In Brief
Recent municipal bankruptcies show that cities can make cuts to public benefit payments after bankruptcy. This brief outlines the benefits at risk and the emerging case law in the municipal bankruptcies in Stockton, CA, Detroit, MI, and Central Falls, RI.
Introduction
Historically, it’s been a rare occurrence for a city to go bankrupt. Between 1980 and 2010, there were 89,500 municipalities in the United States; but in the same time, only 239 of these entities filed bankruptcy (link to: http://www.huffingtonpost.com/mike-barnhart/municipal-bankruptcy_b_2777010.html). In recent years, however, municipal bankruptcies have been on the rise; and, they have become highly visible cases hitting such cities as Stockton, CA, Detroit, MI and Central Falls, RI.
The increase in bankruptcies has led to a deep concern, shared by public employees, as to whether they will receive benefits following a municipality declaring bankruptcy. Given the rarity of such occurrences in the past, there is no clear answer to this issue. Bankruptcy judges are deciding cases with relatively little precedent to rely upon. If the recent increase in municipal bankruptcies continues, it’s uncertain as to what the future holds for: (1)
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This is because the payment of these benefits represents a debt that a municipality is obligated to pay. Depending on the specific facts of a Chapter 9 Bankruptcy case, this debt can be quite substantial. The creditors of this debt are retirees and workers. These creditors have likely worked for a municipality (pre-bankruptcy) with the expectation that they will receive benefits upon retirement. But once a municipality files for Chapter 9, an important question remains as to how a municipality will balance obligations and expectations. Employee benefits can either be honored in full, or, they could be cut to free up funds to pay other creditors (e.g., a municipality’s
The municipal restructuring in Ontario from 1996 to 1999, whether voluntary or involuntary, was the most comprehensive process of municipal reforms since the Baldwin Act of 1849 (Frisken 30). After the election of Harris’ Conservative government in 1995, municipal reform took on a life of its own as it was followed with substantial activity between 1996 and 1999 (Sancton 135-56). This research paper looks to categorize, describe and evaluate the substantial activity that took place between the province and its municipal subordinates. While other papers have argued whether the change of the fiscal relationship was to benefit the province or if the structure of local government had simply become outdated, the issues of why the reforms occurred is not the focus of this research. However, what this paper will evaluate is whether the substantial activity made any long-term changes in the system by outlining the numerous reforms and examining their impact. This paper will begin by assessing the financial reform, which was the starting point for more extensive changes, followed by functional, structural and legislative reforms during 1996 to 1999.
Municipal control or an alternative delivery method? This is the question that has intrigued all levels of local government and created intense debates between taxpayers across municipalities. The services that municipalities provide are often vital to the existence of a local area. The issues of accountability, cost savings, quality of service and democracy often arise when choosing the best options to deliver services to a municipal area. In recent years the concepts of privatization, alternative service delivery and public-private partnerships are often promoted as ways cut down on overburdened annual city budgets and promote a higher quality of service to citizens. Municipalities have historically always provided basic services such as fire protection, water purification/treatment and recreational facilities. However, would private companies or another municipality be able to better deliver the same services more efficiently or at a lower cost? The city or town often provides a political grass roots approach to most local problems. Municipalities are better positioned and have a wider scope to provide services to their constituents in order to ensure quality of service that does not erode accountability and transparency, or drive the municipality deeper into debt.
Commonly associated with pay for employees, benefits is the second biggest obstacle for management. Like Volkswagen starts employees off at the basic pay the unions would achieve, a similar benefits program should be implemented (Greenhouse, 2014). The passing of the Affordable Health Care Act has made it possible for many citizens to receive coverage but it is basic at best. GMFC should create a plan based off of the Health Care Act and unionized plans and allow for extras to be added on. This allows for employees to pick the benefits package that works best for them.
In the planning process, the health care organization’s first step should be to identify alternative expense reduction measures that can be implemented. Marshall and Broas (2009) and McConnell (2006) state that measures such as hiring freezes, reduced work hours, reduced salaries or bonuses, early retirement, limited use of temporary workers and discrepancy spending should be explored first before resorting to mass reduction in the workforce. Given the numerous legal cases in which employees have accused companies of lavish spending during layoff processes, a company should consider taking expense reduction measures. This would show that the company had explored another alternative before resorting to a RIF, and it would also help employers dismiss employees claims that the RIF was not necessary or discriminatory ( Marshall & Broas,2009) .Whatever alternative expense reduction measures were taken by the company along with the reasons for doing so should also be documented( Marshall & Broas,2009).Documenting the reason for the RIF, should be the next step.
