Public Unions / Education

Though you will find some pension reform information on this page,

please see additional page here for more specific info.

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New Empire Center Report Spotlights “Trouble With Triborough”

The case against New York’s 30-year-old “Triborough Amendment,” whose repeal has been a mandate relief priority of local and school officials throughout the state, is laid out in a new report issued by the Empire Center for New York State Policy. Entitled Triborough Trouble, the report explains how the law requires public employers to maintain all contractual perks for unionized public employees, including automatic “step” increases in pay, after the expiration of a union contract. Key findings include the following: The Triborough Amendment gives unions an incentive to resist negotiating structural changes to their contracts, since the status quo will be preserved even if there is no contract. Pay hikes required by the Triborough Amendment cost the state government $140 million a year and add almost $300 million a year to school budgets. The requirement to finance automatic pay increases has undermined attempts to stretch taxpayer dollars further in a time of extreme financial stress. Repeal of the Triborough Amendment will establish a more equitable collective bargaining system in New York’s public sector, preserving basic union rights while giving local officials the tools they now lack to negotiate needed changes to costly and outmoded contracts.


Ulster County School Boards Association targets Albany

Published: Tuesday, February 14, 2012

By KYLE WIND Freeman staff;

NEW PALTZ, N.Y. — The Ulster County School Boards Association has formed a Legislative Action Committee to allow members to speak to their representatives in Albany with a louder voice and also to communicate with area residents about issues like the state’s new tax cap.

Several school boards have formed their own committees, starting with New Paltz at the end of the 2009-10 school year, followed by a handful of others over the last several months including Saugerties, Kingston, and Onteora, whose board President Ann McGillicuddy is chairing the countywide version.

“All school boards in Ulster County are in the same boat and face the same issues,” said Kingston school board President James Shaughnessy. “I think it will strengthen our message when it comes from a countywide organization.”

Daniel Torres, who chairs New Paltz’s Legislative Action Committee and has offered his assistance with the countywide version, agreed that there is “strength in numbers.”

A likely area of emphasis will be on fiscal matters. Regional school officials have spoken of the need for mandate relief at a time when their state aid has been drying up, federal stimulus and jobs money is running out, and a new tax cap is in place.

Educating the public about how the cap works is one area in which trustees want to give an early emphasis, and school officials in the region have been frequently describing the legislation as not a cap but a “tax levy limit.”

The law restricts the growth of the amount of money to be raised through property tax levies to 2 percent or the consumer price index, whichever is less, plus some exemptions that will not count against the limit and will allow levies to grow higher without supermajority votes by taxpayers, like large tax settlements against districts or portions of increases in pension costs.

To raise levies higher than the limit, a 60 percent majority of voters would be required to override the cap.

School officials in the region continue to fear backlash from the public after they adopt 2012-13 budgets that hold levies below the allowable limit after tax bills are sent out in the fall because the cap will not necessarily hold property tax levies to 2 percent.

Other factors like equalization rates, which currently account for the disparities between the percent increases in tax levies and amounts by which their tax bills change, will continue to govern the growth of local property taxes. Continued…


Education’s Medicaid Problem

By on 1.11.12 @ 6:08AM – More bad news for privileged public employee teachers.

About the Author

RiShawn Biddle the editor of Dropout Nation , is co-author of A Byte at the Apple: Rethinking Education Data for the Post-NCLB Era. He can be followed at

Reforming Programs for Children in Need

Two State mandated programs for children with special needs require more than $500 million from county property taxpayers, and are in tremendous need of reform. Both programs have been long-standing priorities of NYSAC for fundamental policy and fiscal reform.

The first is the Early Intervention program (EI), which provides services for disabled infants and toddlers ages 0-3. Counties fund 51 percent of the EI program, while the State pays 49 percent. Annually, county property taxpayers direct $200 million for the State mandated EI program, despite the fact that more than half of the children receiving EI services have access to private health insurance, which refuse to pay the bill. NYSAC is calling for reforms that would close loopholes that have enabled health insurance to deny medically-necessary EI services.

