The Government Union War on Meritocracy

How can you persuasively counter arguments for diversity quotas, when implacable fanatics purporting to represent every identifiable group whose aggregate achievements fall short of the mean will argue it is discrimination, not merit, that determine outcomes? Expect no help from government unions. Resentment gives them passion, restitution gives them power. Undermining the meritocracy is key to their survival.

Imagine a public school system where the excellence of teachers was the only institutional criteria for their job security and prospects for career advancement. Imagine government bureaucracies where innovative, more effective practices were adopted even if it meant smaller budgets and fewer employees. Imagine law enforcement agencies that had zero tolerance for officers that abused their authority. Are we there yet? Not if government unions have anything to say about it.

But the government union war on the meritocracy goes well beyond protecting bad employees. Government unions representing K-12 teachers and college faculty have been overran by “social justice warriors” who preach identity politics as the new religious gospel and the new academic canon. They have taken their war on the meritocracy into the classrooms and lecture halls, saturating the curricula from kindergarten to graduate school. Their message? Unless you are a heterosexual white male, you are a victim of discrimination by heterosexual white males. You live in an unjust society. Merit, according to this doctrine, is a smokescreen. It is discrimination in disguise.

What do you do if you believe in meritocracy? What do you do about this?

Math SAT Scoring Distribution by Ethnicity – 2015

If you want to earn more money in a merit-based, productive market economy, quantitative reasoning skills are required. The more of these skills you’ve got, the more money you’ll earn. So what happens when you have far, far higher percentages of highly qualified individuals in some groups than in other groups?

When it comes to college admissions and college curricula, the solution of the social justice warriors, and the faculty unions who nurture them, is many faceted. Here are some of their mitigating strategies:

  • Invent “holistic” admission criteria that diminishes the importance of quantitative aptitude.
  • Concoct theories of cognition that claim math itself is an arbitrary and subjective expression of white power (yes, this really happened).
  • Create entire college departments that are academically weak but instead offer separatist political indoctrination.
  • Blame most if not all of the gap in aptitude on systemic discrimination by the “white patriarchy.”
  • Demand race-driven quotas of ever-expanding scope; in hiring, promotions, housing, wealth, political office, whatever.

The problem with these solutions, if you want to call them that, are their actual consequences. In pursuit of quota driven diversity, colleges are turning away qualified applicants at the same time as colleges are failing to produce anywhere near the number of STEM graduates that American industry demands. Meanwhile, the students that are waved in despite being marginally qualified to pursue higher education are being trained to ascribe any failures they may encounter to racism, and any successes they may encounter to fortuitous state intervention. And not least, there is the consequence of bitterness and cynicism being bred into the psyche of all those more qualified students and future employees who are passed over in favor of meeting diversity quotas.

How does one challenge the doctrine of equality over merit? How do you challenge allegations of systemic racism? How do you do it persuasively, with hard facts, but also with compassion and empathy? It’s not easy. College youth need passion, they need a cause, they need clarifying polarities. The teachers unions offer them a good one: A rich and wealthy white patriarchy that has exploited people of color for centuries, one that must be resisted, uprooted, and replaced.

Tough love arguments should be part of any campaign of persuasion. Reality therapy. Why are people with lower test scores admitted to college if they’re being discriminated against? That’s ridiculous. And why do they think taking classes that replace difficult coursework with political indoctrination – fomenting resentment and advocating separatism – are going to give them marketable skills? Do they really believe they need on-campus “cultural safe spaces”? Aren’t those just a 21st century version of Jim Crow laws? Where does this end? And why do Asians perform so well on college aptitude tests? Why are Asians so successful economically? Aren’t they also “people of color”? Could it be because they study so diligently, and that a meritocracy is colorblind?

Along with tough love, opponents of quotas should offer understanding. It is our individuality that defines our abilities and challenges much more than the groups we’re a part of. All ethnic groups are collections of individuals with infinite diversity; short and tall, thin and obese, weak and strong, plain and beautiful, slow and smart, timid and assertive, surly and charming, lucky and unlucky, good and bad. As individuals we succeed and we fail. We endure crushing disappointments and spectacular success. Life is not always easy or fair – for anyone. We are joined by our common humanity, no matter what color we are. And nothing overcomes prejudice, should it ever exist, better than a smile.

Despite occasional rhetorical acknowledgments, government unions don’t like the message of individual accountability. But that is the message that must prevail, if we are to avoid the tyranny of quota-driven equality of outcome.

REFERENCES

Race gaps in SAT math scores are as big as ever – Brookings Institution (source for chart)
https://www.brookings.edu/blog/brown-center-chalkboard/2017/02/01/race-gaps-in-sat-math-scores-are-as-big-as-ever/

How Public Sector Unions Exploit Identity Politics

As the ethnic composition of America changes from mostly white to a kaleidoscope of color within a generation, there is no better way to fracture society than to teach everyone to resent everyone else. Nurturing tribal resentment is a winning strategy for government unions, because a swollen, authoritarian, unionized government becomes the referee. Government union power increases every time another “person of color” becomes convinced that only government redistribution and racial quotas can mitigate their persecution at the hands of a racist white “patriarchy.”

When society fractures, when we face increasing unrest and poverty, government unions win. It is inherently in the interests of government unions for society to fail. If public education fails, hire more teachers and education bureaucrats. If crime goes up, hire more police and build more prisons. If immigrants fail to assimilate, hire more multilingual bureaucrats and social workers. If poverty increases, hire more welfare administrators.

If you don’t think this strategy can work, come to California, America’s most multi-ethnic state, and a place where government unions wield absolute power. Their wholly owned subsidiary, the Democratic party in California, has spent the last 20+ years perfecting the art of convincing the electorate that Republicans are racists. The strategy has been devastatingly effective, especially with people of color.

According to the Public Policy Institute of California, among California’s “likely voters,” slightly more Whites remain registered as Republicans, 39%, than Democrats, 38%. Among Latinos the registered Democrats, 62%, far outnumber Republicans, 17%, and among Blacks the disparity is even greater, 82% Democrat vs. 6% Republican. Among Asians, where the disparity is less, the Democrats still have a nearly two-to-one advantage, 45% to 24%.

