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Out of Control Policy Blog Archives: 9.15.13–9.21.13

Released CA "Three Strikers" Recidivate Below State, National Average

Over 1,000 California inmates serving mandatory life sentences for non-violent, non-serious felonies under the state's "Three Strikes Law" have been released since voter approval of Proposition 36 in 2012, according to a recent report by the Stanford Law School Three Strikes Project and the NAACP Legal Defense and Education Fund. Known as the "Three Strikes Reform Act of 2012," Proposition 36 is the first reform of the state's three strikes law, amending the "Three Strikes Law" to require that the third strike must be for a violent, serious offense or crimes committed with a firearm. It also authorizes resentencing of any "third strikers" convicted of a crime that does not meet this revised criteria.

In order to qualify for resentencing, "third strikers" convicted of non-violent, non-serious offenses not involving the use of a firearm must petition before the courts in the county they were initially sentenced in. The district attorney must then review the petition and can contest suitability for release. If the latter occurs, a hearing must be held before the local Superior Court to address this challenge. If the review procedes, a judge is authorized to resentence and release inmates if it is determined that release would not pose "an unreasonable risk of danger to public safety."

According to the report, over 95% of the 1,092 processed petitions have been granted. Only 2% have been denied. Over 2,000 petitions are pending. The report presents four success stories, including the story of Curtis Penn, who received his third strike in 1998 for "shoplifting a pair of tennis shoes." After serving 15 years in state prison, Penn was released in 2013 under Proposition 36. Now pursuing a college degree from San Francisco State University, he works as a landscaper and carpenter. Other stories include men sentenced to life terms for crack possession, possession of a stolen cell phone, and joyriding.

Thousands of California inmates have been sentenced to life terms for non-violent, non-serious offenses. In 2011, there were nearly 8,800 California inmates serving life sentences under "three strikes." This included approximately 3,000 who became "third strikers" following convictions for non-violent, non-serious offenses who qualify for resentencing under Proposition 36. CDCR data from 2011 indicates that at least 1,350 California offenders were sentenced to life terms for drug offenses, including 682 for simple drug possession. As of June 30th, 2013, the total number of drug offenders serving life sentences dropped to 1,027. The number of California inmates serving life terms for simple drug possession dropped to 500. Undoubtedly, these reductions can attributed to Proposition 36.

What these numbers also mean is that hundreds of people have had to serve at least two years in overcrowded state prisons for drug possession while facing the prospect of spending the rest of their lives in prison.

To date, the recidivism rate for these offenders, many of whom spent years in prison for petty theft or drug offenses, is far below state and national averages. The 90-day recidivism rate for the average California inmate is 16%.  By six months, this rises to 27%. Nationally, the average six month recidivism rate is an unacceptably high 30%. But for the released "third strikers," out of prison for an average of 4.4 months, the recidivism rate is currently documents to be "less than 2%."

The report also goes on to indicate that taxpayers have benefited as well. Thus far, Proposition 36 has saved the state prison system "between $10 and 13 million." The report goes on to estimate that if the initiative is fully implemented by reducing the sentences of all qualifying inmates, "the State would realize almost $1 billion in savings over the next ten years." This is in line with a legislative analysis prepared in advance of the November 2012 election that estimated "up to $90 million annually" could be saved for decades with the passage of the reforms.

Perhaps indicative of a deep-rooted problem, virtually all of California's correctional reforms have either come through federal court order or by voter-driven ballot intiative. Since Governor Arnold Schwarzenegger declared a "state of emergency" over the "overcrowding crisis" in 2006, California has struggled to operate a constitutionally acceptable prison system. In 2011, the US Supreme Court ordered California to dramatically reduce the prison population to 137.5% of design capacity. California's correctional health care system is currently under federal oversight, as federal courts have consistently found that the state has failed to provide constitutionally adequate health care and mental health services. The latter two problems are said to be in part the consequence of overcrowding.

Based on the Stanford/NAACP report, it appears that not only will thousands of individuals be given an opportunity to reintegrate into society, but that thus far, they seem to be genuinely trying to do so. In addition, it seems that the reforms have the potential to yield significant savings. Naturally, whether or not California legislators will actually allow those "savings" to occur and not squander may be wishful thinking.  Ultimately, though, the reforms ushered in by Proposition 36 are an important step in enabling the justice system to actually operate justly. Instead of locking up people for life for stealing tennis shoes or using crack cocaine, the reforms inject some common sense in an otherwise broken systen.

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Goldwater Institute Takes On Phoenix Pension Spiking

On August 15th, the Goldwater Institute filed a lawsuit against the city of Phoenix for failing to reign in the costly, and illegal, practice of pension spiking among Phoenix police department employees represented by the Phoenix Police Sergeants and Lieutenants (PPSLA). Phoenix public safety employees participate in statewide Public Safety Personnel Retirement System (PSPRS) for their pensions.

