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AFT-NH Legislative Bulletin 2-10-17: Right To Work (for less) And NH Retirement System

February 10, 2017  

Besides the snowstorms this week, the big news out of Concord is the current status of ‘right to work’ legislation, legislative action on the NH Retirement System, and the continuing saga of Frank Edelblut as NH’s own version of Betsy DeVos.

‘Right to Work’: The House Labor Committee held its mandatory hearing on so-called ‘right to work’ legislation this past Wednesday, a marathon hearing stretching from 10am until past 5 pm. Hundreds packed Reps Hall in the State House, and most of those who testified did so in opposition to so-called ‘right to work.’ There were numerous stories of how unions helped workers in the workplace and bettered their lives, along with testimonies on the need for workers to have a voice of their own. Many of the advocates of so-called ‘right to work’ were from outside NH, offering up slanted evidence and demonstrating virtually no understanding or familiarity with NH traditions, politics or even our economic situation in 2017. One such witness, when pressed, ultimately admitted that the reason business often supports so-called right to work is because it makes it harder to organize (translation: weaker unions, lower pay, fewer benefits). Interestingly, other than gun manufacturer Sturm Ruger (a non-union workplace) virtually no businesses testified in favor of so-called ‘right to work,’ and not a single employer who deals with unions testified in favor of so-called ‘right to work.’ AFT-NH local leaders submitted some fantastic written testimony for consideration by the Labor Committee. Please click here to review the testimony.

At the end of the long day, the Labor Committee then voted on the two identical bills (SB 11 and HB 520). Both bills will be sent to the House floor with the recommendation of “ITL”—Inexpedient to Legislate (in layman’s terms, “kill them”). Five Republicans voted with the nine Democrats on the Labor Committee, a strong bipartisan showing against legislation advocated by outside, non-NH organizations. As a result, SB 11 will come to the floor for a House vote on next Thursday, February 16, while HB 520 will come up later in the session. So, our challenge right now is to defeat SB 11 next Thursday—now is the time to act! Please, contact your State Representative and tell her/him to vote against SB 11 by following the Labor Committee’s recommendation of ITL. Do not delay—now is the time. Democrat, Republican, it doesn’t matter—we need to make our position known!

NH Retirement System: Another important legislative proposal dealing with the NH Retirement System will come before the House on Wednesday, February 15. The House Executive Departments and Administration Committee has recommended passage by a 10-9 vote. If approved by the full House, the bill would then be referred to the House Finance Committee. Sponsored by Representative Renny Cushing, HB 413 mandates that the State of NH reinstate payment by the state of 15% of retirement contributions, thereby providing some relief to cities, towns, counties and school districts, all of whom must bear the burden with employees of contributing to the NH Retirement System. Many years ago, when the State sought to persuade towns and cities to join the NHRS, it made the financial promise to pay 40% of the cost, a promise which has not been kept, thereby leaving towns and cities with increased burdens and higher property taxes to cover the payments reneged on by the State. The increased costs to local communities, especially in our locals such as Nashua, Newfound Area School District and Rochester dealing with tax and/or spending caps, this bill will provide some long-overdue relief and is strongly supported by AFT-NH. So, when you contact your State Reps about so-called ‘right to work,’ be sure to put in a good word for HB 413 as well, and remind them that even Governor Sununu has promised restoring some of the State aid promised to towns and cities.

Frank Edelblut: The Executive Council vote on Frank Edelblut was delayed this past week when it was revealed that a required consultation by the Governor with the State Board of Education had not actually occurred. That meeting was scheduled for yesterday but the snowstorm led to its cancellation, so the meeting will now be held on Tuesday, February 14th. In the meantime, video of Edelblut’s testimony in favor of discredited “conversion therapy” for gay teens is now circulating, leading one to wonder just how supportive he can be of our LGBQT students? There is also more material now available in which Edelblut is clearly identified as a denier of climate change. Combined with his previously noted affiliation with creationism (Patrick Henry College), it is sure to make one question just where science education will be headed under a Department of Education led by Frank Edelblut. So please, keep up the good work and contact your Executive Councilor and urge him to vote against Frank Edelblut as Commissioner of Education. Remind him—if you need to be certified to teach or licensed to drive, shouldn’t the Commissioner of Education meet the statutory requirement for appropriate education and experience?

A brief follow-up on two items noted in last week’s bulletin. First, HB 438 which would prohibit public employers from processing voluntary payroll deductions for union dues is scheduled for public hearing before the House Labor Committee on February 22nd. Secondly, the school voucher type bill, SB 193 had a public hearing and no action has yet been taken by the Committee.

Thank you for all you have done so far and thank you for all you will do this coming week. Please, reach out, participate, and encourage a colleague or friend to do likewise. Democracy is governance by the people, and YOU are the people!