All of this racial perseverating comes at tragic cost. Among the fifty states, California has the highest taxes, the highest state and local government debt, the most welfare recipients, the most people living in poverty, and the highest cost-of-living. The roads and bridges are crumbling, and the water and energy infrastructure hasn’t been significantly upgraded in 30 years. But purveyors of identity politics have a strategy that earns votes, so why engage in actual governance? It’s all about race, stupid. Hire more bureaucrats.

The worst consequence of choosing identity politics over actual governance is the slow but relentless destruction of California’s once great system of public education. There has been negligible improvement in educational achievement for members of California’s disadvantaged, despite decades of political control by public sector union funded Democrats who pander incessantly to the voter’s lowest common denominator of resentment, race. Rather than admit that failures of culture, community, and public education are the real reasons some ethnic groups underachieve, the Democrats that run Sacramento attribute every disparity in outcome among races to the pervasiveness of racism. Their solution? Quotas.

Here is an interesting comparison to prove that quotas are being used to discriminate against California’s “privileged” youth. All data is for 2017. The first column shows what percentage of students taking the SAT, by ethnicity, achieved a score at or above the minimum to be considered “college ready.” The second column shows the ethnic breakdown of college age students in California. Column three uses a factor calculated from columns one and two, for each ethnicity, the percent of college ready students is multiplied by that ethnicity’s percent of the total pool of college age Californians. Each factor is then divided by the sum of all four factors, to calculate a crude but significant indicator of what percentage of 2017 college admissions would be offered to students of each ethnicity, if admissions were based on merit as expressed by SAT scores. Column four shows the actual admissions to California’s UC System in 2017 by ethnicity.

California’s UC System – 2017 Admissions – Actual vs. SAT Based

There are a few obvious takeaways from the above chart. Most salient is the fact that white applicants, if SAT scores were the sole basis for admission, are clear victims of discrimination. After all, if based on their college readiness as assessed by their SAT performance combined with their percentage of the population, they should have earned 43% of the admissions to the UC System, why did they only represent 23% of the incoming freshmen in 2017? But there are other disparities that point to an even bigger problem.

Why, for example, do actual Asian admissions, 34%, exceed the merit based admissions percentage, 21%, as indicated based on their percentage of the college age population and the percentage of them achieving the SAT benchmark? Why, for that matter, are the actual Latino admissions, 33%, slightly less than the amount they would theoretically earn, 35%, based that same criteria? The answer in both cases is the same, and can be best summarized in this quote taken from a report released earlier this year by the Brookings Institution:

“Race gaps on the SATs are especially pronounced at the tails of the distribution. In a perfectly equal distribution, the racial breakdown of scores at every point in the distribution would mirror the composition of test-takers as whole i.e. 51 percent white, 21 percent Latino, 14 percent black, and 14 percent Asian. But in fact, among top scorers—those scoring between a 750 and 800—60 percent are Asian and 33 percent are white, compared to 5 percent Latino and 2 percent black. Meanwhile, among those scoring between 300 and 350, 37 percent are Latino, 35 percent are black, 21 percent are white, and 6 percent are Asian.”

What this means in plain English is that in the UC System, where supposedly only the most elite high school graduates are granted admission, you will find the distribution of the higher SAT scores by ethnicity skewed even more in favor of Asian and White students than you find when evaluating how many students merely achieve the “benchmark” SAT score. This is why Asian admissions, which are arguably the only UC admissions in 2017 that were based truly on merit, skew higher than you would otherwise expect. That is also the reason that Latino admissions skew somewhat lower. And it also indicates that White applicants are discriminated against even more than shown on the table.

Such is the landscape of California’s public system of higher education, considered among the best in the world.

To further investigate this evidence, I talked someone who spent over a decade serving on the Board of Regents at the University of California. They did not mince words. Here are a few of the things they had to say:

– SAT scores have become less important because the university has gone to “holistic admissions” instead of SAT based admissions – the SAT is also watered down with a subjective 3rd “essay” section. The subjectivity of the admissions criteria makes it harder to prove discrimination.

– For years now, the UC System has diversified the faculty by taking more professors to fill positions in African American and Latino studies and shielded itself from discrimination because they can say the person hired had strength in the discipline they needed to fill.

– Ethnic studies departments are academically weak and don’t provide graduates with anything they can use. Most ethnic studies departments are growing because people are being hired and enrolled in order to fulfill de facto diversity quotas both for faculty and students. The alternative would be to destroy the integrity of the hard sciences with unqualified faculty and students.

– After the passage of Prop. 209, the admission of Asians rose to about 35% because you could not suppress their achievement without admitting you’re breaking the law. Latino and Black admissions track at 29% and 6%, respectively, more consistent with their percentage within California’s population. To accommodate the Asian over-enrollment and the Black and Latino quotas, qualified White applicants are the victims – Whites represented less than 25% of admissions to the UC system last year.

– California’s legislature is controlled by the Latino Caucus, which makes sure that 25% Latino admissions are maintained. Whites don’t go out and protest and make noise because that is politically incorrect and the media doesn’t report the data anyway.

Readers are invited to challenge the accuracy of any of the above statements, made by an informed observer. And what is the result of all this mediocrity that hides behind diversity, this discrimination that hides behind achieving quota-driven equality of outcome? A fracturing of society into identity groups, each of them, whether via propaganda or via reality, encouraged to harbor resentment towards every other group.

If one were to identify which of California’s public sector unions is the most guilty of fomenting racial disharmony, it would certainly be the ones representing K-12 public school teachers and the ones representing college faculty. Their outlook, which is reflected in their policies, their curricula, and only somewhat camouflaged on their websites, is to blame the academic achievement gap on anything but their own poor performance as the most influential determinant of educational policy in California. Blame the rich. Blame capitalism. Blame Western Civilization. Blame “white privilege.” Blame racist Republicans. But don’t look in the mirror.

A rising trope among these neo-racialist purveyors of separatist identity politics is that white people should engage in “allyship,” which to them means for well behaved white people to do whatever they’re told by the high priests of the disadvantaged, no matter how disingenuous or ridiculous. But a true ally would provide tough, genuine love, and tell the truth. Which is if you want to achieve in America, the most inclusive and tolerant nation in the history of the world, you have to work hard, stay sober, stay out of jail, keep your families intact, be thrifty, and hit the books.

That truth would unify and enrich this nation. And a unified and prosperous nation would mean less government, less government employees, and weaker public employee unions. We can’t have that now, can we?

