Wednesday, February 22, 2017

How being heard is empowering and preserving public pension security



A listening session town hall forum was held in Duluth on Saturday, February 18, 2017, where state legislative leaders listened to the people. Listening sessions offer a different input for democracy than voiceless, anonymous election voting, and the idea carries over to government from business leadership consultants. Meetings conducted electronically over the telephone are less spontaneous because callers are carefully screened. Live face-to-face exchanges, if respectful, are excellent at constructively revealing deep insights and truths. 

The meeting was open to the public. Numerous underfunded and neglected local matters and community concerns were brought to light. The opening segment was a brief explanation of Governor Dayton’s budget goals, featuring his bonding proposals, followed by questions and answers, then time for speakers with comments or viewpoints that were not to be framed as questions. 

A popular national notion is giving power back to the people, this goal seems closer when we listen to what people say. Should those at the pinnacle of power bow more deeply to public will? Giving power back to the people might mean blunting any statecraft not contingent on current poll results. It might mean devolving governmental power or dismantling costly institutions, anything to turn control back to the people. It might even mean mailing out checks to return surplus collected revenue. Why not give people free reign to share their stories? 

Even though the talk is to turn power back to the people, lately the walk is people’s powers are being reduced. The Minnesota legislature has proposed a law to preempt (override) local ordinances for self-governance that would end desperate municipal efforts to raise revenues and cover lapsed local grants in aid (LGA) from the state.

Another example that a populist refrain to give power back to the people can ring hollow is a new MN Legislative House rule. This rule silences democracy by cutting-off microphones for recording audio during time allotted to elected legislative representatives in open sessions. 

Minnesota legislative sessions are no longer the kind of regularly ordered listening opportunity  citizens cast their votes for in the hope of receiving representation live streamed and publicly recorded.  The pattern is acute, sudden reduction of people’s representative power, in this case by the speaker of the House flicking a cutoff switch, although many might think, “It can’t happen here.” AFSCME operates membership meetings and conventions the opposite way: full throttle democracy as open as practically possible, meaning microphones do not get cut off.  

Minnesota’s largest and most costly bills and enactments or bonds for public works and infrastructure projects are a chance to decide what priorities of the people should be in applying the full force of taxpayer revenue resources. The legislature exempted itself from the 1957 public meeting law and this loophole permits encumbering funds to specific projects out of view behind tightly closed doors at the eleventh hour, a behavior emulating what was called 'earmarking' back when it was common at the U.S. Congress.

Does government power have a more real trickle-down effect than did Reaganomics alms for the rich?  How is it some questionable business methods from the past of the U.S. Congress are now rippling down through to the local level?  Even as congress struggles to grow beyond it's history of drinking deeply of raw power's addictive intoxication to a more stable statecraft involving listening to the people as directly as possible, state legislatures, now overwhelmingly of one party, study the book of secret government for new ways to twist elections from being the start of democracy to being the end of it.

Commentaries and editorials are complaining about midnight regulations and backroom deals in Minnesota.  MnDOT tries to openly engage the public in deciding which projects can meet the most pressing needs by listening to survey respondents asked to assume the role of traffic planners. Secret project earmarking clearly undercuts, or preempts, this open approach. 

Secret legislative sessions protect anonymous bad actors and decisions contrary to public interests, so no-one knows exactly how the public interest was thwarted or by whom. Secrecy also perpetuates the idea government is a bad force doing only bad things and then it no longer matters how rarely legislative activity has statutory foundation to be conducted in closed confidence. How to have accountability when no-one knows who did what? Sunshine builds trust and accountability - unless that is contrary to one's intent. 

A second meeting Saturday was targeted towards public employees regarding their pensions. State worker pension comments did overlap both meetings in the person of one disgruntled taxpayer activist. He argued overly generous public pension funds are out-of-line with epic pension failures in the private sector. He clearly wanted public pensions to also go down in flames, but his dramatic claims about public employee pensioners living high on artificially cushy funds at taxpayer expense did not survive quick fact-checking. 

Governor Mark Dayton reversed a six billion dollar deficit that happened after education funding was used to balance a previous administration's budget plan. Because taxes were increased, Minnesota now has a structurally balanced budget situation, with one estimate showing a $1.1 billion surplus (AFSCME's estimate is $1.6 billion) that the Governor proposes to plow back into the soil. 

Although there is a surplus, population demographics, high tuition costs and strange doubts about the value of knowledge still jeopardize the University of Minnesota’s future as it adjusts with layoffs to steeply declining enrollments. Will irreversible harm result from shrinking this state’s capacity for quality higher education?  

At legislative hearings this year, expensively priced private colleges have lobbyists pressing to close the great Minnesota public land grant institution's doors and then fully monetize all higher education, ensuring a proper barrier holds back lower income students.  A budget surplus provides the wiggle room for dreams of a higher education that several ordinary working people asked for at the Saturday town hall meeting, as well as other things including maintaining pension benefits of public employees.

The definition of a public employee varies widely.  To some, public workers are merely expendable vassals no different than serfs, servants, slaves, subjects or thralls, having no dignity and deserving no respect.  If public workers at institutional facilities are assaulted by patients or inmates, too bad, "That is the job you signed up for, get back to work and your safety concerns are duly noted."

Since public workers have an inferior station in society, if any of their attempts to reach above their place are successful, that must be happening by way of morally perverse political deals.  More likely that kind of accusation conceals how public workers are the most visible target of a corporate power concept of government completely at odds with open democracy that empowers common, working persons.

Do governors who do not have a hard heart and listen to state public employees, thereby gaging their predicament, promise them more than they deserve and also aid and abet unethical favors for their benefit against the public interest?

