Is the Price Right? State and Local Government Architect and Engineer Selection

Abstract

8. For a detailed discussion of arguments for and against full funding, see Bleakney, op. cit., pp. 1 10-1 17. 9. See Rubin G. Cohn, Employee Retirement PlansThe Nature of Employees' 'Rights', Law Forum (Spring 1962). 10. This argument is discussed in Wellington, Harry H., and Ralph K. Winter, Jr., The Unions and the Cities (Washington, D.C.: The Brookings Institution, 1971), pp. 19-20. 11. See Woolf, op. cit. 12. The possible relationship between pension funding policy, wages, and employment is discussed by Mumy, op. cit. 13. See Advisory Commission on Intergovernmental Relations, op. cit., for some discussion on the relationship between pensions and debt. Three general factors limit the degree to which pension and general fund borrowing can be considered fiscal substitutes. First, as ruled in a Washington State Supreme Court decision, pension obligations are not formally debt but rather contingent liabilities and so are not subject to constitutional debt limitations. Next, there are political limitations on the degree of trade-offs a priori between allocating revenue to debt and pensions because of the role of the pension fund administrator, as reinforced by the legal and derived accounting treatment of trust funds in the budgetary process. See Harry D. Kerrigan, Fund Accounting (New York: McGraw-Hill Book Co., 1969). Finally, in terms of the economic theory of public finance, pension and debt apply to different factors of production, labor and capital respectively. Conceptual implications of the difference, in terms of the labor intensity of the public sector, relative factor costs, and factor substitution are fundamental in theoretical analyses of the issue but, while posing interesting questions about the relationship between public sector labor productivity, financial capacity, and fiscal crisis, are outside the scope of this paper. 14. On these points, see Roger F. Murray, Economic Aspects of Pensions: A Summary Report (New York: National Bureau of Economic Research, 1968); and Municipal Finance Officers Association, Accounting and Operating Handbook for Public Employee Retirement Systems (Chicago: Municipal Finance Officers Association, 1966).