to come back for ratification at the September 27 board meeting. (Allowing only two weeks for “negotiations” of a major labor relations contract suggests that union officials and some county supervisors were going to pressure staff to hastily sign off on a standard boilerplate agreement that unions typically introduce at the start of negotiations.)
The plot was now proven. A coalition of organizations banded together and hired a law firm to send a letter to the Board of Supervisors demanding that the vote be nullified. Meanwhile, the Board of Supervisors cancelled its September 27 meeting for unknown reasons. Then the Board of Supervisors scheduled an agenda item at the October 4 meeting to rescind the original September 13 vote.
But supporters of fair and open bid competition on taxpayer-funded contracts even struggled at the October 4 board meeting to get that 5-0 vote to correct the apparently illegal action. Hundreds of Service Employees International Union (SEIU) activists repeatedly disrupted and delayed the meeting to express displeasure with their own contract negotiations. When a representative of the Coalition for Fair Employment in Construction was speaking during public comment to urge the board to rescind their Project Labor Agreement vote, someone set off the fire alarm, resulting in the evacuation of the building.
In the past 20 years, the militant union activism and underhanded political tricks formerly concentrated in a few urban centers of California have rippled out 75 miles to places such as San Joaquin County. While many fiscal conservatives are fleeing the state or dying, those who choose to remain in California must monitor their local government agendas and make elected officials accountable when they violate the law for a special interest group.
Union Creates Bedlam at San Joaquin Supervisors Meeting – Stockton Record – October 4, 2016
Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.
Marin unions appeal pension ruling to state Supreme Court
By Richard Halstead, October 4, 2016, Marin Independent Journal
Four Marin labor groups have appealed a state appeals court decision that some say could radically alter the ability to reduce the retirement benefits of public employees who are still on the job. The plaintiffs — the Marin Association of Public Employees, known as MAPE; the Marin County Management Employees Association; Service Employees International Union 1021; and the Marin County Fire Department Firefighters’ Association — have requested that the state Supreme Court review a decision issued in August by the 1st District Court of Appeal in San Francisco. In the decision, the appellate court upheld the Marin County Employees’ Retirement Association’s interpretation of two 2012 state amendments that created new rules for how county retirement boards are permitted to calculate their current members’ retirement allowances. (read article)
Judgment against union grows to $7.8 million
By L.M. Sixel, October 4, 2016, Houston Chronicle
A judgement against the Service Employees International Union grew by another $2.5 million, according to an order signed last week by Harris County District Court Judge Erin Elizabeth Lunceford. The organization got hit last month with a $5.3 million judgment after a Harris County jury found the labor union’s aggressive organizing campaign went too far when it maligned the reputation of a local janitorial company. The total award grew to $7.8 million when $2.5 million of interest was added, The jury sided with Professional Janitorial Service in a suit the company brought nine years ago against the nation’s second largest labor union, which targeted the company as part of its “Justice for Janitors” organizing campaign and wrongly claimed Professional Janitorial Service had violated wage, overtime and other labor laws. (read article)
Virginia’s right-to-work amendment
By Clarissa Cooper, October 3, 2016, Staunton News Leader
On the 2016 ballot, most people have been focusing on the presidential race. In Virginia, two proposed constitutional amendments will also be on the ballot for people to vote on in November. The second proposed amendment is a right-to-work amendment involving labor unions. According to the Virginia Department of Elections, Virginia’s current right-to-work law states that union membership cannot be a condition of employment. If Virginia voters approved adding this into the constitution, it would make it much more difficult for labor laws to change in the future, according to Department of Elections materials. (read article)
D.C. police, labor union settle divisive claims over overtime and All Hands on Deck
By Peter Hermann, October 3, 2016, Washington Post
D.C. police and the union for the rank-and-file officers have ended one of their most divisive disputes with a $9 million agreement to pay overtime for working All Hands on Deck, the former chief’s signature crime-fighting program. The settlement worked out over the weekend comes after a federal arbitrator ruled in 2009 that the extra assignments were illegal and violated parts of the contract over pay and work schedules. The District appealed the decision to a labor relations board, but lost in 2011. (read article)
Talks resume in faculty labor dispute; union accuses management of ‘regressive bargaining’
By Jan Murphy, September 29, 2016, PennLive.com
Negotiators for the faculty union and the State System of Higher Education returned to the bargaining table on Thursday to continue efforts to reach an agreement and thwart what would be the first-ever faculty strike at the 14 state universities. The faculty has set Oct. 19, the first day after the fall break, as the day they will walkout if no agreement is reached. The more than 5,000 professors in the State System have been working under an expired contract since June 30, 2015. Numerous issues separate the sides including changes to the use and pay of temporary faculty, allowing graduate students to teach courses, and modifications to the health care plan. (read article)
Graduate Students Vote to Select Union Affiliation
By Garrett Williams, September 30, 2016, The Chicago Maroon
Graduate students at the University of Chicago have taken the next step toward unionization by initiating an affiliation referendum. This vote will decide which labor union Graduate Students United (GSU) will affiliate with, should its push for unionization succeed. AFT and SEIU are both major labor unions with about 1.6 million and 1.9 million members, respectively. Non-tenure track faculty at the University of Chicago chose to unionize with SEIU Local 73 this past December. The union chosen by GSU will contribute resources and organizing muscle to GSU’s push for union certification. Once an affiliate union has been decided upon, GSU will proceed with the election process. (read article)
State-Run Retirement Plan OK’d in California
By Nick Cahill, September 29, 2016, Courthouse News Service
Millions of California workers lacking access to pension and retirement plans received a boost Thursday after Gov. Jerry Brown signed a bill that greenlights a state-sponsored savings plan for private employees. Hoping to encourage and spur retirement planning for nearly 7 million Californians relying largely on social security, the California Secure Choice Retirement Program will create savings plans for workers whose employers don’t offer 401(k) or other retirement options. Structured like a traditional 401(k), workers will be able to take the state-sponsored retirement plan with them to new jobs but face penalties for withdrawing before retirement. While similar to California’s public-employee pension plan, it will not be guaranteed by state taxpayers. (read article)
Jerry Brown again vetoes union-backed restrictions on paid signature gatherers
By Christopher Cadelago, September 29, 2016, Sacramento Bee
A union-backed effort to change the signature-gathering process for ballot initiatives was turned away again by Gov. Jerry Brown, who argued in a veto message Thursday that the bill would do little to lessen the grip of powerful interests. Senate Bill 1094 sought to require that proponents of a statewide initiative use non-paid volunteers to collect at least 5 percent of signatures needed to qualify their initiative. SB 1094 “will not keep out special interests or favor volunteer signature gathering,” Brown wrote. (read article)
Chicago Teachers Union sets Oct. 11 strike date
By Lauren FitzPatrick & Jesse Betend, September 28, 2016, Chicago Sun-Times
Determined to control the bargaining clock and “call the question” on what could be the second walkout since Mayor Rahm Emanuel took office, the Chicago Teachers Union’s House of Delegates on Wednesday set a strike date of Oct. 11. “If we cannot reach the agreement by then, we will withhold our labor,” CTU President Karen Lewis said at a news conference, surrounded by dozens of members. CTU’s full membership overwhelmingly voted last week in favor of a strike to pressure the Board of Education. Delegates took a voice vote so loud Wednesday it could be heard from outside the special meeting. (read article)
California pensions: How a deal went wrong and cost taxpayers billions
By Jack Nolan, September 28, 2016, The Mercury News
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived. Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees’ pension fund, they said, would grow fast enough to pay the bill in full. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. (read article)
Labor Pressing Obama for Action on Contractor Workers’ Union Rights
By Sam Skolnik & Ben Penn, September 28, 2016, Bloomberg BNA
Labor groups and lawmakers are pressuring the Obama administration to issue perhaps its furthest-reaching executive order aimed at federal contractors — this time to strengthen workers’ union rights. Labor and progressive leaders told Bloomberg BNA that the administration is discussing a possible post-election action: a model employer executive order (EO), including a labor peace clause that would mandate that contractors affirm workers’ right to unionize in return for a no-strike pledge. However, an administration official downplayed the possibility that the White House currently has plans for a new contractor-focused EO. (read article)
Big Labor has an identity crisis, and its name is Dakota Access
By Aura Bogada, September 28, 2016, Grist
A growing rift has split the country’s biggest union federation, the AFL-CIO. Many labor activists and union members are outraged that Richard Trumka, the federation’s president, threw the AFL-CIO’s support behind the Dakota Access pipeline project earlier this month. The AFL-CIO’s statement backing the pipeline was announced a week after the Obama administration put construction on hold. Trumka acknowledged “places of significance to Native Americans” but argued that the more than “4,500 high-quality, family supporting jobs” attached to the pipeline trumped environmental and other considerations. (read article)
State school board discusses waivers to Labor Day start
By Associated Press, September 28, 2016, Albany Times Union
Maryland’s state school board has adopted a resolution to “expeditiously” approve waivers to Gov. Larry Hogan’s order to start school after Labor Day starting next year, if local school boards can explain the educational benefits to students. The board adopted the resolution Tuesday. Doug Mayer, Hogan’s spokesman, says Superintendent Karen Salmon and board member Andy Smarick have assured the governor’s office that the board will not approve waivers before the regulations have been adopted. He says that could take about 90 days. Mayer also says the executive order requires a “compelling justification” for a waiver. Supporters say the delayed start would boost tourism and increase family time. But opponents say it shortchanges education. (read article)
Government unions in California collect and spend over $1.0 billion per year. That’s just government unions. That’s just California. They use a small fraction of this money to engage in collective bargaining. They use about a third of it to engage in politics – that’s nearly $700 million per election cycle. The rest, well over a billion per election cycle, goes to “educate” the public.
