December 31, 2019
31 Dec 2019

Political Update – December 31, 2019

Teachers Pay High Fees for Retirement Funds. Unions Are Partly to Blame.

Anne Tergesen and Gretchen Morgenson
The Wall Street Journal

December 18, 2019

The pitch from the president of the Indian River County teachers union couldn’t have been clearer.

Liz Cannon, who heads the Indian River chapter of the Florida Education Association, urged union members to buy retirement investments from Valic Financial Advisors Inc. through a firm owned by the union. That way “we also make money,” she said in a November 2017 newsletter, through regular dividends.

What Ms. Cannon didn’t mention was that investments from Valic, a unit of giant insurance company American International Group Inc., can carry high costs that may translate to a smaller nest egg when teachers retire.

The setup is one of an array of similar deals in which unions and other groups get income from endorsements of investment products and services—often at the expense of teachers and other municipal employees.

The ties help explain why many local-government workers continue to pay relatively high retirement-plan costs, while fees in corporate-based retirement plans are often lower and have been falling for years.

At issue are 403(b) retirement savings plans for teachers and 457 plans for government workers—variations on the 401(k) plans many companies offer. About $900 billion was held in 403(b) plans for public-school teachers and 457 plans at the end of June, according to the Investment Company Institute, a mutual-fund industry trade group.

In the crowded market, an endorsement from a union or municipal organization or affiliate can help an investment-product provider stand out. It also can give the provider’s sales agents access to union meetings, teachers’ lounges, benefit-enrollment fairs and professional conferences to pitch retirement and other products.

Valic’s Portfolio Director, an annuity that is popular in teachers’ retirement plans, charges fees of up to 2.3% of assets annually.

Fees average less than 1% in 401(k) accounts, according to research firm BrightScope Inc. and the ICI. The fees 401(k) participants pay for mutual funds that invest in stocks fell to 0.45% in 2017, on average, from 0.77% in 2000, ICI and BrightScope data show.

*IMPORTANT*

Quote of
the week

 


Quote:

“The unions should be advocating on behalf of members, not selling products to them. They are there to protect teachers’ rights, not exploit them.”

Scott Dauenhauer, a registered investment adviser in Murrieta, Calif., who specializes in financial planning for teachers quoted by The Wall Street Journal

Taxpayers shouldn’t foot the bill for political union activity, says NPRI director

Daniel Honchariw
Reno Gazette-Journal

December 9, 2019

Should taxpayers be required to subsidize the activities — including the political activities — of private labor organizations like the Service Employees International Union?

Unsuspecting Nevadans may be surprised to learn their hard-earned money is being taxed to do just that — advance the interests of government unions, including the SEIU among others, who continuously lobby for more public spending, higher tax burdens and larger government.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

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December 24, 2019
24 Dec 2019

Political Update – December 24, 2019

EDITORIAL: California town paying police more in pensions than salary

Las Vegas Review-Journal
December 8, 2019

To understand why public pension reform is urgent, look at California.

Despite a record stock market, CalPERS—the California government pension system — is only 71 percent funded. To make up the gap, it has been raising contribution rates across the state. Unlike in Nevada, where all participating governments pay the same rate, contribution rates vary in California. The amount some cities are paying is astronomical.

Rohnert Park is a small town 40 miles north of San Francisco. This year, contribution rates for its first- tier plan for police and fire employees are 110.9 percent of pay. That means for every dollar in salary, it’s contributing almost $1.11 to CalPERS. Next year, the rate will jump to 118.9 percent.

Last year, 15 public safety plans cost 70 percent or more of employee pay. This year, the number increased to 24. Next year, it’ll be 50, according to Ed Mendel at Calpensions.com.

A study from the League of California Cities found that pension contributions accounted for 8.3 percent of city spending in 2007. Last year, it was 11.2 percent, and by 2025, it’ll be 15.8 percent. Every dollar a government spends on pension contributions is one less dollar it has to spend on roads, parks or public safety.

Government agencies are already struggling to keep up.

“It is difficult to assess just how much strain current contribution levels are putting on employers,” CalPERS wrote in a report last month. “However, evidence such as collections activities, requests for extensions to amortization schedules and information regarding termination procedures indicate that some public agencies are under significant strain.”

Every government agency in California should be thanking President Donald Trump for overseeing a record-breaking economy. If the stock market weren’t soaring, contribution rates would be even higher.

*IMPORTANT*

Quote of
the week

 


Quote:

“In the last decade, contribution rates to the Public Employees’ Retirement System of Nevada for regular employees have increased more than 40 percent. Despite those increases, PERS is only about 75 percent funded. The upcoming problems this will create are perfectly predictable, but Nevada’s leaders have shown little interest in addressing them.”

Las Vegas Review-Journal

EDITORIAL: Democrat plans would cripple economic growth

Las Vegas Review-Journal
December 12, 2019

Economic growth is more than an abstraction. An expanding economy is a healthy economy, one that increases living standards, provides robust employment opportunities and strengthens the public fisc. This week, the U.S. Department of Labor released statistics revealing that the Trump administration is doing a pretty good job in this regard.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

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December 10, 2019
10 Dec 2019

Political Update – December 10, 2019

EDITORIAL: Fealty to state constitution — when it’s convenient

Las Vegas Review-Journal
December 3, 2019

Last month, state officials announced that Assemblywoman Heidi Swank, a Las Vegas Democrat, would leave the Legislature to become the first administrator of Nevada’s new Division of Outdoor Recreation, created by lawmakers in 2019 to promote economic growth through activities such as camping, hunting, boating, hiking and the like.

