The American Legislative Exchange Council’s “State Budget Reform Toolkit” (pdf) is a 1.99mb download, but any Nevada citizen who wants a preview of the upcoming legislative session should take the time to look at it. There are portions of its content which clearly inform some of the recent battles and predict new areas of ideological conflict. Witness: Public Employees.
The first recommendation in this regard is to implement a statewide hiring freeze, the rationale is presented on page 23 of the ALEC document:
During a budget crisis, all state agencies will argue their services are essential. These cries will become even louder if layoffs are discussed. Unions and other special interests will line up against layoffs and cry loudly against disrupting the status quo. This can be avoided by implementing a hiring freeze and analyzing which needs are the most pressing. Adopting a flexible freeze on state hiring would reduce state employment growth while allowing agency
managers to maintain existing staffing levels—prioritizing new hiring where it is most needed, while ensuring the overall size of state government doesn’t grow. This approach maintains the flexibility necessary for agency managers to focus on the most important programs and maintain adequate service levels.
Note, that the proposed auditing of state services assumes a re-prioritization of state services, and does not assume increases in population which might drive a needs assessment, nor does it assume any changes in needs. The bottom line is that “the overall size of state government” doesn’t grow. When ALEC speaks to the “overall size” what they are saying is that they want NO increase in the number of public employees. No matter changes in population or demographics, no matter the changes in economic conditions, and no matter any new needs or demands for state services which might arise.
This is a Zero Sum game. If there is a greater “need” for social services case workers, then perhaps this might be balanced by a reduction in the number of persons hired by NDOT. If there is a greater “need” for NDOT workers then this might be offset by a reduction in the number of health inspectors. If it is felt we need more state health inspectors, then perhaps these positions might be obtained by cutting the number of state park personnel….and so on.
ALEC assumes that “unions and special interests” are the drivers behind the opposition to reductions in force. ALEC’s disdain for public employee unions is palpable, and such organizations as the PTA, or associations of school administrators and school boards are “special interests.” Should local county commissions request increased program funding and support for services like Senior Centers, local health care services, or water treatment improvement support personnel — these may very well fall under the epithetic categorization of “special interests.”
Nevada’s already under this gun. On May 15, 2008 the state personnel office issued a memo saying: (pdf)
Due to the continuing decline in the State of Nevada’s General Fund revenues sources, the State is faced with serious financial challenges. One of the proactive steps we can take at this time is to limit the hiring of current and future vacant positions. Therefore, effective May 16, 2008, the Department of Personnel is stopping all hiring activities for all open positions that are not on the exempt list.
More recently, the State Board of Prison Commissioners implemented a hiring freeze on March 9, 2011 which purports to save the state some $16 million over two years. [LVRJ] Even a cursory look at the state budget yields the information that the state is not hiring. ALEC has an answer for this too: Vacate unfilled positions. The assumption appears to be that if we don’t need the position now we never will.
Mental health services in Nevada demonstrate an unfortunate example of what happens when budgets are cut, and then funding is never significantly restored. The Nevada Disability Advocacy and Law Center issued a report in February 2005 documenting the paucity of services available and the meager funding in this area. (pdf) When the NAMI compiled results of a survey of state funding in 2011 it found that Nevada’s cuts to mental health care services were 5th in the nation, at 28.1% behind only South Carolina, Alabama, Alaska, and Illinois.
The second area of attack on state and other public employees has been and will continue to be public employee pensions. ALEC says, “In recent years, state governments have encountered a funding crisis in their pension plans for public
On February 20, 2012 the ultra-conservatives were sounding off about freezing defined benefit programs:
“It is time for state government to accurately account for and begin reducing massive deficits,” Williams said in the letter. “By freezing defined benefit pensions, you are taking one step closer to truly balancing budgets. Our nation can no longer ignore the realities and push our budget problems onto future taxpayers.” [NNB]
This is a classic illustration of a manufactured crisis. The same article reports:
“Nevada PERS officials say the current state plan is actuarially sound, and that the unfunded liability will be covered over time. They also note that the contribution rates required to keep the plan healthy are set by an independent actuary and are fully funded by the Legislature. The Legislature also made several changes to the existing PERS plan in 2009.”
The current state defined benefits plan will face more attacks, in spite of the fact that it IS actuarially sound, and in spite of the fact that contribution rates are adequate. What the privatization advocates from the right wing, as represented by ALEC, want is a defined contribution plan, such a form of 401(k).
A paper prepared for global institutional investors (pdf) in December 2006 highlights the problem with the move from defined benefits to defined contribution plans in the private sector:
“The transition from DB to DC plans in private sector pensions is shifting investment risk from the corporate sector to households. Households are therefore becoming increasingly exposed to financial markets, and retirement income may be subject to greater variability than before. This is not only the case in countries with a mature occupational pension system, but also interestingly in emerging markets, where pension reforms (aimed at either setting up private occupational pension schemes or funding pay-as-you-go systems) are adopting a structure predominantly based on that of DC or hybrid schemes.” (emphasis added)
Two red flags wave before us: (1) the investment risk is shifted from the employer to the employee; and (2) the employees are “increasingly exposed to financial markets.” This is YOYO (You’re On Your Own) writ large. It is also a nice scheme by which the financial markets — and the financialist marketeers — gain access to more money (retirement contributions) for their Wall Street Casino. For the Financialists this is a double win. Heads they get retirement funds to invest, and Tails they get more people increasingly dependent on their financial manipulations such that they might secure more political support from the now-more-dependent contributors.
These recommendations are precisely what we might expect from an organization like ALEC which has secured support from the Charles G. Koch Foundation, the Scaife Foundation, Coor’s Castlerock Foundation, the Bradley Foundation, and the Olin Foundation. Surely State Senator Dean Rhoads, who has served on the ALEC Board of Directors [PRW] will not advocate legislation too far out of step with the interests of State Farm Insurance Inc., the Altria Group, AT&T, Bayer Pharmaceutical, Coca-Cola, Exxon-Mobil, Koch Companies, Pfizer, Peabody Energy, and WalMart. [AExp] Nor might we expect any dissent from State Senator Barbara Cegavske (R-Clark 8) who includes ALEC membership in her official bio.
The Zero Sum Game hiring freeze will no doubt emerge in the next session of the Nevada legislation, in tandem with the ALEC recommendations for changing the public employees retirement systems from a defined benefits to a defined contribution format. Forewarned is forearmed.