A billion dollars a year to pursue the government union agenda. You can argue this figure. Maybe it’s $800 million. Maybe, and more likely, it’s $1.2 billion. Nobody knows for sure, because government unions are required to reveal even less about their operations than private unions or public corporations. In an attempt to obtain more accurate membership and dues numbers, we spoke with an expert on public sector unions at Pepperdine University. He said that California has over 6,000 “locals” that have organized government workers into unions. In many cases, each of these locals files their own 990 form with the IRS. Our own analysis, stated in a California Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” summed it up as follows:
To amalgamate the financial information provided by literally thousands of local public sector union affiliates across every department and agency throughout California’s 478 incorporated cities and 57 counties would be a herculean task, but it is reasonable to assume that the total annual dues revenue and expenditures of California’s public sector unions is at least twice the total derived from totaling these 16 major organization’s 990 data. Put another way, at the end of 2010, following a lively election season, California’s public sector unions, collectively, were probably still sitting on well over $200 million in cash, and had just spent nearly $1.0 billion dollars on collective bargaining and political activity. It is left to the reader to ascertain why any spending to pursue the agenda of organized government workers is not intrinsically political, but dissecting actual political spending from the sparse data provided in 990 forms is an exercise in futility.
With this kind of money, you can hire a full time, professional army. And they have. When political candidates who are not backed by government unions decide to run for office, they either have to be independently wealthy, or they have to spend nearly all of their time soliciting donations. Campaign “reform” has made it impossible for a candidate to find just one wealthy donor, so unless they’re personally rich, they are in perpetual fundraising mode. The government union backed candidates, on the other hand, are often recruited to run for office by these unions, and have to do nothing more than sign a few forms that have been prepared for them in advance. The unions then run a turn-key operation to put them in office, telling them what to say and where to appear.
That’s not how politics is supposed to work in a democracy. No wonder government unions have taken over nearly every city, county and school district in California, along with the state legislature.
When it comes to “educational” efforts, the government unions spend even more money than they spend on direct political action. From Sacramento outwards to cities, counties and school districts, they hire the most capable consultants that money can buy. The finest attorneys, the most creative and capable public relations professionals, academic experts, polling wizards, media gurus. And, of course, these government unions fund “Think Tanks” that promote their agenda relentlessly.
Without this billion-dollar-a-year torrent of money, political advocacy and policy analysis works the way it’s supposed to work. Political campaigns and policy shops alike are required to present their vision to donors who then decide whether or not to support them. But when these interests, sustained by capricious pittances, are pitted against the government union machine, the outcome is predictable. They lose. And lose. And lose. California is Exhibit A for how a democracy is destroyed by a government that serves itself.
If there wasn’t an intrinsic conflict of interests between what government unions advocate – more power for government agencies and more wealth for government workers, with the welfare of private citizens a secondary concern – perhaps none of this would matter. But California, where government unions have ruled for decades, is a trendsetting travesty of how a democracy is supposed to function. It is a state where appeasing the government unions is a prerequisite for success in business. It is a state where giving up and living on government entitlements is increasingly preferable to trying to make a living when everything – housing, transportation, energy, water, and perpetually rising taxes – is punitively expensive thanks to bad policy choices. And it is a state where unionized government workers earn pay and benefits that average twice as much as what private sector workers earn, rendering them relatively immune to the consequences of their unionized government agenda.
This is America’s future if government unions are not stopped.
* * *
Ed Ring is the president of the California Policy Center.
For years, teachers’ unions have tried to kill charter schools—but only on odd-numbered days. On even-numbered days, they tried to organize them. Things lately have become very odd, at least in California; the unions are in full-assault mode.
United Teachers of Los Angeles president Alex Caputo-Pearl has long groused about how charter schools don’t play by the rules. Teachers’ union talking points effortlessly roll off his tongue—billionaires this, accountability that. But on May 4, despite pleas by charter school parents, UTLA, in concert with the Alliance to Reclaim Our Schools—a union front group—planned a major protest outside schools where charters share a campus with traditional public schools. “We will stand with Los Angeles parents, educators, students, administrators, and community members for fully funded public schools and call on corporate charter schools to pay their fair share to the district,” AROS said in a statement. Of course, charters are public schools, not “corporate.” And charters are the ones that aren’t fully funded, which is why they frequently have to share facilities. But UTLA and AROS don’t bother with those minor details. The rally mostly fizzled, so school kids were thankfully spared the sight and sound of angry protesters marching and chanting.
UTLA wasn’t finished. In what it thought would be a coup de grâce, the union released the results of a “study” it commissioned, which, among other things, asserted that the Los Angeles Unified School District “lost more than $591 million dollars to unmitigated charter school growth this year alone.” The school district countered by pointing out that it actually makes money due to the existence of charter schools. Undaunted, Caputo-Pearl was at it again in August. “With our contract expiring in June 2017, the likely attack on our health benefits in the fall of 2017, the race for governor heating up in 2018, and the unequivocal need for state legislation that addresses inadequate funding and increased regulation of charters, with all of these things, the next year-and-a-half must be founded upon building our capacity to strike, and our capacity to create a state crisis, in early 2018,” he told the annual UTLA leadership conference in July. “There simply may be no other way to protect our health benefits and to shock the system into investing in the civic institution of public education.”
In late August, just weeks after Caputo-Pearl’s tantrum, UTLA hit the streets with a media campaign. Empowered by a massive dues increase, the union began spreading its venom via billboards, bus benches, and the media. The timing was particularly bad, as the just-released 2016 state standardized-test results showed that charters outperformed traditional public schools in both English and math. Los Angeles, where one in six students is enrolled in a charter, saw 46 percent of its independent charter-school students meeting or exceeding the standard on the English Language Arts test, versus 37 percent for students in traditional public schools. On the math test, the difference was smaller: 30 percent versus 26 percent. Despite the unions’ perpetual “cherry-picking” mantra, 82 percent of charter students qualify as low-income compared with 80 percent for traditional schools. Charters also match up closely in areas of ethnicity, English-language learners, and disabled students.
The California Teachers Association jumped into the act on August 31 by unleashing “Kids Not Profits,” an “awareness” campaign calling for more “accountability and transparency of California charter schools and exposing the coordinated agenda by a group of billionaires to divert money from California’s neighborhood public schools to privately managed charter schools. These same billionaires are spending record amounts of money to influence local legislative and school board elections across the state.” In a press release announcing the launch of the campaign, the union quotes from its new radio ad, which claims to lay out the “billionaires’ coordinated agenda”:
- Divert money out of California’s neighborhood public schools to fund privately run charter schools, without accountability or transparency to parents and taxpayers.
- Cherry-pick the students who get to attend charter schools—weeding out and turning down students with special needs.
- Spend millions trying to influence local legislative and school board elections across California.
While Numbers One and Two are outright lies, there is some truth to Number Three. CTA has become fat and happy. It is by far California’s biggest political spender. It drives the union elite crazy that philanthropists are pouring unprecedented amounts of money into edu-politics in an attempt to balance the playing field. The union is finally facing some stiff competition in Sacramento, as well as in some local school board races.
Second only to its obsession with billionaires is the union’s incessant harping about accountability. “It’s time to hold charter schools and their private operators accountable to some of the same standards as traditional public schools,” CTA president Eric Heins says. This is laughable. Charter schools operate in accordance with all state and federal laws. They must meet rigorous academic goals, engage in ethical business practices, and be proactive in their efforts to stay open. If a school doesn’t successfully educate its students according to its charter, parents will pull their kids out and send them elsewhere. After a specified period—usually five years—the school’s charter is revoked. A failing traditional public school, by contrast, rarely closes. Union-mandated “permanence” laws ensure that tenured teachers, no matter how incompetent they may be, almost never lose their jobs.
