WV Center on Budget and Policy > Blog > Public Employees

Let’s Not Go Backwards on Paying Social Workers

Last week, the State Senate passed a bill (SB 559) that would except DHHR social workers from the requirement to be licensed by the West Virginia Board of Social Work. According to the West Virginia Department of Health and Human Services, this bill aims to get more people to apply for positions within Child Protective Services (CPS). While CPS has suffered from retention problems and high levels of caseloads, eliminating licensure could put vulnerable children at risk and remove important accountability standards. Furthermore, this proposal neglects to deal with one of the central underlying problems, which is low pay. As former State Senator Donald Cook pointed out about CPS workers: “They’re underpaid.  They’re overworked.” 

According to the Bureau of Labor Statistics (OES), social workers in West Virginia are paid less than their counterparts in almost every state. In 2013, the average salary for child social workers that worked with children was just $31,700 – ranking last in the country.  Mental health and substance abuse social workers where paid even less in West Virginia on average, just $30,300 per year – also ranking last in the nation. While the average salary of healthcare social workers was $42,780 in 2013, this was lower than all but two states.

social workers pay child

Social worker pay 2

Social Workers Pay 3

While it’s good that DHHR is concerned about staffing shortages, eliminating accountability standards for social workers is not going to solve the problem and could make employee turnover worse. Let’s hope the House makes major changes to the bill and that we take concrete steps in the future to ensure that all DHHR social workers get paid a decent wage for their hard and important work. Instead of a race to the bottom, we need a race to the top. Our children deserve no less.

 

Newsflash: Not All Government Employees Work for the State

In an awkward criticism, gossip columnist Phil Kabler at the Charleston Gazette has taken exception to our monthly Jobs Count report, which is a straight forward report on the employment and unemployment numbers in the state, with the data coming directly from the Bureau of Labor Statistics.

Phil’s point of contention with last month’s Jobs Count is that government employment had fallen by 5,700 jobs between January and November of 2012. Phil finds this hard to believe because “the number of permanent state employee FTE positions grew from 37,709 in January 2012 to 38,149 as of December,” therefore most of the jobs lost are simply temp jobs, and the loss is much ado about nothing.

While Phil is right that the job numbers reported in Jobs Count include both full time, part time, and temporary positions, he seems to be forgetting that there is more than one level of government employing people in the state. While the state of West Virginia may employ 38,000 FTE employees, the lion’s share of government workers in the state are school teachers and service personnel that are employed at the county level.  The  federal government also employs people in West Virginia, not to mention the state’s 55 county governments, and 200+ municipal governments. In fact, only about one-third of the state’s 149,500 “government” employees are employed by the state government.

So Phil is right when he guesses that most of the 5,700 jobs lost were not full-time state government jobs, just not for the right reason. If Phil had  checked our sources, he would have found that the BLS reports (and Workforce WV) that most of the lost government jobs were local government jobs.  

Government Employment, West Virginia, Seasonally Adjusted

 

Jan-12

Nov-12

Change

Federal

23,300

23,400

100

State

51,000

49,000

-2,000

Local

80,900

77,100

-3,800

Total

155,200

149,500

-5,700

Source: Bureau of Labor Statistics, Current Employment Statistics

Our Jobs Count report “claimed” 5,700 jobs were lost in the government sector because that’s what the data show. There’s no bending, twisting, or “comparing apples to oranges.” We compared total jobs in January 2012 to total jobs in November 2012 for each major employment sector. Phil is trying to compare state government with total governments. If anyone is comparing apples to oranges, it’s him.

OPEB Cap Costs Public Employees $5 billion

In his column this morning Phil Kabler briefly noted that the result of capping the state’s contribution to retiree health insurance was “that the burden was shifted onto current and future retirees.” This is something I wrote about last week, so it was nice to see this basic point acknowledged in print. Another point that has been absent from the debate on OPEB is how much in compensation public employees will lose because of PEIA’s decision to cap the retiree subsidy provided by the state.

The chart below provides some estimates.

In FY 2011, the state is estimated to pay approximately 67 percent or $148 million of total retiree health care costs, while retirees will pay about 33 percent or $72 million. With the 3.3 percent growth cap in place, by FY 2030 the state will only be paying about 9% of retiree health costs, while retirees will have to pay 89% of the costs (of course, no retiree will be able to afford this cost, but that is another discussion).

Over the 20 year period, the total costs of retiree health care is $13.7 billion. If the state continued to pay 67 percent of total costs (green bars) like it does today it would cost $9.2 billion over this 20 year period. With the cap in place (red bars), the state will pay only about $4.1 billion over the next 20 years for retiree health care costs.

If no other funding source is found to offset the cost shift to public employees, participating public employees will lose about $5.1 billion over the next 20 years in compensation. Of course, even if a funding source is found it is highly unlikely to defray even half of the $5.1 billion in lost compensation.

Declining Public Sector has Hurt Recovery

Our recent Jobs Count report showed that the economy has added zero net jobs since June and the unemployment rate remains above 8 percent. As a previous post had noted, the momentum the economy seemed to have been building during the recover has been lost over the past few months. However, one sector of the economy has been performing much worse than the rest, and its poor performance has been a drag on the recovery.

