Union Contract Agreements Bolster Case for Collective Bargaining Transparency

MAY 20, 2015  | by BOB DICK

The Wolf Administration finalized contracts with two government unions yesterday, perfectly encapsulating the failings of the current collective bargaining process.

In a terse press release, the Wolf Administration announced contract agreements with the American Federation of State, County, and Municipal Employees (AFSCME) Council 13 and the United Food and Commercial Workers (UFCW) Local 1776.

According to the Wolf Administration, the contracts generally maintain the status quo, which isn’t a promising revelation for public employees or taxpayers who have no interest in subsidizing union politics.

Additionally, a 2.25 percent pay increase was agreed to for employees with at least one year of continuous service. Charles Thompson of PennLive reports the pay increase will cost Pennsylvanians $23 million in the coming fiscal year.

Even if the public does not approve of these new contracts, there isn’t much they can do to prevent implementation. The agreements were hammered out behind closed doors, and the details were only released after both Gov. Wolf and two of his campaign contributors agreed to the deals.

Is there a better example of a process in need of transparency?

Had the Senate’s trio of transparency bills been codified, the process would have been different. Taxpayers could have watched the contract negotiations play out, and they would have been provided the contracts and their costs before ratification, giving them an opportunity to weigh in on the deals.

Fortunately, lawmakers still have time to make the collective bargaining process transparent. The wishes of government unions to keep the process secret should not prevent lawmakers from giving Pennsylvanians a seat at the table. 

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Audio: House Expands State Scholarship Programs


Last week, Pennsylvania’s House of Representatives approved a significant expansion of two state scholarship programs, the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC).

Since 2001, EITC and OSTC have awarded over 430,000 scholarships to students across Pennsylvania, providing lifeboats to children looking to escape dangerous and failing schools.

Matt Brouillette recently spoke with Gary Sutton on WSBA about House Bill 752 and the benefits that its $100 million expansion will bring to children hoping to pursue school choice programs.

Matt explains that EITC and OSTC build connections between corporations and their communities. These programs allow businesses to “see a direct benefit from their tax dollars going to help educate children”–rather than sending that money to strangers in Harrisburg.

Listen below or click here to hear Matt’s interview.

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

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Audio: Fixing the State's Broken Pension System


Public pensions have created one of the worst financial crises in Pennsylvania’s history—a monstrous, $50 billion debt that Gov. Wolf can no longer ignore. To prevent the crisis from growing, the state Senate passed Senate Bill 1 to convert a broken retirement system into a stable and fair plan for public employees and taxpayers.

Matt Brouillette, CF’s president & CEO, sat down with Mike Pintek on KDKA to discuss these legislative and structural reforms.

Meanwhile, government union leaders are attempting to fight pension reform by making deceptive (and debunked) claims, which Matt refutes. He points to pension debt projections for local school districts that simply “do not have enough money in [their] communities to pay”.

Click here or listen below to hear more.

Mike Pintek appears on 1020 KDKA weekdays from noon to 3 pm.

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State-Run Health Exchanges: A Terrible Track Record


Governor Wolf is taking a big risk. His administration is preparing a Pennsylvania-operated Obamacare exchange if exchange subsidies from the federal exchange, or healthcare.gov, are ruled illegal by the U.S. Supreme Court in June.

State-run exchanges have a terrible track record. Of the 17 states opting to run their own exchanges, nearly half face financial trouble. Instead of enhancing competition and making health care more affordable, state exchanges have faced constant cost overruns and technological failures, leading to new taxes and restricted consumer choice.

In many cases, exchange costs are higher than anticipated—largely thanks to labor intensive call centers.

  • Nevada spent $72 million for the initial set up of its exchange and an additional $57 million after new costs emerged.
  • In Colorado, taxpayers are on the hook for a $21 million call center that was originally estimated to cost $13.6 million.
  • Vermont plans to spend almost $200 million to set up its exchange in addition to an estimated $51.8 million in annual operation costs.

Despite cost overruns, some states were still unable to create a working exchange.

As costs exceed projections, states have resorted to new methods to raise revenue.

  • Washington D.C. raises $25 million of its $28 million budget for the exchange through “user fees,” which are taxes placed on consumers’ health plans.
  • The state of Washington also assesses a tax on all health insurance premiums, and the state charges insurers a monthly fee for each exchange user.
  • In Rhode Island, the state legislature is considering a proposal that would assess an additional $11.8 million in “surcharge” taxes.

Many providers are choosing not to participate in state-run exchanges because exchange plans offer lower reimbursement rates than private market plans. Insurers also fear that recipients in the exchange will not be able to continue paying premiums.

  • As a result, consumers face limited choice and restricted competition from providers.
  • Consumers in many states have as few as two choices for health insurance. The Wall Street Journal reports that many hospitals have merged as a result of the negative economic impact of Obamacare.

