Prince Georges County has run into a fast growing budget deficit and is planning to do what Montgomery County officers refused to do here; they are planning school budget cuts and labor union wage reductions even after their yearly budget was approved. A firm hand on the government rudder is necessary even if unpleasant in trying times but our County Exec and Council caved into the school administration and union workforce and did nothing to cut our expenditures. Wait to see how much more our deficit will be after the compounding effect of this year's exorbitant wage increases are coupled with those scheduled for next year. Here are some excerpts from the Post article of June 28 (Metro Section) on the PG situation:
------------------------------------------------------------------
From "Johnson Lays Out $48 Million in Cuts" Washington Post June 28
by Rosalind S. Helderman
...............................................................................
"We're in real serious trouble economically," said School Superintendent John E. Deasy. "We have to deal with, in my opinion, darkening economic times for a year out from now."
Deasy said he and his staff are working on a plan for the cuts to be presented to the Board of Education.
"These are serious cutbacks for a budget that's been approved, that's contained so much reduction already, and we will work to deal with it," he said. He warned that the cuts could affect "big-ticket" items such as programs and staff positions.
Johnson has also proposed saving $13 million by trimming raises for employees, informing leaders of unions that represent county employees Thursday that he wishes to renegotiate union contracts. Without new negotiations, union members will face layoffs or forced furloughs, Erzen said.
Union leaders have questioned the announcement's timing, given how quickly it comes after the council adopted the budget. Earlier this month, the county also held a large party to celebrate an improved bond rating.
"We're finding it very hard to swallow this," said Curtis Knowles, president of the union that represents correctional officers.
Several union contracts are scheduled to be considered by the County Council on Tuesday. A spokeswoman for the council said Chairman Samuel H. Dean (D-Mitchellville) would address the budget situation only after the council discusses the contracts.
.................................................................................
END of Excerpted section
Sunday, June 29, 2008
Thursday, June 26, 2008
Footing the Bill for Increased Fuel Costs for School Busses
FOOTING THE BILL
From the Washington Post
Wednesday, June 25, 2008; Page A12
ANYONE WHO drives these days knows the pain of $4 (plus)-a-gallon gasoline. There's no question, then, that a system using more than 3 million gallons a year is facing some real hurt. But the idea being floated by Montgomery County school officials to extend students' walking distances is, at best, a scare tactic aimed at wringing more money out of the county government. At worst, it's a drastic change that carries serious implications for student safety.
At the behest of schools Superintendent Jerry D. Weast, the county school board changed its transportation policy to give the administration emergency powers to make students walk farther to their schools. Soaring fuel prices have, as The Post's Daniel de Vise reported, resulted in a doubling of costs in four years. Problems are looming this year because officials, who budgeted for $2.75 a gallon, now see the price at $4.40 a gallon and rising. School officials stress they are not scaling back bus service, merely studying options. They insist no decision would be made that would place any student at risk. They also say they're looking at other options, such as consolidating bus runs or trying to coordinate service with Ride-On buses.
Right now, school bus service is guaranteed for elementary school students only if they would have to walk more than a mile and to high school students if they would have to walk more than two. Because of early start times, high school students go to school in darkness for much of the year. With all due respect to the "let them walk" crowd, cold, darkness and a scarcity of sidewalks would be likely to make longer walks unmanageable, even dangerous.
Frankly, we find it troubling that school officials are even considering the possibility. After all, these are the same officials who wouldn't even countenance a suggestion to give less generous raises to school employees. Why is it acceptable to float the idea of a longer hike for a third-grader, and increase the burden on taxpayers, but not to ask a teacher to consider a raise of 6 percent rather than 8 percent? Instead of talking about longer walks or bigger class sizes or supplemental budgets, school officials should exercise the common sense any householder would use in eliminating luxuries that have become unaffordable.
------------------------------------------------------------------------
Got the idea from this Editorial? Huge wage increases for County School employees could be slimmed down in order to pay for increases in fuel costs and our kids would not have to walk further to get to schools. What is more important, safety of the kids or higher living perks for the school staffing? You can see the way that the County is headed from this choice--kids must walk further!!!!
From the Washington Post
Wednesday, June 25, 2008; Page A12
ANYONE WHO drives these days knows the pain of $4 (plus)-a-gallon gasoline. There's no question, then, that a system using more than 3 million gallons a year is facing some real hurt. But the idea being floated by Montgomery County school officials to extend students' walking distances is, at best, a scare tactic aimed at wringing more money out of the county government. At worst, it's a drastic change that carries serious implications for student safety.
At the behest of schools Superintendent Jerry D. Weast, the county school board changed its transportation policy to give the administration emergency powers to make students walk farther to their schools. Soaring fuel prices have, as The Post's Daniel de Vise reported, resulted in a doubling of costs in four years. Problems are looming this year because officials, who budgeted for $2.75 a gallon, now see the price at $4.40 a gallon and rising. School officials stress they are not scaling back bus service, merely studying options. They insist no decision would be made that would place any student at risk. They also say they're looking at other options, such as consolidating bus runs or trying to coordinate service with Ride-On buses.