The CTA and other unions can’t deal with the fact that non-unionized charters typically do a better job of educating poor and minority students than do traditional public schools. So they lie and create distractions in order to preserve their dominion. But all the yammering about charters “siphoning money from public schools,” grousing about billionaires “pushing their profit-driven agenda,” and bogus cries for “accountability” simply expose the unions as monopolists who can’t abide competition. But that’s just what children, their parents, and taxpayers deserve—less union meddling and more competition and choice.
Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.
It’s been 19 months since the U.S. Department of Justice released its scathing report on the Ferguson Police Department. Chief among the DOJ’s findings: Ferguson’s law enforcement practices were “shaped by the city’s focus on revenue rather than public safety needs.” Nearly every policing activity – including tickets, misdemeanor fines and court fees – was seen as an income opportunity.
That model led to tension between police and citizens, disrupting families and the community. When a white police officer shot and killed Michael Brown, a black 18-year-old, on August 9, 2014, a city balancing on a knife’s edge toppled quickly into chaos.
Now what might be called Ferguson’s worst practices have been brought to Huntington Beach.
Last month, as the Orange County Register reported, the City Council approved a plan to hire a city prosecutor to handle misdemeanors.
“A significant number of misdemeanors go unprosecuted,” City Attorney Michael Gates told the Register, adding that the prosecutor will “add a lot of teeth to our laws.”
“There will be a whole class of crimes that will now be prosecuted where the DA may not have gotten to them,” Gates said. “We will prosecute every one of them until conviction.”
This comes on the heels of a proposal pushed through the council last year to substantially raise city fees and fines. Confronting a rising price tag for compensation for police and firefighters, then councilman, now mayor, Jim Katapodis put forward the plan as a means to cover the cost, and additional police officers.
Parking in front of a handicapped ramp will now cost you $356, an incredible jump from its former cost of $55. A glass container on the beach? Skateboarding? They’ll cost you $175 each, up from $125. There are others.
It’s not entirely surprising that Katapodis’ main public policy objective has been to increase the number of law enforcement officers to pre-recession numbers. He has spent his professional career in and around law enforcement. Police and fire unions have been staunch supporters, first backing Katapodis in 2010, when he ran for City Council while still an LAPD sergeant. According to Katapodis, adding more sworn officers is essential to ensure a safe city and should come at whatever cost necessary.
But over the last few years violent crime has been falling. And suspending basic accounting – adding more officers at higher pay – has driven Huntington Beach’s finances into the red.
City Council member Erik Peterson, who voted against the fee increases, said he didn’t understand how the city can start paying salaries without knowing how much they’ll receive from the increased fees.
In fact, H.B. owes $300 million on pensions for its retired city workers. That number was high enough to warrant a 2013 Moody’s investigative review. That review didn’t lead to a downgrade, but it’s a red flag.
In H.B., the Police Department is being expanded literally at the expense of the public, setting police against residents in a struggle not for public safety but for revenue. Critics say the mayor and City Council majority don’t even know how much revenue that parasitic system will generate. It’s equally clear they haven’t considered its costs. It cost Ferguson almost everything.
Matt Smith is a graduate student at Princeton Seminary, and a Journalism Fellow at the California Policy Center in Tustin.
Los Angeles school teachers gathered in August in the posh, iconic – and for the group, weirdly ironic – Westin Bonaventure Hotel. They heard their union’s leaders extol their role as revolutionary defenders of the city’s poorest communities against the wealthy.
But that’s not how the city’s poor have seen it. The poorer you are, it turns out, the more likely you are to believe LA school district leaders have stranded the poor, data reviewed by the California Policy Center suggests.
It’s actually the rich who tend to like the teachers union – a fact that seems to turn the whole class-conflict paradigm on its head. While wealthy Angelenos on the north and west sides of the Los Angeles School District support the teachers union, generally poorer neighborhoods in the south and east often elect reform-minded candidates to the board of education.
CPC evaluated school district representatives – rating them either reformers or union supporters – and overlaid LA Unified’s seven local school districts with a neighborhood income map. The results are conclusive: Voters in the highest-income areas, namely Bel-Air, Porter Ranch, and Beverly Crest elected Steve Zimmer, Scott Schmerelson and Monica Ratliff – all union supporters. Voters in the poorest-income areas – downtown, South Gate and Wilmington elected Monica Garcia, Ref Rodriguez and Richard Vladovic – all reformers backed by charter school advocates.
The split between the high- and low-income voting preferences also correlates with the Academic Performance Index of schools (API). Wealthy families have access to better schools and are therefore likely more satisfied with the status quo. Conversely, poor families send their children public schools that provide a lower level education and therefore have more reason to hope and vote for change. Large neighborhood high schools in LAUSD’s three northern districts averaged an API of 702. Their counterparts in the poorer southern districts averaged 660.
(Perhaps the worst news: even the best public schools are underperforming. California’s state target API score is 800 – 98 points above the north LA average.)
Sean Corcoran, a professor of Educational Economics at New York University, has seen this phenomenon before
“We find that low school quality – as measured by standardized tests – is a consistent and modestly strong predictor of support for charters,” Corcoran observed in a 2011 paper on Washington State Charter Schools.
It’s obvious – but jarring if you listen teachers union leaders.
At their July 31 conference, United Teachers Los Angeles president Alex Caputo-Pearl depicted a Los Angeles in which the wealthy are working overtime to destroy public education.
“Billionaires across the country are looking at Los Angeles as the next and biggest opportunity to privatize and profit from the education of children,” he said. “From late August to late September, over 70 billboards, signs, bus benches and more will carry our messages that billionaires should not be driving the public school agenda, and that amazing people work in our public schools every day.”
Caputo-Pearl mentioned “billionaires” six times in his speech and “money” five times.
Ironically, the billionaires running charter schools occasionally represent LA’s best educational hope. In a 2015 comparison of union schools and charters, my colleagues at the California Policy Center found that charters cost less and teach students more effectively than union schools. In standardized testing, study authors Marc Joffe and Ed Ring noted, “Charter students outperformed the LAUSD traditional students with average [SAT] scores of 1417 to 1299.”
That performance difference might explain more than anything the preference among less wealthy voters for charter schools. Now, at last, those poorer Angelenos have a choice in schools, just like parents in LA’s richest neighborhoods. The poor are finding their voice, and they’re using it to say they want real education for their children.
Their votes have a tangible impact on the board, where the union/reform divide appears frequently. On March 8, the WISH academy (a network of two charter schools operating just west of Inglewood) petitioned to form a high school. Union-backed Steve Zimmer, the district board’s president, moved a motion to deny the petition on alleged financial grounds. When the motion was not seconded, second district trustee Garcia, a reformer, moved a motion to approve the academy charter. Third-district trustee Rodriguez, a public proponent of charters, seconded Garcia’s motion immediately.
After a two-hour debate, they voted. Garcia, Rodriguez, and Richard Vladovic (all reform-funded) voted yes. Monica Ratliff, a young, former teacher from the sixth district, joined them. George McKenna III and Scott Schmerelson voted no. As candidates, both were funded and endorsed by United Teachers Los Angeles. Zimmer had the last vote – and at 4-2, he could safely take a bold stand either for or against the charter school. Instead, Zimmer abstained.
Adam Jacobs is an intern at the California Policy Center. He attends George Washington University in Washington D.C.
Officials of the Orange Unified School District have spent more than $50,000 to support a $288 million bond measure on the November ballot. Expenses include $23,200 for opinion polling and $6,000 per month for campaign consultants, according to documents reviewed by the California Policy Center: School board members authorized the district to spend up to $128,000 on the effort. If voters approve the bond, there will be additional costs – $225,000 for financial advisors and $265,000 for legal advice.
The district’s use of public funds rests on a crucial legal distinction, said Orange Unified Superintendent Michael Christensen. It’s legal to use taxpayer dollars to educate the public, but not to campaign.
Critics say that’s a distinction without a difference during the campaign season.
“It should be illegal for school district resources to be allocated for political campaigns, political polling, campaign strategists and consultants. It’s a shameful abuse of our tax dollars,” said former Villa Park Councilwoman Deborah Pauly, who opposes the bond. “It’s not surprising that OUSD has squandered $50,000 trying to trick well-meaning voters into increasing their own property taxes for the next 30 years.”
