Archive for Tuesday, July 10, 2012

Government costs

July 10, 2012


To the editor:

A recent study showed that it costs a private employer around $28/hour on average for each employee and around $42/hour for the government (not counting federal employees). Approximately one-third of this is for benefit packages. Wisconsin, San Diego and San Jose have voted in overwhelming numbers to change the entitlement culture of public employee unions after seeing their benefit costs rise three to five times and finding that their budgets could no longer support the basic infrastructure needs of their cities. Stockton, Calif., files for bankruptcy. They realized that retiring at age 50 (with 90 percent of your last salary), paying 1 percent into your retirement fund and contributing a fraction of the costs of your health care are not sustainable work practices.

Kansans know that KPERS has a multi-billion dollar shortfall. Yet, over the past six years, the fastest growing segment of the Kansas economy was government. Some folks are upset with what they see as the undue influence that the Koch brothers may have on the electoral process, but they fail to recognize the same level of influence that comes from groups like the Service Employees International Union, who back candidates, and then extract lucrative contracts from the very politicians they helped elect (buy).

Where do our local public entities stand with the ever-burgeoning costs of public employees? Are they providing benefits above that of the private employer? If the private sector can hire qualified personnel and keep them at rates that are two-thirds of those in the public sector while employees pay substantially more into their retirement and health-care packages, why can’t government agencies?


Peter Macfarlane 2 years, 8 months ago

Careers in public service are attractive for several reasons, among them employment stability and good benefits. Offsetting these positives is the reality that the private sector generally compensates its workers at much higher rates than the public sector. For those working in the professions the salary difference between the public and private sectors can be substantial.

chootspa 2 years, 8 months ago

I've got some private sector employees that would argue with you on that score, except they're too lazy to bother.

tbaker 2 years, 8 months ago

The private sector "used to" compensate it's workers at higher rates. This is no longer true.

verity 2 years, 8 months ago

In order to retire at 50 and get full benefits from KPERS, if my math is correct, one would have had to start working for the state at the age of 15. Don't know what percentage of salary one would get, but 90% sounds high. I'm sure somebody who comments here can tell us that.

Since the letter writer only has questions about KPERS and no facts, the letter seems to me to be meaningless, only attempting to insinuate and plant ideas.

jhawkinsf 2 years, 8 months ago

Well, the letter writer referenced California, so I'll take a stab at explaining, since I was a resident there for some time, though I will admit that the information I'm giving is just what I heard while there. Anyway, a state employee's retirement package is based on their last year of employment. A strategy employees use is to accumulate sick leave, holiday pay, etc. and have that paid as salary in the final year. Then they work all the overtime they can possibly get in that final year. So their last year of employment's pay would be substantially higher than any other year, but their future retirement would be based on that. As an aside, I was just a few minutes ago reading an article about a former city employee in S.F. who retired in 1972 from his job as a civil engineer. He ran another business that ran afoul of the city and was fined. But the point I would make is 40 years of retirement, wow. Yes, Stockton, Ca. filed for bankruptcy, as have several other cities. There are indeed some things that are just unsustainable.

verity 2 years, 8 months ago

You just proved my point. KPERS has norhing to do with what happened in Stockton, CA.

The letter writer has no facts about KPERS and is just trying to insinuate from something that has no relationship.

jafs 2 years, 8 months ago

Yes, that's right - age plus years of service have to add up to 85.

And, yes, it's nowhere near 90% of salary - by my calculations, it's more like less than 1/2 of it.

And, of course, the writer fails to mention that two of the main reasons KPERS is in trouble are that the state has failed to contribute it's portion, and assumed overly generous rates of return on their investments.

jhawkinsf 2 years, 8 months ago

The letter writer references Stockton, Ca. in the sentence just prior to his 90% assertion, so I assumed he was referencing a situation happening in Stockton, Ca. KPERS, or the the state of Kansas and how they calculate wouldn't be applicable to his statement.

jafs 2 years, 8 months ago

Sure, so it's completely irrelevant to KS, and KPERS.