In Preschool Special Education, counties have long advocated to be removed from the program, as counties have no role in the program other than to bankroll it. Counties pay 40.5 percent while the State pays 59.5 percent for the program. Counties have no ability to determine the services needed for the children in the program. Last year, county property taxpayers paid approximately $430 million for preschool special education. Nearly $150 million is spent on transportation costs. NYSAC urges the Governor and the State Legislature to reform this program so that counties are phased-out of the fiscal and administrative responsibilities for the program.

Both reports can be downloaded at (Jessica Morelli)

NYFG Image

January 12, 2012

Re: Your Urgent Help Needed!

Dear Friends –

Governor Andrew Cuomo is about to cave into public employee union leaders on one of the key fiscal reform issues before the state, The Wall Street Journal today reports.

The Triborough Amendment gives unions the upper hand in every labor negotiation in the state. It is squeezing the budgets of New York counties, towns, and villages to death. The amendment prohibits state, county, and local governments from changing anything in an expired labor contract until a new contract is signed. It guarantees existing step pay increases and benefits in the absence of a contract, removing any incentive for public service unions to negotiate in good faith. Contracts only get more generous.

New Yorkers for Growth today urged Governor Cuomo to reconsider his reluctance to address this imbalance, which is driving many New York counties and municipalities toward effective bankruptcy.

Donations can be made here.

Assemblyman Robert J. Castelli has authored the only proposal in the Legislature to repeal the controversial provision, as well as a bill to suspend it for a two year period. Assemblyman Castelli’s bills are linked here and here.

Repeal of the Triborough Amendment is the keystone to fiscal reform in New York. We have a rigged system with the public service unions holding all the cards. If Governor Cuomo wants to stop runaway property taxes in this state — and he must — and to bring economic growth back to New York, Triborough has to be on the table this year.

New Yorkers for Growth needs your help in convincing the Governor and the Legislature to act. We are an all volunteer organization and we depend on our supporters for financial assistance. Our organization has helped elect more than a dozen fiscal conservatives to office in New York State and we have been able to substantially drive the public debate. We could really use your help in holding the Governor’s and the Legislature’s feet to the fire on Triborough.

Anything you can do to help would be sincerely appreciated. Information on how can you donate to the cause is available here.

Thank you for your support and generosity. We need you in this fight!

Ever upward!

New Yorkers for Growth

Nothing to be proud of

August 31, 2011 Tim Hoefer
The Competitive Enterprise Institute has just released a new index that takes a comprehensive approach to measuring just how powerful government unions are in each of the 50 states.

Which state had the lowest ranking, denoting the most powerful unions?

Need you ask? Chalk up another #50 for the Empire State. (more…)

New York’s BIG government

September 6, 2011  E.J. McMahon
New York has one of the nation’s largest and highest-paid state and local government workforces, according to the latest U.S. Census Bureau data.

Based on March 2010 payrolls, the average annual salary per full-time equivalent (FTE) employee of state and local government in New York came to $62,365, third highest among the 50 states and 24 percent above the national average. Only California and New Jersey paid higher average government salaries. The state ranking breakdown is at the Empire Center’s Data Bank.

The high cost of living in downstate New York and powerful public employee unions provide much of the explanation for its relatively high government salaries. But those factors don’t completely explain the exceptional size of the government workforce in the Empire State, as illustrated in the nearby chart.


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School boards advocate endorses six-point plan to obtain mandate relief

Written by Meaghan M. McDermott Staff writer democratandchronicle Nov. 20, 2011

As school districts are working to build their first budgets under the state’s new property tax cap law, officials are renewing their call for the mandate relief legislators promised but have yet to deliver.

“This is extremely frustrating,” said Jody Siegle, executive director of the Monroe County School Boards Association.

“I have in my office a stack of reports done between 2007 and now on mandate relief that were done by various different statewide agencies and each one outlines the things the state needs to do to solve the problem of unfunded mandates.