Bonds are loans in which borrowers – in this case, the school district – pay lenders interest on the principal for a period of years. The district makes those interest payments with income from new taxes. Orange school trustees voted July 21 to set that tax at $29 for every $100,000 of assessed property value. The owner of a house or building valued at $1 million would pay $290 per year, for example.
But residents won’t know the full cost of the bond until after the measure is passed and bonds are ready to be issued. The interest rates depend on the market, though Christensen said his staff estimates the rate will be around 4.85 percent. If he’s right, the total cost of a $288 million bond will be roughly $547 million, with about $259 million going toward interest alone.
Though district officials say all Orange Unified schools need a makeover, the measure would refurbish only the district’s four high schools – El Modena, Canyon, Villa Park and Orange. That’s an average of $137 million for each of the four schools.
The bond proposal does nothing to refurbish Orange Unified’s six middle schools or 29 elementary schools.
There was a time when OUSD saved cash for new buildings and maintenance of old ones. That changed in 2002, with a union-backed campaign to recall conservative district trustees, including a high-profile teachers strike in April 2002 and the claim that the district’s conservatives had been so stingy with teacher pay that the district was bleeding qualified teachers.
“Since 1998, Orange’s most experienced educators have departed in droves – more than 1,000 teachers and administrators, including Teachers of the Year, mentor teachers, counselors, librarians, nurses, reading specialists and special education teachers,” a union advocate wrote in the Los Angeles Times.
Behind that dramatic claim was a district that actually saved cash against the certain need of school repairs. But union power triumphed over thrift. In June, the conservatives were shown the exits and union-backed candidates promptly took their places. Once in control of the gavel, district trustees commissioned a report that concluded, “Orange Unified had consistently overestimated its expenses and underestimated district revenues and kept unnecessarily high levels of emergency reserves,” the Los Angeles Times reported.
Those “unnecessarily high” reserves were liquidated to pay for teacher salary increases in 2002. Just two years later, Orange Unified asked voters to approve a bond, first in March, and then again in November. Both times it was denied. Then, in 2014, it lost a bond vote that would have allowed the district to borrow $296 million.
With three bond failures since 2002 – and a controversial fourth bond measure coming in three months – Orange voters seem to be sending a clear message to the district. School officials know how to spend, but voters remember a time, before 2002, when school officials knew how to save.
Ethan Musser is a rising senior at Mississippi State, and a Journalism Fellow at the California Policy Center in Tustin. This article first appeared in the Orange County Register.
Gap Co-Founder Doris Fisher Is Behind the Charter School Agenda
By Joel Warner, September 27, 2016, Capital & Main
As co-founder of the Gap, San Francisco-based business leader and philanthropist Doris Fisher boasts a net worth of $2.6 billion, making her the country’s third richest self-made woman, according to Forbes. And she’s focused much of her wealth and resources on building charter schools. She and her late husband Donald donated more than $70 million to the Knowledge is Power Program (KIPP) and helped to personally build the operation into the largest network of charter schools in the country, with 200 schools serving 80,000 students in 20 states. (read article)
Knight wants delay in OT rule
By Bartholomew Sullivan, September 27, 2016, Ventura County Star
Rep. Steve Knight hopes to get a floor vote this week on a bill he co-sponsored to delay the Dec. 1 implementation of the Department of Labor’s overtime rule that would provide time-and-a-half pay to 4.2 million people earning less than $47,476 a year, including 392,000 Californians. Knight, R-Lancaster, took issue with the rule in a letter to Labor Secretary Thomas E. Perez in December. He contends employers won’t be able to afford the new rule, which would exempt from the Fair Labor Standards Act certain employees who perform executive, administrative or professional duties beyond 40 hours a week. (read article)
What the Jersey City PLA ruling means for union labor in construction
By Kim Slowey, September 27, 2016, Construction Dive
A recent New Jersey appeals court decision has stoked the fires of the union versus nonunion debate, which continues to grow across the U.S. as unions are reportedly losing their grip on critical markets. In 2007, as the country was feeling a kick in the teeth from the recession, Jersey City enacted a law under which developers, using private funds, would receive short-term (five years) and long-term (20 years) tax abatements for building $25 million-plus projects there, according to attorney Russell McEwan with employment and labor law firm Littler Mendelson. In exchange, those developers had to sign a Project Labor Agreement (PLA) obligating them to use union-only labor on their projects. (read article)
Court throws out suit over Wisconsin ‘right-to-work’ law
By Patrick Marley, September 26, 2016, Milwaukee Journal Sentinel
A federal judge on Monday threw out a lawsuit challenging a 2015 law that banned labor contracts requiring workers to pay union fees. The ruling by U.S. District Judge J.P. Stadtmueller is the latest setback for unions, which have challenged the state’s “right-to-work” law in state and federal courts. Two locals of the International Union of Operating Engineers argued the law violated the National Labor Relations Act and unconstitutionally took something of value from the unions without compensation. Stadtmueller disagreed, citing a 7th U.S. Circuit Court of Appeals’ decision that upheld Indiana’s “right-to-work” law. Terry McGowan, president of one of the union locals, said the unions would appeal, putting the issue back before the 7th Circuit. (read article)
Long Beach reaches tentative labor agreement with city’s largest union
By Courtney Tompkins, September 26, 2016, Long Beach Press Telegram
Long Beach’s largest labor union has reached a tentative agreement with the city after nearly two years of negotiations, officials announced Monday. The general terms of the agreement with the International Association of Machinists (IAM), which represents nearly half of the city’s labor force, include a 2 percent annual wage increase for fiscal years 2017 through 2019, healthcare reform provisions, and creation of a labor management committee to develop a pathway for temporary workers to obtain permanent employment. (read article)
Union leaders struggle to turn members against Trump
By Sean Higgins, September 26, 2016, Washington Examiner
Every four years, the AFL-CIO labor federation engages in a quixotic mission: to attempt to dissuade many of its own members from voting for their first choice for president, the Republican candidate. Between one-quarter and one-third pull the lever for the GOP, anyway. The labor leaders’ efforts have taken an added urgency this year because the Republican nominee, Donald Trump, may have the strongest appeal in decades of any GOP candidate to the union rank-and-file. The AFL-CIO has conceded as much. An internal poll it did in June found that 41 percent of its members in five key battleground states — Ohio, Pennsylvania, Florida, Nevada and Wisconsin — favored Trump. (read article)
Under pressure from union, L.A. County makes it easier for probation workers with discipline problems to get promotions
By Abby Sewell and Garrett Therolf, September 25, 2016, Los Angeles Times
More than 50 employees working inside Los Angeles County’s juvenile lockups received promotions despite a history of disciplinary problems or criminal arrests under a deal county leaders quietly cut earlier this year. The workers had previously been denied promotion for actions ranging from mistreatment of children in custody to off-duty drunk driving. The county softened the policy after the union representing the employees filed a lawsuit challenging the denial of promotions. A judge ruled in favor of the county. But when the union appealed, the county decided to settle the case and create a new policy allowing more employees with discipline records to receive promotions. (read article)
How a pension deal went wrong and cost California taxpayers billions
By Jack Dolan, September 24, 2016, The Bakersfield Californian
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90 percent of their peak pay for as long as they lived. Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees’ pension fund, they said, would grow fast enough to pay the bill in full. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. This year, state employee pensions will cost taxpayers $5.4 billion, according to the Department of Finance. (read article)
State Labor Council fined for campaign finance violations
By Associated Press, September 23, 2016, Walla Walla Union-Bulletin
The Washington State Labor Council will pay the state $16,622 over the organization’s failure to file lobbyist employer reports of in-kind and cash contributions properly and on time. The state attorney general’s office said Friday the group agreed to a civil penalty of $18,500, with half suspended for four years as long as there are no further violations of the law; $5,240 in attorney fees and court costs; and $2,132 in investigation costs to the Public Disclosure Commission. The attorney general’s office received a complaint last year from the Freedom Foundation against WSLC alleging multiple violations of the state’s public disclosure laws. (read article)
LA Police Union: Police Commission Wants Cops To Run From Armed Suspects
By Kerry Picket, September 23, 2016, Daily Caller
The Los Angeles Police Commission wants LAPD police officers to run away when a suspect confronts them with a weapon, warns the Los Angeles Police Protective League, the labor union of the city’s police officers. The organization posted a blog post critical of the commission’s recent decision to find that fault lay upon an LAPD officer who used deadly force when a female suspect, Norma Guzman, came at him and his partner swinging a large knife. The commission — composed of five mayoral appointees and city council-confirmed civilians who broke ranks with Police Chief Charlie Beck — claimed the LAPD Officer violated deadly force rules, in the case which happened last year. Despite support from Beck, Guzman’s family and local activists want the officer to be charged criminally, the Los Angeles Times reported. (read article)
