The Public Pension Problem: Illinois Teachers -- The Problem Runs Deep

     Josh Barro and Stuart Buck have produced a good backgrounder on the status of public pension funds for teachers on behalf of the Manhattan Institute for Policy Research, a conservative, market-oriented think tank. Among their findings are that the shortfall between promised benefits and actual assets in the plans is almost $1 trillion, declines in investments account for less than a quarter of that amount, and no reasonably foreseeable increase in investments will make up the shortfall. Only two relatively small states, Montana and North Dakota, have no deficit in teacher pension funds to make up while California, the most populous state, has a deficit of nearly $100 billion. That’s a lot larger than the official deficit of $42 billion because states aren’t required to follow generally accepted accounting principles as you or I would be.
     The reason for this development is obviously the willingness of state and local politicians to make extravagant promises about future benefits coupled with a complete lack of willingness to fund these promises, a perfect example of the Wimpy strategy of public policy.
     His willingness to underfund or even raid teacher pension funds to finance his new programs is one of the several reasons I opposed now-impeached Illinois Governor Rod Blagojevich. Illinois’s problem may not be unique but it is certainly distinctive. The state constitution of Illinois prohibits the state from reducing public pension benefits. Article XIII, Section 5:
     Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
     That’s been fully litigated (the pensions of state supreme court justices are paid from a state retirement system, too) so that in Illinois the only way to change it is to amend the constitution, politically very difficult particularly in a state in which both houses of the state legislature and the governor’s mansion are held by Democrats beholden to public employees’ unions.
     The only likely solution to the problem is a tiered system in which current teachers remain under the defined benefit program now in force and future teachers are enrolled in something more like a defined contributions plan. We’re still going to need to cough up what we’ve promised to today’s teachers and, in the absence of the political will to raise the state income tax, that means that every other government program in the state will suffer.

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By: Dave Schuler on April 15, 2010

State and Local Pension Funding Deficits: A Primer

Pensions, Budget Deficit

     The financial health of state and local pension funds has been transformed from a yawn-inducing topic to a frightening one in a few short years. By some measurements, the shortfall across the nation adds up to over $3 trillion or more than two years' worth of state and local tax revenues. In a few states, such as California and Illinois, pension funding has become a major political controversy. This primer focuses on the following key questions:

• What is the problem?
• How big is it?
• How binding is the legal obligation?
• Why do we care about the problem?
• What caused it?
• How can we solve it?

     This primer does not address the somewhat similar issue of retiree health care, since it differs considerably from pensions both in its legal status and in the level of predictability of future payments, among other things. To the extent that states are underfunded on that score, as many are, it will doubtless make it still harder to solve the pension problems.
 

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Douglas J. Elliott, Fellow, Economic Studies, Initiative on Business and Public Policy
The Brookings Institution

If it Ain't Broke, Break It!!

     We’re all familiar with the old saying, “If it ain’t broke, don’t fix it.” While this advice may have once been wise, it has no validity in today’s fast-paced, increasingly competitive global small business economy.
     Now is a great time for all business owners to take a good, in-depth look at their businesses. Obviously you need to fix what’s broken. But if you want to stay on top of today’s trends, to stay one step ahead of your competitors and to thrive, instead of merely survive, you need to do more than that. To put it bluntly, you need to recharge your business—and one of the best ways to do that is to adopt an “If it ain’t broke, break it” philosophy.

Why would I fix what’s not broken?

     I can hear the protests now: “Why would I fix what’s not broken?” All businesses can benefit by taking a fresh look at what is working, then seeing if those components can be retooled to provide even more revenues. For instance, can you expand your existing product line and offer it to a new demographic? If you are selling online, can you expand to a physical storefront? If you have a retail business and you’re not selling on the Web, you need to start immediately.
     If you’re a service provider, consider teaming up with other business owners in related industries and offer referrals and discounts to one another’s customers. Or think about actually partnering with them. For example, a Web designer and a copywriter could likely charge much more for their joint services than either could pull in singularly.
     Take a look at your pricing structure. Americans have permanently changed their purchasing behaviors. They’re looking for value—are you providing that? What other ideas can you come up with to entice people to buy more from you?
     Examine your marketing efforts. Too often this is the first area where small businesses cut back during tough economic times, and usually it’s the area you can most easily re-energize. Make sure you incorporate social media into your overall marketing mix.
     We’re all operating in a whirlwind. Things change on a dime. That’s a world entrepreneurs should be very comfortable in. But even the most successful among us cannot afford to rest on our laurels. Make the time to review your business—and then take the time to recharge your efforts.

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By Rieva Lesonsky

Tips for Smart Shopping During the Holiday Season

Here are eight easy ways you can shop smart, and help keep your identity safe this holiday season:

In Stores
1. Be aware of your surroundings and protect your personal space at the ATM and registers.
2. Inspect ATMs and points of sale terminals and look for tampering before swiping cards.
3. Keep cards in sight when paying to deter dishonest cashiers.
4. Store all receipts, and closely check your monthly statements to verify transactions.

