Friends with Benefits

Those of you who missed the San Mateo Daily Journal article last week on the Civil Grand Jury's report on city civil servants' pay and benefits might find these bits of information interesting.

If you use Table 8 to calculate the ratio of Full Time Equivalent Employees (commonly known as FTEs in the real world) per 1,000 people of the population in each city, you will find:

• Burlingame:  9.1 FTEs/1000

• Millbrae:       6.4 FTEs/1000

• San Mateo    6.3 FTEs/1000

There might be reasons for the higher levels in Burlingame.  For instance, it is possible that Burlingame provides some services to other cities for which they repay the costs, so the number itself is not the whole story.  You need the revenue side as well.

Another interesting comparison comes out of Table 5 which lists Other Post Employment Benefits, Where Known.  This is an update to the 2007-08 Grand Jury report, so it is not exactly hot off the presses.  Nonetheless, we find that estimated liabilities are:

• Burlingame:      $66.3 million or $140K per employee or retiree

• Millbrae:           $0

• San Mateo:       $20 million or $21.7K per employee or retiree

You have to ask the question, "Is Millbrae's liability really zero, or is that just an unknown?".  If it is zero, then why is is zero?  If San Mateo's liability is one-seventh of Burlingame's when they have 95% more eligible employees and retirees, what caused that difference?  We know from the other comparisons in the report that the basic pay and benefit packages aren't that different from each other.

So, bloggers, who wants to dig in and add to my take on it?

Comments

[Lorne]

Here's what's happening in Oakland:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/09/BARI183DJB.DTL&tsp=1

[Holy Roller]

I am sure that anyone who lives in Burlingame is aware of the First Class Service we receive in every aspect of public service.
For example look at the "Police Beat" articles that appear in the local rag.
Easton Library.
Crossing guards for high school students.
A full time Policeman at the HS.
The most beautiful library in Northern CA.
Banners on Burlingame Ave touting the importance of Colonoscapies.
A dog Park. (Every park in Burlingame is a dog park.)
Your neighbors tree needs trimming, it all gets done.
This all costs money.
Burlingame is a special place. WE should do all we can to keep it that way.
Otherwise, lets get used to the standards that are the norm for most of the Penninsula.

[Joanne]

The words of Suze Orman come to mind. In her book 2009 Action Plan she has a chapter called "A Brief History of How We Got Here." Her short answer:

"We are in trouble today because everyone was happy to lie, or happy to believe lies that any sane person could see right through."

No city can offer its employees retirement at the age of 50 at 90% of the last year's pay with full health care for life and think that this is sustainable. And it's not sustainable to have the non-safety folks retiring at 55 with 75% salary and full health care for life either. Something is going to have to give. We will either be left with a skeletal crew of a few employees who have these exceedingly generous benefits, or these union contracts will have to be renegotiated (whether in bankruptcy or not).

[Unholy Roller]

Amen.

[jim]

Here is another comparison point from today's Sacramento Bee

"But for every number propping up a point of view, there seemed to be two that undercut it. Here are a few numbers and statistical arguments that counter them:

In 2007, California had 103 full-time equivalent state employees for every 10,000 residents, second-lowest in the nation. Efficiency reigns!

Maybe not. States and their local governments divvy up services differently. Populous states like California and New York (130 to 10,000) get economies of scale. Rural Utah, considered a well-run state, had 191 state employees per 10,000."

Just to help with the math, to compare with the calculations from the civil grand jury report (per 1000 residents) we can add 10.3 state employees per 1000 for a total of 19.4 FTEs.

[Holy Roller]

It is not fair to compare City to to City.
Every neighborhood/City has its own energy.
If you are willing to pay 1.3 Million for a two bedrom/one bath house,(@$5000.00 per month) it is only natural that the "community" your home is in contributes to the value of your home, schools and parks.
This talk of paying for sewer upgrades was ridiculous.
The City of Burlingame should be the example of what every City can be on the Penninsula.
THAT IS WHY WE LIVE HERE!