As state exchanges fail, four states—including Oregon and Nevada—opted to join the federal marketplace. In addition, Hawaii and Massachusetts are discussing a possible transition to federal control. But even the transition to healthcare.gov is expensive, costing around $20 million per state.

Given the poor track record of state exchanges, Pennsylvania should stay with healthcare.gov and urge Congress to replace Obamacare with reforms that work.

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Reforming the Welfare Benefits Cliff


Ending the Cycle of Welfare

Imagine you’re a single mom earning $47,000 a year (or $22.59 an hour) working full-time as an assistant manager at large department store. Your boss pulls you aside with great news; you’re being offered a $1,000 promotion to manager. But your heart sinks when you realize the raise will cost you at least $6,000 in lost child care subsidies because your income is now too high.

Reluctantly you thank your boss, but explain that you can’t take the promotion.

This is a hypothetical situation, but for many families it’s is all too real.

All of us can agree on the need for a social safety net. Unfortunately, some of the well-intentioned programs we’ve created have unintended consequences—specifically, a benefits cliff which discourages work and punishes success.

At this cliff, families can lose tens of thousands of dollars in benefits if they earn just $1 more through work. Too many families are being trapped in a broken welfare system, it’s time for a change.

Representatives Steve Bloom and Tom Murt have put together legislation to address the benefit cliff in child care subsidies.  The House Poverty Initiative, led by Rep Dave Reed and his team, identified the cliff as a barrier to success.

Our social service programs should reward and encourage success, not penalize it. By offering incentives for work and smoothing the benefit structure, we can help move families from poverty to prosperity.

As lawmakers move forward and debate this proposal, we have an opportunity to bring attention to the benefits cliff problem in many other programs. Hopefully, this initiative can become a model for reform, not only in Pennsylvania, but across the country and in Washington DC, which mandates many of the barriers to success.

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134 Billion Reasons to Embrace Debt Reform

MAY 14, 2015  | by BOB DICK

Every Pennsylvanian’s share of state and local debt increased by 20 percent over the last twelve years. In 2002, per capita debt totaled $8,693. Today, the total is a shade under $10,450.

This trend must be reversed. Future generations should not be forced to shoulder the consequences of present-day overspending. A greater debt burden means a lower standard of living and quality of life. 

Pennsylvania State & Local Government Debt
Debtor Debt Outstanding Per Person
Total State $50,371,095,000 $3,939
   State $10,899,795,000 $852
   State Agencies & Authorities $39,471,300,000 $3,087
Total Local $83,229,451,000 $6,509
   School Districts $26,382,245,737 $2,063
   County/Municipal/Twp/Other $56,654,115,000 $4,431
Total  $133,600,546,000 $10,448
Sources: Governor's Executive Budget (http://www.budget.state.pa.us) December 2014 data; PA Dept of Education (http://www.pde.state.pa.us) June 2013 data; U.S. Census Bureau (http://www.census.gov) 2012 data

Acknowledging the importance of reining in state debt, a group of lawmakers introduced four pieces of legislation to begin chipping away at the nearly $134 billion behemoth. The following bills are the result of work done by the House GOP’s Debt Working Group:

  • House Bill 928: Establishes annual borrowing limits on Redevelopment Assistance Capital Projects (RACP) and Public Improvement Projects (PIP).
  • House Bill 929: Brings transparency to the debt issuance process by requiring the governor to provide a detailed report to the General Assembly describing the capital budget projects financed with debt.
  • House Bill 930: Lowers the RACP debt ceiling by $50 million each year starting in 2018 until it reaches $2.95 billion in 2027. A similar reform passed back in 2013.
  • House Bill 931: Requires legislative approval before entering into a leased-back debt or installment purchase agreement.

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The Monster at the end of this Blog Post


Grover Pension Monster

One of my favorite children’s books is titled "The Monster at the end of this Book." In it, Grover (of Sesame Street fame) pleads with the reader not to turn the page, or else you will unleash the horrible monster. As it turns out (Spoiler ALERT), lovable furry old Grover himself is the monster, and all is well.

Children are entertained by Grover's protestations, but never frightened by all his warnings against turning the page, as they are quite silly.

Similarly, government union leaders are making dramatic but misleading objections against public pension reform. Their scary rhetoric—that lawmakers are "stealing retirees pensions," that pension reform will "cost taxpayers billions," that legislators are "destroying the middle class" and "taking away retirement security"— has been debunked and should not be taken seriously.

In reality, pension reform ensures the integrity of government employees' retirements and saves taxpayer dollars.

Thankfully lawmakers in Pennsylvania have, like children reading "The Monster at the end of this Book," pressed on with pension reform, understanding that the most dangerous course of action is to do nothing.