REFERENCES

Race and voting in California: Public Policy Institute of California
http://www.ppic.org/content/pubs/jtf/JTF_RaceandVotingJTF.pdf

Class of 2017 SAT Results, College Board
https://reports.collegeboard.org/sat-suite-program-results/class-2017-results

California Demographics by Age and Ethnicity – University of California
https://www.universityofcalifornia.edu/infocenter/ca-demographics

Percentage of 2017 UC Admissions by Ethnicity – EdSource
https://edsource.org/2017/uc-admits-more-students-from-outside-california-but-officials-expect-more-state-residents-will-enroll/584321

Race gaps in SAT scores highlight inequality and hinder upward mobility – Brookings Institution
asdfasdfhttps://www.brookings.edu/research/race-gaps-in-sat-scores-highlight-inequality-and-hinder-upward-mobility/

Even With Affirmative Action, Blacks and Hispanics Are More Underrepresented at Top Colleges Than 35 Years Ago – New York Times
https://www.nytimes.com/interactive/2017/08/24/us/affirmative-action.html

Are We All Unconscious Racists? – City Journal
https://www.city-journal.org/html/are-we-all-unconscious-racists-15487.html

Without Government Unions, there Would be No Gas Tax Increase

Nobody argues that California’s roads need huge upgrades. But the solution didn’t require the $0.12 per gallon tax hike that goes into effect today. The root cause of these neglected roads – and the reason even more taxes will never be enough to fix them – is the power of public sector unions, whose agenda is consistently at odds with the public interest. Let us count the ways.

1 – CalTrans mismanagement:

CalTrans could have done a much better job of maintaining California’s roads. One of the most diligent critics (and auditors) of CalTrans is state Senator John Moorlach (R, Costa Mesa), the only CPA in California’s state legislature. Last year, Moorlach released a report on CalTrans which he summarized in “7-Step Fix for ‘Mismanaged’ Caltrans,” an article on his official website. Just a few highlights include the following:

  • In May 2014 the Legislative Analyst Office determined that CalTrans was overstaffed by 3,500 architects and engineers, costing over $500 million per year.
  • While to an average state transportation agency outsources over 50% of its work, CalTrans outsources only 10% of its work. Arizona and Florida outsource more than 80%.
  • 54% of CalTrans staff is at or near retirement age, so a hiring freeze would reduce staff merely through attrition, without requiring layoffs.

But Moorlach didn’t make explicit the reason CalTrans is mismanaged. It’s because the unions that run Sacramento don’t want to outsource CalTrans work. The unions don’t want to reduce CalTrans headcount, or hold CalTrans management accountable. Those actions might help Californians, but they would undermine union power.

2 – Bullet train boondoggle:

Money that could have been allocated to maintain and improve California’s roads is being squandered on a train that will do nothing to ameliorate California’s transportation challenges. A LOT of money. According to the American Road and Transportation Builders Association, California’s freeways can be resurfaced and have a lane added in each direction at a cost of roughly $5.0 million per mile in rural areas, about twice that in urban areas.

Meanwhile, the latest estimate for California’s “bullet train,” is $98 billion (that’s $245 million per mile), thanks to construction delays, and design challenges including nearly 50 miles of tunnels through seismically active mountains to the north and south. And hardly anyone is going to ride it. Ridership won’t even pay operating costs. But Sacramento pushes ahead with this monstrous waste when that same money could (at the urban price of $10 million per mile) resurface and add a lane in each direction to 10,000 miles of California’s freeways. Imagine smooth, unclogged roads. It’s not impossible. It’s just policy priorities.

But while bad roads destroy the chassis of millions of cars and trucks, and commuters endure stop-and-go traffic year after year, the California High Speed Rail Authority dutifully pushes on. Why?

Because that’s what the government employee unions want. They don’t want roads, with all the flexibility and autonomy that roads offer. They want to create a gigantic high-speed rail empire, with tens of thousands of new public employees to drive the trains, maintain the trains, maintain the tracks, and provide security, running up staggering annual deficits. But all of them will be members of public sector unions.

3 – All rapid transit boondoggles:

In a handful of very dense urban areas around the U.S., fast intercity trains make economic sense. But most light rail schemes, along with laughably absurd “streetcar” schemes that actually block urban lanes sorely needed by vehicles, do not achieve levels of ridership that even begin to justify their construction when the alternative is using that money for better, wider connector roads and freeways. The impact of ride sharing apps, the advent of non-polluting cars, and the option of using buses to accomplish mass transit goals all speak to the superior versatility of roads over rail for urban transportation.

So why do California’s cities continue to poor billions into light rail and streetcars, when that money could be used to unclog the roads?

To reiterate: The public sector unions that run California want tens of thousands of new public employees to operate the trains and streetcars, maintain them, maintain the tracks, and provide security, running up staggering annual deficits. But doing this means that public sector union membership – hence public sector union power – will increase.

4 – CEQA reform so people can live closer to the jobs:

The median home value in the United States today is $202,700. The median home value in California today is $509,600, 2.5 times as much! There is no shortage of land in California, and the alleged shortages of energy and water are self-inflicted as the result of policies enacted by California’s state legislature. But instead of reforming California’s Environmental Quality Act, SB 375, AB 32, and countless other laws that have made building homes in California nearly impossible, California’s legislature is doubling down on more government solutions – primarily to subsidize either extremely high density housing, or subsidized housing for the economically disadvantaged, or both.

None of this is necessary. Outside of California’s major urban centers, there is no reason homes cannot be profitably built and sold at a median price of $202,700, and there is no reason the people living in those homes cannot drive or ride share to work on fast, unclogged freeways.

But California’s public sector unions want more regulations on home building, and they want more subsidized public housing. Because those solutions, even though inadequate and coercive, enable them to hire vast new bureaucracies to enforce the many regulations and administer the public assets. Unleashing the private sector to build affordable homes in a competitive market would rob these unions of their opportunity to acquire more power. It’s that simple.

5 – Insatiable appetite for pension fund contributions:

According to a California Policy Center study, taking barely adequate annual employer pension contributions into account, the average unionized state/local government worker in California makes over $120,000 per year in pay and benefits. But to adequately fund their promised pension benefits, employers will need to pay at least another $20,000 per employee to the pension funds. This funding gap, which equates to over $20 billion per year, is the additional amount that is required to cover the difference between how much California’s public employee pension funds currently collect from taxpayers, and how much they need to collect to keep the promises that union controlled politicians have made to the government unions they “negotiate” with. That is a best-case scenario.