Faculty union leader: ‘If we have to go on strike we are going to do whatever it takes’
By Jan Murphy, September 23, 2016, PennLive.com
Anyone who thought the state universities’ faculty union wasn’t serious about calling the first-ever strike in the 33-year-old system’s history better brace themselves. “I say with a heavy heart that we feel we have no choice but to say by October 19, if we don’t have a contract, all the faculty at all 14 of our universities will be on strike,” said Association of Pennsylvania State College and University Faculties President Ken Mash on Friday at a news conference at the Red Lion Hotel in Swatara Twp. This announcement came as a result of the more than 5,000 faculty members employed by the system have grown increasingly frustrated over working under an expired contract since June 30, 2015. (read article)
Dakota Access Pipeline Exposes Rift In Organized Labor
By Dave Jamieson, September 23, 2016, Huffington Post
The nation’s largest federation of labor unions upset some of its own members last week by endorsing the construction of the Dakota Access pipeline in North Dakota. Some labor activists, sympathetic to Native American tribes and environmentalists, called upon the AFL-CIO to retract its support for the controversial project. The rift within the federation may be even deeper than it first seemed. The day before federation President Richard Trumka issued a statement supporting the pipeline, Sean McGarvey, the head of the AFL-CIO’s building trades unions, sent him and the presidents of the federation’s other unions a blistering letter. McGarvey said unions’ resistance to the Dakota Access pipeline had helped upend the lives of union workers employed on the project. (read article)
Chicago Teacher: Why We May Strike Again
By Gabriel Sheridan, September 22, 2016, Labor Notes
The Chicago Teachers Union announced this morning that members have voted to authorize a strike, with 90.6 percent turnout and 95.6 percent voting yes. The union’s House of Delegates will meet September 28 to decide the next step. A strike could begin as soon as October 11. Chicago teachers are voting September 21-23 on whether to authorize another open-ended strike. I remember how worried I was as a rank-and-file teacher on the eve of the 2012 strike vote. I thought we’d never get a majority. Our contract has been expired for more than a year. We already voted by 88 percent in December to authorize a strike, and walked out for one day in April. The union is holding this second vote partly to discourage any legal attacks from the mayor or governor over technicalities—and partly to solidify our solidarity. (read article)
Chicago Teachers Union Questions Governor’s Appointment
By Sarah Karp, September 20, 2016, WBEZ
The Chicago Teachers Union claims the Illinois Educational Labor Relations Board was further compromised Friday when Gov. Bruce Rauner appointed a former attorney for Chicago Public Schools. With Lara Shayne’s appointment, three of the five members have been appointed by Rauner, who is known for his anti-union views and dislike of the Chicago Teachers Union. Until just last week, Shayne served as senior manager of labor relations for CPS. CTU attorney Robert Bloch said Shayne occasionally participated in negotiations with the union over the contract dispute. Now, as a member of the board, Shayne will be asked to decide disputes between school districts and unions, including disagreements between CPS and the CTU. (read article)
New local taxes and new local borrowing are a regular phenomenon in California elections, but this year our government union controlled politicians have outdone themselves. Let’s compare:
November 2014 – $11 billion in new borrowing proposed via 118 local bond measures, 81% passed. Of the 117 local proposals for new taxes, 68% passed.
June 2016 – $6.2 billion in new borrowing proposed via 48 local bond measures, an estimated 93% passed. Of the 42 local proposals for new taxes, an estimated 66% passed.
November 2016 – $32.2 billion in new borrowing via 193 local bond measures, and 224 local proposals for new taxes!
Not only do these general and primary and special election tax and bond measures accumulate year after year, but they nearly always pass! The primary source for this information is the California Tax Foundation, who have just produced another excellent guide “Local Tax and Bond Measures 2016.” This time, they have not only compiled a list of all of the proposed local taxes and bonds, but for each of the proposed new local taxes, they have compiled the projected annual collections. The result is stunning.
2016 California Local Tax and Bond Measures
As this table reports, $32.2 billion in new borrowing is being proposed, nearly all of it for schools and colleges. At 5.0% annual interest with a 30 year repayment plan, this borrowing will cost property owners another $2.0 billion per year in increased property taxes. If over 90% of these bonds are approved by voters, as recent history indicates is likely, California’s taxpayers will suddenly have saddled themselves with nearly $30 billion in new government debt.
Also as reported on the above table, the 224 proposed tax increases are estimated to cost taxpayers at least $2.9 billion per year. “At least,” because CalTax was unable to find revenue projections for 29 of them. And while “sin taxes” on marijuana and soda promise to bring in $58 million and $18 million, respectively, it is sales tax, that everyone pays, that will bring in most of the revenue, over $2.3 billion.
Because local taxes are numerous and dispersed onto hundreds of differing ballots across the state, they don’t get the visibility that state tax increases generate. But collectively they are just as significant. California’s Prop. 30, passed by voters in 2012, generated about $6.0 billion per year. That same tax, which was supposed to be temporary, will be extended through 2030 if voters approve Prop. 55 this year. But if you compare this statewide tax to the proposed local taxes, $2.9 billion per year, along with required payments on the local bonds, $2.1 billion per year, you are adding another $5.0 billion annual burden to taxpayers.
Passing Prop. 30 was a major fight. Similarly, Prop. 55 has huge visibility with voters. But because nearly all of the local measures pass, and because dozens if not hundreds of them appear on the ballot every election, local taxes and bonds matter more. Invisible, ongoing, and ever expanding, they are silently elevating the cost-of-living for ordinary Californians as much or more than state taxes.
Where does this money really go? Why is there an insatiable thirst for more taxes and more borrowed funds?
One word: Pensions. One cause: Government unions and their allies in the financial community, who together comprise what is by far the most potent political lobby in California.
A May 2016 analysis by the California Policy Center, using the most recent data available from the U.S. Census Bureau, estimated that during 2014, California’s 80+ independent state/local government employee pension systems received $30.1 billion in contributions (ref. table 2-A). Later in that same report, on table 2-C which is displayed below, one can see how much these pension systems actually need to remain financially healthy. At a minimum, they are collecting $8.0 billion per year LESS than they need. And that is if the investments they’ve made yield an annual return of 7.5% per year for the next 30 years. At the modest reduction of that projection to 6.5% – which even CalPERS has announced they are going to phase in as their new projection for calculating required annual contributions, these pension systems are collecting $22.2 billion per year LESS than they need.
California State/Local Pension Funds Consolidated
2014 – Est. Funding Status and Required Contributions at Various ROI
If California’s state and local government workers participated in Social Security like the rest of California’s workers, instead of receiving guaranteed defined benefit pensions that on average pay FOUR TIMES what Social Security recipients can expect, there would be no insatiable need for more money for the pension systems. Even if California’s state and local government workers merely received defined benefits that paid, on average, TWICE what Social Security recipients can expect, these pension funds would currently have surpluses. Moreover, there would be money left over in local municipal and school district operating budgets to maintain facilities, instead of having to perpetually borrow.
Six billion per year ala Prop. 30 and Prop. 55. Another five billion per year thanks to new proposed local taxes and borrowing just this November. And it’s not even close to enough. California’s state and local government pension systems are going to need somewhere between $50 to $60 billion per year to stay afloat, and currently they’re collecting barely more than half that much.
No wonder there’s the perennial scramble for more. More. MORE.
* * *
Ed Ring is the president of the California Policy Center.
I have studied U.S. and California politics in particular since the mid-1990s, and believe the case for limited government is stronger now, than at any other time in history.
A series of emerging trends have coalesced to produce a political environment that makes it very unwise to try to enact sweeping policy change in today’s political environment (with the exception of an outright repeal of failed government programs).
A major treatise could be written on the subject, but here are some of the key considerations that led me to this conclusion.
First, there has been a noticeable decline in the quality of our elected leaders. To put it bluntly, many politicians are just in it for themselves and purport to pursue the public’s interest only as a means to their own ends.
The ramifications of this trend are huge and have served to give public interests more power over the political process and make it impossible in many cases to enact legislation that is within the public’s interest.
Second, the country’s political economy has gotten increasingly complex which makes it more difficult than ever to craft responsible public policy that is capable of addressing a policy problem not only today, but over a significant time period.
Third, the increasing polarization in the electorate, and reflected in U.S. governing bodies, make it extremely difficult, and more commonly impossible, to substantially revise a public policy once it has been approved.
Many examples could be provided to prove the validity of these assertions, but let’s look at a few case studies.
At the federal level, there is no better recent example than Obamacare. The policy was sold as being the best of all worlds expanding coverage, reducing costs, and improving the business climate in the process.
