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Sunday, April 29, 2012 | 2 a.m.
Sun coverage
Whenever we write about the compensation of county firefighters (the current average is about $175,000), someone chimes in that it’s unfair to add pension contributions to the total. Adding money that firefighters won’t see until they retire is misleading, they contend, making it look like they take home much more than they actually do.
The truth is, according to a new book by former Clark County Manager Thom Reilly, too little focus has been put on the hidden costs of pensions. So little, Reilly says, that pension expenses soon may bankrupt many governmental bodies across the country if something isn’t done.
What’s this new book? And what gives a former county manager the expertise to write such a thing?
Reilly was Clark County manager from 2001 to 2006. He’s now a professor of social work at San Diego State University and president/CEO of the Reilly Group Inc., a consulting firm to public, private and nonprofit/nongovernmental organizations.
Reilly’s book, which he spent about a year writing, is “Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?” (M.E. Sharpe, publisher). The cover of the book shows a balloon carrying away a piggy bank.
What prompted his writing of the book?
Life. Reilly was the county manager at a time when the Las Vegas area was booming. Public employee salaries were skyrocketing. He wanted to talk about the long-term costs, he said last week, but few others did. “When I brought up issues of public pay, I was out there alone,” he said.
The Great Recession brought public compensation to the forefront as tax revenues plummeted. Reilly says the media forced politicians to face the issues, even though politicians wince because solutions often mean unpopular cuts in services and/or raising taxes.
The book, by the way, is easy to read, even for a journalist; Reilly’s mom was one of his proofreaders.
How did it get this way?
Reilly calls it the Iron Triangle of Closed Policy Making, with three entities involved: unions, government managers and politicians. Oftentimes, the same government managers negotiating with public unions receive benefits identical to those of union employees. So, it’s safe to say the incentive to be a tough negotiator flies out the window. Then politicians, who give the thumbs up or down to those contracts, face this dilemma. If they say no, they are saying no to unions that can rustle up plenty of voters to throw them out of office. That triangle over many years led to lavish contracts for public-sector employees.
Reilly is only partially joking when he says he envisions governments without enough employees to meet service demands because wages are so high, government can’t afford to hire more people. (It is often noted, by the way, that Nevada’s public employees are among the highest paid in the country, and we have fewer of them per resident than most states.)
Are unions Reilly’s devil?
He laughs and says he’s certain union members will see it that way. He sees a great need for unions in the private sector because of the potential for unchecked abuses by corporations. But civil-service hiring provides a degree of protection for public employees that, he believes, makes unions less necessary in the public sector.
What does he suggest to offset potential disaster?
Change pension and other post-retirement benefits like subsidized retiree health care. More specifically, public employees need to contribute more to their pensions; maybe government needs to set employees up in 401(k)s, like many of those in the private sector. And he is big on transparency. That means opening contract talks to the public. It means pension costs have to be front and center of budget talks. He dismisses as nearly meaningless media stories about some union giving up cost-of-living increases because the amount of money is minuscule compared with pension costs.
Sahara West Library
What’s Reilly say about what’s going on in Clark County?
Clark County is hardly unique. What happened here with public employee contracts happened across the country. But as the former manager, he keeps tabs on the county. He points to Commissioner Steve Sisolak — who, it’s safe to say, is hated by firefighters — as almost a lone voice for transparency regarding employee wages and benefits here.
Does Reilly have any speaking/book signing engagements scheduled?
He will sign books from 3 to 5 p.m. May 19 at Sahara West Library, 9600 W. Sahara Ave. Not released until May, the book is so spot-on that he already is booked to speak June 21 at the Carter Presidential Library & Museum Theater in Atlanta.
