Thursday, February 24, 2011

Compensation Statistics - Essential Links #2

Time for more numbers!

Here is an excellent article by David Kay Johnston. He makes many important points including that the discussion is about compensation, not wages and benefits. Also he discusses the efficiency of public pension funds, especially those in Wisconsin. If you haven't read his books, I highly recommend them.

I'm still waiting for someone to address the pension contribution on pg 46 of the LFB report that shows that executives and elected officials have a greater total contribution rate than regular union, higher rate? Especially in 2009 (effective 2011), when the total contribution jumps 12% for executive/elected and 4% for the regular employee. I am sure the overall total cost is what is significant, but I can't help thinking about the idea of shared sacrifice. I've emailed David Johnston. Would I be thrilled if he responded.

This is the Department of Public Instruction website with the wage and benefits data of every school district in the state.

Here is that same data in a searchable database so you can go and look up any public teacher. This information is totally transparent. Go play with it. See the real numbers.

This is the bureau of labor statistics. I put you on the page with 1 yr trends right on the right side. There is so much to look at here. Basically, looks to me like gov and private rate of change over the past 12 months, for what that is worth.

One of the most beautiful things about the internet is our ability to immediately access information!

Monday, February 21, 2011

More links on Wisconsin Pension Fund

January 2011 - Federal Reserve Bank of Minneapolis with great things to say about Wisconsin's State Pension fund.

From the Pew Center on the States
• In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.

Wisconsin Public Employee Compensation Study

Here is a link to a recent paper by Jeffery Keefe. The paper compares the compensation of public and private employees in Wisconsin.

It is a detailed and interesting paper.

A few comments:

1. In the executive summary at the beginning of the paper (the very first page of the paper - go read it!) , he says Wisconsin employees are underpaid by 4.8% compared to private sector employees. This is the number you should look at it is the hour for hour comparison. (Not the 8.2% which doesn't take into account the number of hours worked.)

2. Public workers in Wisconsin are highly educated. Approximately 59% of full-time public workers have a bachelors degree compared to 30% in the private sector. When you compare workers, you need to compare apples to apples. In other words, since educational level is a main influence on compensation, you cannot group all workers in the private sector and compare them with all workers in the public sector.

3. You cannot just look at wages. You have to combine the wages with the benefits. Public workers take more of their compensation in benefits. Go look at the chart on pg 5 and you will see, as your educational level goes up, you are paid less and less (compared to the private sector).

I have one final comment. On Wall Street, the pay is big because we are suppose to be getting such good results. Why doesn't this same principle hold for public sector workers?

Wisconsin Budget Numbers- Links #1

If you want to look at the primary sources for the numbers floating around in the current budget debate in Wisconsin, this page is for you. I did this research as I wanted to see the source of Gov Walker's $3.6 billion deficit number. I kept hearing it, but couldn't find any primary document that showed it.

Wisconsin State Legislature - Legislative Fiscal Bureau Documents

Here is the document that gives the status of the state as of January 2011 (General Fund Condition Report). On page 2 you will find that the budget has an estimate $121 million surplus. You will also find discussion of factors that may affect that. Wisconsin owes Minnesota some $50 million. And there was a $200 million transfer from an outside fund to balance a previous budget that was ruled unconstitutional, so that liability has to be faced at some point, but it is still in the court, next action is in March 2011. Worst case, $250 million in obligations, so the budget is really $178 million in the hole.

I want to step in at this point and remind you that all of these numbers are estimates. Some are high, some are low. In general, the budget requests for the coming years are high... agencies ask for more that than know they will get. The next document is the agency requests. We are moving on to the new budget for 2012-13

Here is a link to the page for the agency budget requests for the remaining year's budget (2010-11) and the next bienium. Click here (Table 1) and you will see the summary for all agencies which shows you the total amount requested. This document shows a $3.9 billion deficit.

This is a link to a document that gives extensive information on the Wisconsin Retirement System.

On pg 20 you will find interesting numbers for 2009. About $79 billion in the fund, $30 million to the state agency managing it and $204 million to the board's administrative expenses that by statue are not included in the budget appropriations for the agency. "These types of expenditures include custodial and banking fees, legal fees, investment consulting fees, and external management fees."

On pg 50 you will find a chart of the total unfunded pension liabilities which shows that this obligation was greatest in 2000 and has steadily declined through 2009 to 10% of what it was in 2000. On the same page, it says that the State of Wisconsin has NO unfunded pension liabilities. It also says that 1223 of the 1469 entities (municipalities, school districts) have NO unfunded pension liabilities.

For more on the scope of the the pension crisis (is there one?)
On pg 14 it shows the Wisconsin Retirement System is 99.8% funded. Take the time to look at the various states. Seems like Wisconsin has done an excellent job with the pension system.

This document is a great explanation of the budgeting process in Wisconsin. On pg 51, you will find the appropriations and authorizations table. This shows you where the money comes from to pay the bills.

Generally, 1/2 of the budget comes from Wisconsin taxes with the largest sources being income, and sales tax, also known as General Purpose Revenue (GPR) If you want a finer picture of the sources of this revenue, look at pg 59. I was surprised that Wisconsin collects similiar amounts from corporate and cigarette taxes. The next biggest source is from the Federal government (FED) . The two other sources of income are program revenue (PR) and segregated revenue (SR).

Department of Administration Documents

There is a second agency that issues budget documents. The Department of Administration.
Above is the link to their 2012-13 budget document.

On pg 10 you can see how the GPR funds requests are separated from the total funds. This is done so you know what amount of taxes the state has to bring in. This shows projections for the 2012-13 budget.

On pg 12 you have another estimate of the current fiscal balance. This one gives $10 million effective Nov 2010.

Other Documents

Here is a link to what looks to be an official document, I couldn't find it on any state websites. This is the source of the Walker $3.6 Billion number. See page 3. Interestingly, this memo includes two budget scenarios. The first shows a deficit of $645 million. The second, the Walker scenario shows the $3.6 billion deficit.

A bit of perspective is in order....first, the entire budget is based on agency requests, in the last budget round the agency requests resulted in over a $6 billion deficit. Second, the governor and the legislature do not fully fund all requests. It would be like Santa Claus giving a kid everything on the list!! This is just the beginning of the process where the agencies, legislature and governor all negotiate.

Even Governor Walker acknowledges that 2/3s of the $3.6 billion deficit is due to Medicaid costs. Why is a medical cost crisis turning into a union crisis? It has nothing to do with collective bargaining. It has to do with the cost of medical services. Wait, I'm going to shout that out. IT HAS TO DO WITH THE COST OF MEDICAL SERVICES. That is what is going up year after year after year.

Finally, out of generosity and in the spirit of we are all in this together, the workers of Wisconsin have offered to pay more. Essentially they are offering to paying for the health care of the poor and old as that is what is causing the deficit. I have to say I am really proud of those folks. They are willing to sacrifice so we can take care of those who have less than us. I don't see the corporate community (or wall street who cause this crisis) doing that for the less fortunate in our state.

I am really really proud of the state workers of Wisconsin and all of the teachers in Wisconsin. You make this state the great place that it is.