The city’s budget crisis was not a surprise, the City Manager had forecasted the shortfall and brought it to the attention of the city council. Based on the organizational structure, the City Manager clearly had more knowledge and information about the city’s budget, which was his source of power. However, the city council actually controls the resources (money in this case) and how and where to distribute the resource. Both, the City Manager and city council possess authority and power that neither want to relinquish; as a result, the employees suffered. Smithville city leaders needed to come together at the onset of the budget crisis and work together in a direct democratic fashion. When leaders come together and synthesize facts and resources, organizational members can increase the power they exert within an organization (Morgan, 2006). The budget crisis could potentially have been avoided had city leaders made an appeal to the public, explained the situation and offered a reasonable solution to the problem. Moreover, the transparency would have relieved some tension between the City Manager, city council, and the three labor unions. Because the city was not transparent and forthcoming with union leaders, the city negotiators enter the negotiation process giving members false hope of receiving salary and benefit increases when there were none to give. In summary, given the current situation, the City Manager needed to exert his expert power on the budget issue, join alliance with the union leaders, and push the city council to change city charter to implement the sales tax, which would have potentially off-set the budget
Timeline of this case should be clearly organized in order to better understanding this case. In 2009, Poor Son transferred Rich Grandson to Parent. In 2010, Poor Son filed a voluntary petition for reorganization under Chapter 11 of the US bankruptcy code, and Parent deconsolidated Poor Son from statements. In 2011, Poor Son filed an action against Parent seeking to void the transfer of Rich Grandson. In May 2012, the bankruptcy court held a selection meeting in which it considered competing plans of reorganization submitted by four bidders. In June 2012, OtherCo, an unrelated party, became the wining plan sponsor. In July 2012, OtherCo rescind its offer because the bad evonomic condition. In December 2014, the bankruptcy court recommended
Offering employee benefits is one way a company must competes in today’s marketplace to retain old employees and attracts new ones. These benefit packages may range from offering basic health insurance to additional discretionary and perk benefits such as vacation and retirement packages. Benefit packages are often a large portion of employee costs and Federal mandates require an employer to carry and offer certain benefits even if they offer nothing else. Federally required employee benefits make up approximately a quarter of the costs associated with employer offered benefit packages. Some of these mandated benefits include Social Security, Worker’s Compensation Insurance, and the Family Medical Leave Act.
Many public agencies in recent years have followed the trend of privatization, or contracting-out. Activities and functions that were once performed, or services that were once provided, by public employees are now being performed by private sector employees (Lyons). Vehicle towing, health services, police protection, and solid waste collection are among the many services and functions that government has contracted out. A survey in 1995 that was sent to mayors or city managers of America's largest cities (based on population) revealed that only three of the 66 cities that responded to the survey had not privatized any city services. http://fpac.fsu.edu/parbaby/pdf/1997/janfeb/dilger.pdf This trend translates to not only an administrative concerns but a staffing concern faced by many managers.
Many employees when looking for a job or deciding whether to stay with their current employment often considers the employee benefits the company offers.
Schaefer, S. (2013). Detroit files biggest municipal bankruptcy on record. Forbes Magazine, Retrieved from http://eds.b.ebscohost.com.proxy-library.ashford.edu/eds/detail? vid=2&sid=b6189574-03df-4c57-b7ad-a175dc56aebf@sessionmgr113&hid=102 &bdata=JnNpdGU9ZWRzLWxpdmU=
A standing government and a standing army are ones that are in power and prepared to implement force and authority. A standing army comes with a standing government. Thoreau objects to both because they can be easily manipulated and abused by only a few individuals versus allowing the power to come from the people. A wooden gun like an awaiting weapon that can be used when needed and when we give it power but is more for show, which Thoreau related to the government because it is only as dangerous as we allow it to be.
National and state political races often attract the greatest attention from the media and public, but it’s the policymaking local municipal governments that impacts voters on a day-to-day basis. Cities, control a number of vital public functions including public safety, fire and police protection. Many questions have been raised about whether elected officials in municipal government have the tools to respond to their constituents or whether forces beyond their control effectively determine policy options. The problems facing local governments are numerous and immense, and most of our citizens and government officials don’t know how to solve them. Local government officials move quickly up and down the administrative ladders of municipalities,
James Haworth MPS 526 9/19/2017 Challenges Facing Local Government Local governments historically face numerous and varied challenges, and the City of Chicago is no exception. In fact, by most accounts, The City of Chicago tops the list of local governments plagued by overwhelming and often debilitating problems. If a Chicago resident was asked what he perceived as problems and challenges in his city, no doubt he would mention gangs and murders in many south and west side neighborhoods, political corruption and a lack of confidence in Chicago politicians, rising taxes on the middle class, and a struggling public school system. While these issues are important, and indeed challenges, they are more likely symptoms of or results of the greater
The organization is able to manage a high coverage of risks at relative low costs owing to the availability of highly skilled personnel in the company’s team of employees. This benefit also brings about another advantage of easing the financial burden of the organization (Johnson, 2016). Besides, effective employee benefit system offered by the organization could improve the general productivity. This benefit is attributed to the fact that employees tent to be more effective when they are given assurance of job security. In addition, workers become more productive when they and their families are given the desired security by the employer. The other benefit to the organization if it employs an effective compensation and benefits system entail benefits from premiums (Wayne, Shore, M., Bommer, & Tetrick, 2002). These premiums are typically tax deductibles as corporate expense. As such, a company that has an effective compensation and benefits system is likely save extra money for other
Global debt crisis is essentially widespread globally. There are different issues that can cause debt crises. Currently, different countries around the world are facing debt crises, and definitely that is because of an error in the banking system. We’ll see below what are the main causes briefly and what are really the objectives that lead to a collapse in the banking system or so financial crisis.