Online
1. Be sure your anti-virus software is installed properly, and up-to-date.
2. Shop with retailers who you trust, and have a positive Better Business Bureau rating.
3. Avoid links. Instead, visit shopping sites by directly typing in their website addresses.
4. Don't purchase items while using public computers or shared wireless networks.

Another friendly tip from your friends at JWBI

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How to Create an Effective Communications Calendar

 Although this article is centered around the financial services sector, it can be quite useful in many other enviorments.  We hope this will help you in your planning.

Client segmentation and scheduled marketing campaigns are
keys to efficient communications.

      “It’s clear from so many client surveys that performance is on the list, but communications is at the top,” said Dan Kraus, a Raymond James advisor and branch manager in West Palm Beach, Fla.
     That’s just one reason—albeit a vital one—that advisors carefully consider their client communications strategy. Here’s another one. “Most people look at advice as a commodity, so the best way to differentiate yourself is through your communications and service.”
     Kraus is a strong proponent of the 12-month communications plan, a marketing calendar that includes a variety of client touches. “Have it structured on your desktop and make sure you follow though,” he counsels.
     Kraus concedes that the most effective way to communicate with clients is face to face, “but time is your scarcest resource, so you’ve got to merge email, phone and face to face,” he says.
Planning is essential because even scheduling client reviews is a challenge. “You can’t meet with 100 households in one quarter,” he says. “So segment your book and split those segments into thirds.”
     For example, Kraus might have 30 A client, 90 B clients and 110 C clients. He’d split the A clients into A1, A2 and A3, and do the same with the other groups. The A clients get quarterly reviews, so he’d meet with 10 of those every quarter. He meets B clients every six months and C clients annually, also scheduled into the first three quarters of the year. He saves the fourth quarter just for A clients, the other groups having already been dealt with.
     By better coordinating client reviews, Kraus has more time for other communications. He sends out a weekly market analysis, penned by Raymond James’s chief investment strategist, conducts monthly campaigns and sends out a quarterly letter on the market that he has pre-approved by compliance.
     Monthly campaigns are based on themes. January’s campaign is about planning for the coming year, for example, whereas February’s is about collecting 1099s and preparing for taxes. “We keep on track and in touch with clients so I can delegate a lot of it to my assistant,” Kraus says. “These campaigns are more service/planning oriented, which gives me a reason to get on the phone with people.”
     Two years ago, “I used to come in without a game plan,” he says. “My goal for November was to put in five client calls per day about tax trades or swaps. These calls add value and let clients know that I’m thinking about them, and that can lead to more business. November is also the holiday season, so I’d ask clients whether they want to have a family meeting.”
     Now his communications plan is scheduled, Kraus says he has more time for other activities. He’s also a branch manager, so the system allows him to stay on top of those duties while staying productive on the sales side.
     “I encourage other advisors to do this because it’s really in their best interests,” he says. “Those advisors that use this system here have found it valuable.” One advisor even turned the plan around and used it to let clients know that this level of communications is what they should expect from him and that he expects them to make themselves available for quarterly meetings.

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By: Howard J. Stock

JWB Interest, LLC  2010 All Rights Reserved

Are you ready for 2011?

Are you ready for 2011?
I know many of you are still worried about 2010, but this year is essentially over, and you should have already started your 2011 planning.

Before you jump into 2011, you need to look back at this year and take inventory. If you’re a retailer, ask yourself:
·         What products sold well?
·         What was left on the shelves?
·         Did merchandise move well when priced at certain price points?
·         How much did you spend on marketing compared to how much you budgeted?
·         Did you start using social media this year? What were the results?

If you’re a service provider, look to see where your revenues came from. Did you bring in new clients? Get more business from your established customers? You also should look at your marketing budget and expenditures.

Both retailers and service business owners need to assess current staff levels. Is your current staff providing adequate coverage? Are little (or big) things slipping through the cracks? When’s the last time your employees got a raise? Did you stop matching their 401k contributions or cut health (or other) benefits? Can you afford to add that back next year?

What can you learn from this? Do you need to increase your marketing? Maybe you need to re-allocate your marketing budget. If you haven’t explored using social media, it’s time to do so now. Don’t overlook online ratings and review sites. More and more customers are checking out what people are saying about you on the Web before they even consider doing business with you.

Now, look ahead. What do you think 2011 is going to look like? Project your revenues. Estimate expenses. If you think business is going to pick up appreciably, how will you handle the new business? Will you need to hire? Will you need full-time or part-time employees? Many surveys have shown that once the job market recovers, many workers will be out looking for greener pastures. The cost of replacing those employees, both to find new staff and to retrain them, can be substantial. So think about what you can do to retain the staff you have, or budget for new workers.

Do a technology checkup as well. Slow machines or outdated software programs can slow your efficiency and productivity. If that’s your situation, take advantage of the current low prices for new technology.