Comment removed by moderator. Off Topic
Companies since the late 1970's have been allowed by the government to use 401k's and taking away fully paid healthcare insurance while government have ballooned. The interesting new words is Privitization,Charter Schools,etc. A way of getting rid of jobs while allowing Business owners to make profit from taxpayers dollars without being stuck with salary and benefits or issues of laws in how they have to run their businesses.. This has open the doors to get rid of overpaid government workers with their unions. With cuts in Social Security,medicare looming, and the losses alot took from their 401k's while the housing market most lost all of their equity. Who will be supporting any of these pensions anyway in the future. Many still think you can legislate taxpayers to make more money.
I realize it takes some effort on the writer's part but let's not lump all Nevada public employees together. When you say "highest paid in the country" that might refer to a local government but not to NV state employees; however, the part about the ratio of few employees to the public does apply to NV state workers. I suppose little details like this are hard to remember.
As for Reilly, I don't remember him putting the brakes on the Clark County gravy train while he was in office.
The writer lists firefighter compensation at the beginning of the article, but what was Reilly making while he was employed by Clark County?
Reilly books lacks really perspective.
The real pension liability is with corporate executives. Over half of the pension liability at GM is for 500 former executives. While the other have is for 100,000 former employees. The problem here is the millionaire executive are still getting 50% of all the pension money.
It is no different in Illinois. The last repugnican governor, who now is in jail, gave 1 billion dollars in pensions to his political appointees during his term. No unions were involved just political favors.
reilly really needs to do more research into the pension scams in this country. It is not the pensions to union workers, that are the problem, it is the pensions to the good old boys and political appointees.
So let's shoot the messenger? Thank goodness someone is finally speaking up about this legal corruption that goes on in government and with unions. Let's fix it so we don't become a Greece or an Italy in the next few years.
flyinglow..you missed several meetings. Mr. Reilly worked hard to rein in spending, but, he was alone so much of the time. If leaders would listen to other leaders, things could get better. Here is where I have a problem: The "consulting of public and private etc" is again where we get problems. Consulting "private" how to get "public contracts" plus. Those from within, know the way through. Thom is a great guy, knows his stuff, but getting people to listen, act for the citizen and vote right, is the problem. Study "Simpson Bowles"..
And teachers K-12 and many CC and City of LV employees don't contribute while State employees pay half via payroll deduction. Time for the ALL government employees to CONTRIBUTE to their pension costs.
No, Roslenda, it's time to end "defined" pensions for those we employ (elected & unelected government drones & pencil pushers). If IRAs & 401(k)s are good enough for private workers, they are good enough for public employees. The only cost would then be a set percentage of "matching" funds and then the government could wash its hands of any responsibility for pensions except for regulating those entrusted with the funds invested.
HUMMM A former city manager and now a Prof. at San Diego STATE U ?
I wonder if anyone [else] has figured out that Mr Reilly is planning on retiring on a public pension?
"... politicians, who give the thumbs up or down to those contracts, face this dilemma. If they say no, they are saying no to unions that can rustle up plenty of voters to throw them out of office."
that statement might have been relevant 40 years ago but unions don't have anywhere near the power, influence, or money reilly gives them credit for. if they did we would not have a republican governor, all the casinos would be unionized, and nevada would not be a right-to-work state. rank and file union members aren't much different than the rest of the public.
the argument over what to do with public pensions is a valid one. but demonizing union power while breezing over the fact that less nevada public employees do more work than their counterparts in other states makes reilly's book about politics and not about controlling costs.
Comment removed by moderator. Personal Attack
I wonder what department rowdy yates works for? Attacking someone who is trying to bring a problem to light. Typical.
Pensions such as the firefighters will bankrupt Clark County. We can stick our head in the sand only for so long. This is an issue that must be addressed now and resolved.No county government can afford such outrageous compensation.
Jerry. Courts would not uphold an immediate change for current employees. But, Courts do not require that the same contribution rate or percentage of coverage continue. Instead of 2 and 1/2% for each year worked, we can reduce the amount being accumulated to say 1 3/4 %, similar to the federal program and leaving in place pension benefits already "earned." Right now, 20 years means 50% of high salary as a pension. This change would mean 35%. So if we can get a revised plan for NEW HIRES and changes to the current plan for CURRENT EMPLOYEES.....perhaps we could get some legislation that when an employee accepts a promotion, that is a NEW HIRE.....Perhaps current employees could get redefined COLAs that go only to paying their pension costs--City employees might get a 2% raise but see none in the paycheck--it all goes to the pension contribution which right now the City (we the taxpayers) are paying.