Right now, school bus service is guaranteed for elementary school students only if they would have to walk more than a mile and to high school students if they would have to walk more than two. Because of early start times, high school students go to school in darkness for much of the year. With all due respect to the "let them walk" crowd, cold, darkness and a scarcity of sidewalks would be likely to make longer walks unmanageable, even dangerous.
Frankly, we find it troubling that school officials are even considering the possibility. After all, these are the same officials who wouldn't even countenance a suggestion to give less generous raises to school employees. Why is it acceptable to float the idea of a longer hike for a third-grader, and increase the burden on taxpayers, but not to ask a teacher to consider a raise of 6 percent rather than 8 percent? Instead of talking about longer walks or bigger class sizes or supplemental budgets, school officials should exercise the common sense any householder would use in eliminating luxuries that have become unaffordable.
------------------------------------------------------------------------
Got the idea from this Editorial? Huge wage increases for County School employees could be slimmed down in order to pay for increases in fuel costs and our kids would not have to walk further to get to schools. What is more important, safety of the kids or higher living perks for the school staffing? You can see the way that the County is headed from this choice--kids must walk further!!!!
Monday, June 23, 2008
The Social Engineering Problem in Montgomery County
This interesting commentary from the Taxpayer League; read and comment:
An interesting commentary I received passed on for your comments.
Marvin Weinman
Montgomery County Spending Mistakes - A Summary......
-------------For your commentary web pages......
Today we read in the Post that the school board is considering having more
students walk to school in order to reduce school bus fuel expenses. I found
the article especially interesting since just yesterday I saw that heavy, gas
guzzling, motorized trolley car driving once again endlessly around Bethesda -
with nobody in it - as usual. For me it symbolizes everything that is wrong with
Montgomery County's government - a government that has devoted itself to
wrong headed actions each year for the past decade and for which the
results of mismanagement are now apparent even to the dumbest voter.
With social worker Obama poised to take control of our broken federal
government and with him a plan for wreaking further damage on an economy
already teetering toward life support, it is appropriate to review some of the
many mistakes made by Montgomery County's social worker government
during the past decade.
The County is a suitable model for the things to come in an Obama
administration that will be devoted to slathering on ever more layers of social
engineering programs - programs designed to extirpate all of life's problems
in order to make Thomas Moore's Utopia a reality at long last. What Stalin
could not succeed in doing, Obama will succeed in doing - or so he thinks.
Here are the some of big mistakes made by the Councils and the Executives:
1. The belief that for every problem known to man there is a governmental
solution - it is just a matter of one more spending increase and one more
new government program and one more incremental tax increase. Now
the County has so many taxes of so many kinds, no one can pass an
exam asking for an enumeration of all of them - including no doubt the
Executive and the Council members.
2. The failure to understand that the housing boom was a bubble and that
the revenue increases it produced were unsustainable. Instead of doing the
right thing and reducing real estate tax rates, the government spent
every dime of the surging revenue inflows.
3. Piling up of pension and lifetime medical benefit obligations off the
County's balance sheet. Benefits that the County will never be able to
pay because at the state and federal level the same game has been
played. Therefore, in only a couple of decades it will be necessary
to double today's income tax rates to meet the obligations. The voters
are simply not going to go along with that. They will rebel and force
lawmakers at the federal, state and local levels to undo these
commitments.
4. Turning over control of wage and benefit decisions to the employee
unions. Even some staffing decisions are now in union control, such
as the use of volunteers in the libraries. Currently the unions are moving
to take over pension fund management - now that should be pretty (mordant
statement). In short the tail is now wagging the dog - the Executive and
the Council now are mere rubber stamps - the unions dictate the decisions
in a one sided process the County calls "negotiation."
5. The adamant refusal of the school system to put in place meaningful
curriculum reform for the every growing proportion of disadvantaged
students - for whom the classical curriculum is meaningless, useless,
boring and frustrating. The disadvantaged students today need social
skills and work preparation skills. They get neither in today's dysfunctional
school system. The dropout rate and the test score results for these
students speak for themselves. The school system has so little regard
for practical instruction that it does not even publish the results of its
tiny vocational program.
In short the County is the perfect model of a perfectly dysfunctional County
government. The only thing that keeps things from flying apart completely
is the penchant of businesses to keep hiring in this area - even though
doing so makes no sense. How can a youngster be expected to support
herself here on a starting salary of $39,000 a year? But if the job were
relocated to Southwest Virginia, West Virginia or Pennsylvania it would
be a very different story. I guess some of our business CEOs are no
smarter than our government officials.
Richard C. Kreutzberg, Chevy Chase
An interesting commentary I received passed on for your comments.
Marvin Weinman
Montgomery County Spending Mistakes - A Summary......
-------------For your commentary web pages......
Today we read in the Post that the school board is considering having more
students walk to school in order to reduce school bus fuel expenses. I found
the article especially interesting since just yesterday I saw that heavy, gas
guzzling, motorized trolley car driving once again endlessly around Bethesda -
with nobody in it - as usual. For me it symbolizes everything that is wrong with
Montgomery County's government - a government that has devoted itself to
wrong headed actions each year for the past decade and for which the
results of mismanagement are now apparent even to the dumbest voter.