Which are the things we should be concerned most about, since we live here, not in CA, right?

jhawkinsf 2 years, 8 months ago

I absolutely agree that we in Kansas should be most concerned with what is happening in our home state. That said, we can and should look to California, New York, Texas, etc. and see what they are doing and how it's working out for them. If what Ca. has been doing is leading to cities declaring bankruptcy, then we should avoid that path. If Oklahoma is doing things that is leading to good results, then we should look there and copy what they are doing. Combining the letter writer's example with the one I mentioned, 90% retirement for 40 years, is not sustainable, in my opinion. If that's what some other state is doing, we should avoid that. The bottom line is we (the state) should not be making promises now that we won't be able to keep in the future. That, more than anything, is the problem when the relationship between public service employees (and their representatives) becomes too cozy with elected officials.

deec 2 years, 8 months ago

Proposition 13 caused California's financial woes. That, and the loss of manufacturing to outsourcing.

jhawkinsf 2 years, 8 months ago

Prop. 13 was and still is a disaster for California. You'll get no argument from me on that. But it's isn't the only reason Ca. has declined. Agreements with public sector unions has been a disaster. Immigration, legal and illegal has put a huge stress on every part of the state's infrastructure. High taxes have caused major companies to go to nearby states or go offshore. The list goes on.

chootspa 2 years, 8 months ago

If the state was solvent enough to not be drowned in a bathtub, they may very well have handled all those other situations differently.

chootspa 2 years, 8 months ago

Let's not pass Prop 13 in 1978, and then we won't have quite the same situation they do. I don't know about you, but I don't want to be either California or Texas. If I did, I'd move there.

I've done some comparisons out of curiosity, and it looks like state workers in California aren't actually paid that much compared to how much higher the private sector gets paid for the same education level. The starting salary is 35k, and most end up needing a MSed to get any sort of reasonable pay, which, compared to the cost of living, still isn't that much. The average teacher in San Francisco earns 52k. The median income is 70k, compared to Lawrence where the average teacher gets 40k, and the median income is close to the same. (Our median income is a little skewed because of the students. )

I'm not saying that a 90% pension is anywhere near reasonable, but it looks like the justification is that they get paid poorly for a career and then finally can retire with relatively close to the same income. Of course such a system can be abused by the highly paid few, and I'm sure there are plenty examples of that. It also looks like they've reformed their pension system, just as we have, so the argument centers around taking away a promised benefit from people that already paid into the system.

But honestly, this attempt to wedge public and private employees is really lame. The average teacher or firefighter or clerk isn't cozying up to anyone. They're not an us against them. They're us. We're them. If their jobs are so awesome, we should get the qualifications and apply for them instead of trying to get them all fired. If we don't want to promise people things we can't deliver, we should stop raiding the pension coffers every time we need spare change.

2 years, 8 months ago

As stated above City/State salaries are well below that of the private sector, they make it up with benefits. How else would they get anyone to apply for the job. Sure our benefits are good (I'm not KPERs) but not having a raise in 3 years is hard to take. When we got raises it was 1-3% at best. Blame the elected officials for the good benefits and not the workers. And the comment about "nearly impossible for an employee to get fired by the govt no matter how crappy and lazy the employee is", get real, people get fired here just like everywhere else.

beatrice 2 years, 8 months ago

Another attack on workers ... ugh.

Private employers hire people if they believe that employees will help maximize profits. Employees are a true cost only if the employee is losing money. Otherwise, the employees are an asset that make profits possible.

If you want government employees to not cost its employer (the government) anything or to even turn a profit, expect fees for services to go sky high. Call a cop? Better have a credit card ready.

jhawkinsf 2 years, 8 months ago

Isn't it more likely that some employees are a valuable asset to their employer, whether we're talking about a private employer or a government job. And other employees are a drag on their employer, a true cost, again whether it's private or public. And isn't it likely that we've run across both. The difference being that when we run across that bad employee in the private sector. we're thankful that it's someone else's money paying for that bad employee but when it's that bad employee in the public sector, it's our money supporting that bad employee. And we resent that.

beatrice 2 years, 8 months ago

Good and bad employees is not what this letter is about, now is it? It is simply stating that an employee "costs" private employers so much money and that government employees "cost" so much more, which is a nonsense argument as I've already demonstrated. It is basing an argument on a false premise of profits and expenses, comparing radically different working situations -- for profit and government service.

You, on the other hand, are only adding to the current conservative trend of attacking workers. Again ... ugh.

jhawkinsf 2 years, 8 months ago

"That's not what the letter was about ... " The point I was making was that by saying "workers", you're painting with a too wide brush, because you're lumping together good workers and bad workers, people who are assets to the employers and people who are a drag on their employer, both public and private. As I was not informed that you and you alone set the agenda for this forum, I was under the assumption that I was free to respond in the way I did. Please do let me know if I overstepped my place.