It could be much worse. A 2016 California Policy Center analysis (ref. table 2-C) estimated that under a worst-case scenario, the annual costs to fund California’s public employee pension funds could cost taxpayers nearly $70 billion more per year than they are currently paying.

And by the way, California’s pension funds are themselves almost entirely under the control of public sector unions – research the background of CalPERS and CalSTRS board directors to verify the degree of influence they have. Absent significant reform, funding California’s public employee pensions is going to continue to consume every dollar in new taxes for the next several decades. The cumulative financial impact of funding these pensions is easily triple that of the bullet train’s $100 billion fiasco, probably much more.

Let’s be perfectly clear. Government unions control California. They collect and spend over $1.0 billion every year, and spend most of that money on either explicit political campaigning and lobbying, or soft advocacy via expensive public relations campaigns and sponsored academic studies. Their presence is felt everywhere, from local transit districts to the governor’s office. They make or break politicians at will, by outspending or outlasting their opponents. At best, California’s most powerful corporate players do not cross these unions, often they collude with them.

California’s public sector unions operate as senior partners in a coalition that includes left-wing oligarchs especially in the Silicon Valley, extreme environmentalists and their powerful trial lawyer cohorts, and the Latino Legislative Caucus – usurped by leftist radicals – and their many allies in the social justice/identity politics industry. The power of this government union led coalition is nearly absolute, and the consequences to California’s private sector working class have been nothing short of devastating.

Government unions force California’s agencies to over-hire, overpay, and mismanage, because that benefits their members even as it harms the public. These unions enforce absurd policy priorities that further harm the public in order to increase their power. They are the reason California has increased its gas tax.

REFERENCES

Pump bump: California drivers to pay 12 cents more per gallon starting Wednesday – San Jose Mercury, Oct. 31, 2017
http://www.mercurynews.com/2017/10/31/pump-bump-california-drivers-to-pay-12-cents-more-per-gallon-starting-wednesday/

California’s gas tax increases Wednesday – Los Angeles Times, October 31, 2017
http://www.latimes.com/politics/la-pol-ca-gas-tax-increase-political-battle-20171031-story.html

How much you’ll REALLY pay in gasoline tax in California – San Diego Union Tribune, Apr. 23, 2017
http://www.sandiegouniontribune.com/business/energy-green/sd-fi-california-gastax-20170413-story.html

What Californians Could Build Using the $64 Billion Bullet Train Budget – California Policy Center, Mar. 21, 2017
http://californiapolicycenter.org/what-californians-could-build-using-the-64-billion-bullet-train-budget/

American Road and Transportation Builders Association – FAQs, ref. “How much does it cost to build a mile of road?
https://www.artba.org/about/faq/

High-Speed Rail Delay More than Triples Planned Cost to San Jose – San Jose Inside, Oct. 2, 2017
http://www.sanjoseinside.com/2017/10/02/high-speed-rail-delay-more-than-triples-planned-cost-to-san-jose/

A 13.5-mile tunnel will make or break California’s bullet train – Los Angeles Times, Oct. 21, 2017
http://www.latimes.com/local/california/la-me-bullet-train-tunnel-20171021-story.html

California Environmental Quality Act – Wikipedia
https://en.wikipedia.org/wiki/California_Environmental_Quality_Act

State Senate bills aim to make homes more affordable, but they won’t spur nearly enough construction – Los Angeles Times, Aug. 11, 2017
http://www.latimes.com/politics/la-pol-ca-state-housing-deal-effects-20170811-htmlstory.html

California’s Public Sector Compensation Trends – California Policy Center, Jan. 2017
http://californiapolicycenter.org/californias-public-sector-compensation-trends/

What is the Average Pension for a Retired Government Worker in California? – California Policy Center, Mar. 2017
http://californiapolicycenter.org/what-is-the-average-pension-for-a-retired-government-worker-in-california/

The Coming Public Pension Apocalypse, and What to Do About It – California Policy Center, May 2016
http://californiapolicycenter.org/the-coming-public-pension-apocalypse/

 

Napa fires highlight huge disparities between wealthy firefighters and ‘slave laborers’

The Big Appall

How Fraudulently Low “Normal Contributions” Wreak Havoc on Civic Finances

Back in 2013 the City of Irvine had an unfunded pension liability of $91 million and cash reserves of $61 million. The unfunded pension liability was being paid off over 30 years with interest charged on the unpaid balance at a rate of 7.5% per year. Irvine’s cash reserves were conservatively invested and earned interest at an annual rate of around 1%. With that much money in reserve, earning almost no interest, the city council decided use some of that money to pay off their unfunded pension liability.

As reported in Governing magazine, starting in 2013, Irvine increased the amount they would pay CalPERS each year by $5M over the required payment, which at the time was about $7.7M. With 100% of that $5M reducing the principal amount owed on their unfunded liability, they expected to have the unfunded liability reduced to nearly zero within ten years, instead of taking thirty years. Here’s a simplified schedule showing how that would have played out:

CITY OF IRVINE, 2013  –  PAY $5.0 MILLION EXTRA PER YEAR
ELIMINATING UNFUNDED PENSION LIABILITY IN TEN YEARS

This plan wasn’t without risk. Taking $5 million out of their reserve fund for ten years would have depleted those reserves by $50 million, leaving only $11 million. But Irvine’s city managers bet on the assumption that incoming revenues over the coming years would include enough surpluses to replenish the fund. In the meantime, after ten years they would no longer have to make any payments on their unfunded pension liability, since it would be virtually eliminated. Referring to the above chart, the total payments over ten years are $127 million, meaning that over ten years, in addition to paying off the $91 million principal, they would pay $36 million in interest. If the City of Irvine had made only their required $7.7 million annual payments for the next thirty years, they would have ended paying up an astonishing $140 million in interest! By doing this, Irvine was going to save over $100 million.

Four years have passed since Irvine took this step. How has it turned out so far?

Not so good.

Referring to CalPERS Actuarial Valuation Report for Irvine’s Miscellaneous and Safety employees, at the end of 2016 the city’s unfunded pension liability was $156 million.