With social worker Obama poised to take control of our broken federal
government and with him a plan for wreaking further damage on an economy
already teetering toward life support, it is appropriate to review some of the
many mistakes made by Montgomery County's social worker government
during the past decade.
The County is a suitable model for the things to come in an Obama
administration that will be devoted to slathering on ever more layers of social
engineering programs - programs designed to extirpate all of life's problems
in order to make Thomas Moore's Utopia a reality at long last. What Stalin
could not succeed in doing, Obama will succeed in doing - or so he thinks.
Here are the some of big mistakes made by the Councils and the Executives:
1. The belief that for every problem known to man there is a governmental
solution - it is just a matter of one more spending increase and one more
new government program and one more incremental tax increase. Now
the County has so many taxes of so many kinds, no one can pass an
exam asking for an enumeration of all of them - including no doubt the
Executive and the Council members.
2. The failure to understand that the housing boom was a bubble and that
the revenue increases it produced were unsustainable. Instead of doing the
right thing and reducing real estate tax rates, the government spent
every dime of the surging revenue inflows.
3. Piling up of pension and lifetime medical benefit obligations off the
County's balance sheet. Benefits that the County will never be able to
pay because at the state and federal level the same game has been
played. Therefore, in only a couple of decades it will be necessary
to double today's income tax rates to meet the obligations. The voters
are simply not going to go along with that. They will rebel and force
lawmakers at the federal, state and local levels to undo these
commitments.
4. Turning over control of wage and benefit decisions to the employee
unions. Even some staffing decisions are now in union control, such
as the use of volunteers in the libraries. Currently the unions are moving
to take over pension fund management - now that should be pretty (mordant
statement). In short the tail is now wagging the dog - the Executive and
the Council now are mere rubber stamps - the unions dictate the decisions
in a one sided process the County calls "negotiation."
5. The adamant refusal of the school system to put in place meaningful
curriculum reform for the every growing proportion of disadvantaged
students - for whom the classical curriculum is meaningless, useless,
boring and frustrating. The disadvantaged students today need social
skills and work preparation skills. They get neither in today's dysfunctional
school system. The dropout rate and the test score results for these
students speak for themselves. The school system has so little regard
for practical instruction that it does not even publish the results of its
tiny vocational program.
In short the County is the perfect model of a perfectly dysfunctional County
government. The only thing that keeps things from flying apart completely
is the penchant of businesses to keep hiring in this area - even though
doing so makes no sense. How can a youngster be expected to support
herself here on a starting salary of $39,000 a year? But if the job were
relocated to Southwest Virginia, West Virginia or Pennsylvania it would
be a very different story. I guess some of our business CEOs are no
smarter than our government officials.
Richard C. Kreutzberg, Chevy Chase
Thursday, June 19, 2008
Survey of your concerns about Montgomery County Government
Expressing Your Concerns About Your
The list below is a partial list with “other” spaces available to you to list additional concerns not identified.
Place a mark next to the top two priorities of your choice. A space is available below if you care to add comments for your selected choice.
Concerns
Votes
1. ____ Need for open government with more public input
2. ____ Property tax assessment cap reduction
3. ____ Property tax rate reduction
4. ____ Property tax reduction for low income citizens
5. ____ Other categories of taxes
6. ____ Budget spending excesses
7. ____ Salary and compensation
8. ____ MCPS budget issues
9 ____ Grants
10. _ __ Waste of tax dollars
11. _ __ Budget sustainability
12. ____ Accountability in government
13. ____ Capital Improvement cost overruns
14. ____ Supplemental appropriations
15. ____ Impact of excessive development
16. ____ Developers fair share contribution
17. ____Other: Support for IG
18. ____Other:
Comments
1.____________________________________________
2.____________________________________________
3.____________________________________________
Name (optional)___________________________________________
Tuesday, June 17, 2008
Washington Post Editorial of June 16, re;Union Attempts Takeover of County's Investment Board
>Montgomery County executive, is proving to have no more backbone than his predecessor, Douglas M. Duncan, in standing up to the county's powerful public employee unions. 
Having negotiated contracts that grant union members far bigger raises than are common in the private sector, plus staggeringly generous new benefits, Mr. Leggett has now bowed to a blatant power grab by the county's main general employees' union. In the interest of county taxpayers, who pay the bills for this unaffordable largesse, the County Council should overcome its own history as a pawn of the unions and say no.
The stakes in the current dispute seem obscure: whether to change the composition of Montgomery's Board of Investment Trustees, which manages more than $3 billion in assets for the county's employee pensions. Three of the board's 13 current trustees are union representatives (up from one out of nine until 2004); under the proposal now before the County Council, the board would grow to 16 trustees, five of whom would be union representatives.