“Nevada has so many amazing outdoor opportunities and a variety of agencies and organizations doing work in this arena,” Ms. Swank said upon accepting the offer. “I look forward to bringing all these entities together to further Nevada’s outdoor recreation economy and get more Nevadans outdoors.”

But Ms. Swank’s tenure in the position — which paid up to $96,000 a year, not including benefits — ended before it began. Seems someone forgot that Article 4, Section 8 of the state constitution prohibits lawmakers from sliding into “any civil office of profit under this state which shall have been created” during their term in Carson City. Days after the announcement, a legislative lawyer informed Ms. Swank that her appointment was probably illegal. She stepped aside.

“I can’t blame anyone in this,” she told The Nevada Independent. “It was a bit of bad luck.”

We’ll leave for another day whether Nevada needs a new bureaucracy to appease conservationists and other outdoor special-interest groups. The purpose of the Article 4 constitutional prohibition is sound and intended to prevent lawmakers from creating cushy taxpayer-funded sinecures for their own benefit. But while attorneys at the Legislative Counsel Bureau are rediscovering obscure passages of the constitution, did they perchance stumble upon Article 3, Section 1 of that very same document?

“The powers of the government of the state of Nevada shall be divided into three separate departments, the legislative, the executive and the judicial,” it reads in plain English, “and no persons charged with the exercise of powers properly belonging to one of these departments shall exercise any functions appertaining to either of the others.”

*IMPORTANT*

Quote of
the week

 


Quote:

“[Article 3, Section 1 of the state constitution] is intended to guard against the dangers of consolidated power by preventing persons from simultaneously serving in two branches of government at the same time. Yet it has been entirely ignored for decades in Carson City, where — despite state attorney general opinions raising questions about the practice — public employees have routinely served in the Legislature with impunity as the courts and legislative attorneys look the other way.”

Las Vegas Review-Journal

Clark County teachers hit with $1,000 pay cut, thanks to pair of recent rate hikes

Robert Fellner
Nevada Policy Research Institute

December 3, 2019

Just months after threatening an illegal strike to obtain a modest salary raise, members of the Clark County teachers union (CCEA) are going to have to give a big chunk of that back, thanks to a pair of recent rate hikes that will cost the average teacher nearly $1,000 a year.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

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December 3, 2019
03 Dec 2019

Political Update – December 3, 2019

EDITORIAL: Let employees decide if they want to work under a union contract or not

Las Vegas Review-Journal
November 30, 2019

Last year, the U.S. Supreme Court ruled that it’s unconstitutional to force government employees to pay union dues if they choose not to belong to a labor group. Now Congress needs to give nonunion employees in unionized workplaces the ability to negotiate their own contracts.

Last month, three Republican House members introduced the Worker’s Choice Act. It would allow workers in union shops to negotiate with their employers. That doesn’t sound significant — after all, it’s the norm in many work environments. In workplaces with union contracts, however, this would be a revolutionary innovation.

Under current law, unions negotiate a contract that covers all employees in a bargaining unit, including nonunion members. Even if you don’t join the union, you are subject to the conditions outlined in the union contract. Some nonunion members must also pay “agency fees,” which is the percentage of union dues that support contract negotiations. Agency fees are usually around 85 percent of full dues.

Nonunion employees in right-to-work states such as Nevada don’t have to pay agency fees. This is why unions are bitterly opposed to right-to-work laws. It dramatically undercuts their financial and political clout when they can’t extract payment from those who choose not to join.

Last year, the Supreme Court made all public employees right-to-work. In Janus v. AFSCME, the justices held that the mandatory collection of agency fees violated the free speech rights of nonmembers. In states without a right-to-work law, employees in private unions are still required to either pay agency fees or join the union.

Big Labor argues that agency fees are necessary to avoid “the ‘free rider’ incentive that would arise if nonmember employees could avoid paying dues while nevertheless retaining the benefits of representation by “an informed and expert negotiator,” as AFSCME argued in its Supreme Court brief.

But if unions are so concerned about “free riders,” they would be thrilled with the Worker’s Choice Act. Instead, they’re terrified of it.

The term “free rider” is a misnomer because the law grants unions a monopoly on collective bargaining. That means nonunion workers are prohibited from negotiating their own deals in union settings. This is the equivalent of a lawn care service cutting your grass every week without your permission. The company might complain that you don’t pay them. You’d correctly counter by pointing out that you never asked to receive their services.

*IMPORTANT*

Quote of
the week

 


Quote:

“Imagine the union succeeds in increasing education spending by $1 billion a year. After four or six years, members of the education establishment will come to voters again and insist that this time — really — more money will fix our schools. Don’t let them keep fooling you.”

Victor Joecks

VICTOR JOECKS: CCEA promises that this time — really — more money will improve education

Victor Joecks
Las Vegas Review-Journal

November 23, 2019

The Clark County Education Association’s plan to pass the biggest tax increase in Nevada history depends on public ignorance. That strategy has worked before.

Last week, union officials announced they will seek to qualify a ballot measure to raise taxes by $1 billion a year and direct the proceeds toward public education. The union could use the ballot measure to pressure the 2021 Legislature to raise taxes before the initiative went to voters in 2022. For perspective, the largest tax increase in state history to this date brought in around $750 million a year.

This new funding, the union contends, is the key to improving Nevada’s schools. If only someone had tried this approach before. Oh, wait. Nevada did — four years ago. And 16 years ago. And in the late 1980s. And for most of the past 60 years.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
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