 

In Solidarity,

Douglas Ley

AFT-NH, President

AFT-NH Legislative Bulletin: ‘Right To Work’ Passes Senate, House To Hear Bills On NH Retirement

January 20, 2017

Yesterday, the NH Senate passed SB 11, the so-called ‘right to work’ bill, by a vote of 12-11. Ten Democratic senators were joined by Republican Senator Sharon Carson in opposing the bill, while one Republican Senator, Robert Guida, was absent and did not vote. By this action, the Republican majority in the NH Senate (excepting Senator Carson) makes clear where it stands. Their aim is to weaken organized labor and the ability of working people to negotiate collectively and have a powerful voice in the workplace. When organized labor is strong, working people are strong, wages rise, benefits improve, and there is greater mutual respect and equality in the workplace. ‘Right to work’ intends to reverse gains made in New Hampshire over nearly the past fifty years, and in tandem with other legislation, will turn New Hampshire into the low-wage haven of New England.

The battle over ‘right to work’ now moves to the NH House, where it is expected that the Senate bill (SB 11) and the identical House version (HB 520 ) will be examined jointly in a hearing before the House Labor Committee, possibly as early as February 8. When one of the bills would then reach the floor of the House for a vote is not yet clear, but at least one of the measures would likely be brought forward prior to the Legislature’s usual winter break in the final week of February.

What does this mean for us? It means we must redouble our efforts to rally public opposition to this anti-working families legislation and we must each commit ourselves and our co-workers to identify the NH House members who represent us, contact them, and make our position clear and our voices heard. Phone calls, emails, letters and petitions will all be in play over the next few weeks, so tighten your seat belts—it will be a rough ride! You can start by visiting the AFT-NH website, clicking on ‘State House News’ under the ‘2017 State House’ tab, and scroll down to where you can search out the names of your NH Senator and Representatives. Knowing who they are is Step 1, before we initiate further actions. And while there, please browse the AFT-NH website—there is much useful information on so-called ‘right to work’ and other issues of concern to us.

In other legislative news, HB 438, prohibiting public sector automatic union dues withholding from paychecks has yet to be scheduled for a hearing in front of the House Labor Committee. Advocates of so-called ‘right to work’ like to claim they are defending individual choice (to free-load) but with HB 438, no such figleaf or specious justification exists. This is direct and undisguised attempt to destroy the ability of labor unions to collect dues from their members in a convenient and simple manner, negotiated via their collective bargaining agreements. Keep this bill in your sights—it is crucial that we defeat it.

A number of bills regarding the NH Retirement System will have their House committee hearings next week. These early hearings are on bills that utilize a variety of strategies to reduce the heavy burdens being placed on public employers (cities, towns, school districts) across New Hampshire due to the State’s refusal to share the burdens and make ANY contributions into the NHRS. Assaults on the NHRS itself will come in future weeks, when proposed legislation reducing benefits or even dismantling the NHRS will come up for hearings.

The final deadline for House bills to be introduced is January 27th. The AFT-NH Bill Watch list is posted on our website and will be updated regularly.

Finally, in the area of education, we have had committee hearings on bills authorizing the State Board of Education to implement a code of ethics for certified teaching personnel, mandating a minimal two-week notice regarding curricular materials on human sexuality, and a proposal to repeal the education tax credit program benefiting charter and private schools. Education Committee actions have not yet been reported on these bills, and we will continue to monitor them as we move deeper into the legislative session. And no account of education-related activity in Concord would be complete without noting Governor Sununu’s nomination of Frank Edelblut as NH Education Commissioner. Given Edelblut’s complete lack of any education experience (he is an accountant by profession) and his clear support for siphoning public funds to pay for tuition at private schools, this is a nomination that deeply concerns AFT-NH and likely the entire education community in NH. So stay tuned—we will be asking your help to mobilize opposition to his confirmation by the Executive Council.

 

In Solidarity,

Douglas Ley

AFT-NH, President

Buying (and Selling) the Future on Wall Street

Verizon as a case study of why our economy doesn’t work, part six

The “ah-ha!” moment came during a conversation with a friend. What we realized: the way we usually talk about the stock market doesn’t match the reality of our modern economy. Things we assume about stock ownership often aren’t really true.

NYSE_09_26_1963_US_News_World_Report

New York Stock Exchange, 1963 (Photo by US News and World Report via Library of Congress)

Start with the basics: what is a share of stock? Most of us think “Investors give a business money and get back shares of stock that give them a fractional ownership of the company.”

But try applying that concept to Verizon, and it doesn’t fit. Verizon stockholders buy and sell shares on the open market – and none of that money goes back to the corporation. The money that investors pay when they buy stock… goes to the investors who sold the stock.

