public finance
Example 1
As the city manager I would be responsible in developing a plan that both benefits the city and employees. To maintain employee moral it is important in finding solutions which will help the city and give employees new opportunities that would benefit them in the long term. I would implement short term and long term goals to achieve this. The short-term goals would be to re-evaluate where expenses are going and cut out unnecessary expenditures to put money into the employees. The second short term goal I would offer would be an early retirement plan for employees that are nearing retirement. The employees that choose the early retirement plan would begin to receive their pension sooner but at a lower rate. The city would begin to pay out a pension however it would be less of a burden on the city in the long-term.
The long-term goals would include a mandatory 3% contributions by new employees which would be used to help alleviate the burden on the city. The contributions would be in payed out in the employee’s pension when they retire (Staff, 2017). The second will be a dual pension plan which incorporates an investment plan. This would put less of a burden on the city to fully pay out a pension and allows employees to contribute more or less depending on their own choice (457 Deferred Compensation Plans, n.d.). The more they contribute will ultimately be put into investments which can boost their final payouts. The employees will be given options of a variety of different investments they can participate in.
Example 2
A Short term goal that I would suggest to the town leadership would be to encourage early retirement (Ammons, 2010). The benefits from this idea would consist of downsizing the amount of employees that work for the city, primarily the ones that are making the big salaries. The benefits that would result from this move would be promotions within the city, more money allocated which could go towards funding the retirement pension fund and new hires that would cost less to employ.Another short term goal could consist of a tax raise for the city (Rivlin, A. M., & Sawhill, I. V, 2016). This method will not necessarily make citizens very happy, but will allow for the public pension fund to recoup what was lost over the past ten years. The downside to this is that the city will probably not vote for this to pass due to it not benefiting them in any way.
The Long term goal that I would suggest to the town leadership would be to do away with pensions. The people currently working within the city would continue to benefit from a pension later in life when they retire; the only difference is that the new hires would not benefit from a pension when they retire. This thought will not be widely accepted and is usually not practiced out in city work; however this is one scenario that could work to balance the budget in a long term deal. Cutting pensions would mean that over time there will be less money needed to fund the pension program due to the fact of fewer people receiving it later on.Another option for a long term deal would be to cut back on amenity’s that are offered to the employees such as: Paid time off, high coverage health and dental insurance, 401k, bonuses and other perks that were offered when the budget had more money to spend. These are perks that people benefit from working for the city or a big company, however all of these programs cost excess money which is not necessary to spend.