The PSPRS is the most generous retirement system in Arizona. The average retiree enrolled in PSPRS retires at the age of 51, with 23.6 years of service, and receives an annual pension of $48,842. In Phoenix, the average police officer actually receives closer to $60,000.

The PSPRS, like most public employee pension systems, is a defined benefit plan. Rather than tying pension benefits to the contributions an employee makes throughout their career (e.g. 401(k)-plans), defined benefit plans use a set formula to calculate pension benefits a retiree will receive for life.

For example, the formula for employees hired before 2011 who have worked 25 or more years: "50% of average monthly compensation for first 25 years + 2.5% of average monthly compensation for each year of service above 20 years. Maximum benefit is 80% of average monthly compensation."

At issue in the lawsuit is the arrangement between the PPSLA and the city of Phoenix to define "compensation" in a manner at odds with how state law governing the PSPRS does.

According to Arizona law governing the PSPRS, "compensation" may include base salary, overtime pay, shift and military differential pay, holiday pay, and longevity pay. For the purposes of calculating pension benefits, Arizona law is clear in excluding "payment for unused sick leave, payment in lieu of vacation, payment for unused compensatory time or payment for any fringe benefits."

However, in the 2012-2014 memorandum of agreement (MOA) between PPSLA and the city of Phoenix, multiple sections enable the inclusion of payments explicitly prohibited by state law. For example, on page 16 of the MOA, the contract provides that "a unit member who has accrued 1,714 hours or more of unused sick leave may elect to have the additional sick leave that he earns paid to him as salary on a monthly basis." In other words, the contract allows those represented by PPSLA to inflate their salaries.

Phoenix Mayor Greg Stanton has reportedly called for an end to the provisions that enable instances of pension spiking. Considering that the $5 billion pension plan itself is only between 56.6% to 65.8% funded, and the city of Phoenix has had to dole out increasing portions of its budget towards pensions, any gaming of the system takes advantage of taxpayers while contributing to the unsustainability of the system itself.

According to The Arizona Republic, a police union official said that "if the city takes away pension benefits, then Phoenix must increase other forms of compensation for public-safety officers."

This is a common counterproposal by public employee unions facing any reforms to pension plans. In California, police officers in the city of Santa Barbara demanded pay increases to "offset" an end to "pension pick-ups," a practice by which government employers, in addition to making their contractually obligated contributions to the pension systems, "pick-up" the payments employees are supposed to make. In Ventura County, the Service Employees International Union similarly negotiated for a one-time payment of $750 and salary increases in exchange for agreeing to end pension pickups.

If it is any indication of how flawed the pension system in Phoenix is, the outgoing city manager of Phoenix was recently in the news for using $200,000 worth of unused sick leave to spike his own pension. According to one calculation, he will be receiving an annual pension of over $200,000 for life. As icing on the cake, he will soon be assuming his role as the new city manager of Santa Ana, California, where he will receive a salary of $315,000 and a housing allowance with a combined worth of nearly $500,000.

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Innovators in Action (September 2013 edition): Designing and Implementing Pension Reform in Utah

The latest interview in Reason Foundation's Innovators in Action 2013 series focuses on a major issue facing state and local governments today: the massive unfunded liabilities accrued by public employee pension funds. Estimates of the aggregate, unfunded state and local pension liabilities range anywhere from $757 billion to over $4 trillion, and the overwhelming scale of the problem has prompted a growing number of policymakers to seek reform.

Utah became an early leader in the pension reform movement when it passed Senate Bill 63 and Senate Bill 43 in the 2010 legislative session, which together shut down the state’s existing defined-benefit pension plan to new entrants, created a defined-contribution style retirement plan for new state employees, ended the practice of retiree “double-dipping,” and other critical reforms.

As the sponsor of Senate Bills 63 and 43, former Utah State Senator Dan Liljenquist has become known across the nation as the architect of Utah’s pension reform efforts and one of the foremost experts on the subject. He recently authored a new report—Keeping the Promise: State Solutions for Government Pension Reform—that outlines principles and concepts that policymakers can use to advance pension reform in their jurisdictions.

I recently interviewed Liljenquist on what prompted him to take on the issue of pension reform in Utah, how he made the case to policymakers and stakeholders to enact their landmark reforms, the specifics of the reforms enacted, and more. Here's an excerpt:

Gilroy: How much of an understanding of the pension situation did your legislative colleagues have when you started talking to them to make the case for reform? What convinced them to ultimately support your efforts?

