Why Was Alvin Brown's Pension Reform a Bad Deal?

[NotNow]

Good luck with your experiments.  Now I see why so many good Officers are leaving JSO.

[theduvalprogressive]

Steven is correct for the same reason privatized libraries didn't work in my hometown. They low ball to get the contract and then spread the cost of operating below profit ratio over successive years. By the time cities figure this out they are too vested to go back. IF you want to see the biggest waste and corruption associate with privatization, look no further than the Military Industrial Complex.

There is a model of privatization I believe would work and it revolves around employee owned cooperatives. I believe the city could benefit from taxpayer investment in employee owed and operated companies as it would increase more private ownership in the means of production of goods and services - keeping it local.

What that would involve is, say, a company is about to leave town and close shop. The city could partner with local lenders to help purchase equipment, help with rental of the facilities, and provide start up cash to kickstart the enterprise. The company could payback the money over time and do services for government on a "pro bono" or discounted basis.

For example if a civil contractor goes out of business and the employees could submit a plan that would show they were capable of running a similar company, the city would help them. In return they would have the option of paying the money back on terms or paying part of the money back in cash and providing a service in trade such as repairing roads or clean up. Once their term is done they would go on their own.

[JFman00]

What you're describing duvalprogressive is almost entirely how the Chinese economy is structured. Government-run banks give loans to government-run companies which provide services to other government-run companies while soaking up excess labor from urbanization. The loans are offered at rates not available to private enterprises and the companies are entrenched "employee-owned" bureaucracies.

Countries like Venezuela or ME countries similarly use government-owned piggybanks like oil companies to prop up other government-owned companies or interests. It's not a sustainable way to operate and the oft-touted social benefits end up limited by commodity prices (Venezuela) or slow growth (Brazil).

[NotNow]

Back on point, would you propose privatization of police and fire service in Jax JFman00?  If so, I would have a few questions.

[JFman00]

I think fire service could plausibly be privatized, police probably not. In terms of practical and political feasibility, absolutely not. Practically because of the insurance issues that Sandy Springs ran into, politically because the benefits would be dispersed while the loses would be concentrated. There was a news story... last year? about a county with a privatized fire service that allowed someones house to burn down because they hadn't paid their bill. They were on hand to prevent the neighbors houses from being damaged though. Is that system working as designed? Probably. Is it equitable and fair? Depends on who you ask. Did voters change their mind? I'll have to do some research.

I just last week moved into a house for the first time since I lived with my parents and was quite surprised that trash pickup is municipal and not privatized. That's a pretty straightforward service to 100% outsource.

[SunKing]

and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan.  Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all.  The City (we) owe what we owe and there may be a deal to cut with the union but who knows?  Stop the bleeding by moving away from that tired old system.  It is simply unsustainable.

The broken system is really the fact that we have a moocher/looter 'conservative' government.  It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.

THAT is what needs to change.

Its a bad financial deal for the City and it needs to be changed.

Just don't forget that this bad deal for the City was brokered by the City.  That fact is what makes this issue bigger than it is on the surface and why things like lawsuits need to remain a part of the discussion when talking about "pensions". The police and fire fighters did not create the mess.  City officials did from the original barter of the deal to it's ultimate mismanagement exasperated by "pension holidays". 

Like I said I wouldnt support privatizing police and fire.  but there is another $200million in the General Fund that I would.

Those funds would be?  Are they one time money, unencumbered and not earmarked for other uses?  Curious to know where you got the number. 

Im not talking about CIP.  Anything that's non public safety that's in the General Fund.

[JFman00]

Obion County, TN. They will now extinguish all fires, but will bill non-subscribers ($75 a year) $3,500 for the response.

[JFman00]

Been going pretty well since 2005. I'll never understand the ideological rigidity that rejects out of hand ideas of how to do things better. Conservatives and liberals in this country alike seem absolutely set in their worldviews and resistant to not only compromise but non-partisan alternatives. Guess it's easier to blame someone else than entertain the idea that a particular system or institution is broken.

[JFman00]

I didn't say that the Chinese system is awful, simply what it is. If you like it, good for you. I think it's done a great job given its foundations and goals (supporting economic development at all costs and resulting in the largest absolute decrease in poverty in world history) but I'm pessimistic on its long-term prospects as it's economy transitions away from the low-hanging productivity gains that come from pure physical capital investment. There's always a trade-off and it bothers me when people don't acknowledge them.

[SunKing]

Steven is correct for the same reason privatized libraries didn't work in my hometown. They low ball to get the contract and then spread the cost of operating below profit ratio over successive years. By the time cities figure this out they are too vested to go back. IF you want to see the biggest waste and corruption associate with privatization, look no further than the Military Industrial Complex.

Actually you both are wrong and it is working in Georgia very well by the way.  But privatization has been in place throughout most of Florida for years, particularly in areas that are experiencing rapid growth.  Shifting non public safety employees off a city funded pension will provide immediate and future savings.  Its a fact, don't hate the truth.

The argument that the private sector is somehow inherently more corrupt than the public sector?  Military Industrial Complex?  Cmon folks we are talking about pensions, not politics.

[JFman00]

Been going pretty well since 2005. I'll never understand the ideological rigidity that rejects out of hand ideas of how to do things better. Conservatives and liberals in this country alike seem absolutely set in their worldviews and resistant to not only compromise but non-partisan alternatives. Guess it's easier to blame someone else than entertain the idea that a particular system or institution is broken.

This isnt a conservative or liberal issue.  Its a simple question of how to provide services.  The Atlanta Constitution is hardly a bastion of socialism, incidentally.  Privatization breaks down because when it stops working its generally unfixable.

I argue that privatization breaks down when the circumstances that led to it were unfavorable to begin with. There was a great article in the Economist on how Raul Castro seems to be managing Cuba's transition away from a communist system in a way less prone to the oligarchic capitalism that came with Russia's rushed privatization process. Or see a lot of the half-baked, half-hearted privatization proposals that the EU is forcing Spain and Greece through. Will the failure of privatization in those countries be blamed on the act of privatization? Or the difficult circumstances that led to a search for alternatives to the status quo in the first place?

When you look at government bankruptcies across the country from Stockton, CA to Jefferson County, AL it's hard to believe that privatization is the bogeyman people make it out to be. Privatization, like government-owned and operated services, non-profits, public-private partnerships or other structures we haven't thought of yet, is just one of a set of possible tools to use when approaching issues. The same structure won't always work in the same place, but given that each has it's own set of costs and benefits, and the multitude of issues facing governments at every level, it makes sense to leave all options on the table and explore their applicability on a case by case basis.

[SunKing]

OK, JFMan already mentioned a few in Georgia but in Florida how about Miami, Weston, Pembroke Pines, West Palm Beach, Orlando, Ft. Lauderdale.

[SunKing]

had to catch my breath but anyway forget the Chinese, ask the Greeks about all of those public sector jobs.  They are loving all of this socialist trickle down economics.

now back to Jacksonville and our little pension problem....

[JFman00]

Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.

To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.

There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.

[SunKing]

OK, JFMan already mentioned a few in Georgia but in Florida how about Miami, Weston, Pembroke Pines, West Palm Beach, Orlando, Ft. Lauderdale.

Cool.  Provide the link that shows how they saved the pensions with 30 years of unmet obligations.  Im sure that I must have missed the story of how Miami privatized their pension program.  That must have made headlines.  Lets see a few.  Im very curious.

I am making the point of privatizing jobs in order to eliminate pensions, not privatize pensions.