“The reports don’t say different things from year to year and there are no secret answers here.”

The Monroe County School Boards Association is endorsing a six-point plan for mandate relief unveiled earlier this month by Let New York Work, a coalition of business, municipal and state leaders.

The group is calling for the following changes:

Make the pension system predictable and affordable with two new retirement options for employees: a reduced benefit plan or a defined benefit plan similar to a 401(k).

Redefine compulsory arbitration.

Control the costs of construction on public/private projects by reforming laws that govern contract bidding.

When contracts expire, freeze step increases by reforming the Triborough Amendment, a state labor law that requires schools and municipalities to keep paying employee raises while negotiations on a new contract are ongoing. Officials say since the raises under previous agreements are usually more lucrative than new proposals, there’s no incentive for employees to bargain down their pay and employers have no leverage.

Establish minimum health insurance contributions for employees and retirees. Currently, health care costs are negotiated into each individual union contract. Let New York Work wants the law to state that employers should cover no more than 85 percent of a single health care premium or 75 percent of a health care premium for families or retirees.

No new mandates.

“Just as we faced the property tax cap head on, we must focus on enacting meaningful mandate relief,” said Brian Sampson, executive director of Unshackle Upstate, the Rochester-based business advocacy group.

“Making our communities more affordable and preventing the insolvency of local governments and school districts needs to be our top priority. Doing so will help to stabilize the state’s economy and provide a sense of security for taxpayers.”

Siegle said unfunded mandates strip school systems of the flexibility they need to keep providing services to children in the face of difficult financial times.

“It’s not that we think everything the state mandates is bad, but we’re focusing on the ones that seem to waste our time and resources,” she said.

“The ones that take away our flexibility to do things in a better way or that pull people away from doing things they should be doing as their primary responsibilities.”

State Sen. Joseph E. Robach, R-Greece, said legislators are open to considering additional mandate relief.

“While the Senate worked closely with the governor in this year’s budget to not only close a $10 billion dollar gap without raising any new broad-based taxes, and include some mandate relief, I realize more work needs to be done,” he said.

“Certainly everyone in government needs to listen to all groups and organizations and everyone involved to make accountable and logical policy decisions that will move New York in the right direction.”

It’s difficult to quantify how much local property tax money goes toward state-mandated spending. Monroe County Executive Maggie Brooks has estimated that unfunded mandates account for as much as four-fifths of all county spending.

And while there is no data available specific to Monroe County, a 2007 study by the Rockland County School Board Association showed about one-quarter of every property owner’s school tax bill there pays for unfunded state and federal government mandates.

Monday, October 31, 2011

The NY Post Editorial is correct in pointing out compensation paid to NYSUT’s honcho Richard Iannuzzi, and the financial problems the Union is facing. When will the teachers — and there are many we admire for their absolutely dedication to students — take the union back? Of course, if the Members of the Legislature truly cared about the rank and file members of all unions, they would repeal Agency Shop!

Piggies at the trough

NY Post  Last Updated: 11:15 PM, October 30, 2011

Ah, to live the lush life of a teachers’ unionist in the Empire State.

Specifically, the life of New York State United Teachers honcho Richard Iannuzzi.

NYSUT is, among other things, the parent organization of the UFT; it represents teachers upstate and in the suburbs — and it’s back in the news.

Turns out that even as the national economy was tanking in 2009 — and his own union was moving deeper and deeper into the red — Iannuzzi managed to wrangle an 18 percent increase in his total compensation package — to an impressive $345,987.

And he’s not the only NYSUT official doing well: Some two dozen union staffers get total compensation above $200,000.

Richard C. IannuzziNice work if you can get it.

Now, the union disputes those figures, saying changing IRS rules make the actual increase much smaller; that a lot of it was in pension and other benefits, rather than salary (as if that doesn’t count); that the big increase came long before New York teachers were being laid off — and, besides which, why should anyone care?

Actually, there’s good reason to care.

NYSUT, again, is the parent organization of the UFT, which, by its own admission, has become one of the key components of the Occupy Wall Street protests.