The only thing Obamacare has done well is expand coverage, but this has come at a great cost in the form of double digit annual cost increases on individuals, business, and government itself.
Without question, the program needs some major fixes to restore at least short-term viability and there are no signs that the political consensus needed to bring such change could be achieved. The result is a government program that is completely unsustainable, but has nonetheless provided health coverage to tens of millions more Americans which makes it impossible for anyone to advocate an outright repeal without a replacement.
Obamacare is looking like another example of a major government program that was enacted with very good intentions, but cannot be made sustainable over the long-run due to the huge complexity of the issue and the inability of the U.S. Congress to come anywhere close to the consensus needed to reform it. Two other examples: Social Security and Medicare, both unsustainable, yet almost politically untouchable.
At the state level, the pension crisis is an excellent example which holds ramifications for the long-term health of state government that equal or exceed Obamacare, Social Security, and Medicare combined.
In California, the level of retirement benefits provided to public employees is unaffordable to most public agencies in California, and is not currently being covered through contributions raised from public employers, and to a far less extent public employees.
The result is a massive run up is debt for nearly all state and local public agencies in California. In 2013, the total debt for unfunded pension liabilities was estimated at $950 billion, according to Stanford University. But more recent calculations for 2016, peg the debt at $1.5 trillion 50% higher due to major investment losses and soaring benefit costs.
Public pension debt alone in California is currently estimated to equal $77,000 per household in 2013, according to Stanford University’s pension tracker.
Despite the magnitude of the current pension crisis, there are only a handful of California Legislators who will even publicly admit that the pension crisis is a major issue in California. This is due to the fact that the state’s public employee unions control the California Democratic Party, and the Democrats run the California State Legislature.
The state’s pension crisis has the potential to bankrupt the State of California and nearly all of its public agencies, but there is not the faintest sign of a political consensus that will even admit that there is a major problem here, let alone consider a solution.
Furthermore, absent changes to the state’s pension system it makes no sense to further increase state and local tax revenues (i.e. tax and fee increases) since these increased revenues will simply go to fund overly generous and unsustainable public employee benefit costs which are increasing at 10-25% per year on average.
Private conversations with Republican legislators, who are the minority, indicate that they understand the issue and the need for reform but there is nothing to be gained by them going out on the issue short of a critical mass for reform.
Democrat legislators, on the other hand, support the status quo because the public employee unions bankroll their campaigns and the Democratic Party, and most if not all have already signed pledges to the state’s public employee unions to only increase public employee compensation, regardless of the consequences for the state.
The state’s unsustainable public pension system is another example of a large government program gone bad, but nothing can be done to fix it given the circumstances of the state’s current political environment.
One last case study regarding the need for limited government is the state’s regulatory climate, which has an obvious parallel at the federal level but I will confine my discussion to the State of California.
The State of California’s regulatory climate is credited with being a key factor, along with high taxes, for encouraging more than 10,000 businesses to relocate out of state in recent years.
In a recent Inside Source interview with Stanford University Economics Professor Roger G. Noll, Noll states that California’s regulatory policies and practices are deeply flawed, but not necessarily enough to “drag Silicon Valley to Texas.”
Noll said most California legislators lack the capacity and inclination to craft responsible regulatory policy and that most regulation considered by the California Legislature is deeply flawed.
“We have pretty much a bankrupt system, it is rare to have a bill that is well crafted,” Noll stated.
Yet this does not stop the Democrat Legislature from developing bill after bill that seeks to regulate the California economy in almost every way imaginable. The sad truth is that the vast majority of this legislation is deeply flawed and will do more harm to the state’s business climate while providing little if any public benefit other than a political sound byte.
Moreover, most Democrats develop and pass regulatory legislation as a means to advance their careers and the policy agendas of their supporters, as opposed to advancing the public interest.
Thus, we have a Democrat majority whose primarily occupation is advancing their own agenda, as opposed to the public’s interest, without regard for the long-term consequences for the state’s business climate and economy.
If the Legislature cannot craft legislation in such as way that is beneficial and cost-effective it should just leave the issue alone, which brings us full circle to the need for limited government.
The increased complexity of the economy has dramatically increased the number of issues that can be regulated as well as the potential for harmful effects from poorly crafted legislation, which has become the rule in California, not the exception.
In other words, the best thing the California Legislature can do on most regulatory issues is do nothing. But political motivations necessitate the opposite due to a decline in the quality of our public leaders, primarily if not exclusively California Democrat politicians.
Then California Treasurer Bill Lockyer (D) saw this trend in 2010, noting that most of the legislation considered and passed in the California State Assembly is “junk” but lawmakers “move it along” to keep the special interests happy.
Lockyer also chastised the Democrat Legislature for its inability to address the state’s pension crisis because of who elected them (i.e. public employee unions) stating that it will “bankrupt the state” if nothing is done.
In short, government has reached a point in California, as well as at the federal level, where politicians cannot address the most important issues (i.e. failing government programs) due to political realities, but commonly do the wrong things in the areas where they can act.
The only solution is limited government. First, we must prevent more government programs from going on the books that will inevitably become unsustainable or unworkable, but impossible to fix. And second, we must limit politicians from advancing their own private agendas through legislation that actually does more harm than good.
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.
The Legislature is in adjournment, and with lawmakers at home campaigning for reelection, they are unable to engage in their favorite pastime of undermining Proposition 13 and its protections for California taxpayers.
However, this time out is only a brief respite from the Sacramento politicians’ inexorable pursuit of taxpayers’ wallets, the ferocity of which matches the dedication and intensity of a bear going after honey.
This December, after the election, lawmakers will reconvene to kick off the next two-year legislative session. During the just completed session, with great effort, taxpayer advocates were able to blunt a number of major efforts to modify or undermine Proposition 13, and, as surely as Angelina and Brad will be appearing on the covers of the supermarket tabloids, these attacks on taxpayers will begin anew when the Legislature is back in session.
Bills will be introduced to make it easier to raise taxes on property owners as well as to cut the Proposition 13 protections for commercial property, including small businesses. There may even be an effort to place a surcharge on all categories of property, an idea that was put forward by authors of an initiative that nearly collected enough signatures for placement on this year’s November ballot.
Accompanying the legislative fusillade will come the usual arguments that local government, or schools, or infrastructure, or the homeless, or the elderly, or (fill in the blank with the program or cause of your choice), or all of the preceding, need more money.
Government at all levels has become a militant special interest and its Prime Directive is to increase revenue – to take in more taxpayer dollars that is – and more is never enough.
The dirty little secret behind why government has changed from a service entity, dedicated to meeting the needs of its constituents, to a rapacious overlord, is that since being granted virtually unfettered collective bargaining rights in 1977, California’s state and local government workers have become the highest compensated public employees in all 50 states. With the high pay comes high union dues, collected by the employing entity and turned over to the government employee union leadership. These millions of dollars can then be used as a massive war chest to elect a pro-union majority in the Legislature and on the governing bodies of most local governments. And since these elected officials’ political futures are dependent on the goodwill of their union sponsors, there are almost no limits on what they will be willing to do to extract more money from taxpayers to be shoveled into ever increasing pay, benefits and pensions for government workers. (Government employee pension debt is several hundred billion dollars).
Literally, the only protections that average folks have from a total mugging by state and local governments are Proposition 13 and Proposition 218, the Right to Vote on Taxes Act. These popular propositions put limits on how much can be extracted from taxpayers by capping annual increases in property taxes, requiring a two-thirds vote of the Legislature to raise state taxes and guaranteeing the right of voters to have the final say on local tax increases.
It is easy to see why these taxpayer protections are despised by the grasping political class and their government employee union allies. This is also why taxpayers will have to work hard to preserve them.
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.
Pot shop vote in LA?
By Debbie L. Sklar, September 20, 2016, MyNewsLa.com
Will you get to vote to keep and permit pot shops in Los Angeles?
