Tag Archives: union

A Tale of Three N.J. School Budgets

Today, The Star Ledger profiles how three New Jersey school districts have responded to the Governor’s proposed five percent reduction of their total budgets.

Roselle Park stands to lose $1.4 million of its $30 million budget. They plan to cut middle school sports, clubs and 58 jobs. Property taxes will increase. There will be no wage freeze for teachers. The union told the school district,“Freezing salaries is not something that you can look at lightly. It has implications that affect people for many years. We’re considering everything.”

North Brunswick’s $4.1 million cut will mean the end of full-day Kindergarten, an increase class size by three students, and some job cuts. What about a pay freeze for teachers? At 4:30 on Friday the union agreed to a one-year pay freeze. As a result, full-day Kindergarten will be reinstated. Taxes will still increase.

Montclair is going half way. Only top earners and administrators will take a one-year pay freeze. In addition to cuts to some programs property taxes will increase.

Tomorrow, most New Jersey school districts will hold a vote on their budgets. The debate up to this point has been acrimonious and intense. The teachers’ unions are against the proposed state aid cut. And most districts have decided not to freeze teachers’ salaries.

President of the Garden State Coalition of School argues voters should look beyond teachers’ salaries before casting a vote. Gov. Christie advises residents reject budgets that don’t share in the sacrifice. He has accused the teachers’ unions of “using students like drug mules,”in their fight to stop budget cuts.

Montclair residents, unlike most New Jersey school districts, don’t get to vote on their school budget. They must accept the education board’s decision. And they don’t have much say about the board either.  Montclair’s school board is appointed by the mayor.

Battling Bankruptcy in America’s Cities

Business Insider ranks America’s most bankrupt cities. Many in the list of 16 are wrestling with the same problems including unions that refuse to concede on salaries and benefits.

Detroit Mayor Dave Bing is showing particular resolve in trying to close the city’s $325 million deficit. He is pushing to reolcate residents from sparsely populated neighborhoods to shrink the city’s footprint. And he may privatize some city services. Last month he accused AFSCM, the city’s largest union, for stalling on contract negotiations, “Either they can’t read, they can’t add, or they can’t comprehend.” Mayor Bing would also like to transfer control of the city’s pension system to a non-profit.

Other cities making the list include Las Vegas, Los Angeles, Chicago and New York City.

Using the “B-word” in California’s Public Sector Pensions

At City Journal, Steven Greenhut writes that cities in California are becoming increasingly comfortable talking about bankruptcy. Los Angeles and San Diego have their eyes on the city of Vallejo which filed for Chapter 9 in 2008. What drove the port city of 117,000 to this point? Benefits and salaries for public sector workers. To see the handiwork public sector unions on Vallejo’s fiscal plight consider that 74 percent of the city’s budget is spent on police and firefighter salaries and benefits. Some highlights include $300,000 a year for police captains, and average fireman’s compensation of $171,000. The looming question for Vallejo and cities and states across the country is how to pay for pensions. Vallejo was given a chance to void its existing union contracts by the court but chose to buckle. Now the options are between the impossible and the unpalatable. Vallejo can ask bankrupt Sacramento for a bailout or they can raise taxes on city residents.

How Vallejo manages will be an early indicator for the rest of the nation. State pensions face an unfunded obligation of $3 trillion, nearly triple what is officially reported. Johnathan Lang writing for Barron’s offers a few possible scenarios in the near future for state and local governments including higher property, sales and income taxes, cuts in essential services, debt defaults and bankruptcy filings. He writes, “The possibility of taxpayer revolts and likely insolvencies has shaken some investors’ confidence in general-obligation bonds–those backed by the “full faith and credit” of the states or localities.”

“You know taxes are too high when even the liberals root for spending cuts.”

Thus begins David Halbfinger’s Week in Review essay on New Jersey in today’s New York Times.

He continues:

New Jersey’s tough-talking new governor, Christopher J. Christie, the first Republican elected in 12 years, is grappling with a deficit in the billions by squeezing nearly everyone — school children, the elderly, mass transit, cities, suburbs, subsidized renters and home owners.

[…]

But what’s most surprising about New Jersey is how in such a blue, labor-dominated state, Democrats and union members seem to be cracking under the pressure of the state’s tax burden, revealing a kind of split-personality disorder. Continue reading

Class Warfare

In my recent op-ed on the structural flaws of public pension systems, I argued that politicians, union heads and bureaucrats use their positions to play taxpayers against public employees for political and financial gain. Monday, the New Jersey Star Ledger reported on a growing backlash against public employee benefits:

In internet postings and on talk-radio shows, government workers are being called “greedy” and “bloodsuckers.” Commenting on the teachers union, one writer called its members “the worst human beings on the face of the planet.” Criticizing the police, another wrote, “The typical criminal could never steal what these cops are walking out the front door with.”

As New Jersey’s unemployment hovers at 10 percent and 401(k)s are dented by stock-market losses, retired public workers find themselves on the receiving end of “pension envy.”

“I understand that I retired with a good pension and the taxpayer contributed to it,” said Tevlin, who kicked in 8.5 percent of his salary toward his pension, which is about $4,000 a month. In his mind it was a fair bargain: In exchange, the public received reliable emergency services. “I don’t apologize to anybody,” he said. “I did a dangerous job.” Continue reading

A Range of School Reforms: Vouchers in Chicago and Teacher Control in L.A.

William McGurn writes in this week’s Wall Street Journal about a seemingly strange political alliance. The Rev. William Meeks, a Democratic Illinois State Senator introduced a bill to provide school vouchers to 42,000 students in some of Chicago’s worst schools. In fact, the growing call for vouchers, and  charter schools has increased support from many Democrats. Those with the greatest stakes in education are the parents of children in failed districts.