UFT President Michael Mulgrew has been a frequent visitor to Zuccotti Park, along with his predecessor, Randi Weingarten, who now heads the national American Federation of Teachers.

(The AFT recently revised its “working document” to endorse OWS’ extremist “1 Percent” rhetoric.)

The UFT’s own Web site boasts of the lead role the union has played in helping organize the protest marches, as well as providing storage and meeting space.

Indeed, both NYSUT and the UFT have long poured cash into such groups (think ACORN and the Alliance for Quality Education, among others), which willingly serve as fronts for the unions’ push for higher pay and virtually unlimited benefits.

Of the kind that NYSUT pays to its own members — but which, according to its most recent tax returns, has pushed the union’s net assets into the red — to the tune of $192.5 million.

That’s money that, ultimately, comes from taxpayers — who subsidize teacher salaries and lucrative benefits.

Maybe NYSUT can afford it — at least until its own financial house comes crashing down — but New York taxpayers no longer can. And it underscores the fact that the teachers unions are using OWS to press for higher taxes in order to push more money in the system to subsidize their members’ benefits.

It has nothing to do with fairness or quality education or “the children.”

They want Albany to keep spending taxpayer money on their members as lavishly as they spend dues revenue on themselves.

Remember last winter, when the UFT’s chief political fixer in Albany, Paul Egan, tried to weasel out of paying a four-figure dinner tab for 25 people by claiming poor service and inadequate portions?

He finally had to ante up when cops threatened to take him in — but only after getting the restaurant to shave a hunk off the bill. What a chisler, no?

But that’s the teachers unions for you — always throwing their weight around, demanding to be treated like royalty, their every demand met quickly.

That’s why they’re so heavily invested in Occupy Wall Street.

But remember: It’s never about the kids.

It’s always about the unions.


Report Reveals Massive Cost Of Government Retiree Health Care Empire Center for NY State Policy Wednesday, October 13, 2010

New York’s public-sector employees have been promised $205 billion in post-retirement health benefits that the state and its local governments have set aside no money to pay for, according to a report released today by the Empire Center for New York State Policy.

The report-entitled “Iceberg Ahead: The Hidden Cost of Public-Sector Retiree Health Benefits in New York”- provides the first statewide survey of unfunded retiree health care liabilities for New York State and its largest counties, cities, towns, villages and school districts.

For the full text of the Press Release, click here. To read and download a pdf of the report, click here.

The New York Daily News

How public worker pensions are too rich for New York’s – and America’s – blood

Eileen Norcross and Todd Zywicki publish an op-ed on New York public pensions in the New York Daily News.


Mandate non-relief

June 28, 2011 by E.J. McMahon

If you haven’t read much about the details of the “mandate relief” provisions approved by the Legislature as the session ended last week, there’s a good reason for it: virtually none of the relief priorities cited by the state’s major local government groups were included. Compared to this, the Senate Republicans’ lengthier one-house mandate relief bill was downright trail-blazing, since that measure at least touched on a few potential big-ticket items such as binding arbitration guidelines for police and fire unions, and costly prevailing wage requirements for government contractors.

The principal innovation in the enacted bill is the creation of an 11-member Mandate Relief Council, controlled by seven gubernatorial appointees, to “identify and review mandates that can be eliminated or reformed, and make such other and further inquiries, reports and recommendations as the council may deem necessary and prudent to effecctuate its mission of mandate relief.”


Repealing New York’s Triborough Amendment is ‘Core Reform Issue in State’   Wednesday, January 19, 2011

New York, NY-Jan. 19…New Yorkers for Growth , a leading voice for responsible fiscal policy in New York State, today announced its chief legislative priority for 2011: repealing New York’s Triborough Amendment which has unfairly added millions of dollars in extra costs to state, county, and local governments, the group says.

From Defined Benefit to Defined Contribution

Scott Beaulier | Sep 26, 2011

This paper explores the current state of public pensions across the United States and addresses transition cost and capital flight concerns.