This is a terrifically bad idea. Retirement plans should be overseen by investment experts, not labor figures whose agendas can be, and often are, political. There is abundant historical evidence, in Montgomery and elsewhere, that when investment decisions are tainted by sweetheart deals with union-friendly advisers and other shenanigans, retirement funds suffer. The county itself is responsible for meeting its employees' pension obligations, which are funded overwhelmingly by taxpayers; that also means taxpayers -- not the unions -- would foot the bill for less-than-optimal fund management.
In a deeply researched memorandum, Stephen B. Farber, the experienced chief adviser to the County Council, urged council members to oppose wider union influence on the board. Offering examples of funds that have suffered from union influence, he concluded, "As many jurisdictions (including the State of Maryland) have learned from bitter experience . . . politics and pension funds are a toxic mix."
The unions argue that they merit a greater say in the investments that support their members' retirement benefits. In fact, there are more nonunionized retirees with a stake in the plans -- around 5,500 -- than current unionized workers, who number fewer than 5,000. And the association representing retired county employees is bitterly opposed to packing the board with more union trustees.
Montgomery has long prided itself as a bastion of good government, but the County Council's weak knees regarding organized labor are becoming an embarrassment. The union has made it clear that it will not stop at controlling five of 16 seats on the board. If council members approve this expansion now, it will only lead to further such demands, along with parallel calls by retirees, who currently have just one trustee representative, to increase their own clout. Chances are nil that all this will enhance the management of the $3 billion in retirement assets. When the bill will come due, it will be paid by angry voters.
Friday, June 13, 2008
A Letter Describing the Pitfalls of Increasing Union Representation On the County's Board of Investment Trustees
This letter in edited form also appears in this week's Sentinel newspaper.
June 13, 2008
To: All Councilmembers
From: Wayne Goldstein, MCCF Immediate Past President
Dear Councilmembers:
At the June 9th MCCF General Meeting, MCCF delegates voted unanimously to oppose Expedited Bill 6-08 and to oppose Bill 11-08. I have included my submission for this week's Federation Corner column to the Montgomery County Sentinel to provide some background to you on the issues. You can also read the edited version of this submission in this week's Sentinel.
Yours truly,
Wayne Goldstein
3009 Jennings Road
Kensington, MD 20895
Unions Dictate Pension Policy to County Council by Wayne Goldstein, MCCF Immediate Past President
Earlier this week there was an instructive confrontation between Municipal & County Government Employees Organization (MCGEO) Union Boss Gino Renne and County Council Staff Director Stephen Farber. The most dramatic moment came when Mr. Renne threatened legal action against Mr. Farber. The cause of this? A memo from Mr. Farber to the three members of the County Council's Management and Fiscal Policy (MFP) Committee detailing his reasons for opposing Expedited Bill 6-08, which would increase the number of members of the County's Board of Investment Trustees (BIT), an appointed group which manages more than $3 billion in assets for the County's employee retirement plans.
Mr. Farber explained that when BIT was set up in 1986, the County Council decided that 3 of the 9 trustees should represent employees (1 union, 1 non-union, and 1 retired), 2 should be members of the public "knowledgeable in pensions, investments, or financial matters," and four should be County managers. By comparison, the 9-member MCPS pension fund covers members of 3 unions but has only 1 union trustee. In 2004, the County Council agreed to increase BIT to 13 members, including 2 more union members to allow each of the 3 unions to have a trustee, along with 2 more knowledgeable members of the public. The three unions are MCGEO, the Fraternal Order of Police (FOP) - the police union - and the Montgomery County Career [Paid] Firefighters Association - the firefighters union - also know as the International Association of Firefighters (IAFF) Local 1664. Expedited Bill 6-08, the result of collective bargaining negotiations, would add 2 more MCGEO members and one more knowledgeable public member.
Mr. Farber clarifies that since BIT has nothing to do with benefits, there is no reason to have more union representatives. He states that BIT needs investment experts because the "continuing rise in benefits negotiated" in union contracts "places constant pressure on the retirement system. The largest of the funds, the Employees' Retirement System (ERS), with $2.8 billion in assets, is funded at 79.5% of obligation, rather than 90% which is the average for state pension funds. The unfunded liability is $631 million. "A 0.1 percent decrease in the ERS' annual investment return would require $2.7% million more in taxpayer support for the fund." That's $27 million more taxpayer funds for a 1% decrease, or $270 million more in taxpayer funds for a 10% decrease, not unheard of in a volatile situation like today's market.
Mr. Farber claims that the unions, with 5,300 active participants, are outnumbered by the 5,500 retired employees, who no longer belong to a union, yet they have 1 trustee while the unions have 3. He believes they are overrepresented in terms of money, because 87% of ERS funding and 100% of the Retiree Health Benefits Trust funding comes from taxpayers. However, Expedited Bill 6-08 would result in 5 union trustees and 5 public trustees. Mr. Farber believes that the larger BIT becomes, the harder it will be to operate. He points out that MCGEO asked this question of 2006 County Council candidates: "Would you initiate and sponsor legislation that would change the composition of [BIT] to require that 50 percent of the board be trustees from the 3 county employee unions?" In other words, unions would need to get 7 more trustees added to the current 13 to end up with 10 out of the resulting 20. If 1 public trustee were added for every 2 new union trustees, as Expedited Bill 6-08 would require, the result could be 37 Board trustees.
