Posts for May 4, 2010

UMA JOINS NAM AND OTHERS ON PROPOSED ERISA CHANGES

May 4, 2010 – NAM/UMA

Late last month UMA joined with national affiliate NAM and dozens of other business associations and companies in submitting a letter to the Office of Management and Budget objecting to a proposed regulation to redefine “welfare benefit plan”. The letter signed by UMA follows:

The Honorable Peter Orszag, Director
Office of Management and Budget
725 17th Street, NW
Washington, DC 20503

Dear Mr. Orszag:

It is our understanding that the Department of Labor has submitted a proposed regulation to the Office of Management and Budget for a 90-day review that would redefine the phrase “welfare benefit plan” under the Employee Retirement Income Security Act of 1974 (ERISA). We are concerned that this proposal, as applied, may be incompatible if not irreconcilable with provisions in the Patient Protection and Affordable Care Act (PPACA), (P.L. 111-148) and may make it difficult, if not impossible, for employers to comply with either PPACA or the regulation. We request that this proposed regulation be withdrawn in order to assess its compatibility with the intent of the recently enacted comprehensive health care reform.

During the year-long debate over health care reform, we encouraged Congress and the Administration to build on current strengths by working to develop and advocate strategies for controlling costs and improving access while preserving ERISA.

Over 170 million Americans receive health care benefits from their employer under the ERISA framework. The nationally uniform federal standard provided by ERISA is a critical feature of our employment-based health care system. By preserving the ability to offer and maintain equal benefit plans across state and municipal lines, ERISA enables employers to cover beneficiaries in more than one state or locality, regardless of the physical location of employees and retirees. The recently-enacted Patient Protection and Affordable Care Act reflects the view of Congress and stakeholders that ERISA preemption must be maintained, protecting employer-sponsored plans from conflicting state or local requirements and allowing employers to offer uniform benefits to their employees.

Given the recent enactment of PPACA which preserves ERISA preemption, we have significant concerns with the regulation currently before OMB. As we understand it, the proposed redefinition of a “welfare benefit plan” could obligate employers, whose plans are currently governed by nationally uniform rules under ERISA, to comply with myriad state or local rules. If adopted, this change would undermine the clear intent of Congress and the President that health care reforms maintain the uniform framework provided by ERISA.

To accurately consider the compatibility of this definition of “welfare benefit plan” with the complex health care reform recently enacted, we ask that the proposed regulation be withdrawn.

Sincerely,

Utah Manufacturers Association

SUPREME COURT ON ARBITRATION

May 4, 2010 – FLAG Communication Weekly (NAM)

In its April 27 ruling on Stolt-Nielson S.A. et al. v. Animalfeeds International Corp., the U.S. Supreme Court reinforced the value of contracts, their clarity and enforcement. (Opinion here.) The NAM’s Manufacturing Law Center entry explains: In an antitrust dispute, the parties agreed to arbitration, but did not specify whether the arbitration could include class arbitration. When arbitration is conducted on behalf of a class, the value of the claims is affected by the size of the class, and as a practical matter, the pressure on the defendant to settle is enormous. In this case, the Supreme Court decided that an arbitrator may not impose class arbitration when the parties did not expressly allow it under their agreement. A federal court had rejected class arbitration because it is not customary in the maritime industry, but an appeals court reversed, saying the law in this area is not so clear. In its decision on April 27, 2010, the Court ruled 5-3 that imposing class arbitration on parties that have not agreed to it is inconsistent with the Federal Arbitration Act. The central purpose of that Act is to ensure that private agreements to arbitrate are enforced according to their terms. If the parties did not agree to arbitrate class action claims, arbitrators may not infer such an agreement solely from the fact that the parties agreed to arbitrate. According to the Court, "The differences between simple bilateral and complex class action arbitration are too great for such a presumption."

THE 3RD SEMESTER PROGRAM: HOW TO INCREASE TEACHER PAY BY 50%, WITH NO TAX INCREASE

May 4, 2010 – Utah Taxpayers Association

For the last year, the Taxpayers Association has promoted a proposal to expand the school year from 2 to 3 semesters. By not leaving school buildings empty for that third semester, school districts could avoid having to build new buildings, and increase teacher pay by 50 percent without any tax increase.

Everyone loves the idea of paying teachers more, but generally they have a hard time understanding how the pay increase we tout can happen without a tax increase. Let me explain exactly how that works.

Because the Jordan School District’s financial plight prompted our review of this proposal, I’ll use Jordan as an example. However, the raw numbers matter less than the basic ratios, so the same math will apply as well in the Nebo or Ogden districts as it does in Jordan.

The Jordan School District has approximately 48,625 students distributed among seven high school prisms. (A high school prism is the high school and its feeder junior high, middle and elementary schools.) Because of the dramatic changes this proposal would require if implemented across an entire district in one fell swoop, this analysis assumes that a 3rd semester proposal is implemented one prism at a time, so that no teacher or parents feel forced into the 3rd semester option.

On average, the 267 teachers in each of the Jordan School District’s prisms currently teach two semesters to 6,946 students. However, 178 teachers could teach the same 6,946 students, if each of those teachers taught for 3 semesters. That would mean the district wouldn’t need as many teachers. At first glance, that sounds like a recipe for laying off teachers. It’s not. Remember that teachers retire or otherwise stop teaching every year, so every school district hires scores of new teachers each year. The Jordan School District hires approximately 200 new teachers. Moving one high school prism to a 3rd semester program simply means the Jordan School District would only hire 111 new teachers.