West Virginia’s public sector employment, particularly state and local government workers, has dropped off during West Virginia’s recovery. Since February 2010, when West Virginia’s employment bottomed out, state and local government employment has declined by 2,100 jobs, or -1.6%, while total employment has grown by 13,100 jobs, or an increase of 1.8%.
 
So not only has a declining public sector held down employment, its decline has accelerated. The chart below compares average monthly growth rates for the 18 months before the beginning of the recession in West Virginia, the past 18 months since employment bottomed out, and the past three months for which there has been no net job growth.
 
Source: Bureau of Labor Statistics
 
While private sector employment has grown at twice the monthly rate it did in the 18 months before the recession, state and local government employment been on the decline. And that decline has accelerated recently, while the private sector has limped along, unable to make up the difference. As a result, the recovery has stalled.
 
Maybe a proposal to prevent further decline in public employment isn’t so absurd.

Putting OPEB in Budget Context (Again)

The Daily Mail reported today on the fate of legislation to address the state’s OPEB liability and the future of public employee retiree health care. In doing so, they may have confused readers by not putting the OPEB issue in context for its readers.

For example, the lead paragraph states: “Ask West Virginia legislators if they want to pay down or reduce the budget-busting $8 billion the state owes retired public workers for health care over the next three decades, and many will say it’s one of the top issues they face.”

Is OPEB busting the budget? What percent of the budget is retiree health care? Readers need answers to these questions before they can conclude it is a “budget-buster.”

In FY2012, retiree health care (PayGo) will make up about 3.8% of General Revenue spending or about $145 million (About $20 million of this will come from local agencies, lowering amount to 3.3%).  In 1995, retiree health care (PayGo) was about 2% of General Revenue spending. So yes, it is growing – just as all health care related expenditures – but you’d be hard pressed to call this “budget-busting.” For example, this is nothing compared to Medicaid/Medicaid/CHIP at the federal level. These social insurance programs make up 21% of the federal budget. Or take corrections. In 1992, corrections made up 1.1% of direct state government expenditures, compared to 2.8% in 2009. This is a far larger growth than OPEB costs, but I haven’t read one article about “budget-busting” spending in jails and prison.  This is not to say that controlling retiree health care is not a serious
budget concern for the state, it clearly is and we should do everything we can to reign in those costs.

Another point of constant confusion in the article is the assertion that the “state owes” retired public workers $8 billion over the next 30 years. The state is under no contractual obligation to provide these benefits (we don’t have collective bargaining) and they can be taken away by the PEIA Finance Board (this already happened to new hires starting 2010). If the state does owe public employees this money, why not give every covered public employee (75,000) an average check of $107,000 and get rid of the subsidy. This because the $8 billion is not a “fixed” dollar amount like a pension and that we do not owe this money today. Nor is this a “debt” of the state. As Moody’s stated last month in an AP article:

“”While we do include OPEB liabilities in our analysis of states, we have not included them in the current report because they are less binding under state law,” the report explained. “Once accrued, public pension benefits are protected, contractual obligations, sometimes shielded by specific pension provisions in state constitutions.” West Virginia’s OPEB liability is considered a looming problem for the state. But for its analysis, Moody’s concluded that pension shortfalls “have an irrevocable, long-term nature that resembles bonded debt.

 
Let’s hope someday, somewhere, someone puts OPEB in context.

The $8 Billion OPEB Liability is Not Due Today

How many people understand this point? My guess, not many. An article in the Charleston Gazette this morning may help:

“The unfunded liabilities would be a problem if all state and local retirees went into retirement at once, but they won’t. Nor will state governments go out of business and hand underfunded pension plans over to a federal regulator, as happens in the private sector.  State and local governments are ongoing enterprises.”

The same could be said of West Virginia’s OPEB liability, which may be addressed this week. The $8 billion OPEB liability reflects the total projected cost of retiree health care benefits over the next 30 years. It is important to recognize that the growth of retiree health care costs is not happening in a vacuum; state and local budget will also grow over the next 30 years.

For example, the total shortfall in funding is $7.6 billion in FY 2011. In 2009, West Virginia’s GDP was $63.3 billion. Using a growth rate of 2.6% per year (which is modest given our 12-year annual state average of 4.3% from 1997-2009) and a 3.0% discount rate, our total output over the next 30 years would be about $1.8 trillion. Of this amount, the OPEB liability represents about 0.42% of future income. This implies that increased revenue equal to 42 cents of every $100 of future output would be enough to eliminate the shortfall. As I noted here, this does not imply that we should do nothing to control costs or that we should not find additional revenue.

Another clarifying point made in the above article is the crucial difference between state governments and the private sector. Since private sector employers cannot raise new revenue easily, it makes sense to worry if pensions and OPEBs are not fully prefunded. A state, on the other hand, does not “go out of business” and they can always raise revenue through taxation (although this can be difficult).

WV State and Local Workers Rank Almost Last in Pay

There’s been considerable press over the last couple of years about the costs associated with the retiree health care subsidy (affectionately know as OPEB or Other Post Employment Benefits) offered to state and local employees. I’ve written about it several times in the past.

The basic story is that this subsidy is too generous and that it’s costing the state too much now and into the future. While I agree with the second part of this argument, I think some policymakers and the media have failed to recognize just how little we pay public employees in West Virginia. In fact, how many people know that we rank almost dead last in average annual pay in the nation?

Source: BLS, 2009 QCEW: www.bls.gov/cew/