Irvine was doing everything right. But despite pumping $5M extra per year into CalPERS to pay down the unfunded liability which back in 2013 was $91M (and would have been down to around $64M by the end of 2016 if nothing else had changed), the unfunded liability as of 12/31/2016 is – that’s right – $156 million.

Welcome to pension finance.

The first thing to recognize is that an unfunded pension liability is a fluid balance. Each year the actuarial projections are renewed, taking into account actual mortality and retirement statistics for the participants as well as updated projections regarding future retirements and mortality. Each year as well the financial status of the pension fund is updated, taking into account how well the invested assets in the fund performed, and taking into account any changes to the future earnings expectations.

For example, CalPERS since 2013 has begun phasing in a new, lower rate of return. They are lowering the long-term annual rate of return they project for their invested assets from 7.5% to 7.0%, and may lower it further in the coming years. Whenever a pension system’s rate of return projection is lowered, at least three things happen:

(1) The unfunded liability goes up, because the amount of money in the fund is no longer expected to earn as much as it had previously been expected to earn,

(2) The payments on the unfunded liability – if the amount of that liability were to stay the same – actually go down, since the opportunity cost of not having that money in the fund is not as great if the amount it can earn is assumed to be lower than previously, and,

(3) the so-called “normal contribution,” which is the payment that is still necessary each year even when a fund is 100% funded and has no unfunded liability, goes up, because that money is being invested at lower assumed rates of return than previously.

That third major variable, the “normal contribution,” is the problem.

Because as actuarial projections are renewed – revealing that people are living longer, and as investment returns fail to meet expectations – the “normal contribution” is supposed to increase. For a pension system to remain 100% funded, or just to allow an underfunded system not to get more underfunded, you have to put in enough money each year to eventually pay for the additional pension benefits that active workers earned in that year. That is what’s called the “normal contribution.”

By now, nearly everyone’s eyes glaze over, which is really too bad, because here’s where it gets interesting.

The reason the normal contribution has been kept artificially low is because the normal contribution is the only payment to CalPERS that public employees have to help fund themselves via payroll withholding. The taxpayers are responsible for 100% of the “unfunded contribution.” CalPERS has a conflict of interest here, because their board of directors is heavily influenced, if not completely controlled, by public employee unions. They want to make sure their members pay as little as possible for these pensions, so they have scant incentive to increase these normal contributions.

When the normal contribution is too low – and it has remained ridiculously low, in Irvine and everywhere else – the unfunded liability goes up. Way up. And the taxpayer pays for all of it.

Returning to Irvine, where the city council has recently decided to increase their extra payment on their unfunded pension liability from $5 million to $7 million per year, depicted on the chart below is their new ten year outlook. As can be seen (col. 4), just the 2017 interest charge on this new $156 million unfunded pension liability is nearly $12 million. And by paying $7 million extra, that is, by paying $20.2 million per year, ten years from now they will still be carrying over $35 million in unfunded pension debt.

CITY OF IRVINE, 2017  –  PAY $7.0 MILLION EXTRA PER YEAR
REDUCTION OF UNFUNDED PENSION LIABILITY IN TEN YEARS

This debacle isn’t restricted to Irvine. It’s everywhere. It’s happening in every agency that participates in CalPERS, and it’s happening in nearly every other public employee pension system in California. The normal cost of funding pensions, which employees have to help pay for, is understated so these employees do not actually have to pay a fair portion of the true cost of these pensions. If this isn’t fraud, I don’t know what is.

It gets worse. Think about what happened between 2013 and 2017 in the stock market. The Wall Street recovery was in full swing by 2013 and by 2016 was entering so-called bubble territory. As the chart below shows, on 1/01/2013 the value of the Dow Jones stock index was 13,190. Four years later, on 12/31/2017, the value of the Dow Jones stock index was up 51%, to 19,963.

Yet over those same four years, while the Dow climbed by 51%, the City of Irvine’s unfunded pension liability grew by 71%. And this happened even though the City of Irvine paid $12.7 million each year against that unfunded liability instead of the CalPERS’s specified $7.7 million per year. Does that scare you? It should. Sooner or later the market will correct.

DOW JONES INDUSTRIAL AVERAGE
PERFORMANCE FOR THE PAST FIVE YEARS, 2013-2017

While the stock market roared, and while Irvine massively overpaid on their unfunded liability, that unfunded liability still managed to increase by 51%. Perhaps that normal contribution was a bit lower than it should have been?

Irvine did the right thing back in 2013. CalPERS let them down. Because CalPERS was, and is, understating the normal contribution in order to shield public sector workers from the true cost of their pensions. The taxpayer is the victim, as always when we let labor unions control our governments and the agencies that serve them.

REFERENCES

CalPensions Article discussing CalPERS recent polices regarding pension debt repayments:
https://calpensions.com/2017/09/25/calpers-considers-paying-down-new-debt-faster/

Irvine 2017-18 Budget – discussion of faster paydown plan on UAAL
http://legacy.cityofirvine.org/civica/filebank/blobdload.asp?BlobID=29623

Irvine Consolidated Annual Financial Report FYE 6/30/2016
http://legacy.cityofirvine.org/civica/filebank/blobdload.asp?BlobID=28697

Irvine – links to all Consolidated Annual Financial Reports
http://www.cityofirvine.org/administrative-services-department/financial-reports

CalPERS search page to find all participating agency Actuarial Valuation Reports
https://www.calpers.ca.gov/page/employers/actuarial-services/employer-contributions/public-agency-actuarial-valuation-reports

CalPERS Actuarial Valuation Report – Irvine, Miscellaneous
https://www.calpers.ca.gov/docs/actuarial-reports/2016/irvine-city-miscellaneous-2016.pdf

CalPERS Actuarial Valuation Report – Irvine, Safety
https://www.calpers.ca.gov/docs/actuarial-reports/2016/irvine-city-safety-2016.pdf

Governing Magazine report on Irvine
http://www.governing.com/columns/public-finance/col-irvine-california-plans-prepay-pension-bill.html

Steps to Improve Police Training and Accountability

“We’re not anti-cop. We’re anti bad cop. Bad cops have to be fired, just like bad politicians”
– Leader of Black Lives Matter counter-protest, who was spontaneously invited to speak at a pro-Trump rally (watch video).