So buying stock isn’t “an investment in the company”… it’s an investment in the stock itself. If you later sell that stock for more than you paid for it, that profit is what’s known as a “capital gain.” If you sell it for less than you paid for it, that’s a “capital loss.”

Stock ownership does give shareholders a “fractional ownership of the company.” But what does that mean? There are more than 4 billion shares of Verizon stock outstanding.  If you own one of those shares, you don’t have rights to any particular network router or mile of transmission line.  Instead, you own slightly less than one-four-billionth of the corporation’s “stockholder’s equity.”  That means if the corporation were to be liquidated tomorrow, you – along with all the other stockholders – would share whatever remained after the corporation’s assets were sold and its other debts were paid.

And that’s probably when, if you were a stockholder, you would start remembering the $49 billion in long-term debt that Verizon acquired in 2013.

And that’s probably when you’d realize that Verizon’s corporate balance sheet shows less than $12.3 billion in “total stockholder equity.” And there are more than 4 billion shares of stock outstanding.

Which means each share of stock represents less than $3 in stockholder equity.

VZ stock chart

Verizon Share Price

Verizon has been trading above $40 a share since… April Fool’s Day 2012. (Back when there were less than 3 billion shares outstanding and the balance sheet showed stockholder’s equity of about $11.76 per share.)

That’s a huge difference between the per-share value of stockholder equity and the per-share price stockholders have been paying… for years now.

So… what else are stockholders buying? (in addition to that minuscule percentage of a relatively small amount of stockholder equity)

Each share also confers the right to receive a dividend, when and if the corporation issues dividends.  And – no surprise – Verizon has been issuing steadily-increasing dividends for more than a decade.  At this point, it’s issuing dividends that total more than $2.20 a year.  With shares trading between $40 and $45, that means stock purchasers can expect to make back – in dividends – about 5% a year on their investment. Which is way more than the rest of us can get in bank interest right now, if we put money into a savings account.

But although those dividends represent a whopping big “return on investment” – there’s still the risk that you could lose money on the stock itself.  Think about it: if you bought a share of Verizon stock last October, you paid about $49 a share. Since then, you’ve received about $2.20 in dividends. But the price of each share of stock has dropped to about $44. So even though you’ve received 5% in dividends… if you sold the stock now, you would still have “lost” about $2.80 per share.

So corporate executives pay a whole lot of attention to share prices.

VZ_Exec_Comp_Program_from_ProxyFor two reasons. First, because executives’ compensation is largely “pay for performance.” For Verizon executives, 90% of compensation is “incentive-based pay.” And what’s the objective? “Align executives’ and shareholders’ interests.”

Second reason: because most corporate executives own a lot of stock in their company.

VERIZON SHARES OWNED by executivesAs of this past February, when stock incentives were awarded, Verizon’s top 10 executives reported owning a total of more than 645,000 shares of corporate stock – worth, at the time, $49.31 per share… or, more than $31.8 million.

But Verizon stock is now trading at about $44 per share. That means those same executives’ shares are now worth only about $28.4 million.

So is it really a surprise that corporations spend trillions of dollars buying back their own stock, to bump up share prices?  Is it really a surprise that corporations borrow money to pay dividends and fund buybacks?

I don’t see anything here that provides an incentive for corporate executives to grow a company long-term.  Nothing that provides an incentive to pay employees a fair wage.  Nothing that provides any incentive to “create jobs” (no matter how low the tax rate goes).

The only incentives are: to keep stock prices high and to pay dividends. (And an incentive for corporate executives to take as much money as they can, however they can, while it’s still available.)

And so for the rest of us, the economy doesn’t work.

— — — — —

retirement eggWondering why you should find time to care about this, with everything else that’s going on right now?

Because of that huge difference between the per-share value of shareholder’s equity and the actual price per share.

And what happens during recessions.

And the fact that almost everybody’s retirement money is – in one way or another – invested in the stock market.

Here in the Granite State, the NH Retirement System lost 25% of its value in the last recession.

In June 2007, before the Wall Street meltdown, the NHRS had $5.9 billion in investments, including
•  $29.7 million of stock in Citigroup, Inc.
•  $23.5 million of stock in American International Group, Inc. (AIG)
•  $14.0 million of bonds issued by Federal Home Loan Mortgage Corp. (Freddie Mac)
•  $13 million of bonds issued by Federal National Mortgage Association (Fannie Mae)

Two years later, when the recession was in full force,
•  Citigroup stock had plunged to only about 6% of its former value
•  AIG stock was worth only about a penny on the dollar and
•  Freddie Mac and Fannie Mae had both been placed into federal conservatorship

That’s what happens to stock values, during recessions.

Remember hearing about the Detroit bankruptcy? Which supposedly was triggered by unsustainable public employee pension costs? The Detroit pension systems were fully funded, as of June 2008. Then the recession hit.