The Public Elects the The Politicians that create these situations. So, You Do Know how to FIX the problem where some connected Unions get far more than their fair share of the Tax Dollars while others are withering on the vine. This also shows what losers the Teachers Union is and how they are not even able to take care of themselves - never mind the students. I would encouage the Public to oppose all Property Tax Increases to force sanity back into the Political Elite that continually mismange our money.
@lvfacts,
I would be just fine if they changed mine to a 401k. I work for the state and already contribute 50 percent towards my pension anyway. If they left the contributions the same, I am sure that with the match over 25 years I could save at least a million. I could also draw that pension plan that you have. It's called social security and I "contributed" to it for 14 years before I became a public employee. Now, because of the government pension offset, I cannot draw that "pension" like you can. I actually like your idea, I would be better off if I was in control of my money. And then I would be able to get a nice monthly check on top of it when I turn 65.
IRAS and 401Ks are not good enough for private workers. Many are broke with a retirement deficit approaching $7 trillion dollars. Fire dept. compensation is ludicrous and needs to be curtailed.
Pensions for private sector workers need to be greatly increased.
When private sector compensation is tabulated social welfare programs like medicaid are left out. When public sector pensions are tabulated they bring up fire and police. The average public sector pension nationwide is about $2 grand, many with no medical.
When you add social welfare to the private sector and leave out police and fire the spread closes greatly.
http://www.calpers.ca.gov/eip-docs/about...
Wages and benefits are outstanding in California. The average Calpers retiree in California only gets about $2300 a month.
That is about what a good family health insurance plan cost. The Porac Blu-cross health plan I had is currently approaching $2 grand a month. 55 million private sector workers have medicaid at almost no cost and at 65 the get medicare at a discount.
Collective bargaining rights and Civil Service, a poison pill for Local and State governments.
Sisolak may be hated by firefighters but the property tax payers hate the corrupt, thieving, over paid firefighters 1,000 times more...and they are going to see that very clearly the next time the county even SUGGESTS a property tax increase.
The book sells for $70.00! Talk about fleecing the public! Who can afford this book?
Many cities and counties will soon be overwhelmed with pension and healthcare costs not only for the active employees but the retired ones as well. This is a result of politicians promising ever increasing pension and health benefits in lieu of pay raises to avoid having to ask for ever increasing property tax rates.
Ultimately what will happen is those cities and counties will declare bankruptcy which will allow for a major revision in government employee pay and benefits. The taxpayers simply will not allow government employees to reap higher and higher pay and benefits while their own incomes and families continue to suffer...IT WILL NOT HAPPEN...the longer the disease festers the more painfull the cure.
I started reading the article and thought, no mention of Sisolak or the firefighters, WRONG!!! Just wondered if Reilly will accept his pension from the State of Nevada and also the one he is earning as a professor???
Of course that wasn't one of the questions asked of him........???
Comment removed by moderator. Comment is off-topic and references another comment that has been removed.
Government employees have an additional,heavy weight benefit on their side - nearly 100% job stability. In this on-going recession, the Federal Government employee lost their yearly raises for a couple years but not their jobs.
When the Government employee retires after 20 years, they have the savings that did not get burned up during unemployment periods. Government employees keep working when millions of private sector people loose their savings and homes looking for work.
For the private sector employee, the ramifications of being laid off 1 year in every 5 are that this consumes most or all savings made before another job is found. At retirement, they are left with only social security checks and medicare - a shoddy pittance of reward from a 45 year working period.
The modern real estate and economic debacles are created by greed. Every Republican President in the pass 30 years has them. The real estate bubbles create enormous debt that will never be paid off except through bankruptcy or special programs that build government debt.