If the 178 teachers in the 3rd semester prism are still teaching 6,946 students, the district no longer has the costs associated with the 89 teachers who weren’t hired. The salaries the 89 teachers would have earned are instead spent on 50% pay increases for the 178 teachers teaching a third semester.

The benefits to teachers who opt into the 3rd semester are even richer. While school districts pay teachers for the 2 semesters they teach, they buy their teachers’ health and dental insurance for a year. That means the district doesn’t have to spend on insurance what they would have spent for the 89 teachers who aren’t hired.

That savings is equal to about 40 teaching days for each teacher who opts into the 3rd semester. This savings would allow the district to offer 3rd semester teachers 3 weeks, or 15 days of discretionary, paid vacation, plus 10 paid holidays. It may come as a surprise, but teachers do not currently receive any paid holidays or paid vacations. In fact, teachers who take a day off have to pay for their substitute teacher out of their own pocket. These 25 days of paid vacation and holidays should go a long way towards mitigating the concern many people have voiced about teacher burnout associated with a 3rd semester.

Even if the paid vacations and holidays alone do not stop the teacher burnout, the insurance savings offer other opportunities to help teachers. With the remaining 15 days, the district could pay for teacher training, and/or hire part-time administrative help to do the grunt work of data entry that so often burns teachers out.

Moving one prism to a 3rd semester program means every teacher who wants to continue teaching in the district could do so, whether the teacher prefers the higher pay of a 3-semester program, or the free semester of a 2-semester program. And because this program is entirely voluntary, teachers from across the district would have the opportunity to opt into or out of the prism using a 3rd semester program.

PUBLIC EDUCATION: PAYING TEACHERS FOR SUCCESS

May 4, 2010 – Utah Taxpayers Association

Despite efforts to reform public education throughout the nation, nearly every option seems to produce the same poor results as the status quo continues: the public education forum is more of a job-creation platform than a student-teaching one.

Recent national news articles highlight the complex issues which limit the effectiveness of public education to produce smarter students and better teachers, yet offer little in the form of viable options to improve the system down the road.

Last month, the Chicago-Sun Times evaluated the relationship between teacher salaries and student achievement in Illinois and discovered there wasn’t one. In Illinois, as in Utah, teacher pay is determined largely by seniority and whether a teacher has an advanced degree. This system, however, doesn’t improve student performance.

The Chicago Sun Times study points to the wide disparity between teacher pay and student achievement throughout the Illinois public school system. Only 7 of the top 25 elementary districts for the highest-paid teachers also made the top 25 in student achievement scores.

One high-school district ranks 3rd highest state-wide in teacher pay, at an average $92,300, but comes in 368th in students’ test scores (out of 879). When asked why the payroll was so high in comparison to the overall performance of the student population, the district superintendent admitted it was due to age and seniority, arguing that the higher pay scale acts as a draw that enables the district to “compete for the best teachers in the state.” Student performance suggests otherwise.

Unfortunately, the same system was protected in Florida, when Governor Charlie Crist recently vetoed a bill which would have required teachers to be “retained, certified and compensated based on student test scores on standardized tests – not years of experience or degrees held.” In addition, the legislation would have penalized school districts that even consider length of service or degrees held when determining compensation or reductions in work-force. This common sense reform would have encouraged teachers to be retained and compensated for their performance instead of their seniority.

Governor Crist’s veto protected the broken system. A recent report by the Empire Center for New York State Policy showed that over the last ten-years, the overall number of public school teachers had risen by 7 percent and nonteaching professionals had risen by 26 percent while total public school enrollment had decreased state-wide by over 4 percent. Advocates argue that as class size decreases, student performance improves. However, as the study points out, class size has little impact on student performance. New York’s pupil-teacher ratio is the eighth lowest in the nation, and they are first in public school spending, at $15,981 per pupil. Yet according to the PEW Center for the States, New York was given a C- grade for overall student achievement.


As the articles individually point out, it’s clear that the status quo is alive and well. Rather than be concerned with the improved education of our nation’s youth, the education establishment are more concerned about creating more and higher-paying teaching positions.

HILL AIR FORCE BASE A MAGNET OF ECONOMIC ACTIVITY

May 4, 2010 - EDCUtah

One of Utah's most significant magnets of economic activity sits on 6,698 acres approximately 30 miles north of Salt Lake City: Hill Air Force Base.
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GERMAN RETAIL SALES UP IN MARCH

May 4, 2010 – Today in Manufacturing.net
Federal Statistical Office says German retail sales rose 3.9 percent in March in nominal terms over the same month last year as the country climbs out of its economic slump... continue

FACTORY ORDERS RISE UNEXPECTEDLY IN MARCH

May 4, 2010 – Today in Manufacturing.net
Commerce Department said that total factory orders rose 1.3 percent in March, much better than the 0.1 percent decline analysts had expected... continue

CALIFORNIA CLIMATE LAW OPPOSED BY BUSINESS

May 4, 2010 - AP

A coalition of business groups in California turned in signature petitions for a ballot initiative that would unravel Gov. Arnold Schwarzenegger's top environmental priority. If the California Jobs Initiative makes it onto the November ballot, California voters will consider undoing the nation's most far-reaching global warming law.

Governor Schwarzenegger blasted "greedy oil companies" for attempting to stop his "sweeping environmental policy."

The AP noted "the ballot initiative is largely being funded by Texas oil companies that oppose climate regulations in California and similar legislation moving through Congress." John Kabateck, executive director of the National Federation of Business California, stated business groups warn the "regulations needed to enact the law would cost jobs and prompt billions of dollars in higher energy prices," which is a "cost businesses cannot shoulder as they struggle in a weak economy."