All those defined-contribution 401(k)s? Across the country, families lost an estimated $2 trillion (with a T) of their retirement savings when stock values plummeted during the last recession.

Artificially-high stock prices hurt almost everybody, in the long run.

— — — — —

Yes, there’s more.

Smashed Piggy Bank RetirementVerizon’s balance sheet includes $24.6 billion of “goodwill” and $81 billion of “intangible assets.” And if you factor those out, Verizon has “net tangible assets” of minus $93.4 billion. That’s what most of us would think of as a negative net worth… of about minus $23.35 per share. While investors are paying about $44 per share to buy the stock.

The good news, from the investors’ perspective: they’re not personally liable for that $116 billion in long-term corporate debt. If – and this is purely hypothetical – if Verizon were to declare bankruptcy and default on that debt, stockholders would not be expected to pitch in $23.35 per share to satisfy the corporations’ creditors.

The bad news is, somebody out there would take that loss… and retirement systems across America invest in corporate bonds. (At last report, the NH Retirement System owned more than $433 million worth of corporate bonds.  Can’t tell, from here, whether any of those include Verizon.)

— — — — —

Photo by Stand Up to Verizon via Flickr

Photo by Stand Up to Verizon via Flickr

If you want to support the 39,000 Verizon employees who have been working without a union contract since August 1st, you can sign the petition here.

Stand Up to Verizon is on Facebook here.

Part one of this “Verizon as a case study” series is here.  It focuses on Verizon’s $5 billion stock buyback last February, and the short-term bump in stock prices which followed.

Part two of the series, showing how Verizon executives benefited from that $5 billion buyback, is here.

Part three, looking at the disconnect between Verizon’s reported profits and the dividends it pays its stockholders, is here.

Part four, about phantom stock and how Verizon executives are avoiding taxes by investing in imaginary assets, is here.

Part five, about how Verizon is borrowing money to pay stockholders and executives while demanding givebacks from unions, is here.

This is part six.  And yes, there will be more.

Two Recent Court Rulings That Pit Legal Theories vs Workplace Realities

US Supreme Court BuildingCan’t help but think there’s a huge “disconnect” between recent court rulings and real-life work situations.

First Case: Yesterday, the US Supreme Court weighed in on the question of whether employees are entitled to be paid for time spent waiting for security screening as they leave the job each workday. Apparently, the Supreme Court doesn’t believe that routinely searching employees to see if they’re stealing anything is actually “integral and indispensable” to those workers’ jobs. And the law doesn’t require employers to pay wages for duties that aren’t “integral and indispensable.”

At one level, I agree with the Court wholeheartedly. Proving you’re not a thief, day after day, should not be an “integral and indispensable” part of anyone’s job.

But, in real life: what would happen if those workers refused to go through the security screening? My guess is: they’d be fired.

Which, in my mind, makes those daily screenings “integral and indispensable” – at least as long as the employer insists upon them. Myself, I would distinguish between investigating employees after a theft, and the practice of requiring workers to go through daily screenings “to prevent theft.”  And I don’t think workers should be required to donate their personal time, just because the employer mistrusts every single one if its employees.

Second Case:  This morning, the New Hampshire Supreme Court weighed in with a reverse-and-remand decision about the NH Retirement System.

The court case, Professional Fire Fighters of New Hampshire et al. v. State of New Hampshire, challenged the 2011 increase in public employees’ contributions to the NH Retirement System. That increase ranged from 2% to 2½ % of employees’ paychecks, depending on the job classification. This “pension reform” provision was included as part of the State’s biennial budget.

The plaintiffs and the NH Retirement Security Coalition are still reviewing this morning’s decision.  From their press release:

The NH Retirement Security Coalition has long contended that promises made to our member employees should be enforced because our members uphold their promises each and every day that they go to work. The Court’s decision today unfortunately allows public employers to renege on their promise of security in retirement. While this decision is disappointing, our members will continue to provide high quality service to the state and its cities, towns, and school districts.

We are deeply concerned about the long term impact of this decision on the people of NH. We are carefully reviewing this decision in detail with our attorneys and members of the Coalition and we will offer further in-depth comment as soon as we are able to do so.  

But as I read the decision, one thing jumped out at me: again, I see a disconnect between the legal reasoning and everyday workplace reality.

As I read the ruling – and I could be wrong on this, I am NOT a lawyer – it appears to me that the Court is viewing this from a purely theoretical perspective. It seems to me that the Court based its ruling on the theory that raising retirement contribution rates didn’t retroactively harm public workers because the retirement benefits they had already accrued (under the lower contribution rates) were still there – and the new contribution rates only applied to retirement benefits accrued going forward.

Or, in other words: if a public employee had retired on the day the new contribution rates went into effect, then he or she would still be entitled to all the retirement benefits accrued up to that point… and therefore (as I read the Court decision), the Justices do not see any unconstitutional retroactive impact.

