06 June 2012

The Way Forward - Blue State Reforms

The victory by Gov. Scott Walker (R - WI) last night points a way forward for other Blue State Governors to start reforming Public Employee Union problems with pensions and health care.  It is a multi-step process but the key points are now clearly visible.

First - Stop collecting Union dues for the Union at the State and local level.  The power of the PEUs comes from dues garnered from employees who may not want to be in the Union.  As States have sovereign power outside of those powers vested in the federal government, it can decide with input from its people on how best to ensure that public employees are to be treated.  When WI stopped the government role of dues collector and left it up to voluntary contributions, the number of dues paying teachers, as an example, dropped by 2/3 (Source: Fox News/WSJ 31 MAY 2012):

Wisconsin membership in the American Federation of State, County and Municipal Employees-the state's second-largest public-sector union after the National Education Association, which represents teachers-fell to 28,745 in February from 62,818 in March 2011, according to a person who has viewed Afscme's figures. A spokesman for Afscme declined to comment.

This hits the ability of PEUs to flow cash into political campaigns and to seek to get PEU friendly representatives across the table to pass legislation friendly to the PEUs.  That is inherently corrupt as it puts PEUs in a position of running both sides of the table during negotiations, which short-changes the public at large.  For a Blue State Governor, putting the case forward that the public, alone, should be the ones to decide how many employees should be in the government, what they should get paid and what other perks should be paid by the public to give to the employees.

Of course this is the 'Third Rail' of PEU influence in politics at the State and local level.  Yet it is the easiest to sell to the public.  Why should PEUs get a say in the political process which, in essence, allows them to influence votes, influence the legislative process and to bias the legislation in their favor at public expense?  The major upside is that public employees will get an opportunity to get a virtual raise by not funding the PEUs.

Second - Pension and health care reform requiring PEU members to pay a larger percent (or ANY percent) of their pension and health care insurance.  Changing the pension system to get away from the pyramid scheme system where current PEU members pay for the pensions of current retirees, with the State or local government picking up any difference, is bankrupting the governments involved.  Shifting to a defined contribution set of plans under the control of the public employees individually, firstly empowers employees to determine their own course in life means that their independence is increased by having an individual retirement plan.

As most private employees pay a large percentage of their health care insurance (either through an employer or purchased individually) the idea that public employees should pay an equivalent amount, or at least something closer to what the federal employees pay (approx. 40%) attacks the idea of 'fairness'.  Putting public employees in the same position as their private counterparts is self-evident as a 'fairness' measure, and yet another easy sell to the public at large.  Anyone who spouts 'fairness' should support this as it is the basis of having a level employment system amongst public and private employees.

These can both be made more palatable to public employees by letting them decide if they want to pay dues to the PEUs (step 1), thus by doing the first step, the second becomes easier.  This can be made more palatable to public employees by allowing a voucher so that they can choose a private health plan or cash it out as additional income and fully take the risk for their own health care on their own.  Shifting cost need not be a fully negative affair and can be made into a liberating and empowering experience for the individuals involved.

Third - Remove the under-performers.  For the public to see an increase in performance and to see that tax dollars are being spent wisely and that public employees are dedicated to their job and not just to their perks, remove protection from being fired from the public employee workforce and shift pay to meet performance.  To do this set standards of performance and efficiency to be met by public employees and fire the bottom 10% each and every year, regardless of seniority, time in service, or level of service.  Performance can have input from peers within the workforce, input from upper and lower levels of the public employee structure and public input.

This moves a step beyond what has been done in WI, but follows the successful system utilized by the CIA.  There it is possible to shift up and down the pay structure very quickly which means that performance matters.  By linking pay with performance and getting under-performers out of the system means there is incentive to perform better and serve the public in a more open and friendly manner.  After the power of the PEUs is removed and public employees are given more independence, the move to a performance based system then becomes possible.  This utilizes the 'best of breed' systems utilized elsewhere and underscores that the job of a public employee is to serve the public, not just service the public.

By increasing visible efficiency and friendliness government functions are done better and with greater transparency.  Increased efficiency means having a workforce that can be downsized over time, perhaps by removing job billets with the annual 10% reduction, until optimal efficiency is reached by the remaining labor force.  Companies do this and the same methodology can be applied to government functions.  After step one and step two, this then puts the results of those two into play to the benefit of the public.  A way to show this is to remove fees and other payment overhead from State functions for the public as the public is already paying for the function and shouldn't have to pay twice for it: efficiency should have visible rewards beyond just better service.

Result - For a Blue State Governor this achieves reform without having to become a 'Right To Work' State, which means that Unions (not just PEUs) have no basis to lobby against the government on hostility to Unionization grounds.  Public employees are a different category from private employees as they serve the public, on the public's dime and that is garnered through involuntary taxation (not voluntary purchase).  That sovereign function of needing individuals to perform duties for the State is due to there being a public willing to support the system of government for the benefit of the public in an unbiased manner.  Public employees do not have to worry about evil capitalist bosses as the State is not in a position to make a profit as it is not a corporation, thus there is no 'exploitation' of workers: the public sets the rules through the legislative process, everyone knows what they are and what the standards are for employment on the public's dime.

Resolving the problems of insolvency of States and local government can be handled in such a way as to ensure that all services (not just 'vital' ones) are done in an efficient, timely and courteous manner by public employees.  By rewarding efficiency and courtesy, it is reinforced, meaning that public employees understand that they are volunteering to take a public job and that they are beholden to the public for their activities.  This is a benefit not just to the public, but to public employees who are given the ability to chart their own course for longer-term life necessities and make their own decisions about what they should be.  By not rewarding organizations that slack off, by not rewarding inefficiency through larger work force sizes, and by not taking on the future debt of public employees, government size and cost can be reduced.  Showing a balanced budget, a user-friendly government, transparency on cost, and by demonstrating that positive moral values are enforced by the government, a Blue State Governor can demonstrate that they can support public needs while not putting future generations at risk for insolvent decisions made for politically expedient reasons, now.

Because of the future insolvency problems due to the current system of PEU contracts, reforms will take place.  Taking some pain now can mean avoiding default and bankruptcy of governments, which is a much, much larger pain when that happens.  It doesn't matter how Blue the State is: this is coming.

The other results from last night were from the cities of San Diego and San Jose reforming pensions for their public employees.

CA is a very Blue State, yet even there reform is coming due to decades of spendthrift government and bloated government PEU structures.

If a Governor doesn't get ahead of the game, then it will be done for him or her starting from the ground-upwards.

When that happens the color of Blue just might disappear.

Even the most deeply committed ideologue in government does have a survival instinct.  From last night's results, that instinct is now being forced to the forefront.

Reform is coming to America.

You can do it fast and with some pain now, or with much greater pain in a couple of years and putting our children and grandchildren into a 3rd world failed Nation situation.

That choice is yours.

I suggest you make sure you are registered to vote.

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