Proponents of a measure to repeal Proposition D, a city ban on medical marijuana dispensaries, say they have turned in more than 100,000 signatures to the City Clerk’s office in an effort to qualify for the March ballot. The measure calls for creating a permitting process that would replace the ban. It was put forward by the United Food and Commercial Workers Local 770, a labor union, and the UCBA Trade Association, which is consists of dispensaries that were given immunity to continue operating under Proposition D despite the ban. The City Clerk’s office still needs to verify whether the petitions meet the 61,487 minimum threshold for valid signatures. The proponents are aiming to put the measure on the March 2017 ballot. If the signatures are deemed sufficient, the City Council also has the option to adopt the ordinance language as-is or call a special election. (read article)
Chicago Teachers Union Questions Governor’s Appointment
By Sarah Karp, September 20, 2016, WBEZ
The Chicago Teachers Union claims the Illinois Educational Labor Relations Board was further compromised Friday when Gov. Bruce Rauner appointed a former attorney for Chicago Public Schools. With Lara Shayne’s appointment, three of the five members have been appointed by Rauner, who is known for his anti-union views and dislike of the Chicago Teachers Union. Until just last week, Shayne served as senior manager of labor relations for CPS. CTU attorney Robert Bloch said Shayne occasionally participated in negotiations with the union over the contract dispute. Now, as a member of the board, Shayne will be asked to decide disputes between school districts and unions, including disagreements between CPS and the CTU. (read article)
The Pension Gap
By Jacquelin Sullivan, September 18, 2016, Los Angeles Times
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. (read article)
Graduate-Student Unions Mean Good News for Professors, Too
Alex Gourevitch and Suresh Naidu, September 18, 2016, Chronicle
The National Labor Relations Board’s recent decision that graduate students are employees who have a right to unionize has produced a predictable bout of hand-wringing among university administrators. Elite institutions, like Columbia University, the University of Chicago, and Princeton University, have issued warnings that unions suppress the individuality of graduate students under the weight of “collectivist” solutions. (read article)
Detroit teachers ratify new union contract
By Anne Zaniweski, September 16, 2016, Detroit Free Press
Detroit teachers have ratified a new contract. Under the deal, teachers will see pay increases, mostly in the form of bonuses; an added prep period for elementary school teachers, and the creation of a committee to address teachers’ health and safety concerns. About 60% of the votes cast were in favor of the deal, according to officials. The contract will be for six months, retroactive to July 1 and lasting through December. The new school board that takes office in January can maintain it through the end of the school year or renegotiate it. More than 2,900 teachers and paraprofessionals will be covered by it. (read article)
Report outlines how to make equity part of California’s low-carbon economy
By Jacqueline Sullivan, September 14, 2016, Phys.Org
Governor Jerry Brown’s signing last week of two landmark climate bills, SB 32 and AB 197, demonstrates the emergence of a powerful coalition of environmentalists, labor unions and grassroots “environmental justice” organizations that will be crucial to achieving the new emissions goals, as explained in a new report by the University of California, Berkeley and the University of Southern California.
The report, “Advancing Equity in California Climate Policy: A New Social Contract for Low-Carbon Transition,” identifies ways to reduce greenhouse gas emissions while ensuring that the low-income and working class in California do not bear the brunt of the costs and are included in the benefits of the state’s transition to a low-carbon economy. (read article)
Major Union Sits Out Ohio Senate Race
By Morgan Chalfant, September 14, 2016, Washington Free Beacon
A major labor union in Ohio is refraining from endorsing a candidate in the state’s contested Senate race, despite having previously backed Democrat and former Gov. Ted Strickland. The Ohio State Building and Construction Trade Council, which boasts 94,000 members, said Thursday that it would not endorse either Strickland or incumbent Sen. Rob Portman (R.), the Dayton Daily. The revelation comes after several labor unions have broken with histories of endorsing Strickland and backed Portman instead. The decision was made by the organization’s 21-member executive board, which discussed the issue at a recent meeting in Columbus. (read article)
National Police Union Endorses Donald Trump
By Dave Jamieson, September 16, 2016, The Huffington Post
A labor union representing more than 250,000 police officers officially endorsed Donald Trump for president on Friday. The Fraternal Order of Police said its “member [had] spoken,” and that the Republican candidate had locked down the necessary two-thirds support from the union’s board. The union’s president, Chuck Canterbury, said in a statement that Democratic presidential nominee Hillary Clinton hadn’t bothered seeking the union’s backing. (read article)
Local farmworkers will get expanded overtime pay
By Kaitlyn Bartley, September 14, 2016, Half Moon Bay Review
Jerry Brown signed a law granting state farmworkers overtime pay after eight hours of work per day or 40 hours per week instead of the current 10 per day or 60 per week. Assembly Bill 1066 removes exemptions for agricultural employees regarding meal break and specific wage requirements, bringing their state-mandated benefits in line with employees in many other industries. Agricultural workers currently receive some overtime pay under a state law from 2002, but AB 1066 will increase it to time-and-a-half pay for working more than eight hours in a day or 40 in a week, and it will double pay for those who work more than 12 hours a day. The bill will phase in the changes starting in 2019 through 2022, and allows the governor to temporarily suspend the pay increases for a year if he also suspends scheduled increases to the state’s minimum wage. (read article)
SEIU civil trial calls into question inner workings of labor union
By David Yates, September 14, 2016, SE TexasRecord
Earlier this month, a Harris County jury ordered Service Employees International Union to pay Professional Janitorial Services – Houston $5.3 million in damages, finding the Chicago-based labor union made false claims about the company’s business practices and treatment of employees. In the wave of news articles and press releases that followed the trial, questions were raised on the seemingly controversial methods SEIU employs to force companies to fall in line, calling into question the integrity of the organization’s leaders and past and current attorneys. (read article)
AZ Supreme Court OKs police pay for on-the-clock union work
By Peter Cheng, September 14, 2016, Cronkite News
The Arizona Supreme Court on Tuesday ruled that paying police officers while they did work for the police union does not violate the state constitution. The court’s split decision overturns two previous lower court rulings against the practice of so-called “release time” for Phoenix police officers. As part of the city’s agreement with the police union, Phoenix had for years allowed officers to do work for the Phoenix Law Enforcement Association – on the taxpayers’ dime. Over a two-year period, the union had negotiated release time provisions worth about $1.7 million, according to court documents. (read article)
California expands already historic farm overtime policy
By Alison Noon, September 13, 2016, San Diego Union Tribune
For the first time, farmworkers in California will soon be entitled to the same pay as other hourly workers after California’s governor signed an expansion of a labor policy. Gov. Jerry Brown’s announcement came decades after labor leader Cesar Chavez and the thousands of farmworkers he organized pushed officials to recognize the union of agricultural laborers. The legislation will require that farm employers pay workers one and one-half times regular wages pay after eight hours in a day or 40 hours in a week, rather than the rate enacted in 1975 of 10 hours in one day or 60 hours in a week. (read article)
Construction unions gain in New York City
By Greg David, September 13, 2016, Crain’s New York Business
Construction union leaders are pushing hard for a requirement that all residential buildings built with the 421-a tax break be required to use union labor. Developers are resisting because using union labor in the city costs at least 30% more than nonunion and such projects will have to set aside at least 25% of the units at low rents, eroding profit margins. Yet, oddly, union leaders claim that their members worked on 65% of all residential buildings with more than 100 units and 80% of projects with more than 300 apartments. (read article)
Arizona court ruling OKs ‘release time’ for public employees’ union work
By Dustin Gardiner, September 13, 2016, The Arizona Republic
A five-year legal battle between the Phoenix police union and a conservative think tank ended Tuesday when the Arizona Supreme Court ruled that public employees can be paid public money for time spent working on behalf of their union. The 3-2 decision found the city’s agreement with its police union for paid “release time” doesn’t violate a provision in the state Constitution barring public entities from making gifts or donations to benefit private individuals, associations or companies. (read article)
Does that fact have your attention? Because media consultants insist we preface anything of substance with a hook like this. It even has the virtue of being true! And now, for those with the stomach for it, let’s descend into the weeds.
According to payroll and benefit data reported by the City of Costa Mesa to the California State Controller, during 2015 the average full-time firefighter made $240,886. During the same period, the average full-time police officer in Costa Mesa made $201,330. In both cases, that includes the cost, on average, for their regular pay, overtime, “other pay,” the city’s payment to CalPERS for the city’s share, the city’s payment to CalPERS of a portion of the employee’s share, and the city’s payments for the employee’s health and dental insurance benefits.
And if you think that’s a lot, just wait. Because the payments CalPERS is demanding from Costa Mesa – and presumably every other agency that participates in their pension system – are about to go way up.
We have obtained two innocuous documents recently delivered to the City of Costa Mesa from CalPERS. They are entitled “SAFETY FIRE PLAN OF THE CITY OF COSTA MESA (CalPERS ID: 5937664258), Annual Valuation Report as of June 30, 2015,” (click to download) and a similar document “SAFETY POLICE PLAN OF THE CITY OF COSTA MESA (CalPERS ID 5937664258), Annual Valuation Report as of June 30, 2015,” (click to download). Buried in the bureaucratic jargon are notices of significant increases to how much Costa Mesa is going to have to pay CalPERS each year. In particular, behold the following two tables that appear on page five of each letter:
Projected Employer Contributions to CalPERS – Costa Mesa Police
Projected Employer Contributions to CalPERS – Costa Mesa Firefighters
In the rarefied air of pension arcana, pension systems can get away with a lot. If you’re a glutton for punishment, read these notices from CalPERS in their entirety and see if, anywhere, they bother to explain the big picture. They don’t. The big picture is this: For years CalPERS has underestimated how much they are going to pay in pensions and they have overestimated how much their investments will earn, and as a result they are continuously increasing how much cities have to pay them. This notice is just the latest in a predictable cascade of bad news from pension systems to cities and other agencies.