I specifically said that some employees, both public and private are good workers and an asset to their respective employers. How is that an attack on workers? Oh, I know, because I said that which you refuse to say, refuse to acknowledge, that there are some employees that are poor workers, and not an asset at all to their respective employer. You want to live in a dream world where every single employee is an asset simply because they show up. That is simply not the truth. You may believe that if you want. You may believe in the Easter Bunny, for all that matters. But if my comment was an attack on workers, it was that sub-set of workers that I defined as bad workers, poor employees. I offer no apology for an attack on that group. If you should choose to defend them, that's your choice.

beatrice 2 years, 8 months ago

As I said, since this letter isn't about "good" and "bad" workers, your comments read as nothing more than yet another conservative attack against workers -- unapologetically at that.

chootspa 2 years, 8 months ago

Hey, didn't the state already "fix " KPERS? I can't remember the particulars, but I remember it was a much worse system than what they have now with more mandatory payments and fewer benefits. I know new hires haven't been in the 85 point system for quite some time. I think they got rid of that 5 or 6 years ago. Maybe longer?

chootspa 2 years, 8 months ago

Looked it up. They ended it for new hires in 2009, and now apparently they're ending COLA benefits for that group and making Tier 1 pay more. Tier 3 gets basically very little. Better start working for the state before 2015.

just_another_bozo_on_this_bus 2 years, 8 months ago

Typical of rants such as this, it operates under two assumptions-- state workers produce nothing of value, and whatever money they earn disappears from the economy-- it's not used to do things like buy houses, cars, food, etc., that support the non-governmental sector.

jhawkinsf 2 years, 8 months ago

While you complain that others ignore where the money goes, once it's paid to public sector employees, you ignore where the money comes from to pay them. Pot, meet kettle.

chootspa 2 years, 8 months ago

And therefore the goods and services provided by public employees have no value? There's no ignoring anything. They get paid by taxpayers. It doesn't mean that taxpayers get nothing of lasting value in return or that the circulation of that money through the system doesn't do a state any good. Argument fail.

jhawkinsf 2 years, 8 months ago

I never said the goods and services produced had no value. In fact, the government often does things that benefit us all, and they're the only ones who would do it. Certainly, we need government. That said, they often do those things in a most inefficient way, a way that drives up the costs. As an example, look at the Bay Bridge that connects San Francisco and Oakland. The bridge is a vital link that millions use every year. No one would build such a structure other than government. But look what happened when a section collapsed during the 1989 earthquake. It was determined that the eastern span of that bridge needed to be replaced. But here we are nearly a quarter of a century later and the project has not been completed. Cost overruns doubled the original estimate and then doubled again. And again. And more. If you want to praise government for building a needed structure that no one else would, I'll stand right beside you in praise of government. But there is a cost, and that cost is, well cost. Government is costly.

just_another_bozo_on_this_bus 2 years, 8 months ago

Did the government really build that bridge, or did they just let the contracts to private contractors, who have failed to complete it while driving up costs?

jhawkinsf 2 years, 8 months ago

Still building it. Some of the largest cost overruns happened while the mayor of Oakland (Jerry Brown, the now governor) and the mayor of S.F. (Willie Brown, longtime State Speaker) (both Democrats) argued back and forth about the building design. Meanwhile, costs kept skyrocketing. Of course, in the meantime, the dot com bubble burst, 9/11, housing bubble, recession, etc. Had it been done efficiently, it would have been completed prior to any of those things happening and the cost overruns would not have happened. Twenty-three years and counting.

just_another_bozo_on_this_bus 2 years, 8 months ago

This fact is that this is a very daunting task of engineering, fabrication and construction, with lots of other complications caused by its location in a very busy area with multiple jurisdictions. It's not simply an indication that government can never do anything efficiently, no matter how badly you want to make that simplistic assertion.

jhawkinsf 2 years, 8 months ago

The Golden Gate Bridge, built with many more complications you mentioned was completed in just over 4 years. But I'm sure you're right, a quarter of a century is efficient.

chootspa 2 years, 8 months ago

Yes. I'm sure it's exactly as simple as you state it is. Open and shut. No mitigating factors at all.

And the private sector never does anything stupid with money? Can you explain to me what exactly HP was doing with 1.2 billion dollars on Palm again? Yet when the private sector does it, it's considered to be just a few bad apples or one bad call. When one municipal project in an entirely different state does something you don't like, it means that "government is costly."

jhawkinsf 2 years, 8 months ago

I'm certain the private sector does dumb things all the time. And I could care less, it's their money and they can waste it all they want. I'm equally certain the public sector does dumb things all the time as well. But it's not their money, it's OUR money.

verity 2 years, 8 months ago

I'm thinking that when the private sector screws up, it also affects all of us.

And at this point, it's often hard to differentiate between public and private, with so many government functions being bid out or essentially sold.

chootspa 2 years, 8 months ago

Huh. And here I keep being told that the public sector needs to be "run more like a business."

jafs 2 years, 8 months ago

Where exactly do you think the private sector gets their money? From us, I would think, as customers.

jhawkinsf 2 years, 8 months ago

Investors and customers are very different sources of revenue for any company. The customer could care less if a company is run well, run efficiently. They either buy a product or they don't, their choice. An investor has a very real incentive in seeing that the company is run well.

