On first blush, the latest effort by Gov. Jerry Brown and Democratic legislators to give public-employee unions access to public agencies to hold “orientation” seminars with new hires is an unfair special privilege not normally provided to private groups. It’s even more disturbing that the legislation authorizing such access is being rammed through the Legislature in a secretive manner without the full hearing and vetting process.
But critics of this brazen example of union muscle-flexing should take heed. It’s the latest reminder that even public-employee unions understand that the world is about to change. It’s only a matter of time before they lose a key to their enduring power: the current system by which public employees are forced to pay dues to their respective unions, even if they have no desire to give a large chunk of their paychecks to these unions.
Los Angeles Mayor Eric Garcetti, who campaigned four years ago as someone who would stand up for Department of Water and Power ratepayers, is pushing a proposal to give six raises within five years to more than 9,000 workers at the utility.
The salary agreement, backed Tuesday by Garcetti’s appointees on the DWP board, would provide raises of least 13.2% and as much as 22.3% by October 2021, depending on inflation. Beyond that, the pact would deliver a 4% boost over two years to the base pay of hundreds of DWP electrical distribution mechanics, also known as linemen.
Four years ago, Los Angeles’ elected officials wrested major financial concessions from the Department of Water and Power’s biggest and most powerful employee union, persuading those workers to go three years without raises. City budget officials billed the agreement as a road map for negotiations with its other employee groups. Soon afterward, several other unions agreed to postpone pay increases for one or more years. Now a new salary package, backed by Mayor Eric Garcetti and heading to the City Council next week, would give six raises in five years to thousands of DWP workers. That could spur other unions to seek a similar deal, placing new burdens on a city budget already under significant stress.
Contributions to public pension plans have increased in recent years, but their unfunded liabilities have increased more, according to an analysis by the Society of Actuaries released Wednesday.
Between 2006 and 2014, employer contributions increased 76%, up to $85 billion in 2014 from $48 billion, and employee contributions increased 30%, to $37 billion from $28 billion. Total unfunded liabilities increased 150% to $1 trillion in 2014 from $400 billion in 2006, and the plans studied were 73% funded by the end of 2014.
S. public pension funds' unfunded pension liabilities are expected to rise through 2020, even under positive investment return scenarios, said a report Tuesday from Moody's Investors Service.
In its report, Moody's ran a sample of 56 plans with $778 billion in aggregate reported net pension liabilities through three different investment return scenarios. Due to reporting lags, most 2019 pension results appear in governments' 2020 financial reporting, Moody's noted. The plans had $1.977 trillion in trillion assets.
Under the first scenario with a cumulative investment return of 25% for 2017-'19, aggregate net pension liabilities for the 56 plans fell by just 1%. Under the second scenario with a cumulative investment return of 19% for 2017-2019, net pension liabilities rose by 15%. Under the third scenario with a 7.2% return in 2017, -5% return in 2018 and zero return in 2019, net pension liabilities rose by 59%.