Which I guess begs the question: what would have happened in 2011 if every single one of the public employees covered by the NH Retirement System had chosen retirement, rather than what was effectively an employer-imposed pay cut?

And in the real world, what does this do to NH RSA 273-A, the Public Employee Labor Relations Law, if public employers are now able to unilaterally change the terms and conditions of employment by increasing required “contributions” to the NH Retirement System?

The NH Supreme Court may be asked to reconsider today’s ruling. Stay tuned.

 

*       *       *       *

Members of the NH Retirement Security Coalition include:
Sandy Amlaw, New Hampshire Retired Educators Association
Steve Arnold, NE Police Benevolent Association
Dennis  Caza, Teamsters Union Local 633
Laura Hainey, American Federation of Teachers – New Hampshire
Mark Joyce, NH School Administrators Association
Rich Gulla, State Employees Association of New Hampshire – SEIU Local 1984
Dave Lang, Professional Fire Fighters of New Hampshire
Mark MacKenzie, New Hampshire AFL-CIO
Harriett Spencer, American Federation of State County and Municipal Employees Council 93
Keith Phelps, New Hampshire Police Association
Scott McGilvray, NEA – New Hampshire

Enough is enough!

Smashed Piggy Bank RetirementToday the Nashua Telegraph posted the article, “Pension tension: New research dispels old notion that public employees make less than private sector peers,” which highlights supposedly “new” research focused on public employee pensions.

There are many things wrong with this article and I feel obligated to correct some of these inaccuracies.

Let’s start with the fact that the “new research” they cite was written in 2012, hardly making it breaking news. It was based on surveys taken in 2004 and 2006. The report basically says that while public employees do make less per hour than their private sector counterparts, when you include their retirement benefits public employees make more.

Here are the facts.

1) Research from the National Institute on Retirement Security (NIRS) shows that public employees earn 11-12% less than their private sector counterparts. There is no denying that public workers have a better benefits package than private sector employees – however, even when you add in retirement benefits, public sector employees still fall behind private workers by 6-7% overall. Many people choose to work in the public sector for less pay because they want the better benefits and a real retirement plan.

Unfortunately the trend in the private sector is to take away defined benefit pension plans and force workers into 401(k) programs. This makes employees responsible for funding and managing their own retirement plans. Employers are able to reduce their contributions, reducing what they pay for the benefits they offer. This shifts the entire burden onto the employee. This is also why private sector worker are paid slightly better: because they are expected to save that extra pay for their retirement.

2) Public sector employees are better educated than private sector employees. NIRS found that only 23% of private sector employees have a college degree – compared to 48% of public sector employees with a college degree.

This is easy to understand when you think about some of the jobs in the public sector. You have thousands of literal rocket scientists at NASA and thousands of doctors and medical professionals at the Center for Disease Control. Every teacher is required have a college degree. The result is a highly educated public workforce.

3) It is an outright lie to blame public employees for underfunding of the NH Retirement System. The fact is that in 1999, the NHRS was 100% funded – until Wall Street shenanigans started cutting into its value.

As reported by Liz Iacobucci, “the Trust Fund lost 10% of its value in the recession of 2001.” The NHRS Trust Fund continued to decline and hit rock bottom during the 2008 economic meltdown. “It lost another 25% of its value in the 2008 recession,” said Iacobucci. In 2008, the NHRS had more than $5.9 Billion in investments – and when the stock market crashed, that created what many are calling an unfunded liability.

Think tanks often spin the numbers, calculating that if every employee retired today, the trust fund would be short by “X” amount of money. The fact is that new employees replace the retiring workers, and the new employees pay into the Trust Fund. Investment returns are hugely important to the Retirement System: about 75% of NHRS pension benefits are funded by investment returns. The employers’ contributions are – literally – just pennies of each dollar paid.

Wall Street has rebounded nicely from the 2007-08 crash. The stock market has been setting new records for almost 18 months now. The NHRS has recovered much of its lost ground – and as the market continues to grow, so will the NHRS Trust Fund.

I also can’t believe that Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy Studies, is suddenly so concerned about municipal budgets. His conversion is almost laughable. In the article, he says “Your town budget is higher than it would be because the pension system is more expensive than it should be. That’s money that’s not going to hospitals, to universities.”

But the Bartlett Center was one of the biggest proponents of “pension reform” bills during the 2011-12 legislative session – and back then, Arlinghaus didn’t talk about the impact those bills would have on municipalities. Cities and towns are paying more now for employee pensions thanks to the hard work of Arlinghaus and the JBC.

Enough is enough!

We need our elected leaders and these Koch-funded “think tanks” to stop lying to the people. The media pits worker against worker when these think tanks are given unwarranted publicity.