Getting it Right: State Pension Liabilities

Eileen Norcross | January 13, 2011

State governments have reported unfunded pension liabilities of $452 billion as of June 2009. Recognizing the unsustainable future of current public pension plans, many state legislatures are considering pension reform. Unfortunately, most proposed reforms are insufficient to fill the funding gap because government accounting standards continue to underestimate the true debt.

Recent Events

Managing the Crisis in Public Pensions

Public pensions are radically underfunded, and fundamental reform is no longer an option, but a necessity. State policy makers can no longer avoid addressing this shortfall, with many public…

NFIB Says Take Down the Scaffold Law Director Mike Durant says that it’s time to take down the 100-year-old Scaffold Law, which lets workers sue their employers for all “elevation related injuries” even if they’re negligent.


Property Tax Cap: Pass or Fail for School Districts

added comment – If these alternatives can lower our tax burden beyond the tax cap (actually an increase), then why not do them as well? They (and Albany) should do them regardless of the the cap! 

Property Tax CapProperty Tax Cap: Pass or Fail for School Districts– highlights the impact of a tax cap and offers seven alternatives that would be more effective than a property tax cap at lowering the cost of public education and reducing the property tax burden.Full Report (12 pages – 5.52 MB)

School boards propose fiscal reform playbook

IconWritten by Michael Moran on May 11, 2011 – 11:50 am

The New York State School Boards Association (NYSSBA) is pushing essential fiscal reforms that will allow districts to lower costs and provide relief to property tax payers.

The seven reforms proposed in NYSSBA’s playbook are generally supported by The Business Council, including reform of the Triborough Amendment, pension reform, employee health care costs.

Link to NYSSBA’s full Essential Reform Playbook.


 Report – Excelsior! Key Drivers Behind New York’s ‘Ever Upward’ Property Tax Burden

Download Report

Introduction – Ever Upward

Ask school board members around New York State what their most pressing concern is and they will most likely say student achievement. Second, however, just might be managing costs that are largely beyond their control.


Property tax caps do nothing to change the rising costs facing school districts. For example, over 70% of a typical school district budget is personnel costs. In New York State, due to the Triborough Amendment to the Taylor Law, costs embedded in expired contracts must continue to be paid until a new contract is agreed upon, creating a disincentive to face tough fiscal decisions.

Like most employers, school boards provide health insurance coverage to their employees with school districts picking up about 90% of the costs for employees and up to 70% for retirees. By law, such benefits cannot be reduced without the consent of the employees and retirees themselves. School districts also pay the majority of the costs associated with employee retirement – on average about 8% of salary. For a midcareer teacher making $55,670 the district pays nearly $4,500 per teacher. Health insurance premiums continue to rise at about 12% each year.


 Report : Excelsior! Key Drivers behind New York’s ‘Ever Upward’ Property Tax Burden

NYSSBA ISSUE BRIEF: Prohibit New Unfundaed State Mandates

“While the state appears eager to control both the amount of aid it provides and the amount a school district may tax its local residents, it is much less enthusiastic about restraining the requirements it places on schools. A study by the Regional Educational Advocacy Districts group of the costs of 94 various state and federal unfunded mandates (including special education services, transportation, costs associated with No Child Left Behind, academic intervention services, health and safety, finance, and building and grounds) determined that these mandates alone comprise between 17 and 20 percent of school district budget spending. Extrapolated statewide, these unfunded mandate costs equate to approximately $5.4 to $6.3 billion. Any legitimate attempt to make schools more efficient must come with a recognition that mandates cost money.”



NYSSBA ISSUE BRIEF: Consolidation of School Districts and Functions

Report : Taxation Without Representation : The Reality of Charter Schools

May 5, 2011

    • Better use of School Buses. Do you need a seat for every student?
    • Link to: 2011 NYSSBA Rural Schools Summit

May 2, 2011

    • Contract Negotiations
    • Health Care Costs
    • Layoffs
    • Teacher Disciplinary Procedures
    • Pensions
    • Special Education
    • Purchasing
    • Link to Download – NYSSBA Essential Fiscal Reform Playbook


STEVEN MALANGA is City JournalSenior Editor, a Manhattan Institute Senior Fellow, and a columnist. He writes about the intersection of urban economies, business communities, and public policy.

