ShareNew Jersey...and how it got that way: August
Situation:Government is struggling with a mountain of debt, as pension and health care costs spiral higher due to a surfeit of public employees covered by collective bargaining.
Cause: Economic and technological forces compel companies to bring better and cheaper products to consumers. Auto makers, airlines, and other businesses with broadly unionized workforces have struggled to compete in this economic climate. Labor is the biggest single expense for government entities as well as private companies. But because government operates as a virtual monopoly—one state government, one set of municipal or school employees, no danger of going out of business—it hasn’t been subjected to the cost-cutting pressure private-sector entities face.
Fix:
1. Consolidate. Now. When businesses struggle, they close underperforming factories or units. New Jersey still operates the 566 municipalities and 616 school districts that have helped cause the present fiscal mess and landed us more than $100 billion in debt. Last year’s special legislative session on property taxes began with promises of relief but yielded no long-term solutions.
Leaders are loath to rile their constituencies, but they need to prioritize which services are most important to people. For instance, many residents take for granted services such as twice-weekly garbage collection; but when faced with choices about what cutbacks should be made to balance the budget, they may decide once-a-week collection is acceptable.
Once the preferred level of services has been determined, consolidation can address workforce size, service quality, and compensation. (Compared to the private sector, public pay tends to skew higher at the bottom of the ladder and lower at the top.)
If the state ignores consolidation, it will face ever-higher tax bills and growing state and local debt.
2. Quit bickering. One of the strongest structural changes in government in recent decades was the 1995 creation of a statewide court system, which could not have happened without the cooperation of all involved parties, including Governor Christine Whitman, Chief Justice Robert Wilentz, the Legislature, and 77 unions representing roughly 7,700 county workers. The deal moved thousands of county workers onto the state payroll alongside 1,500 judicial state employees; $326 million was thereby lopped off county budgets and shifted to the state; and an archaic system with unequal allocation of resources and representation was replaced by a trial and appellate system headed by a supreme court offering equal resources statewide.
Union workers are often painted as receiving inflated pay and cushy benefits. Public benefits and pensions that once appeared meager now look attractive compared to pitiful or nonexistent coverage in the private sector. But the average employee of a state agency is 45 years old, has been on the job twelve years, and makes a median salary of $50,444. That’s hardly rolling in dough.
Unions have helped reduce the workforce and reconfigure government in Massachusetts (where a comprehensive plan is guiding the winnowing of employees while closing agency personnel offices) and Ohio (where the Department of Transportation downsized from 7,800 to 5,800 jobs). Such progress cannot happen here unless all sides bury their differences.
3. Educate workers. When the Government Performance Project handed out its report cards in 2005, published in Governing magazine, New Jersey earned its highest grade, a B, in the “people” category. It was praised for “training and developing its workforce” and implementing a “computerized performance assessment system [to] provide feedback to employees.”
It’s a start, but the state must do more. According to the 2006 State Government Workforce Profile, more than 53 percent of state employees have a high school degree, GED, or less.
4. Be realistic. The state avoided strikes by essential employees such as police and firefighters by hiking salaries and benefits to keep workers at a time when the private sector offered lucrative packages. Those provisions have become untenable for the state as the workforce and state debt have gone up and the economic climate has shifted. The contract approved in April by the Communications Workers of America, the state’s largest public union, bumped the retirement age from 55 to 60 and agreed to a small contribution by employees toward health insurance premiums.
Future negotiations must stress the state’s dire financial predicament and the need to work together. Otherwise, what the unions win at the bargaining table now may ultimately preclude attempts to address a pension fund shortfall estimated at more than $30 billion.
