Former Clark County Manager Thom Reilly – now director of the School of Social Work at San Diego State University – has a timely book coming out this week, titled “Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?”
As a veteran of past employee contract wars right here in Las Vegas, Mr. Reilly knows the problems of that unsustainable system from the inside, and he proposes some thoughtful remedies. He says he has invited some current county commissioners to attend his book-signing at the West Sahara Library at 3 p.m. Saturday, though he’s not sure they’ll attend. They should.
America’s unfunded government pension obligations top $1 trillion, and may actually be as high as $4 trillion. Nevada’s may exceed $9 billion. The need to fund those obligations – magnified by the fact government workers often retire at the age of 55 and live past 80 – are squeezing out money that taxpayers would rather see spent on parks, police protection and other current services, Mr. Reilly says.
And that’s just the pensions. When it comes to retiree health care – often promised to employees and their families for life after they’ve worked as little as five years – most states and counties “haven’t even stopped to count up what they owe,” Mr. Reilly says. (He estimates Nevada’s at $2 billion.)
Reform must include possibly moving public employees to 401(k)-style plans or “hybrid” models that are portable from employer to employer and offer a minimum guaranteed rate of return – perhaps 4.5 percent, says the former county manager. And he insists this isn’t merely a partisan demand from hard-hearted Republicans – Democratic governors including Andrew Cuomo of New York, Pat Quinn of Illinois and Jerry Brown of California all favor higher retirement ages and a “hybrid” pension system, Mr. Reilly pointed out.
Those governors believe government employees should work to age 67 and be penalized if they retire early, Mr. Reilly notes. “And there should be a moratorium on new benefits at least till (the pension funds) are 80 percent funded.”
He’s not against union membership or collective bargaining, but says there needs to be a better understanding of the difference between what unions do in the public sector as opposed to the private sector. Private-sector employers go out of business if they let personnel costs soar, Mr. Reilly notes. But in government, there’s often an incentive for “management” negotiators to sign off on huge pay and benefit packages: The managers see their own pay rise in tandem, and all too frequently leave their jobs to go to work for the very unions that used to sit on the other side of the table.
At the very least, he says, pensions should be taken out of the list of what’s negotiable under collective bargaining.
Contract negotiations also need to be transparent, Mr. Reilly says. Opening all sessions would allow public pressure to limit conflicts of interest on the part of elected officials, who today often benefit from union support at the polls. Mr. Reilly recounted witnessing now-disgraced former County Commissioner Erin Kenny on the phone to her union supporters during a closed-door contract discussion.
If nothing else works, pension and benefit hikes should be put to a vote of the people, accompanied by careful explanations of what the proposals will cost, not just today, but in 20 and 30 years, Mr. Reilly says.
“Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?” should be a must read for every elected official in this state.