Prior to joining City Journal, Malanga was executive editor of Crain’s New York Business for seven years, serving on the publication’s editorial board and writing a weekly column. He also supervised special projects, including investigative stories. Before that, Malanga served for seven years as managing editor of Crain’s. During his tenure at the publication it twice won the General Excellence award from the Association of Area Business Publications (AABP).

Read Steve’s full bio >>

As their infatuation with President Obama fades, millions of Americans anxiously ask, Is this the change we were waiting for? The current administration represents change, for sure, Steven Malanga argues a momentous transformation of the fundamental structure of American politics. A self-interested coalition of public-sector unions and government-financed community activists (like the young Barack Obama) has become our era’s characteristic political machine.

In Shakedown, Mr. Malanga shows how this machine’s single-minded goal is always bigger government and more public spending. The bill, he says, is now coming due for the relentless rise of this new political powerhouse. He chronicles how public-sector unions and the corrupt political hacks beholden to them have all but bankrupted once-rich states like California and New Jersey. He details the campaigns to undermine the successful and popular 1990s welfare reform and to revitalize the failed, wasteful War on Poverty programs that funnel taxpayer money to the advocacy groups that are integral cogs in the new political machine. And he provides a comprehensive summary of how these same advocacy groups spent decades helping undermine mortgage standards in the name of helping the poor—in the process enriching themselves and enabling the housing meltdown. As Americans anxiously ponder the future direction of their government and their economy, Shakedown explores the questions of who got us in this mess and why we need change—constructive change—more than ever.


By BLAIRE BRIODY, The Fiscal Times July 13, 2011
“…Yet even during these hard times, there are thousands of government employees who still earn great, big salaries – In New York, 35 state employees were paid over $400k last year.”

Basketball coach Earnings: $1,200,000
Where:SUNY Binghamton, NY

Kevin Broadus, who had a five-year $1 million contract, was let go from his job as head coach for little-known SUNY Binghamton men’s basketball team in 2009 over an ethics scandal. He sued the school for discrimination, and received a $1.2 million buyout to drop the suit. Taxpayers got to pick up all the legal bills too. In June, Broadus was hired as an assistant coach at Georgetown, where he has worked previously.

CEO and vice president hospital affairs Earnings: $721,043
Where:Stonybrook Hospital, NY

Running a university hospital makes Steven Strongwater the fourth-highest paid employee in the state, earning six times what a physician at the hospital makes. He was hired in 2006, after a long career as a hospital administrator.

Chancellor Earnings: $560,038
Where:City University of New York

As CUNY deals with $205 million in budget cuts, and Chancellor Matthew Goldstein proposes raising tuition on some 533,000 students in the system, he maintains earnings of $560,000.


We’ve Become a Nation of Takers, Not Makers

More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined.


If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida’s ratio is more than 3 to 1. So is New York’s.

Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker.

Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That’s less than half of the state’s 1.48 million government employees.

Don’t expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren’t willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.

The employment trends described here are explained in part by hugely beneficial productivity improvements in such traditional industries as farming, manufacturing, financial services and telecommunications. These produce far more output per worker than in the past. The typical farmer, for example, is today at least three times more productive than in 1950.

Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.

But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn’t pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores.

The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we’ve gotten.

Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.

President Obama says we have to retool our economy to “win the future.” The only way to do that is to grow the economy that makes things, not the sector that takes things.

Mr. Moore is senior economics writer for The Wall Street Journal editorial page.


New York: Death of A State?