Today, the State Senate passed Senate Bill 1 (read our news release on that), by at 28-19 vote. SB 1 would create a hybrid system, with a defined contribution plan and a cash balance component, for all new hires. Yesterday, the State House advanced House Bill 727, which would offer a defined contribution plan for all new hires.

Pennsylvania should follow the lead of 18 other states that have moved to a defined contribution or hybrid pension plan—without seeing the horrors claimed by union leaders—delivering affordable and predictable retirement benefits, which can’t be politically manipulated or underfunded.

See Commonwealth Foundation’s pension reform toolkit for more information on pensions.

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Audio: Bills Shine Light On Union Contract Negotiations


Public sector union contracts are a huge cost for the state government, and they have also become a conflict of interest for Gov. Wolf. He will be negotiating contract deals with 16 unions­–which contributed millions of dollars to his gubernatorial campaign–behind closed doors, but some legislators want to open these doors to the public.

CF’s president & CEO Matt Brouillette recently spoke with Dom Giordano on Talk Radio 1210 WPHT in Philadelphia about several transparency bills that passed in the state Senate.

As Matt points out, SB 644, would put "a price tag on what the governor and the unions have negotiated” by empowering the Independent Fiscal Office to estimate the costs of public sector union contracts prior to ratification.  

The second bill, SB 645, requires public sector collective bargaining agreements to be posted on state, school district, or local government websites two weeks prior to signing–giving the taxpayers a chance to see government union contracts before they have to pay the bill.

Listen below or click here for the interview. 

The Dom Giordano Show airs every weekday from 9 am – 12 pm. 

Read Matt's op-ed Wolf Negotiates Billions with Unions Who Gave Him Millions for more.

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House Expands Indispensable Scholarship Programs

MAY 12, 2015  | by JAMES PAUL

In a sweeping, bipartisan vote, members of the Pennsylvania House of Representatives approved a substantial increase to the state's cherished scholarship programs—the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC). Rep. Jim Christiana’s House Bill 752 increases the EITC cap by $70 million and the OSTC cap by $30 million.

It’s hard to overstate what an additional $100 million would mean for low- and middle-income families in Pennsylvania. Should this legislation be signed into law, tens of thousands of new students will be afforded the opportunity to receive a high-quality education.

HB 752 opens the door for more children like Hudson, whose OSTC scholarship allows him to attend and excel at Philadelphia Classical School, and Kaiden Myers, who attended the Westwood School in Philadelphia with the help of the EITC.

All eyes now turn to the Senate—and ultimately the governor—to follow the House’s lead and ensure that more families reap the benefits of these valuable school choice programs.

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It's Not Enough Just to Say No...


"It's not good enough to just say no and continue with the same old same old." So said Gov. Tom Wolf during his budget address, making clear his administration is committed to finding solutions, compromising, and working with both Republicans and Democrats to improve Pennsylvania. 

Unfortunately, the governor isn't practicing what he's preaching. 

Angela Coloumbis of the Inquirer reports that Wolf's spokesman Jeff Sheridan has emphatically repeated Wolf's opposition to Senate pension reform legislation and other Republican ideas to end business as usual in Harrisburg. 

As I point out in a recent letter to the editor, Gov. Wolf needs to stop blocking transformative reforms—like liquor store privatization, pension reform, and the Taxpayer Protection Act—critical to achieving prosperity for all Pennsylvanians.

I’m disappointed to see Gov. Wolf’s spokesman Jeff Sheridan accuse Sen. Bartolotta (Governor wants to reinvest in higher education, April 29) of having a “profound misunderstanding” of middle class families, while at the same time misleading readers about how Gov. Wolf’s proposal harms those same middle class families.

Sheridan conveniently fails to mention that Wolf proposed taxing university fees, textbooks, and meal plans—to the tune of $150 million per year.

Middle class students will pay the brunt of that burden—as will middle class families paying more for nursing home care, day care, diapers or utility bills. A recent study by the Independent Fiscal Office notes that every income group will pay more under Wolf’s tax increases.

While Sheridan repeats campaign slogans about changing the status quo and blames the previous administration, Wolf’s budget calls for more of the same. Following decades of spending increases and tax hikes, Pennsylvania’s tax burden rose to the 10th highest in the nation. As a result, Pennsylvania has ranked among the worst states in job, income and population growth for 40 years.

Ironically, it is Gov. Wolf who is saying “no” to needed reforms to get our state on the right track. He has already threatened to veto liquor store privatization and has indicated opposition to pension reform. Wolf has also been silent on Sen. Bartolotta’s own Taxpayer Protection Act—which would limit the growth of state spending and unleash the private sector.

Higher taxes and spending won’t fix Pennsylvania’s economy, and it’s time for Gov. Wolf to stop blocking reforms that will offer prosperity for all Pennsylvanians.

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