Saturday, May 1, 2010

California's government

Looking for waste

Easier blamed than found

Apr 29th 2010
From The Economist print edition

CALIFORNIA’S candidates for governor, especially the two Republican ones, assign the blame for California’s ongoing budget crisis with little difficulty. “I am running to rid our state government of waste, duplication and inefficiency,” declares Meg Whitman, the Republican front-runner, pledging in her policy platform to “get control of runaway spending”, primarily by cutting the state workforce. Steve Poizner, her rival, claims that he is the only candidate “who has actually cut waste from state government”, in his current job as insurance commissioner.

Alas, there seems to be much less of this waste than the politicians like to claim, at least as far as head counts are concerned. As of 2008, the last year for which comparisons are available, California had 108 state employees for every 10,000 state residents (see chart). That has hardly changed in a decade and is far leaner than the average (149 state workers per 10,000 residents) of America’s other states. Only Florida and Illinois have fewer state workers relative to population. Even if employees in local government, such as teachers, are added, California’s public workforce is still among the nine leanest.

Ms Whitman’s claim that this workforce might be easily reduced seems especially facile when considering where state government has been growing and shrinking. The California Budget Project, a mildly left-leaning think-tank in Sacramento, has calculated that the state government’s largest employer, with 38% of the employees, is the university system, a source of pride for four decades that is now struggling as state funding is cut. None of the candidates wants to eat the seed-corn of California by hurting the universities.


Posted by Steve Sinai


Kathy Meeh said...

Good source article Steve. So, rule-out number of State employees per 10,000 as part of the CA economic problem, except for employee salaries, overtime, health/cafeteria plan cost, and trailing pension for a lifetime. CA STATE SENATE BILL 919 is a partial attempt to deal with some of that expense.

Local example, 1) our city is understaffed by county standards, but 2) the existing city council voted themselves a cash increase in 1996 when opting not to take Cafeteria Plan health related benefits. Such a provision to "take the money if you don't take benefits" is rare anywhere in private industry or municipal government. Funding health related and pension benefits for part-time workers is in itself very generous.

So, is this a good use of money? Shouldn't this policy be reversed to "the county average" on a "use it or lose it" bases, and "if you already have an existing plan, chose one" basis?

Of course, funding benefits for government workers is not just a USA issue. Currently the Euro Alliance will bail-out Greece with restrictive conditions. Germany, the largest contributor, is demanding reforms. The German government pension formula for example is 48% of salary over 45 years, whereas Greece funds 98% of salary over 35 years. USA-- States, Counties, Cities have similar needed pension/entitlement reform issues. Check this out CA two major pension funds $61 BILLION UNFUNDED LIABILITY .

Anonymous said...

Total compensation per employee is a much more relevant stat than the one supplied in this posting. How do you think Calif. rates on that one?

Another interesting stat would be total compensation of all state employees divided by the number of citizens who actually pay state income tax. Again, me bets "We're Number One!".

The Gunslinger said...

Steve, I have the feeling that what is a "mildly left leaning" think tank to you is what I would undoubtedly call a "rabidly Marxist" one!

And I submit that it is not the universities that anyone is loathe to hurt...but rather the UNIONS to whom every single politician in California is beholden, and without whom they cannot be re-elected...and who have every single California taxpayer in their cross-hairs for their lavish salaries and benefits and their obscene pensions.

Foxhound said...


True Dat!

Steve Sinai said...

Gunslinger, I wasn't trying to make any particular political point when I posted the story. I was surprised that the state had so few employees, and I thought the article was interesting enough to be worth posting.

If we're going to fix the state's (and city's and country's) problems, we need a realistic understanding of what's causing those problems. Getting all wing-nutty and placing the blame on one group, e.g., unions, isn't going to solve anything.

The article referenced a "mildly left-leaning think tank," but the article was also published by The Economist (the one magazine I subscribe to), which most people would classify as a mildly right-leaning publication.

There was a discussion on Riptide last week about government unions, and people would probably be surprised at how little support government unions got from Riptide's generally lefty-readership.