There aren’t too many things that are easier to agree on than this sentiment. Even those of us who offer nearly unequivocal support for law enforcement can agree that bad cops have to be fired. But progress in the form of better training and more accountability will be incremental, despite the fact that social media now makes every tragic incident – no matter how statistically insignificant – visceral and immediate.

Last year the City of Sacramento enacted incremental improvements to their local ordinances governing police department officer training and police accountability. The impetus for this came after a homeless, mentally ill man was shot 14 times by police for walking around with a knife in North Sacramento. As the Sacramento Bee editorialized, the incident “cried out for a new approach to police abuse, one that would set a statewide or even a national standard. Instead, hamstrung by local and state laws that over the years have made police accountability much too hard in California, the City Council had to settle for doing what it could around the margins, revamping civilian review, pushing for better training and slightly improving transparency in officer-involved killings.”

What the City of Sacramento did was not necessarily enough, but it is a good place to start. It represents a savvy mix of steps that accomplish as much as can be hoped for in the face of existing laws, most of them enacted by California’s legislature.

Here are key features of the City of Sacramento’s reform:

1 – De-escalation: Greater police training to emphasize de-escalation and other nonlethal tactics when confronting suspects.

2 – Body Cameras: Police also will have to wear body cams, which tend to make interactions between officers and the public more transparent and civil.

3 – Transparency: Dashcam video of police shootings will be made public after 30 days unless the department can prove it will compromise an investigation, and victims’ families will get a first look, which will shine a light on cases that too often get complicated by emotion and hearsay.

4 – Accountable to City Council: The Office of Public Safety Accountability will at last get some money and staffing, and will report to the City Council, not the city manager, who also oversees the Police Department.

5 – Civilian Oversight: A new oversight commission, made up entirely of civilians, will get broader powers to review complaints filed with the accountability office. This will include the ability to subpoena information when needed.

SAMPLE LANGUAGE – “OFFICER NEXT DOOR” FRAMEWORK

RESOLUTION NO. 2016-Adopted by the Sacramento City Council

ADOPTING THE OFFICER NEXT DOOR FRAMEWORK

BACKGROUND:

A. During the State of the City address on January 30, 2015, Mayor Kevin Johnson announced the Officer Next Door Program (OND).

B. The vision of the OND is that Sacramento will become the safest big city in California and a model of community policing practices.

C. The goals of implementing the OND program are a measurable decrease in crime and a measurable increase in community trust and engagement.

D. The OND framework consists of four pillars: Training, Diversity, Engagement, and Accountability. Implementation of these four pillars is in the best interest of the City of Sacramento to achieve the OND vision and goals:

1. Training: The police officers of the City of Sacramento will receive training that is nationally recognized as the best practices in community policing.
2. Diversity: The City’s police department (at all levels) will reflect the diversity of our City’s residents.
3. Engagement: The OND police force is actively engaged in the community that he or she is sworn to protect.
4. Accountability: Our police department is held accountable to the highest professional standards and embraces transparency.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:

Section 1. The Officer Next Door Framework attached as Exhibit A is hereby approved.

Section 2. The City Manager or the City Manager’s designee is hereby authorized to take administrative actions and develop procedures to implement the OND Framework.

Exhibit A – Officer Next Door Framework

VISION & GOALS
To make Sacramento the safest big city in California and a model of community policing demonstrated by a measurable decrease in crime and a measurable increase in community trust and engagement

FRAMEWORK
– Training: The police officers of the City of Sacramento receive training that is nationally recognized as the best practices in community policing strategies.
– Diversity: The City’s police department (at all levels) will reflect the diversity of our city’s residents.
– Engagement: The Officer Next Door police force is actively engaged in the community he or she is sworn to protect.
– Accountability: Our police department is held accountable to the highest professional standards and embraces transparency.

TRAINING
Our Officers Receive Training That Is Nationally Recognized As The Best Practices In Community Policing Strategies

SUMMARY
We want our police officers to receive consistent, high-quality training to ensure that they are well equipped to address challenging situations that may arise as they are doing their important work in the community. Over the last decade, a myriad of training programs have been developed for public safety officials which can make them more effective when faced with difficult issues. Our police department must have the necessary resources to provide access to this type of training.

ACTION STEPS
We will continue to ensure that our officers are trained in the following:
– Cultural sensitivity
– Implicit bias and discrimination recognition
– Peaceful conflict resolution and de-escalation techniques to include less lethal options.
– Chronic and mental illness recognition training including peaceful conflict resolution and deescalation techniques.
– Problem-oriented policing

DIVERSITY
Our Police Department (At All Levels) Reflects The Diversity Of Our City’s Residents

SUMMARY
Sacramento is one of the most diverse cities in America. As such, it is critical that we put proactive and deliberate strategies in place to ensure that our police force becomes more diverse. We strongly believe that this diversity will result in stronger community relations and robust engagement with our residents.

ACTION STEPS
We will work to implement the following:
– Targeted recruitment strategies focused on increasing diversity (of race, gender, sexual orientation, etc.).
– Mentoring and professional development geared toward increasing diversity in police leadership and command structure.
– Incentive programs to encourage police officers to live in the City and hiring more officers who currently live in the city.
– Exploring the development of a public safety charter school.

ENGAGEMENT
Our Officers Are Actively Engaged In The Communities They Are Sworn To Protect

SUMMARY
Our police force is most effective when they have meaningful and trusting relationships in the communities they serve. We must work toward creating true collaboration and understanding between officers and residents, so that our work can be proactive and preventative.

ACTION STEPS
We will implement the following to increase engagement levels:
– Community activities such as youth listening sessions and education events.
– Youth development and crime prevention strategies like Summer Night Lights and the Mayor’s Gang Prevention Taskforce.
– Restoring police staffing levels to support community policing.
– Addressing underlying, systemic issues such as education and unemployment.

ACCOUNTABILITY
Our Police Department Is Held Accountable To The Highest Professional Standards And Embraces Transparency

SUMMARY
As a community, we need to have faith that our law enforcement officers are always operating in the best interests of our residents and community. We should consistently be sharing and discussing public safety data to ensure that we’re identifying where potential issues may exist and working to correct them. Equally important is the responsibility the public has to support our police department with the resources they need.