Planning helps you prepare for the future.  Start planning now to ensure a better 2011.

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By: Rieva Lesonsky
JWB Interest, LLC  2010 All Rights Reserved

Incorporate Creativity Into Your Business Practice

     Creativity has always been an important business skill, but in this turbulent economy it is essential. The rules of the game change constantly now. The pundits can’t decide whether to celebrate or begin mourning our economic future. We are on new and shifting ground with no clear path and no one to show us the way. The current economic realities have placed us all beyond what is known. The only way to meet this challenge of operating in this unknown terrain is to make it up as we go. It follows then, that building a creatively agile company will not only help you survive but give you a powerful competitive advantage.
     Creativity is not just the domain of a talented few. We are all creative. It is highly likely that your creativity has been diminished by social norms and life experience, but it can be fostered and revived. You may not even think you are creative, but that is not true. Creativity is our birth right, it is part of what makes us human.
     Like any new skill you want to learn, becoming more creative takes time and effort. If you want to become more creative and establish a creative business culture, you will need to become familiar with the business literature about creativity, learn about the creative process, maybe hire some consultants, look at other companies and their experiences and, of course, make it up as you go. The payoff is a company that is vibrant, easier with the constancy of change, has the commitment of an energized workforce and a greater chance of being successful.
     The following techniques are offered to get you started by experiencing first hand the power of consciously evoking your creativity. However, building a creative business takes more than using some techniques now and then. Creativity must become part of your culture, how you interact with and see the world and how you relate to each other.
     When you’re having trouble coming up with a fresh approach or need some new ideas, the following two very simple exercises may intrigue you enough to explore creativity further.
     When using techniques, let your mind free associate and don’t bring in judgment until you are finished generating ideas. Judgment is reactive to what exists and is a very different process from generating ideas. Judging too soon is one of the most common ways to shut down your creativity.
    
Use a Metaphor
     Metaphors, comparing your situation to something else, is one of the easiest techniques to get ideas flowing.
      Let’s say you want to increase sales and are having trouble coming up with any good strategies. If you choose to use the metaphor technique you might ask how is selling my product or service like doing stand up comedy or baking a cake. You will be amazed how quickly you arrive at some innovative solutions.
     Choose an object or an action. Metaphors depicting an action are usually more evocative and activities you have some emotional relation to, whether it’s good or bad, are even more powerful. If you have a hard time coming up with an idea for a metaphor, try one of the following examples: going on a diet, doing stand-up comedy, running for political office, riding a bike, running a day-care center, courting a woman, disciplining a child. But remember anything will do, don’t get hung up on trying to get the best metaphor.
     Having done this exercise many times, I am always impressed with its power. Give your self or your team a few minutes to look through magazines and tear out images that speak to you. You could pose a question first or after you have made the collage. Create a collage of your images. You can paste them to a background or just arrange them on the surface in front of you. Go around and share your thoughts and associations as they pertain to the issue at hand. This doesn’t have to take a long time. Allowing 10-15 minutes for this can produce many new possibilities.

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If I Just Had More Time

 If I Just Had More Time
By: John Burdin

     As we enter our workday each and every day as well as our personal lives ask yourself the following question; how well am I organized, my managers, my team? As we know, most people are not well organized. Although most of us believe that we are. This is often a mask for, “I don’t want to be organized” or “it’s too much trouble to be organized”.
     In the twenty-first century and never more so than today, being organized is a real key to success. Some of the old tried and true methods of organization will still produce results, however in a business world that is moving ever more rapidly, the more efficient we operate the more we can achieve. And, that all starts with being well organized.
     Time management is a key element of organization for everyone at any level in business or at home. With a limited amount of time each day to perform all the things we have to do, having a schedule and sticking to it is a key element of success.
     Think for a minute about how your life would improve if you at least had a good idea what each hour would bring or you could expect. What difference would it make if you knew exactly what each hour would bring or you could expect. It doesn’t sound like much of a difference, but the difference between having a good idea and knowing can be considerable.
     Most people in management positions have been doing things their way, and same way for quite a while. After all that is a big part of why they are in the position they hold. To owners, managers and on down the line, five minutes here and five minutes there doesn’t sound like much. Add it up, and see how much it really is.
     No one is talking about cracking a whip or anything like that. That is not what this is about. For the sake of conversation let’s say that you are operating at an organizational efficiency of around seventy percent. We’ll agree that things are pretty good, but what would it be like if that were kicked it up just five or ten percent to eighty percent. That would generate a tremendous jump in productivity results, and most likely those improving would feel a lot better about themselves, their work and maybe end up with more time for less important things. Their time at home should be much improved as well.
     A more efficient work environment, a more productive work environment and a better quality of life – What more could anyone wish for?
     It’s all an issue of how we parse our time, and with only twenty four hours in a day, it is very important that we don’t waste too much of it.

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