The status quo tends to be guarded, not suprisingly, by those who have the most to lose from school competition and choice: the teachers unions and politicians who benefit from their support.

Reform appears to be percolating  in New Jersey. This week the New Jersey Department of Education approved the first Mandarin-English charter school in the state, bringing the state’s charter school total to 68.

Control over schools is at the heart of a recent reform in Los Angeles. This Tuesday, the state’s Board of Education voted to award control of 30 of its schools to teachers’ groups, or to charter school groups. Most went to the teachers, leading charter school groups to protest. The teacher’s unions generally oppose charters because they don’t require teachers be hired under union contracts.

The tension between charter schools and the teachers unions has been a major challenge in the school reform movement. For more, see the recent documentary, The Cartel.

Showdowns in school budget cuts force creative thinking

Across the country, budget cuts are hitting school districts. Outside Providence, Rhode Island 100 teachers and staff will be fired from Central Falls High School. School Superintendent Frances Gallo cites the “callous disregard” of the union which refused to accept other cost-saving measures presented by the school that would have avoided firings. The union claims the school needs a complete overhaul.

In Woodbridge Township, N.J.  Governor Christie’s state school aid cuts have led school officials to announce $10 million in proposed cuts to its $185 million budget. The proposed staff cuts are telling. They include eliminating several positions: two middle school librarians ($173,000), one plumber ($106,000), two social workers ($195,000), and one attendance officer ($70,000). Additionally, the proposed cuts include the closure of two empty school buildings for a savings of $133,957.

The budget belt-tightening prompted the school district to ask voters to call Trenton and ask for more aid to avoid the measures.

Interestingly, Woodbridge Township officials appear to be considering an alternative plan should no aid appear, including seeking private sponsors to fund elementary and middle school sports. Corporate sponsorship is not without precedent in the township: Woodbridge High School’s football team relies on private funds for its website, with excess donations used to help fund the team’s apparel and equipment purchases.

The March of the Public Sector Union

For the first time in U.S. history membership in public sector unions has surpassed membership in private sector unions. As the Wall Street Journal writes, this is deeply significant for U.S. democracy.

Roughly 51.4% of unionized workers in America belong to a public sector union. Over this same period  membership in private sector unions has declined. While workers in the private sector are still subject to market forces, unionized public sector workers enjoy lifetime protection, “once a city or a state’s workers are organized by a union, the jobs almost never go away.”

This puts public sector workers directly at odds with middle-class taxpayers. Public sector unions enjoy growing support from politicians, enabling them to win greater benefits and higher salaries regardless of budgetary reality. The alliance between politicians and public sector unions is a recipe for dysfunctional government. Elected officials lose claim to being representatives of the people and become nothing for than an insider lobby for public sector worker interests.

A previous post explains the Executive Order that gave rise of the public sector union.

“A Very Smart Person”

Mercatus Senior Fellow and Neighborhood Effects leading lady Eileen Norcross appeared on Fox Business this afternoon, discussing her recent article in Reason. She discussed the fiscal situation in New Jersey, and how it got so bad. From the Abbot court cases to public sector unions, she covers a lot of ground. Watch the interview here.

In the Reason article she dives into the union stranglehold on state finance in more depth:

Since 1990 local governments have added 45,500 new jobs. Nearly all of them are represented by one of a dozen unions, which have helped secure some of the plushest public sector jobs in the nation. It’s easy to see how property taxes have grown at twice the rate of inflation over the past decade. A government worker in New Jersey earns an average of $58,963, a police officer averages $84,223 (the second highest in the nation), and six-figure public sector salaries are commonplace. Compare this to neighboring Philadelphia, where the average police salary is $49,000. According to one estimate, of the $23 billion New Jersey raised in property taxes in 2008, $18 billion was spent on police, municipal, and teacher salaries.The tab for public workers doesn’t end there. Factor in the state’s pension plan, currently under-funded by $34 billion. The New Jersey Taxpayers’ Association calculates pension payouts for the average teacher range from $1.6 million to $2.5 million, per retiree. For the average police officer, that range totals between $3.2 million and $6 million, per retiree.

Not In My Back Yard?

Richard Epstein has a great new article in Forbes detailing his New Year’s resolutions for public policy. Despite the scuttlebutt on a second stimulus, health care, and all the other looming federal issues, he takes time to examine the local and regional policy problems that have proliferated recently; a sort of death-by-a-thousand-cuts:

On real estate, change the culture so that getting permits for yourself and blocking them for everyone else is no longer the preeminent developer’s skill. The government can still prevent buildings from falling down and fund infrastructure through general taxation. But don’t let entrenched landowners and businesses raise NIMBY politics to a fine art. Today our dysfunctional land-use processes too often build thousands of dollars and years of delay into the price of every square foot of new construction. The instructive requirements on aesthetics and handicap access should be junked, along with the crazy-quilt system of real estate exactions that asks new developments to fund improvements whose benefit largely belongs to incumbent landowners. And for heaven’s sake, learn the lesson of Kelo and stop using the state’s power of condemnation for the benefit or private developers.

On labor, state and local governments have to junk the progressive mindset in both the public and the private sector. State and local governments should never, repeat never, be forced to negotiate with local unions. The huge pensions garnered by prison guards in California or transportation workers in New York present the intolerable spectacle of requiring ordinary citizens to pay huge subsidies to union workers far richer than themselves. On the private side, don’t force developers to hire union workers on construction sites or to block the construction of new facilities that hire nonunion labor. If unions are really efficient–and they aren’t–let them compete like everyone else.

(H/T Matt Welch at Reason)

We’ve recently covered the real estate problem. Eileen and I have a forthcoming paper paper on just how monumentally screwed up public pension systems are.