The most controversial item in Mr. Farber's memo is this: "The Board's union trustees have shown a divided loyalty… "In August 2005, IAFF Local 1664 president [John] Sparks wrote to [BIT's] 18 investment managers - who each managed on average about $130 million in ERS assets - to solicit contributions of up to $5,000 for an event the union was sponsoring. [One letter sent to a manager in Philadelphia states: "The Montgomery County Career Fire fighters Association will be hosting the Professional Fire Fighters of Maryland 19th Biennial Convention and Training Session at the Carousel Resort Hotel in Ocean City, Maryland from {9/25-9/28}, 2005. As a friend of our Local, we would like to invite your firm to attend and/or sponsor this important event, and to provide you with the opportunity to meet with fire union officials from all over the State of Maryland. Since this is the first time that our Local has hosted the State Convention we want to make sure that everyone has an enjoyable experience. To help us put together the best State Convention ever, we ask that you consider one of the following sponsorships: Platinum $5,000; Gold $2,500; Silver $1,500; Brass $750. Please make the check out to 'MCCFFA State Convention' and mail to... John J. Sparks, President"]
Mr. Farber wrote: "Most trustees felt that the Board should amend its bylaws to expressly prohibit any such solicitations. While not questioning the integrity of those who want to solicit in this way, trustees opposed [such solicitations] for two reasons: respect for the letter and spirit of the Ethics Law, and concern that our investment managers could misinterpret such solicitations because of the 'pay-to-play' culture that still infects the public pension world. Mr. Sparks and the Board's union trustees strongly disagreed with this view. In December 2005, as a compromise, the Board tried a weaker requirement: that its investment managers simply report annually on any solicitations received from, or contributions made to, Board members or associated organizations. The union trustees demanded that the motion be defeated or tabled, and it was tabled. For the next 2 years, led by Mr. Sparks, they blocked its reconsideration. In January 2008, the Board was finally able to adopt the weaker requirement. Two of the 3 union trustees were absent, the third cast the only negative vote."
Union boss Gino Renne responded to Mr. Farber's memo with one of his own. He expressed a number of opinions about Expedited Bill 6-08 and about Mr. Farber. Here are a sample of them: "… Nonetheless, for reasons that remain somewhat unclear, Mr. Farber has taken it upon himself to lead an anti-employee, anti-union crusade against this relatively innocuous proposal… Since right now the BIT is dominated by 'management and public trustees', perhaps an increase in the number of employee representatives would actually improve our funded ratio. Obviously, the status quo is not achieving what we want. In any event, the BIT, like most pension funds, relies heavily on the advice of paid experts and consultants for investment advice. What BIT members are charged with is evaluating that advice and good judgment in the interest of the participants of the plan; and it is precisely in this area that employee participation could prove most useful.
"… Perhaps Mr. Farber's biggest canard is his scurrilous, inaccurate and possibly defamatory allegation that union trustees have in the past and will continue in the future to violate their fiduciary duties to the plan participants. These are inflammatory accusations of the most serious kind-and ones for which Mr. Farber has absolutely no factual support… The accusations against Mr. Sparks are a similar example of Mr. Farber's McCarthyisms. He alludes to a solicitation made by Mr. Sparks when he was not a member of the BIT, and then says he would not question Mr. Sparks' integrity. To be clear-there is absolutely no evidence that there were any improper solicitations made by Mr. Sparks or any other union trustees, or that there have been any breaches of fiduciary duty on the part of any union trustee. But again, Mr. Farber will not let facts get in the way of his crusade, nor dissuade him from trying to smear dedicated employee representatives.
"… Mr. Farber obviously has strongly held views-against Unions, against employee participation on the BIT, against the raises negotiated by the County and approved by the Council against the process of collective bargaining and against the authority of the County's duly authorized Labor Relations Administrator. Perhaps Mr. Farber should run for County Executive or for a seat on the County Council. But until he does we respectfully submit that his role should not be that of self-appointed advocate against employees and the Unions they have chosen to represent them… We urge you to support the bargained for changes in the composition of the BIT."
According to a Washington Post reporter's account of this meeting: "Gino Renne… angrily disputed Farber's memo, shaking his head at what he said was the equivalent of calling Renne a liar, a thief and a cheat. He told Farber, 'You'll get my responses in the court of law.' 'I welcome it,' Farber shot back… 'It is absolutely essential that the employees have substantial say in how this money is invested,' Renne wrote in a letter to council President Michael Knapp…"
At this week's MCCF general meeting, after our delegates received a copy of Mr. Farber's memo and were further briefed about it, they voted unanimously to oppose Expedited Bill 6-08. I don't believe that Mr. Renne's memo would have dissuaded them from such a vote. If you are also persuaded to oppose this bill, I hope you will contact the County Council as soon as possible as the Council will vote on this rushed bill on Tuesday, June 17th. There is a second bill, Bill 11-08, which would guarantee a return of 7.25% to a union retirement plan, regardless of the actual market rate return. While the IRS may not allow such a high guaranteed return, any guarantee that is not based on market performance could create additional future taxpayer obligations of hundreds of millions of dollars in a bad market. MCCF delegates also voted unanimously to oppose this bill as well.
