Corona virus and state budget thoughts The piece I wrote a few weeks ago based on one of my international trader sources is being bore out as the Italian outbreak is being better understood. The Chinese connection has now been better publicized and in fact the first two patients were Chinese. Sweden is going to be the country for all others to benchmark against in how you deal with a pandemic. They have chosen to rely on individual responsibility and have not shut down bu...siness or public gathering. So far they have not been impacted any more or any less than other countries. At least there is now a comparison to keep the "we were right no matter the outcome" game from being played by our politicians and bureaucrats. Sometimes there is an opportunity in state budgeting for a win-win-win. The budget crisis may give us one. State work forces in every state I have studied are heavily weighted towards elderly workers. The structure of benefits and advancement almost guarantee that outcome but that is for another discussion. However, given that reality states should consider a voluntary buy out or what is called a VoBo of any state worker over 65 by giving them additional "years of service". State retirement systems using defined benefit types of retirement have an equation that rewards workers for more years of service hence offering more years to those workers is a powerful incentive. For example five years in a 2% multiplier system creates a ten percent increase in retirement benefits. If they are over 65 they automatically qualify for Medicare thus there is no need to offer any COBRA or extension of health benefits. By reducing the age of the workforce the state health insurance costs are reduced giving the taxpayer and the budget a break without harming the retiree. There is an additional savings in the fact the older workers are some of the highest paid. I could go into a long discussion of how you replace them without increasing the number of FTEs but that is for another time. That 'hit' on the retirement system of those additional years is a "future value of a dollar" play i.e. a dollar in the future is less costly than a dollar today and if they manage the savings to the state it is not a true cost at all in the long run. I would guess five years is about the right amount to maximize the number taking the VoBo and the structure I suggest minimizes the costs to everyone concerned from state worker to state budget to taxpayer hence the win-win-win.
from Corona virus and state budget thoughts The piece I wrote a few weeks ago based on one of my international trader sources...