Liljenquist: Pensions are a tough issue. When I went into the legislature, I knew absolutely nothing about pensions, and I had to educate myself first. And this is a complex issue, and it took some time to understand what actuarial rates of return are, for example, or what actuarially required contributions are, what the different rules around smoothing gains and losses are, et cetera.

But by the time we got to the fall of 2009 though, I felt like I had a pretty decent understanding of it, and we began to lay out—with some allies, including the Utah League of Cities and Towns—some principles for reform.

Our first goal was to make sure that every penny would be paid to current employees and retirees. And we weren’t entirely sure we could do that if we had another year like 2008, which could cripple the pension plan and make it very difficult to operate state and local governments while still providing the committed benefits that our public workers were counting on. So our first goal was making sure that we meet every penny of the commitment we made to current employees and retirees.

Our second goal was in line with that, and it was to reduce and eliminate the pension-related bankruptcy risk over time. We saw just how much of a risk that actually was and that there was far more uncertainty than we realized.

So those were the two broad principles we laid out. The first thing we did in explaining the situation to legislators was to explain that this is going to get very expensive very quickly, and we need to take action to make sure that this doesn’t happen again. The seeds of the pension problem that we were facing were sewn decades ago when these programs were set up, and while we needed to make sure that we could come up with the money to pay for the existing liabilities and existing required contributions, maybe we should also look at a new system for new workers that didn’t put us in that spot down the road.

Those are the ideas that we started bringing forward, and those two principles—to meet every commitment we’ve made for current employees and retirees and to reduce and eliminate the pension-related bankruptcy risk—naturally led to a discussion on how we should provide for retirement. Where we came down was that we had to have predictable costs—that’s the policy objective that’s worthwhile.

So we went forward with those principles to find a way to close the old system down in terms of new enrollment and create a new system with predictable employer costs that provided adequate retirement security for future public employees. And then we went legislator by legislator to explain the situation and some ideas for how to proceed. Before we actually proposed any policy recommendations, I went and met with every member of the House and Senate in various caucus meetings over the summer and fall to explain the situation and why we needed to make some changes, laying the foundation by really helping them understand what the problem was.

So by the time it came to December 2009, that’s when I moved forward with my proposal to close down the defined-benefit pension system to new employees and begin a new retirement system for the state with a statutorily-prescribed contribution into the system, allowing new employees the option to choose to invest their retirement compensation in either a 401(k) plan that was professionally managed—but which also does not allow borrowing against the plan—or in a hybrid defined benefit/defined contribution plan where they could pool their retirement resources together with other employees, with the understanding that the state’s commitment toward that hybrid retirement plan was set and defined. And if the actuarially required contributions for that plan exceeded the amount that the state had budgeted per individual, then the individual employees would have to automatically pay the difference.

We moved forward with those principles as we engaged the political process.

Check out the full interview here. Other articles featured in the Innovators in Action 2013 series are available here.

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Atlanta Needs a Comprehensive Highway and Road Network

In an Op-Ed appearing in today’s Atlanta Journal-Constitution I suggest that Atlanta build a comprehensive highway and transit network. The recommendations are part of a recently released Reason study titled Practical Strategies for Increasing Mobility in Atlanta

Like other metro areas, greater Atlanta has an $84 billion transportation plan that neither reduces traffic congestion or is fiscally realistic. Metro Atlanta has one of the most deficient surface street networks of any major metro area in the country. As a result when the freeways become congested due to an accident, there is no alternative route causing major congestion and long delays. The Reason Atlanta plan would build 11 primary arterials as an alternative. 

The Op-Ed also discusses how adding a Managed Lanes to all Atlanta freeways would help both drivers and transit users. Most importantly these new improvements can be paid for using existing funds. No additional tax dollars are required. 

The complete Op-Ed is available here. The full study is available here

Atlanta’s mobility and congestion problems are well known. It has the seventh-worst congestion in the country. The area’s residents waste 51 hours a year sitting in traffic, and those delays cost the region $3.1 billion a year. 

Metro Atlanta agencies plan to spend $84 billion over the next 30 years on transportation. Unfortunately, the transportation plans treat far too many projects as stand-alone ventures intended to address single-problem spots. 

Atlanta needs a connected transportation network to fix today’s congestion and handle the demands of looming population growth. Right now, Atlanta, with 7,500 lane miles, has one of the most underdeveloped surface street networks of any major U.S. area. With a similar population, Dallas has 10,000 lane miles. Detroit has a smaller population, but more lane miles — 8,600. 

Surface streets, or arterials, are key to traveling within cities and also provide alternatives to congested freeways. Today, an accident on I-285 creates major congestion in part because there is no alternate route. 

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