ACTION
We will implement the following to increase transparency and accountability

Increase transparency and availability of data to the public
– Release all video associated with an officer involved shooting, in-custody death, or complaint reported to OPSA within 30 days, where said video does not hamper, impede, or taint an ongoing investigation or endanger involved parties. The family of the decedent shall be offered the opportunity to review the video prior to public release. All faces will be blurred to protect the identity of those present and a warning will also be included to advise of the graphic content of the video. If the video cannot be made public by the 30th day, the Police Chief will provide the reasons and obtain a waiver from the Council.
– Work in coordination with the Coroner’s Office to notify the impacted family as soon as possible, an assign staff to the family to act as a liaison through the process.
– Adopt a use of force policy that encourages transparency and accountability.
– Respond to public records requests and other information requests in a reasonable and timely manner consistent with law.

Implement a body camera program
– Adopt a body camera video policy consistent with council policy and law.
– Ensure the program enhances transparency and availability of data to the public.

Changes to the Office of Public Safety Accountability (OPSA)
– Have OPSA Director report directly to the Council.
– Have OPSA be responsible for staffing the Sacramento Community Police Review Commission.

Changes to the Sacramento Community Police Review Commission (SCPRC)
– The Commission should be 100% civilian led.
– SCPRC to make policy recommendations to the City Council.
– SCPRC’s governance structure to be 11 members with one from each councilmember and three from the Mayor.
– The commission shall review quarterly reports prepared by the office of public safety accountability consistent with California Penal Code section 832.7(c), relating to the number, kind, and status of all citizen complaints filed against police department personnel, to determine whether there are patterns of misconduct that necessitate revisions to any police policy, practice, or procedure.

Monitor the national movement towards independent investigations

Monitoring and follow-up
– Bi-annual presentation and quarterly reports to the City Council and SCPRC on implementation of the OND Framework.
– Annual review of OND Framework implementation including activities of OPSA and SCPRC by the City Auditor.

SAMPLE LANGUAGE – ADOPTING A USE OF FORCE POLICY

RESOLUTION NO. 2016-Adopted by the Sacramento City Council

ADOPTING A USE OF FORCE POLICY

The sanctity of life is inviolable and every person is precious. Developing and maintaining a professional and highly trained police force is imperative. In an effort to guarantee that all lives are protected and valued in the City of Sacramento, Council is adopting the following policy that requires the City Manager to ensure the police:

A. Are authorized to use deadly force only when an officer reasonably believes that a suspect poses a threat of death or serious bodily injury to the officer or others.

B. Issue a clear and comprehensible verbal warning, when possible, before using deadly force.

C. Use the minimum amount of force necessary, under the circumstances presented to the officer, to apprehend a subject.

D. Develop and issue specific guidelines for the type of force and tools authorized for a given level of resistance.

E. Are issued and carry less-lethal weapons consistent with current best practice.

F. Do not move in front of moving vehicles.

G. Do not shoot at moving vehicles unless the person poses a threat with a weapon other than the vehicle OR has exhibited a specific intent to use the vehicle as a weapon.

H. Intervene when an officer observes another officer using force that is clearly beyond that which is objectively reasonable under the circumstances, and when in a position to do so, to prevent the use of unreasonable force and report the incident to their immediate supervisor as soon as reasonably possible.

Monitoring Method: Council Report

Frequency: Semi-Annual (March & September)

I. Receive training in de-escalating encounters with the public, to include mentally ill individuals.

J. Are trained in basic first aid and render such aid (as soon as it is safe to do so) after a deadly force incident.

K. Make death notifications to family members of a subject that has died as a result of an officer involved shooting or while in police custody.

L. Release all video associated with an officer involved shooting, in-custody death, or complaint reported to OPSA within 30 days, where said video does not hamper, impede, or taint an ongoing investigation or endanger involved parties. The family of the decedent shall be offered the opportunity to review the video prior to public release. All faces will be blurred to protect the identity of those present and a warning will also be included to advise of the graphic content of the video. If the video cannot be made public by the 30th day, the Police Chief will provide the reasons and obtain a waiver from the Council

REFERENCES

City of Sacramento City Council Report, November 29, 2016
http://sacramento.granicus.com/MetaViewer.php?view_id=22&clip_id=3900&meta_id=485761

City of Sacramento City Council, Archived Meetings
http://sacramento.granicus.com/ViewPublisher.php?view_id=22

Sacramento’s new rules are just a first step toward police reform, Sacramento Bee, December 1, 2016
http://www.sacbee.com/opinion/editorials/article118330608.html

Heavyweight Los Angeles law firm to challenge Sacramento on police practices, Sacramento Bee, November 27, 2016
http://www.sacbee.com/news/local/article117615278.html

A lost opportunity on police reform, Sacramento Bee Editorial, June 6. 2015
http://www.sacbee.com/opinion/editorials/article23220456.html

How Placer County Privatized Inmate Food Services

Introducing competition to the public sector is an essential part of delivering cost-effective services to taxpayers. What happened earlier this year in Placer County is just one example of how millions of savings can be realized by privatizing a public service. By replacing county employees with a private firm to provide inmate food services to county inmates and juvenile offenders, starting in 2018 Placer County will save over $600,000 per year. Here is how these savings can be realized:

1 – Give Agency Authority to Outsource: Ensure that your agency has the authority to contract for government services. The Placer County Charter has a provision under “general powers” that states as follows: “The Board may contract with an independent contractor to provide any services required of, or performed by, the county if it is more economical to do so.”

2 – Conduct Cost Analysis: Placer County engaged in a comprehensive analysis of the cost and benefit of continuing to use county employees to provide inmate food services vs. using outside private contractors. This process was conducted concurrently with taking bids from qualified contractors.

3 – Enact Resolution and Award Contract: On March 7, 2017 the Placer County Board of Supervisors awarded a five-year, $13.2 million contract with Aramark Correctional Services.

Making changes like this impact existing county employees, but to mitigate this, Placer County obtained an assurance from Aramark that all county employees interested in working with the contractor will be interviewed. In addition, arrangements were made for staff who do not transition to Aramark to receive assistance from the county’s Human Resources department and Business Advantage Network, to provide job training and assist county employees in identifying other job opportunities.

What Placer County has done with inmate food service they can do elsewhere. In early 2016, the county issued a request for proposals to evaluate other service delivery options. By making judicious use of the option to outsource public services to private contractors, public agencies can realize significant direct savings. But merely the deterrence value of the outsourcing option can be valuable for a public agency. When public employee unions know that their employers have the option of turning to a private contractor, they will be more reasonable in their negotiations.