Two of the three members of the MFP Committee voted to recommend Expedited Bill 6-08 to the full Council, and all three members voted to recommend Bill 11-08. They expressed little concern over the exchange between Mr. Farber and Mr. Renne. I'll discuss the union background of several Councilmembers in a future column and how all union members consider the results of a collective bargaining agreement to be one of the most sacred of objects.
You can read Mr. Farber's memo at: http://www.montgomerycountymd.gov/content/council/pdf/agenda/cm/2008/080609/20080609_ADDENDUM3.pdf
June 13, 2008
To: All Councilmembers
From: Wayne Goldstein, MCCF Immediate Past President
Dear Councilmembers:
At the June 9th MCCF General Meeting, MCCF delegates voted unanimously to oppose Expedited Bill 6-08 and to oppose Bill 11-08. I have included my submission for this week's Federation Corner column to the Montgomery County Sentinel to provide some background to you on the issues. You can also read the edited version of this submission in this week's Sentinel.
Yours truly,
Wayne Goldstein
3009 Jennings Road
Kensington, MD 20895
Unions Dictate Pension Policy to County Council by Wayne Goldstein, MCCF Immediate Past President
Earlier this week there was an instructive confrontation between Municipal & County Government Employees Organization (MCGEO) Union Boss Gino Renne and County Council Staff Director Stephen Farber. The most dramatic moment came when Mr. Renne threatened legal action against Mr. Farber. The cause of this? A memo from Mr. Farber to the three members of the County Council's Management and Fiscal Policy (MFP) Committee detailing his reasons for opposing Expedited Bill 6-08, which would increase the number of members of the County's Board of Investment Trustees (BIT), an appointed group which manages more than $3 billion in assets for the County's employee retirement plans.
Mr. Farber explained that when BIT was set up in 1986, the County Council decided that 3 of the 9 trustees should represent employees (1 union, 1 non-union, and 1 retired), 2 should be members of the public "knowledgeable in pensions, investments, or financial matters," and four should be County managers. By comparison, the 9-member MCPS pension fund covers members of 3 unions but has only 1 union trustee. In 2004, the County Council agreed to increase BIT to 13 members, including 2 more union members to allow each of the 3 unions to have a trustee, along with 2 more knowledgeable members of the public. The three unions are MCGEO, the Fraternal Order of Police (FOP) - the police union - and the Montgomery County Career [Paid] Firefighters Association - the firefighters union - also know as the International Association of Firefighters (IAFF) Local 1664. Expedited Bill 6-08, the result of collective bargaining negotiations, would add 2 more MCGEO members and one more knowledgeable public member.
Mr. Farber clarifies that since BIT has nothing to do with benefits, there is no reason to have more union representatives. He states that BIT needs investment experts because the "continuing rise in benefits negotiated" in union contracts "places constant pressure on the retirement system. The largest of the funds, the Employees' Retirement System (ERS), with $2.8 billion in assets, is funded at 79.5% of obligation, rather than 90% which is the average for state pension funds. The unfunded liability is $631 million. "A 0.1 percent decrease in the ERS' annual investment return would require $2.7% million more in taxpayer support for the fund." That's $27 million more taxpayer funds for a 1% decrease, or $270 million more in taxpayer funds for a 10% decrease, not unheard of in a volatile situation like today's market.
Mr. Farber claims that the unions, with 5,300 active participants, are outnumbered by the 5,500 retired employees, who no longer belong to a union, yet they have 1 trustee while the unions have 3. He believes they are overrepresented in terms of money, because 87% of ERS funding and 100% of the Retiree Health Benefits Trust funding comes from taxpayers. However, Expedited Bill 6-08 would result in 5 union trustees and 5 public trustees. Mr. Farber believes that the larger BIT becomes, the harder it will be to operate. He points out that MCGEO asked this question of 2006 County Council candidates: "Would you initiate and sponsor legislation that would change the composition of [BIT] to require that 50 percent of the board be trustees from the 3 county employee unions?" In other words, unions would need to get 7 more trustees added to the current 13 to end up with 10 out of the resulting 20. If 1 public trustee were added for every 2 new union trustees, as Expedited Bill 6-08 would require, the result could be 37 Board trustees.