Blaming workers for the consequences of two stock market crashes isn’t “new research” – it’s political spin.

Calling retirement benefits unaffordable – without mentioning the fact that the Legislature underfunded the NHRS for years – isn’t honest “research,” it’s political spin.

And we as workers need to change the conversation away from “look at what he gets” – and start asking, “why am I not getting that?”   We as workers, both public and private need to stop blaming each other, and start demanding better from our employers.

Public Pensions: Still Waiting to be ‘Made Whole’

IOU in a piggy bank by Images of Money via FlikrLooks like the Justice Department is settling cases with banks responsible for the 2008 financial meltdown. Citigroup is next up: and reported to be paying $7 billion to end Justice Department investigations.

But I don’t see any of that money headed back to public pension systems.

…like, say, New Hampshire? In June 2007, the New Hampshire Retirement System Trust Fund held $29.7 million in Citigroup stock. Within two years, that stock had lost 94% of its value. (That’s a lot of retirees’ COLAs, right there.)

…like, maybe, Detroit? In June 2007, the two retirement systems covering Detroit public employees had a total of $343 million invested in mortgages. But after the crash, the systems’ “unfunded pension liability” was one of the main justifications for declaring that Detroit was “bankrupt.” (Read “Detroit’s Pension Systems: not ‘unaffordable’, just battered by Wall Street” here.)

State and local pension funds lost a total of $1 Trillion (yes, with a “T”) in value between 2007 and 2008. NOT a coincidence: those state and local pension funds are now “underfunded” by $1 Trillion.

And now the Justice Department is wrapping up its investigations, with fines to the federal government and assistance to homeowners…

… and nothing, as far as I can tell, in the way of restitution to all those public employees whose retirement dreams were destroyed.

Meanwhile, Wall Street broke more records last week…

…and Governor Chris Christie has decided not to pay New Jersey’s pension system more than $2 billion in employer contributions.

New Hampshire public sector retirees haven’t received a cost-of-living adjustment since 2010.

Detroit’s retirees are voting on whether to accept benefit cuts.

And so far, only one banker has gone to jail (compared to 839 people who were convicted for crimes during the savings-and-loan scandals of the 1980s)…

…and as far as I can tell, nothing whatsoever in the way of restitution to public pension funds.

Does that $7 billion settlement sound like a lot to you? Here’s some context:

  • That’s just slightly higher than the $6.4 billion Citigroup had originally planned to spend next year to buy back corporate stock. (Why would a company buy its own stock? “To counteract the dilution of bank shares when executives are awarded stock as incentives.”)
  • It’s roughly equal to six-months’ profit for the corporation.
  • It’s less than 2% of what Citigroup received in the federal bailout.
  • It’s less than one percent of what public pension funds lost in the meltdown.

Mad, yet?

Read the Rolling Stone’s “Looting the Pension Funds” here.

Read “The Plot Against Pensions” here.

 

Opposing Ideas On How We Can Fix The NH Retirement System: The NH Labor News Vs Fosters Daily Democrat

Fosters Daily Democrat is basically a right-wing talking machine. Between Fosters and the Union Leader, they cover a majority of the state pushing half-truths and dis-information to drive the right wing, Tea Party agenda in NH.

Take for example this week’s Sunday editorial “Sharing the burden of reform,” talking about the NH Retirement System’s fiscal problems.

Fosters is arguing against a recent op-ed penned by John Broderick Jr., NH State Supreme Court Justice and the current Dean of the UNH Law School, entitled “State employee pensions are a promise, not a gift.” Both editorials agree that the NH Retirement System is not fully funded and that changes need to be made to protect the taxpayers, and the workers.

Broderick argues that the William (“Bully”) O’Brien legislature forced through pension reforms that were unjust, unfair, and unconstitutional. Since the NH Supreme Court has already ruled in Broderick’s favor, it is simple to see that he is correct.

Fosters, on the other hand, argues that fixing the “broken pension system” means gutting the defined pension system, and forcing all employees to pay more of their money to the pension fund. Forcing employees to pay more for retirement, Fosters argues, would relieve the overpaying, taxed enough already, taxpayers from having to pay more to fix the NH Retirement System. The part that Fosters ignores is that over 75% of retirees’ pension benefits are paid out from investment returns. Increasing employees’ contributions is NOT going to fix Wall Street.

Long gone are the days when companies, and municipalities cared about ensuring that their workers could live happily in retirement after years of dedication to their employer. As Pulitzer Prize winning author Hedrick Smith explains in his book, “Who stole the American Dream”: just three decades ago, 84% of large companies offered a full pension. In 2010, only 30% did. Companies and municipalities have been pushing workers away from pensions and into defined contribution (401K) plans – which makes employees responsible for funding their own retirement. Yet workers’ wages haven’t been raised to compensate for the benefit cuts.

