Negotiating with the unions? Asking for a raise? Trying to get more money in your budget? Here’s a handy tip from the Barking up the Wrong Tree blog: “Crossed legs can have a devastating effect on a negotiation. In How to Read a Person Like a Book, authors Gerard I. Nierenberg and Henry H. Calero reported that the number of times settlements were reached increased greatly when both negotiators had uncrossed their legs. In fact, they found that out of two thousand videotaped transactions, not one resulted in a settlement when even one of the negotiators had his or her legs crossed.”
“Whereas in 1991, just 11 percent of workers expected to retire after age 65, in 2012, more than three times as many (37 percent) report they expect to wait until after age 65 to retire -- and most of those indicated an expected retirement age of 70 or older,” writes Nevin Adams of the Employee Benefit Research Institute on the organization’s blog. This is a stunning fact, which leaves us wondering how many of the states, counties and cities have adequately altered their actuarial assumptions for retirement ages that are used in calculating pension funding needs. We’re as worried as the next guys about pension underfunding -- but if some plans fail to raise retirement ages, the problem may be a bit less severe than generally perceived.
What’s the real cost? A recent Bloomberg Businessweek article told the story of San Jose, Calif.’s novel method for getting public buy-in on budgetary changes. “About 90 leaders of neighborhood associations in San Jose gathered in small groups to play a game,” the article relates. “Each person had a roll of fake money, from which he or she could pay for city services -- like beat cops or libraries. Each group lacked enough money to cover the city’s budget.” Some of the recommendations that came from this exercise were actually adopted by the city.
Kind of cool, right? But what intrigued us most was one significant element of this exercise that was originally developed for corporations: “The rules require specific cuts: ‘close libraries one hour earlier,’ rather than ‘cut library budgets by 5 percent,’” reports Businessweek. “This keeps players from passing the hard choices down to the library and requires them to confront the impact of their decisions.”
We think this approach is critical. Force people who create the budget to make their cuts based on outputs and outcomes instead of inputs, and the conversation becomes much more realistic.
We really liked substitute teachers when we were in grade school. Typically, the subs just turned a regular class into an opportunity to pass notes to your friends, doodle many pointed stars and maybe even study a little bit. But now, some people are beginning to question the fiscal wisdom of hiring a sub every time a teacher is out for a day or two. According to teachinghistory.org, “teachers do not know when they will miss school. For this reason, ‘substitute plans’ generally have little instructional value and are usually designed to keep students engaged and well behaved for the length of a class. ... Further, hiring substitutes can be an administrative nightmare. Most school districts contract with substitute services that experience frequent turnover. Often, first-time subs arrive late or not at all, and the administration scrambles to find a free teacher to supervise the class. When no one is available, an administrator must ‘cover’ the class.”
If subs aren’t adding educational value, then aren’t there other far less expensive solutions for school districts? For example, teachers can place groups of students into study groups in supervised areas, such as the library. Or they could be permitted to sit in the back of other classes and just listen. This feels like a great opportunity for creative, money-saving alternatives.
Closing schools saves money, right? That just seems like simple common sense. But an audit out of Washington, D.C., serves as a cautionary note. According to The Washington Post, “Former schools chancellor Michelle Rhee’s decision to close 23 D.C. public schools in 2008 cost the city far more than previously reported, according to the District’s auditor.
“The original $9.7 million price tag should have also included another $8 million that the city spent to move or demolish buildings, remove furnishings and transport displaced students.” In addition, “the city forfeited $22 million in lost property value at the closed sites, bringing the total cost to about $40 million.” The point here isn’t that low-performing schools should be kept open, but that carefully calculating the costs is essential before running a cost-benefit analysis to demonstrate the sense of closing one.
“If you really want to know about the future, don’t ask a technologist, a scientist, a physicist. No! Don’t ask somebody who’s writing code. No, if you want to know what society’s going to be like in 20 years, ask a kindergarten teacher.” -- astronomer Clifford Stoll in a 2006 Ted Talk.
Ordinarily, when we hear folks saying that government should run just like a business, our blood pressure rises slightly. But a recent article in Inc. Magazine titled “5 Steps to Make More Money Now” -- which was written for a private-sector audience -- provided great advice for the public sector too (even though the goal there isn’t so much making more money, but using the money available wisely). Here are four of Inc.’s suggestions that seemed to have the most application for cities and states:
1) Review your existing results.
2) Forget what everyone else is doing.
3) Offer greater value.
4) Consider a joint venture.
With cities and states relentlessly searching for ways to cut down on their retirement costs, it comes as a little bit of a surprise to read that the California State Teachers’ Retirement System appears to be missing some easy shots at reducing its fiscal burden. According to the state controller, John Chiang, the plan has missed a number of opportunities to cut down on so-called “spiking,” which allows employees to increase their pension payments by artificially increasing their income in their last few years of service.
According to PlanSponsor.com, the comptroller’s office identified three major concerns:
1) “CalSTRS did not provide adequate oversight of the reporting entities it should be monitoring. For example, at the rate at which audits currently are being performed, each district would be audited only once every 48 years. In addition, CalSTRS’ audit process should have been more effective in detecting pension spiking at its reporting entities (i.e., school districts);
2) “CalSTRS missed opportunities to increase reporting entity accountability. The independent review of the San Francisco Unified School District and the San Diego Unified School District concluded that these districts lacked the level of transparency and the necessary controls over management pay increases that a public entity should exercise on behalf of its constituents. As a result, pension spiking may be occurring at these districts; and
3) “CalSTRS did not review or verify the results of electronic ‘edits’ it put in place to specifically identify potential pension spiking, except when there was an occasional inquiry from other CalSTRS divisions”.
Just for the fun of it, here are a few factoids from the 2012 Census of Governments:
- Illinois has the most local governments of any state with 6,968.
- Hawaii has 21 local governments -- the fewest of any state.
- Texas remains first in the nation with the most independent school districts at 1,079. Closely behind is California, with 1,025 independent school districts.
- Seventeen states had more special districts compared with 2007, and 29 had fewer. Five states (including the District of Columbia) had no change.
- Ten states had fewer townships because of mergers and consolidations. Kansas decreased the most, moving from 1,353 in 2007 to 1,268 in 2012, a decrease of 85.