The most controversial item in Mr. Farber's memo is this: "The Board's union trustees have shown a divided loyalty… "In August 2005, IAFF Local 1664 president [John] Sparks wrote to [BIT's] 18 investment managers - who each managed on average about $130 million in ERS assets - to solicit contributions of up to $5,000 for an event the union was sponsoring. [One letter sent to a manager in Philadelphia states: "The Montgomery County Career Fire fighters Association will be hosting the Professional Fire Fighters of Maryland 19th Biennial Convention and Training Session at the Carousel Resort Hotel in Ocean City, Maryland from {9/25-9/28}, 2005. As a friend of our Local, we would like to invite your firm to attend and/or sponsor this important event, and to provide you with the opportunity to meet with fire union officials from all over the State of Maryland. Since this is the first time that our Local has hosted the State Convention we want to make sure that everyone has an enjoyable experience. To help us put together the best State Convention ever, we ask that you consider one of the following sponsorships: Platinum $5,000; Gold $2,500; Silver $1,500; Brass $750. Please make the check out to 'MCCFFA State Convention' and mail to... John J. Sparks, President"]
Mr. Farber wrote: "Most trustees felt that the Board should amend its bylaws to expressly prohibit any such solicitations. While not questioning the integrity of those who want to solicit in this way, trustees opposed [such solicitations] for two reasons: respect for the letter and spirit of the Ethics Law, and concern that our investment managers could misinterpret such solicitations because of the 'pay-to-play' culture that still infects the public pension world. Mr. Sparks and the Board's union trustees strongly disagreed with this view. In December 2005, as a compromise, the Board tried a weaker requirement: that its investment managers simply report annually on any solicitations received from, or contributions made to, Board members or associated organizations. The union trustees demanded that the motion be defeated or tabled, and it was tabled. For the next 2 years, led by Mr. Sparks, they blocked its reconsideration. In January 2008, the Board was finally able to adopt the weaker requirement. Two of the 3 union trustees were absent, the third cast the only negative vote."
Union boss Gino Renne responded to Mr. Farber's memo with one of his own. He expressed a number of opinions about Expedited Bill 6-08 and about Mr. Farber. Here are a sample of them: "… Nonetheless, for reasons that remain somewhat unclear, Mr. Farber has taken it upon himself to lead an anti-employee, anti-union crusade against this relatively innocuous proposal… Since right now the BIT is dominated by 'management and public trustees', perhaps an increase in the number of employee representatives would actually improve our funded ratio. Obviously, the status quo is not achieving what we want. In any event, the BIT, like most pension funds, relies heavily on the advice of paid experts and consultants for investment advice. What BIT members are charged with is evaluating that advice and good judgment in the interest of the participants of the plan; and it is precisely in this area that employee participation could prove most useful.
"… Perhaps Mr. Farber's biggest canard is his scurrilous, inaccurate and possibly defamatory allegation that union trustees have in the past and will continue in the future to violate their fiduciary duties to the plan participants. These are inflammatory accusations of the most serious kind-and ones for which Mr. Farber has absolutely no factual support… The accusations against Mr. Sparks are a similar example of Mr. Farber's McCarthyisms. He alludes to a solicitation made by Mr. Sparks when he was not a member of the BIT, and then says he would not question Mr. Sparks' integrity. To be clear-there is absolutely no evidence that there were any improper solicitations made by Mr. Sparks or any other union trustees, or that there have been any breaches of fiduciary duty on the part of any union trustee. But again, Mr. Farber will not let facts get in the way of his crusade, nor dissuade him from trying to smear dedicated employee representatives.
"… Mr. Farber obviously has strongly held views-against Unions, against employee participation on the BIT, against the raises negotiated by the County and approved by the Council against the process of collective bargaining and against the authority of the County's duly authorized Labor Relations Administrator. Perhaps Mr. Farber should run for County Executive or for a seat on the County Council. But until he does we respectfully submit that his role should not be that of self-appointed advocate against employees and the Unions they have chosen to represent them… We urge you to support the bargained for changes in the composition of the BIT."
According to a Washington Post reporter's account of this meeting: "Gino Renne… angrily disputed Farber's memo, shaking his head at what he said was the equivalent of calling Renne a liar, a thief and a cheat. He told Farber, 'You'll get my responses in the court of law.' 'I welcome it,' Farber shot back… 'It is absolutely essential that the employees have substantial say in how this money is invested,' Renne wrote in a letter to council President Michael Knapp…"
At this week's MCCF general meeting, after our delegates received a copy of Mr. Farber's memo and were further briefed about it, they voted unanimously to oppose Expedited Bill 6-08. I don't believe that Mr. Renne's memo would have dissuaded them from such a vote. If you are also persuaded to oppose this bill, I hope you will contact the County Council as soon as possible as the Council will vote on this rushed bill on Tuesday, June 17th. There is a second bill, Bill 11-08, which would guarantee a return of 7.25% to a union retirement plan, regardless of the actual market rate return. While the IRS may not allow such a high guaranteed return, any guarantee that is not based on market performance could create additional future taxpayer obligations of hundreds of millions of dollars in a bad market. MCCF delegates also voted unanimously to oppose this bill as well.
Two of the three members of the MFP Committee voted to recommend Expedited Bill 6-08 to the full Council, and all three members voted to recommend Bill 11-08. They expressed little concern over the exchange between Mr. Farber and Mr. Renne. I'll discuss the union background of several Councilmembers in a future column and how all union members consider the results of a collective bargaining agreement to be one of the most sacred of objects.