This pro-business mentality of reducing benefit expenses while refusing to raise wages has made corporations billions in additional profits. Workers are getting screwed out of their retirements, while the corporate giants and Wall Street hedge fund managers add more zeros to their already inflated paychecks.

Fosters is arguing the same for the NH public workers: “make the workers pay more, to save the taxpayers money.” There are a few problems with this idea. The NH Retirement System is underfunded due to the Legislature over-estimating the investment returns (not putting enough in to cover their share of the cost) and the 2008 recession.

“As recently as 1999, the New Hampshire Retirement System was more than 100% funded.  But then the Trust Fund lost 10% of its value in the recession of 2001.  It lost another 25% of its value in the 2008 recession,” wrote Liz Iacobucci in her blog post entitled, “Going Behind the Rhetoric on Public Employee Pensions.”

During the O’Brien reign of terror, they created legislation to absolve the state from have to uphold their end of the retirement bargain. O’Brien and his Tea Party buddies re-wrote the pension laws to make employees pay more to cover the money. Thankfully, the NH Supreme Court has ruled those changes unconstitutional.

No matter what Fosters tries to tell you, the taxpayer already has an obligation to their public employees. They made an agreement when they hired the employee and that includes paying the costs associated with hiring these workers. Taxpayers and the Legislature have been avoiding paying their portion of the bill.

Avoiding a problem does not make it go away, it only makes the problem worse. I believe it was the GOP who really coined the phrase “kicking the can down the road.” Well, now that can is kicking back.

AFT-NH Legislative Update: NH Retirement Lawsuits, and Finishing Up Education Bills

It is that time in the 2014 legislative session for Committees of Conference. Bills that were amended by either chamber will need a recommendation of concur, non-concur, or non-concur with a request for a Committee of Conference from the committee in which the bill originated.  At the moment, the following bills will be moving to Committees Of Conference, and both chambers have till June 4th to act on these bills.

HB 1128, establishing a committee to study issues related to students receiving special education services while attending a chartered public school. AFT-NH is in support of the bill’s intent.

Around 2011-2012 the state passed a bill which mandated that local districts must pay for support services for special education students enrolled in Charter schools. This means that a district must send someone to the Charter school, contract out the service, or pay the Charter school to provide the services. All of which can add up to tens of thousands of dollars. We need to have a clear picture on what it is costing districts to educate special education students enrolled in a Charter school in or out of their home district. Because this is a mandate from the State we also need to have the discussion on who should be paying for these services.

HB 1494-FN, relative to administration of the New Hampshire retirement system and authority of the board of trustees.We were originally opposed to this bill but when amended we came out in support.  This bill moves to a committee of conference, AFT-NH will monitor this process.

The original bill was a policy overreach by the NHRS, but Rep. Goley’s amended version ensures this is just a housekeeping bill that establishes a procedure for the determination of the costs of purchase of service credits, clarifies the ability to earn service credit while on a salary continuance plan, changes the date for the approval of the comprehensive annual financial report (CAFR), adds a penalty for employers who fail to timely remit data on compensation paid to retired members, and repeals obsolete provisions.

RETIREMENT LAW SUITS

This past Thursday, May 15, 2014 the Supreme Court heard oral arguments on our Merrimack County I (rate case).

In this case, the Superior Court found that the recently imposed rate increases were substantial and were not justified by any particular public policy requirements.   The rate increases were, thus, improper for any employee vested in the Retirement System under the Contract Clause of the NH Constitution.  The Contract Clause prohibits the state from breaching its contracts.  The judge, however, found that employees do not become vested in the Retirement System until they complete ten (10) years of service.

The Retirement Coalition appealed because it believes employees become vested upon achieving permanent status, not at ten years.  The State appealed because it claims employees do not ever vest or do not vest until they actually retire.   The Retirement System also filed a brief in which they claim not to take any positions, but at the same time claim that the Retirement System should not be required to refund any monies that become due.  The NH Municipal Association and the NH School Boards Association filed a brief that essentially sides with the State.

It will be a few months until the Supreme Court issues its written decision; once it is out I will send out a summary as to their ruling.

RETIREMENT LAW SUITS STILL WORKING THEIR WAY THROUGH THE COURTS

Merrimack County II (COLA and Special Accounts).In this case, the Superior Court found that employees do not have vested rights in their COLAs and no right to challenge the defunding of special accounts.  The judge also repeated his findings about a ten (10) year vesting period for other aspects of the Retirement System.

The state’s brief are due May 20, 2014, our response is now due July 7, 2014, their response to us is now due August 5, 2014. The next step will be for the Supreme Court to schedule oral arguments.