Governor Dayton’s structural balance philosophy departs from business as usual in past budgets that were deliberately toxic to state workers.  He proposes not forcing agencies into an artificial dilemma requiring pension or health benefit adjustments be taken out of agency personnel and payrolls. 

Governor Dayton’s budget proposal installs pension maintenance costs up front as a budget line item, where denying it, or back-charging agencies its cost later on and thereby forcing layoffs, is much more difficult. Both budgets and pension forecasts must continually anticipate and adjust to bends in curves as players change in St. Paul and Washington, D.C. Sometimes financial manna does not continue falling from heaven on cue as promised or expected, although it might initially appear that will be happening. 

Is it correct to collapse the pension debate to a single, simplified but alarming number, because “Numbers don’t lie?” If the state is Michigan, yes.  Rather than anticipating rises in unfunded liability, liabilities exploded disastrously because of an unanticipated $14 billion bloat in retiree medical costs.  Following a city bankruptcy, employees of Detroit now receive a monthly stipend instead of health coverage.  Michigan's state legislature is looking at bills to prohibit health benefits in collective bargaining and intends to install caps on what coverage may be offered by local governments.  Since the 1990s, there has been no defined benefit pension for new state workers.  In Oregon, the amount of underfunding has grown to $22 billion.  Public pension deficits for teachers have run even higher in other states.

When a demographic alarm bell sounds because all retirees as a group live longer, and also because fewer full time employees are being recruited to sustain the pension fund, the answer to this challenge can be handled various ways. One can change to a less equal ratio of pension contributions between employee and employer, prune work benefits for new hires and allow unfunded pension liabilities to spiral upward until guaranteed benefits sputter out – or, after careful monitoring and forecasting, one can adjust erroneous assumptions back in line and make timely preventative and corrective shared sacrifces that avoid reducing or ending benefits, thereby preserving pension security.

Carefully pursuing the latter idea is preferred by experienced pension legislators and their approach is also written into the current administration’s budgeting proposals, where the attitude is of thanks for many years of service by public employees. The alternative is to keep paying lower wages to all public service workers, including those doing dangerous police and fire public safety work, deny or limit job health benefits for those workers as a penalty for excess longevity among them, then at their retirement add insult to injury by ensuring the first stock market down cycle wipes out everything they have coming. 

In states following the ACT 10 model of Wisconsin, Iowa being one very recent example, the door knockers make offers that are psychologically too tempting to refuse: sign to irrevocably rescind union membership and start shopping for better toys.  A pension cutoff check would be similarly hard to resist.  Take   $100,000 immediate cashout now that forever surrenders pension vestment - later forego $1,000,000 of cumulate long term benefit payouts.

Administrations change, rules change, committee sizes and memberships change with elections for political and strategic reasons. The current pension adjustment proposals have passed muster with retirees, AFSCME Councils and the Governor. 

One known unknown for the future of a secure Minnesota public worker retirement is the current state legislature and its partisan committees, although thankfully, pension-related commissions are usually places where compromises can be found.  That is mainly true because a public presence is allowed where committees convene, but not in direct proximity later in session when votes are about enactments and bills.  Imagine the presence of 50 AFSCME workers standing quietly and breathing every day in the same room as testimony is heard.  Standing and listening.

There is some conjuring going on intended to distract from the fact that even though there is a popular hope, a general expectation of coming economic gain and promise of prosperity to come, some of the most astute, long-range financial forecasting possible, long range pension forecasts that run on 30 year databases, say that now is the time for thrift and reigning in optimism in regard to retirement. 

If Michigan, Oregon and other states in crisis saw cautionary pension solvency forecasts, maybe those reports were put in a drawer and ignored, and decision makers had to work on gut feel in weighing the risks.  Ultimately doing nothing must have been the best course to take regarding what would possibly happen.  

Actuarial reports are perfect places to hide inconvenient things.  In Minnesota, where seniors last on average two years long than most other states, that fact is now not buried in reams of spreadsheets.  Lack of planning on the part of other states should not constitute an emergency on the part of Minnesota, where public pension fund solvency gets attention with an eye to avoiding bankruptcy, and the long range demographic radar is on high alert.

Regarding the demographics of retirement, is it better to burn out than fade away, where one lingers on for years?  Anyone searching "health care cost versus age" graphs can see a picture that meets the eye, an enormous, ominous  difference between this country and other rich countries in health care spending per capita versus longevity. Where are all those 'exit dollars' going in the U.S.?

Are the vast sums spend nationally on geriatric care truly effective, helping all no matter where they live, or is the national total dragged upward because there are runaway health costs in certain sovereign states opposed in principle to preventative public health maintenance for everyone?  Does Minnesota want to be such a state, a state where one must choose between refilling pills or paying bills?  How likely is it that every graphical data plot out there is a rigged, cyber-propaganda fake? 

Retirement pensions embody a major transition point when one can end working on employer's dreams and start living one's own dream.  Not even on the radar of most young, fit persons without a care in the world, retirement pensions are a distant future fog when far more immediate things are happening, such as going fishing or looking for where they're biting.

But if things drift carefree and suddenly there is a crunch, the exact mix of what the health care access is to be and also how will the bills get paid can really fall into sharp focus.

Public pensions get loaded with the conventional wisdom about public workers: political cronies start them, have their friends run them to steer pension fund investments at cross-purposes with pensioner's interests.  Not exactly the current scenario in Minnesota, but maybe other states.

Will younger and older workers be divided by a fancy hybrid, half 401k pension reform plan? Will there be large public pension buyout offers? What good health care is not going to be cash up front?  

Fiduciary and investment advisor rules have already unwound back to restore financial advisors leeway to place the interest of the financial industry over that of investors.  When, or if, public pension plans have all been destroyed (long in the works), try to remember while the fiduciary rule was in effect did you notice any change in the advice coming from your trusted financial planner?

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