You can read Mr. Farber's memo at: http://www.montgomerycountymd.gov/content/council/pdf/agenda/cm/2008/080609/20080609_ADDENDUM3.pdf
Thursday, June 12, 2008
The 2009 MoCo school budget revealed
The MoCo School Board has just released its 2009 school system budget. Topping 4.2 billion dollars the school system will have to absorb a slimming down of just over 44 million from their original request which included an increase of 129 million. This seems like a minor consideration from so large a budget but their are many complaints on what will be lost. To see for yourself go to this Washington Post article that describes it all:
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/10/AR2008061002250.html?hpid=sec-education
Do you think that ways could be found to slim down this huge expenditure? Submit your thoughts to Supt Weast himself or to the MoCo School Board. You may win an award for creative thinking; there doesn't seem to be any coming from the school authorities themselves. One area of substantial savings could come from use of Open Source software which is free to the user instead of the expenditure of the commercial stuff. Give this some thought!
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/10/AR2008061002250.html?hpid=sec-education
Do you think that ways could be found to slim down this huge expenditure? Submit your thoughts to Supt Weast himself or to the MoCo School Board. You may win an award for creative thinking; there doesn't seem to be any coming from the school authorities themselves. One area of substantial savings could come from use of Open Source software which is free to the user instead of the expenditure of the commercial stuff. Give this some thought!
Thursday, June 5, 2008
On the passing of a true Montgomery leader, Neil Potter
Neil Potter was a real democrat in the sense that he sought benefits for the county that aided all residents not the special interests. He fought for limited growth and fair taxation. The June 4 Gazette has a lengthy discussion of his service on the County Council (twice) and as County Executive which should be read by all county residents. Here is a small extract of that article dealing with his stance on taxes and county worker pay increases during a period of economic stress in the early 1990's when he was the County Executive, a time just like the one we are in now.
"During Potter's executive tenure, the county also experienced one of its toughest fiscal times when the country faced a recession. Although some viewed Potter as a liberal he stood up the unions and opposed pay raises.
"We were in the midst of a major recession and he was the right man for the job because it was all about fiscal responsibility and doing it right," said former Councilwoman Gail H. Ewing, who served from 1990 to 1998. "It did not come naturally to him to be the leader but he did what was needed."
The comparison of leadership styles between the present county government folks and Potter stands out starkly because the present leaders have failed to reign in the outrageous union worker's contracts which provide a 30% raise over three years when our fiscal situation can hardly bear the cost.
It is time to identify a new slate of leaders, such as Potter, to be voted into office at our next election cycle. We must find those willing to support the interests of the majority citizenry.
"During Potter's executive tenure, the county also experienced one of its toughest fiscal times when the country faced a recession. Although some viewed Potter as a liberal he stood up the unions and opposed pay raises.
"We were in the midst of a major recession and he was the right man for the job because it was all about fiscal responsibility and doing it right," said former Councilwoman Gail H. Ewing, who served from 1990 to 1998. "It did not come naturally to him to be the leader but he did what was needed."
The comparison of leadership styles between the present county government folks and Potter stands out starkly because the present leaders have failed to reign in the outrageous union worker's contracts which provide a 30% raise over three years when our fiscal situation can hardly bear the cost.
It is time to identify a new slate of leaders, such as Potter, to be voted into office at our next election cycle. We must find those willing to support the interests of the majority citizenry.
Monday, June 2, 2008
Hi again all you agitated tax cohorts, here is some more ammunition to show why we in Montgomery County are asked to pay more in taxes than our friends in neighboring counties. In todays The Examiner Washington newspaper (Monday June 2) in an article entitled "D.C., Montgomery public workers most likely to earn more than $100k" you will find the basis for this title in that with the exception of D.C., that the number of Montgomery's high salaries exceed those of the other nearby counties by at least a couple of percentage points. Here is the link to this article: http://www.examiner.com/a-1419432~D_C___Montgomery_public_workers_most_likely_to_earn_more_than__100K.html
Bear in mind that many of the county's union workforce, including about 80% of the firemen, do not live in our county and therefore do not pay our high taxes. When these firemen reach retirement after only 20 years of service they will receive their full annuity at the expense of our taxpayers for the rest of their lives even though they are spending this money elsewhere and at locations where the cost of living may be much less than here and while they have other jobs to carry them over the strain of only an annuity to live on. As Jackie Gleason used to say on his TV show, "Oh how good it is!" Folks, you must stay frugal to afford all this giveaway.
See you at the Taxpayer League meeting this Wednesday evening, 7:30PM at the Council Office Building.
Bear in mind that many of the county's union workforce, including about 80% of the firemen, do not live in our county and therefore do not pay our high taxes. When these firemen reach retirement after only 20 years of service they will receive their full annuity at the expense of our taxpayers for the rest of their lives even though they are spending this money elsewhere and at locations where the cost of living may be much less than here and while they have other jobs to carry them over the strain of only an annuity to live on. As Jackie Gleason used to say on his TV show, "Oh how good it is!" Folks, you must stay frugal to afford all this giveaway.
See you at the Taxpayer League meeting this Wednesday evening, 7:30PM at the Council Office Building.
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