Over the past twenty-four hours, several media outlets, such as the Dispatch and the Plain Dealer, have been reporting on a supposedly “ new analysis” on SB 5 done by Kasich’s Department of Administrative Services. I say supposedly “new” because although I have yet to see it myself, the press reports seem to contain the very same “analytical” claims by the same agency we dissected all the way back in FEBRUARY.
But even as the Kasich Administration tries to highlight what they claim (through faulty statistics) are the savings of the bill, they’re equally trying to deny that SB 5 creates these savings by cutting wages. As Rob Nichols said in the Columbus Dispatch:
Kasich spokesman Rob Nichols said the governor is correct – the bill does not prescribe what government leaders pay their workers.
"Nowhere in the bill are there any instructions on what an employee should be paid," he said. "In fact, the bill preserves the right for employees to collectively bargain their salaries with their employer."
The Dispatch piece, in fact, seems to point out many of the same flaws I pointed out back in February… in criticizing the last Dispatch story that reported virtually the same claims without question.
But before we get to the similarities between what the Dispatch wrote today and what we wrote in criticizing the Dispatch’s February reporting of the same or eerily similar claims by DAS, there’s a real simple problem with Kasich’s argument: it conflicts with a major line of argument made by both Nichols and Kasich during the campaign.
"This bill does not cut anybody’s salary."- Gov. Kasich, repeatedly.
Kasich’s argument is that the savings created by eliminating longevity pay and step increases is not a cut in wages because those promised increases have yet to be realized. Yet, isn’t this the same John Kasich who repeatedly called Ted Strickland a “tax raiser” because Strickland temporarily stayed (until the end of his term) promised income tax cuts before people were expecting to receive them? Using the same line of reasoning he used in regards to taxes, John Kasich the Candidate would argue that John Kasich the Governor is, in fact, cutting wages. And unlike Strickland, Kasich’s move is permanent.
And Nichols claim that government won’t dictate instructions on what an employee should be paid is also totally false. Perhaps Nichols should read the bill and find in its 500 pages the provisions that give DAS the authority to proscribe rules determining how “merit pay” will operate, which means an unelected government bureaucracy will be providing instructions on what an employee should be paid.
And that, of course, raises another flaw in the DAS analysis. It considers the “savings” by eliminating the step increases and longevity pay being eliminated, but it doesn’t factor in the raises in wages people should get under SB 5’s ill-defined and currently entirely theoretical “merit” pay system. After all, someone in government besides Jai Chabria and Beth Hanson is still going to get a raise, right?
Unless those who get raises under the system do so at the expense of their co-workers in a revenue-neutral fashion, “merit” based pay will still result in increased government payroll spending. You cannot honestly call something a savings until you factor in all of the fiscal consequences of a change compared to the status quo. DAS’s math is missing half the equation—the part that offsets the savings with the increases in expenditures under the new system—resulting in yet another error that grossly overstates the potential “savings” to taxpayers.
Since the DAS is sophisticated enough to realize this, we must assume that their “analysis” makes an assumption that SB 5’s “merit pay” system will, in fact, be revenue-neutral. Therefore, to those employees who don’t financially benefit from SB 5’s “merit pay” system, who are losing out on step increases and longevity pay, they are definitely taking a pay cut under SB 5.
Add that to the number of errors in the analysis that have been pointed out by the Dispatch today and us in February.
The Dispatch said:
But what’s not said in the analysis is that those savings would not occur right away. The new law would not affect workers until their current contracts expire.
The bill cannot save any money right now because it cannot impact collective bargaining agreements that are still in place.
Which is funny because my post and Joseph’s post both point out this obvious error was to correct the same Dispatch reporter who wrote the story in February who wrote today’s story correcting it.
The legislative liaison for the Ohio Department of Administrative Services, himself, revealed one of the biggest holes in his own agency’s analysis of SB 5’s purported savings:
Asked if the pension or health-insurance changes could be considered pay cuts, Kaman said local governments "tcan bump up their wages to make up for that." (emphasis added.)
That would be the “absorption rate” issue we identified way back in February. Any claims of savings from SB 5 relies on the assumption that organized labor does not obtain any increases in wages for their members to offset SB 5’s mandated increases in employee contributions to benefits.
The Dispatch said today:
The department used 2010 data, though state workers that year did not get step increases as part of wage concessions. The estimate is based on what they would have gotten had the steps been in place.
We said in February:
Over 35%, over a third, of the savings the Administration claims SB 5 would save the State is in step increases. However the “analysis” concedes that these savings can, and already have been obtained, through the current collective bargaining law.
The Dispatch also reported today that the DAS’s analysis assumes that step increases at the local level are no different than step increases at the state level. This, too, turns out to be a majorly faulting assumption on DAS’s part.
The problem is that until merit pay is implemented and we see how much the additional employee shares are offset with wage increases, the true number of “savings” created by SB 5 cannot be accurately determined. However, between this site and the Dispatch, there have been five major errors identified in the DAS’s analysis, and every single one of these errors indicate that the actual number is substantially less than the Administration is claiming. In fact, just one of these errors alone suggest the analysis overstates the savings to the State by one-third.
Whatever the true number may be, the purported savings of SB 5 is nowhere close to the number that the Administration is claiming under DAS’s deeply flawed, and frankly, amateurish “analysis.” Kasich’s DAS report is not analysis; it’s propaganda, hoping that Ohioans are duped into buying overinflated claims of savings while Kasich spins madly to avoid those same Ohioans from realizing that his savings come at the expense of their neighbors’ paychecks. Kasich has improved government efficiency, though. He’s now able to tell two lies at once.
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