So, if I believe a company is run well where I might expect a profit, I might invest in that company. If at some future time I come to believe that the company is not being run well, I sell my stock. But if I believe that the city or county or state or federal government is not being run well, I cannot divest myself from them. At least not easily. Once I divest myself from the company, I have no real interest in that company. But since divestment from the city, county, state or fed. is virtually impossible, I will always have an interest in them doing things in an efficient manner, using good sense, sharing the common values we as a society expect of them.

chootspa 2 years, 8 months ago

Actually no. Investors often merely have an incentive to make money. They do not necessarily have the long term viability or best business interests of the company in mind. Some do, but quite often investors are happy to see short term jumps in stock prices when companies go on layoff sprees or get acquired by other companies that are simply interested in a few patents. The same thing is often true of CEOs these days. There's no incentive for making sure a company is well run. Those gains are too small compared to the vast wealth of running a company to the ground.

BTW - if you have sufficient funding, you are, indeed, free to divest yourself of the government and choose one more to your liking. You could go shelter some predatory investment profits on a beautiful island somewhere. People with that sort of cash somehow don't tend to do that. They figure it's easier to just buy the government they want instead.

just_another_bozo_on_this_bus 2 years, 8 months ago

I didn't ignore anything. I merely pointed out that there are two sides to the equation, but anti-government freaks can never acknowledge that.

lucky_guy 2 years, 8 months ago

Why does this letter get in the letters to the editor and not something else. Who decides what letters get in. I think that the liberal media is REALLY dead. If there ever was one. As previously stated comparing public sector teachers, police, accountants, mayors and governors to pancake flippers at the IHOP and grease monkeys at the Jiffy Lube is a streach but the righties eat that up. It feeds into the meme. But my point is there was surely another letter that wasn't this stupid to print. Hmmm.

JayCat_67 2 years, 8 months ago

Other than NPR/PBS, almost all media is a private enterprise geared toward making a profit. Fox News, for example, isn't just some channel trying to convert everyone to a conservative mindset. It's a business maximizing it's advertising revenue by targeting an audience that already shares this point of view. The same applies to all media regardless of political leanings. If there's not an audience for it, the format is either changed or the company goes under.

Claudean McKellips 2 years, 8 months ago

Is KPERS is a matching program, similar to a 401K? Is KPERS really the employees own money (at least half)? If it is the employees own money, it can hardly be considered an "entitlement program." How could we possibly promise an employee matching funds and then violate that contract? How could that possibly be legal, or ethical? Do we really want to live in a state that practices such deception?

How could it be good for taxpayers or workers to give over the system to the same Wall Street tycoons who wrecked our economy? Do we want to take our money from Main Street and transfer it to Wall Street? Don't those who teach our kids, protect our streets and put out our fires typically spend their money here in Kansas, encouraging a strong local economy (unlike Wall Street tycoons)?

Certainly, it would be tough to make an argument that teaching, policing, or firefighting are the work of the lazy. One thing is for certain, none of these positions are held by people who "cannot be fired." For the first three years of teaching, a teacher can be fired for no reason, with no due process at all; thereafter, there must be a reason and due process given.

Perhaps legislators should not have been allowed to raid hardworking teachers, firefighters and police officers retirement funds for pork projects and the like. The state, as an employer, failed to fund its obligation to the pension system, while, employees have always fully paid their share into the system. In the Fiscal years 1962 -1976 and 1978-2003 the legislature put in less than the 4% the employees contributed.

The Koch brothers (who pay no taxes with Brownback's new plan, but currently subsidized by your tax dollars) and their unethical front groups have tried to convince taxpayers KPERS is broke, but I am not sure that is factually correct.

chootspa 2 years, 8 months ago

Sort of. It's a combination of the part you pay into it an the part the state is theoretically paying into it and making wise investments instead of raiding the coffers or putting it in furry trout fish farms. The risk when you set up a 401k is that the bottom will fall out of the market - like what just happened - and you'll end up eating catfood. KPERS takes care of that problem with a defined benefit when you retire, based on your salary and years of service. It's possible to get more benefit out of it than what you paid into it, but unlike 401k matches, your contributions are mandatory and not voluntary. It's part of your compensation package.

At least that's my understanding.

KSManimal 2 years, 8 months ago

Salaries, wages, insurance benefits, and retirement programs are not entitlements. They are compensation for services rendered.

That being said, Mr. Meyer really loses the game when he claims that state employees only pay 1% into KPERS. Right......

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