July 1, 2010 by Herbert London

The sound you hear on Wall Street at noon isn’t bells chiming, but rather the death knell for New York State. The once proud Empire State that was the engine for capital investment across the country is gasping for breath. Wall Street, that paid the state’s bills, is a shell of its former self. A combination of the 9/11 attack and a credit meltdown have left Wall Street a different and less vital place. Goodbye Lehman Brothers, Bear Stearns, Merrill Lynch. Yes, this is a different place.Upstate is no better, perhaps worse. The only economic activity in cities like Elmira can be found in state run hospitals and prisons. The citizens of these towns are ostensibly wards of the state. Taxpayer levies keep these towns afloat since there isn’t any sign of private enterprise.That is an understandable condition wrought by extortionate taxes and onerous regulation which strangulate wealth creation. I have yet to meet a young entrepreneur who in assessing investment opportunities decides to put his capital in New York. With the capital gains rate near the highest in the country, you cannot afford to invest in New York, live in New York or die in New York.What you can do is use the political system for personal advantage. Sheldon Silver, leader of the Democratic led Assembly or Al D’Amato, former Senator and registered state lobbyist, have milked the system for personal gain and advantage. If you wish to promote the interest of a municipal union, you see Silver. If you want a state construction contract, you see D’Amato. Both men have become enormously wealthy feeding at the public trough. Of course, they aren’t alone, the nomenklatura in Albany have an array of ties to law firms, accounting organizations, construction companies, consultants, etc.The recent scandal involving a gambling casino in Aqueduct Race Track is merely the tip of the proverbial corruption iceberg. There is scarcely a political figure in the state capital who is unblemished by sub rosa deals. Mr. and Mrs. John Q. Public shake their heads in despair, but there is little they can do about it.A political force of enormous power has emerged based on municipal employees. Between New York City and New York State there are approximately 625,000 public service employees. Assume that there is at least one other voting member in their families (a conservative estimate) the 1,250,000 means in effect, that this voting bloc controls two-thirds of an election since it is estimated that two million votes are needed for a statewide position. This bloc invariably votes for the party or candidates that will extend public benefits and raise taxes. The reality in New York is that the extension of public expenditures has driven private capital out of the state or out of existence. And while it is assumed the Democratic party is culpable of fiscal irresponsibility, a claim that is clearly justified, the Republicans under Governor George Pataki and the majority in the State Senate have been as irresponsible.Surely if the next governor decides to take on the municipal unions and the lavish pension system and follows a fiscal program outlined by E.J. McMahon among others, the state may be on track for solvency. But I wouldn’t place a bet on that scenario. Financing the debt accounts for a substantial portion of the annual budget. Reducing state jobs would exacerbate the economic environment in areas already suffering from blight and joblessness. And political reality makes it unlikely anyone outside of New Jersey Governor Christie will attack union benefits.New York State government has for decades engaged in a seduction of its residents until almost everyone is sucking on the public breast. Medicaid sustains grandma in a nursing home. The state version of the Community Reinvestment Act allows workers with modest assets to buy homes they can ill afford. The State health plan relieved small business owners from the burden of providing healthcare for their employees. Johnny and Mary attend public institutions of higher learning where tuition is a fraction of what it would be at private universities like Columbia or NYU. The list goes on until everyone is touched by the long arm of government even when they don’t realize it.There is no doubt New York State has extraordinary assets: an educated workforce, potable water, cheap hydro-electric power, magnificent scenery. But these assets have been surpassed by manipulative leadership, profligate spending, and the appeasement of municipal union demands.As I see it the once magnificent Empire State is now the Vampire State with the Albany government sucking the blood of working men and women who are trying to eke out a living. It is not surprising that the average municipal worker with salary and benefits has an income of $97 thousand dollars and he is being supported by a worker in the private sector with an income at $51 thousand.This is not a sustainable arrangement which, as I see it, explains, in large part, why the death rattle is heard around the Contributing Editor Herbert London is president of Hudson Institute and professor emeritus of New York University. He is the author of Decade of Denial(Lanham, Maryland: Lexington Books, 2001), America’s Secular Challenge(Encounter Books), and Decline and Revival in Higher Education (Transaction)..