Hillsborough County (Definition of Earnable Compensation, Benefit Structure).In this case, the Superior Court found that employees vest in the Retirement System upon achieving permanent status.   The judge ruled, however, that she cannot tell without a trial whether definitional changes made by the Legislature regarding factors such as what constitutes “earnable compensation” are substantial enough to have violated petitioners’ rights.   (Merrimack I and II were determined on an agreed statement of the facts, without a trial).

Case Status:  Over our objection, the Hillsborough County judge stayed proceedings in this case pending the outcome of the Supreme Court appeals.  As a result, there is not pending activity in this case.

If you have any questions or concerns please email me at lhainey@aft-nh.org.

Thank you!

In Solidarity,
Laura Hainey

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Late breaking news appears on our web site and on Facebook!

UPCOMING COMMITTEE HEARINGS

TUESDAY, MAY 20

LEGISLATIVE ADMINISTRATION, Room 104, LOB
10:00 a.m. Interim study subcommittee work session on HB 1440-FN, including the writing, promoting, or distributing of model legislation to elected officials as lobbying and requiring disclosure of scholarship funds, money, or other financial support received from such lobbyists by elected officials.

WAYS AND MEANS, Room 202, LOB
10:00 a.m. Full committee work session on Revenue Updates.

THURSDAY, MAY 22

10:00 a.m. Senate in Session

WEDNESDAY, JUNE 4

10:00 a.m. House in Session

NH Retirement Security Coalition Comments on First Oral Arguments in “Pension Reform” Case in Supreme Court

NH Retirement CoalitionCONCORD – The New Hampshire Supreme Court heard oral arguments the morning of Thursday, May 15th in regards to the New Hampshire Retirement Security Coalition (NHRSC) lawsuit challenging so-called “pension reforms” passed by the Legislature in 2011 (Professional Firefighters of NH, et al vs. State of N.H.).

In response to litigation following the disastrous legislation passed in 2011, a Superior Court judge ruled that the increase was unconstitutional for workers who had ‘vested’ in the pension fund. Attorney Andru Volinsky, lead counsel for the NHRSC, argued Thursday to the Supreme Court that public employees ‘vest’ in the New Hampshire Retirement System immediately after accepting the job, not after 10 years (which some have claimed is precedent).

Volinsky asked the justices to think of the pension benefit as an annuity, agreed upon as part of the terms of employment, and something that cannot be changed unilaterally.  The fact that pension annuities are considered not to ‘vest’ for ten years would seem to undermine the growing necessity to attract skilled young people to government work in this state, especially when the pension fund participation is mandatory. The current approach adopted by the 2011 Legislature will scare off, not attract young people to government service.

“When a police officer responds to a potentially life-threatening situation, as we see happen all too often, he or she goes in with 100% commitment to protecting the public interest. The deal is made on day one – that’s the job, that’s the commitment”, said Keith Phelps, President of the New Hampshire Police Association (NHPA).

“What’s to stop them [the Legislature] from raising the price to 25% or higher in the years ahead if the Court allows this broken promise to stand?” said Laura Hainey, President of the American Federation of Teachers – NH.

At stake for the approximately 48,000 public employees in the pension system is $75 million per year in higher costs.  Diana Lacey, President of the largest state employees’ union SEA/SEIU commented, “It’s been almost three years.  They’ve charged us almost $225 million more than they were supposed to for our annuities.  We don’t have the right to strike when they take from us.  If the Courts let this stand, to what end will legislators be able to steal from taxpayers?  That’s what we are and we’re being targeted unfairly.”

For more information on the New Hampshire Retirement Security Coalition, please visit nhretirementfacts.com and follow us @NH_RSC

Senate Republicans Blaming Public Employees for State’s Revenue Shortfalls

NH Retirement Coalition

CONCORD – Yesterday, New Hampshire Senate Republicans were quick to attack their fellow legislators and public employees after Standard & Poor announced New Hampshire’s bond rating was adjusted following a court ruling on the Medicaid Enhancement Tax (MET).

In 2007, responsible and bipartisan retirement reforms were enacted. Instead of allowing these changes to work, in 2011 Sen. Jeb Bradley (R-Wolfeboro) and his fellow Senate Republican colleagues added to the unfunded liability (UAAL) by slashing employer contributions. Due to Senate Republicans’ so-called pension reforms in 2011, they increased the UAAL by 11.5% – adding over $400 million to the state’s underfunded status, exacerbating the problem. These failed policies were a contributing factor to New Hampshire’s lowered bond rating.

Embracing real pension reform for newly hired employees and encouraging an open discussion with public employee groups would have been a responsible solution to our state’s financial concerns. Unfortunately, Senate Republicans refused to discuss retirement security for all public workers, and sentenced newly hired police officers and fire fighters to a future reliance on taxpayer-funded services.

 

For more information on the New Hampshire Retirement Security Coalition, please visit nhretirementfacts.com and follow us @NH_RSC

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