How Detroit Bankruptcy is Exaggerated, Dangers of Facebooking When Hiring, and Value of Pensions to Millennials

All the public-sector management news you need to know.
August 8, 2013

Cybersecurity is a hot topic in states, cities and counties. The risks presented by potentially malevolent hackers are huge, and government entities have all sorts of programs in place to protect their computers. But some experts believe that a big part of the risk could be reduced if only employees followed pretty simple protective measures like deleting attachments that look a little peculiar.

What do you think: Are your co-workers aware that they’re an important part of cybersecurity safety? Email us your thoughts.

As soon as we got the word about Detroit’s bankruptcy, we thought it would only be a matter of days before the national press would assume it’s a harbinger for other municipal crashes -- and we were right. The headline of Time’s Aug. 5 cover story, for example, was “Is Your City Next?”

The article’s text is a little more modulated, but it indicates that Detroit’s crash has changed the world in a serious way. “America’s cities desperately need a wake-up call to fix their finances,” writes Rana Foroohar. But we’re pretty confident that most big cities woke up years ago about the need to be fiscally sound and that there’s nothing new about this.

We asked a handful of city experts the same question: “Do you think the Detroit mess is being extrapolated unreasonably?” All agreed. Mike Pagano, Dean of the College of Urban Planning and Public Affairs at the University of Illinois in Chicago responded, “Yes. Yes. Yes. Cities have been adjusting/waking up/experimenting well before Detroit. Detroit has been held up as the basket case for more than last week!”

“PowerPoint is the crack cocaine of state government.” -- Richard Pimentel, comedian, author and senior partner at Milt Wright & Associates, Inc.

Beware of Facebook! It’s a widely known and accepted practice for both public and private employers to look at job applicants’ Facebook pages. Why not see what they look like when they’re not in their best clothes on the other side of a maple desk?

This appears in our free Management e-newsletter. Not already a subscriber? Click here.

We were enlightened a bit about potential pitfalls of this practice at a session given by attorneys Adam Santucci and Jennifer Will at the recent annual conference of the National Association of State Personnel Executives. The dangers center on information that an employer might glean from Facebook that would otherwise be off-limits in a traditional interview. If employers use such information (about a person’s medical history or the existence of a disability, for example) in the decision process, they can find themselves in court.

“During my local government years, I have seen and been a part of presenting tax issues to the voters under the assumption that the only way to secure their approval was to have a specific list of services that residents like,” writes D. Michael Segrest in the current issue of Public Management magazine.

We’ve made the same observation many times, but Segrest goes on to point out an unfortunate side effect of this phenomenon: an expansion of special revenue streams. “The general fund, which gives us the most flexibility, has shrunk as a component of government financing and the complexity of government finance has grown exponentially.”

A “rickety bridge to the future” is how we described gambling revenues in the states some years ago. Our argument was that with the rapid growth in the number of gambling facilities, states that start them up would siphon players from neighboring states -- a scenario that’s playing out now in New England.

Massachusetts’ decision to license three destination resort casinos and one slot parlor in the state jeopardizes gambling revenues in other nearby states -- notably Rhode Island -- says a recent study from the University of Massachusetts’ Center for Policy Study. According to a release, “Massachusetts residents' spending has generated over $1.1 billion in tax revenues to Rhode Island state government.”

Although the public sector has been accustomed to peddling the richness of its benefits as a factor that offsets the weakness of salaries, the interrelationship between those factors often gets short shrift, as we point out in our current Smart Management column. Most obviously, the amount of salary received determines the amount of future pension benefits. One of the big challenges for the public sector is that in many cities, states and counties, responsibility for health benefits, salary, vacation, sick leave and pensions might be delivered by a number of separate entities that all present information to the legislature, city council or county commission separately.

A broader discussion is particularly tricky because while salary has a known value, benefits have a perceived value, which may differ depending on someone’s needs. It won’t make an impression on a 25-year-old to double their life insurance, but that might have significance to a 55-year-old.

“Everyone can tell you what their salary is,” says Neville Kenning, president of Kenning Consulting. “But people can’t tell you what the value of their benefits are and decision-makers don’t know what the value of benefits are either.”

A new performance audit in Washington state about its developmental disabilities program has both good and bad news.

The good news: Based on interviews with clients, families and other stakeholders, most of the 20,500 people who receive services are “pleased with the results.”

The not so good news: “We found that the state has no method in place to prioritize those on the waitlist by their level of need.” This is a significant issue, as there are 15,000 people on waiting lists, and we can’t help but believe that this problem exists in a number of other states.

What’s more, according to the audit, “within the system we found that people with the same level of need receive care in many different settings at dramatically different costs.”

B&G readers who responded to our question about the value of pension plans to young employees were pretty much uniform in agreeing with our thesis that pension plans aren’t significant in hiring for entry-level jobs but they’re very helpful for retaining employees once they’re vested.

One of the notes we found particularly instructive was from Jeff Clarke, the general manager of the Alderwood Water and Wastewater District in Washington state. Here are some of his most notable excerpts:

“I scarcely noticed the program when I was hired. Of course it was 1979, the hiring environment for those of us with planning degrees was poor, and I was happy just to land a job. I suspect that similar thoughts go through the minds of many entry-level hires.”

“But through the 1980’s, as I began to climb in the organization, I was very aware that people were rolling the dice and taking jobs with tech companies, with possibly large payoffs. But by then I was aware that the state pension plan was a pretty safe (if dull) feature of my employment.”

“Going into my fifties, I began to play with spreadsheets to project retirement benefits. A couple of things pop up quickly. One is that the benefit is based on your final five years salary. A person could leave at 55 with 30 years credit, but if s/he goes to work outside the system at that point and delays drawing their pension until they are 65, in effect their pension will erode by ten years of missed wage inflation. That is a huge consideration -- will your new job make up the difference? It plays a big role in keeping senior managers in government service.”

“Then as we hit our sixties, go back to the spreadsheet and see that every additional year of service can mean a nice little bump in eventual pension (for systems that do not have a maximum number of credit years). That can keep some of us from retiring as quickly as we would like -- how much is enough? This, of course, keeps some talent at their desk but also blocks some younger talent from advancing."

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Smart Management