President Donald Trump has signaled federal workforce reform is a high priority as a means to cut wasteful spending and improve the delivery of public business. It is a promising that the new administration is seeking guidance from Wisconsin Gov. Scott Walker, who successfully championed public-sector reforms in his state that got the state’s pension system fully funded and increased labor union accountability to workers.
Trump should also look to Iowa, which recently passed sweeping collective bargaining reforms, and Missouri for reforms, since it seems poised to pass strong reform plans this legislative session.
Walker’s famous Act 10, part of a package of collective bargaining reforms, requires government employers and employees to share the cost of funding public employee pensions. Prior to the passage of Act 10, unions had negotiated collective bargaining agreements where government employers agreed to make nearly all contributions to the retirement system. In 2010, the year before Act 10 was enacted, state and local government employers made 99 percent of all contributions to pension system. Now, as Politifact Wisconsin noted, “public employees contribute 6.8 percent of their salaries for their pensions and their employers contribute the same amount.”
Requiring government employees to contribute a reasonable part to their own pensions resulted in massive taxpayer savings. Analysis from the MacIver Institute, a Wisconsin based free-market think tank, found that Act 10 saved the Badger state “$3.36 billion by requiring government employees to contribute to their government-backed pensions.”
In addition to savings, Wisconsin is the only state with a retirement system deemed fully funded, which is a huge benefit to workers by making it all but certain that they receive their full pension benefits in retirement.
The federal government could achieve significant savings if federal employees similarly shared pension expenses. Currently, most federal employees contribute very little toward their pensions, as research by the Heritage Foundation shows. Most federal employees, those hired before 2013, only pay 0.8 percent of their paychecks toward their pension system. Taxpayers foot the rest of the remaining 13.2 percent of payroll costs that fund the federal employees’ defined-benefit pension system.
Another priority reform for the Trump administration to pursue is periodic union recertification elections. That would increase worker freedom in the federal government and make government unions more accountable to the people they seek to represent. As in the private sector, it is likely that most federal workers never voted for the union that represents them. Yet regular elections are crucial to guaranteeing that the majority of workers are represented by the union of their choice, instead of merely inheriting a union chosen by past workers.
Finally, Trump should make it a priority to eliminate a practice known as union “release time,” or “official time” at the federal level, as Missouri seems poised to do this year. The federal government and a vast majority of states grant public employees paid time off to perform union activities like lobbying and attending union conventions. This amounts to a massive subsidy to government unions at the expense of the taxpayer.
According to the Office of Personnel Management, official time at the federal level cost taxpayers $157 million in 2012, which is the latest year data are available. This amounted to federal employees spending 3.4 million hours on union activities in 2012. While these are staggering numbers, the costs and hours is almost certainly higher. In 2014, the Government Accountability Office issued a report that found at four of the six agencies it examined official time costs are about 15 percent higher than the OPM cost estimates.
The real cost of official time is actually higher. OPM only calculates the salary and benefits of employees on official time. However, there are other costs associated with official time. The Social Security Administration is required to report these extra costs annually. In fiscal year 2015, the value of official time in salary and benefits was $13.2 million and the cost of travel and per diem, office space, telephones and supplies, interest and arbitration related to official time was $2.2 million. These extra official time costs accounts for 15 percent of the total official time cost at the Social Security Administration.
If the Trump administration and congressional Republicans are serious about government union reform, they should look to states in the lead, like Wisconsin, Iowa and Missouri.
