John Eby: Disney principles in play on pensions in ColoradoPublished 11:26pm Wednesday, March 9, 2011
My Feb. 28 column hit a nerve. Critics made some valid points, such as teachers and other public employees paying little or nothing for benefits better than those accrued by the private sector.
As Mike put it, school districts “can’t afford the continued rising costs of insurance and retirement without some help from those insured and retiring.”
Since this is a complicated issue, let’s spend a little more time looking at other aspects at this competitiveness crossroads.
While the debate often shakes out as shrinking big government, the real issue is making it smarter with the kind of changes most other jobs were already subjected to years ago.
Starting with manufacturing and moving through retail and other sectors, productivity and efficiency have been scrutinized and technology has been applied in the face of intense global competition.
It’s natural in crisis to make overdue adjustments, such as rewarding public employees with effectiveness in the equation.
Short-term, budgets stabilize.
Longer-term, such realignments could lift our entire economy because the so-called efficiency gap between public (21.6 million, including 2.2 million federal civilians and 19.4 million at state and local levels — almost half in education) and private sectors (108 million) holds us all back.
The United States ranks 68 (out of 139 countries) in government spending wastefulness in the 2010-11 World Economic Forum report.
I read in Time magazine that experts put public-sector productivity 10 years behind the rest of our workforce.
Just halving that gap could mean annual savings of $100 billion to $300 billion, according to a McKinsey Global Institute study — equivalent to a recurring stimulus package every three to eight years.
Any cuts made to unsustainable pensions should not be done while blinded by ideology.
Rodney Tom, a Washington state senator, introduced a bill to require school districts to make necessary teacher layoffs based on performance ratings rather than seniority alone.
I’ve also heard Dowagiac school board and local teachers discussing such results-based reform.
Wisconsin Gov. Scott Walker’s political proposed pension and health care changes exempt police officers, state troopers and firefighters, who enjoy expensive benefits. Not all pension systems are failing. North Carolina’s is solid because public officials and plan managers consistently minimized risk, assumed a realistic return rate on investments and paid into the system what was owed, proving what’s possible through fiscal discipline over time.
Illinois and New Jersey, by contrast, not only underfunded pensions, in some cases they retroactively boosted benefits without paying for them.
Ironically, Wisconsin was the first state to allow public workers to negotiate conditions of employment in 1959.
Thirty-four states require collective bargaining, 11 states permit it and five states prohibit it.
Virginia, Utah and Washington states and Phoenix, Austin and Portland, Ore., have in common reputations as well-run because their leaders make data-driven policy decisions, measure results and convinced rank-and-file workers to share their vision.
Reading up on this topic, I learned that education rivals health care for the most wasteful sector.
An intangible benefit most of us lost years ago is job security.
Government is known as the most reliable employer.
While the number of private-sector employees shrank 6.5 percent, there were only 1 percent fewer state and local employees, according to the U.S. Bureau of Labor Statistics.
Yet the federal civilian workforce is actually 12 percent larger than in November 2007.
If we want effective government, benefits should be tied to meaningful outcomes.
One article I read mentioned Singapore, which increased pay for cabinet ministers and top civil servants to compete with the private sector. The government therefore attracted the best and brightest candidates, who were also harder to corrupt.
The difference with America is that when the country loses money, they do, too. In 2008, the prime minister and senior civil servants absorbed 15- to 20-percent pay cuts to reflect recessionary losses. When the economy rebounded 15 percent, their bonuses equated to more than two months salary.
The rub is there is no perfect way to measure performance, though that should not be an excuse to do nothing.
As I’ve heard at school board meetings and The Disney Way, the best organizations mix subjective and objective data tied to the actual job mission — test scores being one measure of student success — and realign or remove those performing in the bottom tier to reward those in the top tier with more money and responsibility.
U.S. Foreign Service is an example of such a competitive promotion policy.
“The only job security for public workers in the long run is quality and efficiency. People want efficient services … There has to be a massive push, and I would hope unions will try to lead it, toward quality and productivity.” It’s interesting who said that: Andy Stern, former president of the 2.2-million-member Service Employees International Union (SEIU).
While Wisconsin, New Jersey and Indiana politicians blame unions for their fiscal crises, there also needed to be complicity from legislators, mayors, city councils and school boards, so merely eliminating collective bargaining rights would not fix the primary problem — lack of incentive to improve.
Five states in the decade since the last recession buckled down and made their bureaucracies smarter — Georgia, Virginia, Minnesota, Texas and Kentucky.
Colorado is trying.
Last year, teachers’ unions, state employees’ unions, retirees, state patrol officers and lawmakers from both sides of the aisle agreed to pension reforms, including caps on annual cost-of-living adjustments for current and future retirees.
The state also passed a law tying teachers’ job security to measures of students’ progress, including test scores.
The Democratic president of the Colorado state Senate, whose wife teaches fifth grade and whose mother is a retired teacher, said what mattered most was that he and the Republican minority leader trusted each other. “We linked arms and said, ‘We’re doing this together, no matter what.’ We knew it was urgent, and it would just get worse if we procrastinated.”
A lawsuit has been filed to overturn pension reforms, but taxpayers come up to him to say thanks for stabilizing the pension system — usually because they’re in it themselves.
Mutual respect and trust.
That’s a real-world page torn right out of the Disney playbook.
John Eby is managing editor of the Dowagiac Daily News. E-mail him at email@example.com.