Many of the taxpayers who pay the fire fighters salaries will have to go bankrupt themselves to be able to afford retirement. This is the new American economics that will be around for a long time as Wall Street has gotten rid of the Glass-Steagall Act that kept banking safe for almost 70 years.
This is what Johnny Gee calls equality. Judges in the legal industry are never unemployed but here they are, deciding whether it is Constitution to deprive private citizens the right to affordable health care (known as 'Obamacare' better called 'Affordacare'.)
Pensions will not bankrupt any city or county because they come from a completely different system (PERS) to pay out the pensions. PERS is constantly adjusted to increase what is paid into the system with half of that being the responsibility of the employee. What is putting the financial strain on local governments is the inability to decide what is a necessity and what is just something that would be nice to have. A 120 million dollar park in North Las Vegas sounds wonderful, but in these financial times its ridiculous that they would spend that kind of money on a park (which they now have no money to maintain it each year). Do we need sculptures and paintings on our freeways? Do we need to paint water pipes and put fancy awnings along wash areas? As usual the government does not know how to prioritize.
U are going to have to change the system if it's not to late . States like California , Illinois , New York , New Jersey have huge pension liabilities and will not have enough money to pay retires and expenses. i say revise the contracts now or else don' complain when state is bankrupt. Just an example California one of the highest taxed states in the country is putting on the ballot to increase taxes. BTW it might win. Either the people are stupid or do not care . BTW on another subject what happened to the $1.2 B of MF Global money? Last I heard Jon Corzine (former GOV of New Jersey and Chairman of Goldman Sachs )is still fundraising for Obama. Isn't America wonderful?
Questions that need answers? How long must one work in the system to qualify for pension and why. How does worked overtime affect retirement benefits and why.
Public sector unions should be forbidden. At the very least they should not be allowed to endorse candidates for offices that affect their members. That is a huge conflict of interest.
I am at point where I will automatically vote for any candidate that opposes someone endorsed by a public union.
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Don: 5 years to vest. Overtime is NOT used in retirement calculations--base pay, the highest 36 consecutive months are averaged into an annual high pay--to which the percentage is applied. If 5 years times 2.5% that's 12.5% of high pay--at age 60 or older or any age if a teacher, firefighter, LEO. Try a Nv PERS search.
Even some democrats realize expensive union pensions and healthcare bills will ruin cities:
"Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, "You won't recruit a business, you won't recruit a family to live here."
http://online.wsj.com/article/SB10001424...
http://www.pensiontsunami.com/
Sure there are long time clerks getting paid 50k/year, an directors without full college education hauling down 130k/year all with defined benefits. But there are also RN's, PT's, OT's, ST's, and physicians taking home way below the prevailing wage. I know, I'm one. I did choose to work for a publicly supported organization with lower wages because of the guarantee of a defined retirement. Like in the old days. I'm not sensitive to those in the private sector who whine about my future retirement being so much better than there's because they too had every opportunity to gain employment with a tax supported entity. I also agree that the influence unions hold over politicians and not over the collective bargaining process does create unfair pay-outs to public employee groups. But not all.
AgMallard: But sooooo many directors, managers, supervisors in name only who have NO higher ed and NO relevant experience other than within the same system where their "significant" friends recommend them for one job a few grades higher and then in a couple years they "qualify" for another manager job a few grades higher and then..... SPOILS system rampant in Nevada jobs. And no use for education or real-world experience for accountants, analysts, staff assistants, auditors, budgeters.
Kind of like a rock star saying not to do drugs.
Yeah, pensions could potentially be the next huge bubble to burst in the country. We constantly see that they are mismanaged and liabilities are constantly underreported (http://on.wsj.com/qB3BON). We've already seen one state, Rhode Island, pushed to the brink of total insolvency because they couldn't properly manage their pension system (http://nyti.ms/wn7HlE). If states don't look at these warning signs and try to reevaluate their pension systems, we're probably going to see more states forced declare bankruptcy.