REFERENCES

Charter of the County of Placer
Article III General Powers, Sec. 302 Duties, Part (h) Contracting for Services:
“The Board may contract with an independent contractor to provide any services required of, or performed by, the county if it is more economical to do so.”
http://qcode.us/codes/placercounty/view.php?topic=charter_of_the_county_of_placer-charter-iii-302&frames=on

Press Release – Placer County
“Placer opts to shift inmate food service to private contractor”
https://www.placer.ca.gov/news/2017/march/correctional_food

Meeting Agenda – Placer County Board of Supervisors
Agenda for March 7th, 2017 Board Meeting including resolution to privatize correctional food services
http://www.placer.ca.gov/upload/bos/cob/documents/sumarchv/2017/170307A/bosa170307.htm

Memorandum – Placer County Board of Supervisors
Cost analysis of privatizing correctional food services – March 7th
http://www.placer.ca.gov/upload/bos/cob/documents/sumarchv/2017/170307A/04A.pdf

Charlottesville: Political payday for the American Federation of Teachers

In Search of Heroes

California is not just any “blue state.” By many measures, California is a blue nation. It boasts the world’s sixth largest economy, isolated from the rest of the nation by mountains and deserts that were virtually impassable before modern times. It is blessed with diverse industries, abundant natural resources, and the most attractive weather in North America. California is nearly a nation unto itself.

And it is an occupied nation. California is ruled by a coalition of monopolistic businesses, public sector unions, and the environmentalist lobby. These Occupiers control a Democratic super-majority in the state legislature, as well as nearly all of California’s major cities, counties and school boards. To enrich and empower themselves, the Occupiers have oppressed California’s dwindling middle class and small business sectors, and condemned millions more to poverty and dependence.

For the average working family, no state in America is harder to live in than California. It has the highest cost-of-living, the highest taxes, the most onerous regulations, one of the worst systems of public education, congested freeways and failing infrastructure.  It will take heroic efforts to turn this around. And heroic efforts require heroes.

In the face of this overwhelming power, this alliance of oligarchs and government bureaucrats that has conned voters into embracing their servitude, where do you begin? What steps can you take? How do you rescue education, cut taxes, encourage new homes and new infrastructure, and save small businesses from crippling regulations?

As it turns out, a lot has been done in select locales, where heroes stepped up and successfully fought for reforms. And if those reforms could be replicated in other cities and counties, things would begin to change. To borrow a quote from Winston Churchill, if small local reforms began to spread across this great state, it would “not be the beginning of the end, but it would be the end of the beginning.” Here are some examples:

(1) Turning failing schools into charter schools:

As recently reported by CPC general counsel Craig Alexander, in 2015 parents at the Palm Lane Elementary School of the Anaheim City School District turned in far more signatures than needed under the Parent Trigger Law. The goal of the law and the parents at Palm Lane was to convert a public school that had failed their children for over a decade into a charter school. But the district, as a pretext to denying the Parent’s Petitions, improperly disallowed many signatures. It took a few years for parent volunteers and pro-bono attorneys, all of them heroically volunteering their time, to fight in court. But on Friday, April 28, 2017, the Court of Appeals issued a 34-page opinion that upheld in full the trial court’s ruling in favor of the parents and against the Anaheim Elementary School District. The Appeals Court found the trial court’s initial ruling, including the court’s findings of the bad faith tactics of the district, was correct in all aspects. Palm Lane Elementary school will start the 2017-2018 school year as a charter school.

(2) Stopping secret negotiations between cities and counties and public sector unions:

It wasn’t easy, but a few years ago, heroic progress was made. Orange County, Costa Mesa, and Fullerton all adopted so called “COIN” ordinances. COIN stands for “civic openness in negotiations.” This prevented elected officials from approving sweetheart deals with the government unions whose campaign contributions got them elected, all behind closed doors with minimal opportunities for public review. And to explain what happened next, one may borrow a quote from Tolkien: “Sauron’s [the Occupiers] wrath will be terrible, his retribution swift.” California’s union-controlled legislature passed a law they termed “CRONEY” (Civic Reporting Openness in Negotiations Efficiency Act), which mandates government agencies with COIN ordinances make public all negotiations with private vendors involving contracts over $250,000. There’s no comparison, of course. Private vendors disclose proprietary cost information in negotiations, and public entities are already required to take multiple bids in a competitive process. By contrast, public sector compensation, benefits and work rules are by definition not proprietary, they are public. And public sector unions, regrettably, have no competitors.

(3) Reforming financially unsustainable pension benefits:

If someone told you that they were going to invest their money, but if that money didn’t earn enough interest, they were going to take your money to make up the difference, would you think that was fair? Of course not. But that’s how a couple of million unionized public sector workers are treating the rest of us. California’s annual pension costs have risen from 3% of all state and local government revenue (i.e., “taxes”) to nearly 10% today, and there is no end in sight. But heroes are out there. In June 2012 voters in San Diego and San Jose passed pension reform initiatives. In both cases, to borrow some Star Wars terminology, “The Empire [The Occupiers] Strikes Back.” After relentless attacks in court, San Diego’s reforms were left largely intact, and San Jose’s were severely undermined, although some important provisions were preserved.

The people who fought for these reforms are too numerous to mention. They are all heroes. Some of them, like San Jose mayor Chuck Reed, San Diego councilmember Carl DeMaio, Costa Mesa mayor Jim Righeimer, and California state senator Gloria Romero, were elected officials whose courage has earned them the permanent enmity of the Occupiers. Other heroes, far more numerous, were the citizens, parents, and activists who dedicated countless hours to these causes.

Turning California back into a place where ordinary citizens can afford homes and get quality public education is not going to be easy. But there is no chance unless heroic individuals band together and fight the Occupiers, one issue at a time, one city at a time, one school district at a time.

Over the next several months, the California Policy Center intends to find more examples of heroic local reforms. It is our intention to not only compile these stories, but for each of them, distill them to the essential steps that were taken, so that these winning formulas can serve as an example to others.

We are in search of heroes. Contact us. Tell us your story.

 *   *   *

Ed Ring can be reached at ed@calpolicycenter.org.