Coming down to earth just a bit, consider the two terms on the above charts, “Normal Cost %” and “UAL $.” It would be proper to wonder why they represent one with a percentage and one with actual dollars, but rather than indulge in futile speculation, here are some definitions. “Normal Cost” is how much the city pays (never mind that the city also pays a portion of the employee shares – we’ll get to that) into the pension system if it is fully funded. The reason pension systems are NOT fully funded is because, again, year after year, CalPERS underestimated how much they would pay out in pensions to retirees and overestimated how much they would earn. Read this disclaimer that appears on page five of the letters: “The table below shows projected employer contributions…assuming CalPERS earns 7.5 percent every fiscal year thereafter, and assuming that all other actuarial assumptions will be realized….”
And when the “Normal Cost” payments aren’t enough, and the system is underfunded, voila, along comes the “UAL $,” that bigger catch-up payment that is necessary to restore financial health to the fund. “UAL” refers to “unfunded actuarial liability,” the present value of all eventual payments to retirees, and “UAL $” refers to the payments necessary to reduce it to a healthy level. Notice that for firefighters this catch-up payment is set to increase from $4.2M in 2017 to $6.8M in 2022, and for police it is set to increase from $5.8M in 2017 to $10.1M in 2022. This is in a small city that in 2015 employed an estimated 125 full-time police officers and 75 full-time firefighters.
As always, it must be emphasized that the point of all this is not to disparage police or firefighters. No reasonable person fails to appreciate the work they do, or the fact that they stand between us and violence, mayhem, catastrophe and chaos. And it is particularly difficult for those of us who are part of the overwhelming majority of citizens who appreciate and respect members of public safety to have to disclose and publicize the facts of their unaffordable pensions.
The following charts, using data downloaded from the CA State Controller, put these costs into perspective:
Average and Median Employee Compensation by Department
Costa Mesa – Full time employees – 2015
In the above chart, before sorting by department and calculating averages and medians, we eliminated employees who worked as temps or only worked for part of the year. This provides a more accurate estimate of how much full-time workers really make in Costa Mesa. Bear in mind that most part-time employees still receive pension benefits, as will be shown on a subsequent chart. As it is, during 2015 the average full-time police officer in Costa Mesa was paid total wages of $121,636, about 15% of that in overtime. But they then collected another $79,694 in city paid benefits, including $59,337 paid by the city towards their pension, AND another $11,562 that the city paid towards their pension that the State Controller vaguely describes as “Defined Benefit Paid by Employer.” Total 2015 police pay: $201,330.
Also on the above chart, one can see that during 2015 the average full-time firefighter in Costa Mesa was paid total wages of $150,227, about 32% of that in overtime. They then collected another $90,659 in city paid benefits, including $72,202 paid by the city toward their pension, and as already noted, another $10,440 that the city paid toward the employee’s share of their pension. Total 2015 firefighter pay: $240,886.
To distill this further, the following chart shows, per full-time employee, just how much pensions cost Costa Mesa in 2015 as a percent of regular pay.
Average Employer Pension Payment as % of Regular Pay
Costa Mesa – Full-time employees – 2015
As the above chart demonstrates, employer payments for full-time employee pensions during 2015 already consumed a staggering amount of budget. For police, every dollar of regular pay was matched by 80.5 cents of payments by the city to CalPERS. For firefighters, every dollar of regular pay was matched by a staggering 94.4 cents of payments by the city to CalPERS.
The next chart shows the impact this has on the City of Costa Mesa budget. Depicting total payroll amounts by department, it compares the same variables, total employer pension payments as a percent of total regular pay. As can be seen, the percentages are nearly the same, despite this being for the entire workforce including temporary and part-time employees, some who may not have pension benefits (most do), and many who do not receive top tier pension formulas which the overwhelming majority of full-time public safety employees still receive. As can be seen, for every dollar of regular police pay, CalPERS gets 75 cents from the city, and for every dollar of firefighter pay, CalPERS gets 92 cents from the city.
Total Employer Pension Payment as % of Regular Pay
Costa Mesa – All active employees; full, part-time and temp – 2015
At this point, the impact of CalPERS stated rate increases can be fully appreciated. And because this article, already at nearly 1,000 words, has violated every rule of 21st century social media engagement protocols – keep it short, shallow, simple, and sensational – perhaps the next paragraph should be entirely written in bold so it is less likely to be lost in the haze of verbosity. Perhaps a meme is in here somewhere. Perhaps an inflammatory graphic that shall animate the populace. Meanwhile, here goes:
Once CalPERS’s announced increases to the “unfunded payment” are fully implemented, instead of paying $10.9M per year for police pensions, Costa Mesa will pay $15.2M per year, i.e., for every dollar in regular police pay, they will pay $1.04 toward police pensions. Similarly, instead of paying CalPERS $6.4M per year for firefighter pensions, Costa Mesa will pay $9.1M per year, i.e., for every dollar in regular firefighter pay, they will pay $1.30 towards firefighter pensions.
So just how much do Costa Mesa’s retired police and firefighters collect in pensions? Repeatedly characterized by government union officials as “modest,” shall we report and you decide? The following table, using data originally sourced from CalPERS and downloaded from Transparent California, are the pensions earned by Costa Mesa retirees in 2015. Excluded from this list in order to present a more representative profile are all pre-2000 retirees, since retirement pensions were greatly enhanced after the turn of the century, and it is those more recent pensions, not the earlier ones, that are causing the financial havoc. Also excluded because the benefit amounts are not representative and the retirement years are not disclosed, are all “beneficiary” pensions, which survivors receive.
Average Pensions by Years of Service
Costa Mesa retirees – 2015
While these averages are impressive – work 30 years and you get a six-figure pension – they grossly understate what Costa Mesa public safety retirees actually get. There are at least four reasons for this: (1) The data provided doesn’t screen for part-time workers. Many retirees may have put in decades of service with the city, but only worked, for example, 20-hour weeks. They would still accrue a pension, but it would not be nearly as much as it would be if they’d worked full time. (2) Nearly all full-time employees are also granted “other post-employment benefits,” primarily health insurance. It is reasonable to assume that for public safety retirees, the value of these other post employment benefits is at least $10,000 per year. (3) Because CalPERS did not disclose what department retirees worked in during their active careers, this data set is for all of Costa Mesa’s retirees. That means it includes miscellaneous employees who receive pensions that are, while very generous, are not nearly as good as the pensions that public safety retirees receive. (4) While recent reforms have begun to curb this practice, it has been common at least through 2014 for retirees to purchase “air time,” wherein for a ridiculously low sum they are permitted to claim more years of service than they actually worked. It is common for retirees, for example, to purchase five years of air time, so when their pension benefit is initially calculated, instead of multiplying, for example, 20 years of service times a 3.0% multiplier times their final salary, they are permitted to claim 25 years of service.
All of this, of course, is dense gobbledygook to the average millennial Facebook denizen, or, for that matter, to the average politician. To be fair, it’s hard even for the financial professionals hired by the public employee unions to acknowledge that maybe 7.5% (or even 6.5%) annual investment returns will not continue for funds as big as CalPERS, or that history is no indicator of future performance. And even if they know this, they’re under tremendous pressure to keep silent. So the normal contribution remains too low, and the catch-up payments mushroom.
Finally, to be eminently fair, we must acknowledge that since modest bungalows on lots so small you have to choose between a swing set or a trampoline for the kids are now going for about a million bucks each in most of Orange County, making a quarter million per year ain’t what it used to be. But there’s the rub. Because until the people who work for the government are subject to the same economic challenges as the citizens they serve, it is very unlikely we’ll see any pressure to lower the cost of living. Everything – land, energy, transportation, water, materials, etc. – costs far more than it should, thanks to deliberate political policies and financial mismanagement that creates artificial scarcity. But hey – artificial scarcity inflates asset bubbles, which helps keep those pension funds marginally solvent.
Cost-of-living reform, if such a thing can be characterized, must accompany pension reform. What virulent meme might encapsulate all of this complexity?
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Ed Ring is the president of the California Policy Center.