Saturday, November 17, 2018

How to Bail out the Ailing Local Governments

Bailing out the Ailing Local Governments

In order to bail out the ailing ones (and prevent it from snowballing through the system in the future) we need a total re-invention of the Local Government System, in line with the private sector.
1. Replace the existing Pension system with a 403 Matching System (match up to 6%), thereby preventing any unfunded liability. Unfunded liability poses serious financial threats to many state and local governments.
2. ​All Paid Time (Vacation, Sick, Personal days, etc.) must be reset each year (use it or lose it). No carry over! Though sounds trivial, this causes a serious problem to many large municipalities, especially when the exit door gets crowded.
3. All Overtime and Comp Time must also carry the same annual reset, with no cash conversion whatsoever! This adds more fuel to the regulation (#3) fire. At least, the carryover needs to be nipped in the bud. 
4. Introduce Mandatory Retirement at age 67 (when Social Security and Medicare come into effect), with an incentive to retire early at age 62 (as the first SS qualification). Make cheaper forms of healthcare (e.g., HMO) free for the retirees, upping the ante (retiree contributions) for the non-HMO healthcare insurances. Unions must co-share retiree (who contributed to the unions for a period of time) premiums with the government. 
5. Minimize Civil Service hiring. Use "Temps" to fill seasonal requirements and "Leased" employees to cater to the long-term requirements.
6. Outsource! Outsource! Outsource! Start outsourcing all non-essential services including analytics/modeling, research, assessment, appeals review, data collection, etc. (those private vendors face true competition in the marketplace so they are forced to hire the best and the brightest, hence much better value to the taxpayers!).
7. Take away all decision-making powers from the senior Government employees (pertaining to high value projects, outsourcing, etc.) in order to minimize fraud, nepotism and post-retirement revolving door options. Establish and empower public-private committees to vet and award such projects and contracts. 
8. All Civil Service Interviews must be conducted by a duly elected/selected external body (Professors, CEOs, Industry Experts at the EVP/SVP level, Trade Association Chiefs, etc.), with right to reject ALL (needed!).
9. All Civil Service jobs requiring a college degree must have two-part tests: Part-1: College level Math & English, leading to Part-2: Regulation. Even re-qualification exams (say every five years) could be considered (Civil Service must not be a lifetime entitlement). 
Of course, the counter case could be equally compelling. As long as these governments have unrestricted access to the "eternal" cash cow called homeowners, none of this might matter. Yet, the local governments must fight to institute these changes. For too many, it's already a race against time!  

-- Sid Som, MBA, MIM
President, Homequant, Inc.

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