[Rich]

Two items on the upcoming City Council meeting agenda:

1. Conference with Labor negotiator (closed session)

2. Resolution affirming City Council retiree medical benefits

[Holy Roller]

Regarding the Labor Negotiations..
The offer from the City of Burlingame was rejected by every group, Police, Fire, Management, and Miscilanius.
The offer from the City of Burlingame was year one-pay freeze, the next two years a 3% raise each year.
At the end of the 2011 contract the employees would have to pay 5% towards the City of Burlingames 95% contribution, towards health insurance.
What is wrong with these people?
The Burlingame Police Dept has been in unable to come to a labor agreement for at least a year. They may be forced into excepting the decsion of an arbatration panel.
Why is it that the people who live in the City of Burlingame, who can afford to pay $5000.00 a month for moratage be upset that the reason they moved here costs something?
The details will be in "The Post" Monday.
Or Tuesday, after the City of Burlingames Council meeting regarding the next years budget becomes Public.

[Holy Roller]

Regarding JoAnnes last post.
It is the POLICE & fire THAT ARE BREAKING THE BANK!
Does anyone who views this site realise the City of Burlingame Fire Fighters get paid more that the City/County of San Francisco?
The City of San Francisco Fire Fighters are busy night and day, fires, crimes,suicides,undergroud fires, homeless people medical isssues, etc.,etc.
WE DO NOT NEED THE CURRENT FIREFIGHTERS COVERAGE IN BURLINGAME!
WE DO NOT NEED THE POLICE COVERAGE IN BURLINGAME.
IT IS TIME TO UNDERSTAND WE HAVE LITTLE TO FEAR.
WE NEED TO REEVALUATE THE MONEY SPENT ON FIRE AND POLICE.
IT IS TRUE THOSE TWO GROUPS ARE GOING TO BANKRUPT THE CITY OF BURLINGAME.
FYI
79% OF THE ENTIRE CITY OF BURLINGAME BUDGET!

[Unholy Roller]

"It is not fair to compare City to to City.
Every neighborhood/City has its own energy.
If you are willing to pay 1.3 Million for a two bedrom/one bath house,(@$5000.00 per month) it is only natural that the "community" your home is in contributes to the value of your home, schools and parks."

I've never heard a single city labor union argue that they should be paid LESS because the houses in their town cost LESS, so how is it that the opposite is true???????????????????????

[Ron]

The sooner the city of burlingame declares bankcruptcy the better. All contracts can be renegotiated and we can get unburdened with absurdly generous and impossible to afford pension plans and salaries.

At this late stage of fiscal irresponsiblity I say give the city employees everything they want and let it break under its own weight.

[Holy Roller]

That is an excellant idea.
As long as it starts with the generous lifetime medical benefit package that the City Council receive after serving.
Then lets see who we get as Council people.
Lowering the "bar" to allow citizens that are not real estate speculators, using the position as a stepping stone to further political advancement, or meglomanics with an ax to grind would be a breath of fresh air.
I think the reasons I mentioned are the reason Rosilie Mahoney has been able to stay so long as a City Elder.
Russ Cohen seemed to me like another. Some of us who live here are just happy to make the best of what we have. To keep it that way.

[Lorne]

Would be nice to see Burlingame joining SSF and San Carlos on this list:

http://www.smdailyjournal.com/article_preview.php?id=124002

[Lorne]

http://www.pewcenteronthestates.org/news_room_detail.aspx?id=57334

[actual Burlingame resident]

Thank you for this. If you go through to California's situation it says

California needs to improve how it manages its long-term liabilities for both pensions and retiree health
care and other benefits. From 1997 through 2001, the state consistently met its actuarially required pension
contributions; since 2002, however, it has not made this payment in full. Overall, California’s pension plans are
87 percent funded—above the 80 percent benchmark that the U.S. Government Accountability Office says
is preferred by experts—but the results for individual plans vary. In 2008, the California Public Employees’
Retirement System paid its entire actuarially required contribution of $7.2 billion, but the California State
Teachers’ Retirement System contributed less than two-thirds of its $4.3 billion obligation. Meanwhile, the
state has set aside only $3 million to cover the $62 billion, long-term liability for retiree health care and other
benefits. In the face of California’s fiscal crisis, addressing this bill coming due will be a daunting challenge.

$3MM down, $61.997MM to go!

[Lorne]

From this week's Economist- see last paragraph about Illinois and pension bonds:

State-level pensions

Promises to keep
States face a looming pensions crisis
Feb 18th 2010 | CHICAGO | From The Economist print edition

FISCAL officers in the states might be forgiven for having a collective mental breakdown. Over the two years from December 2007 to November 2009, the 50 states have faced a cumulative budget gap of $304 billion. Revenues are expected to continue dropping for at least the next two years. And looming in the not-too-distant future is an enormous bill: extravagant promises of pensions, health care and other benefits made to an ever-growing number of government retirees.

America’s states have a $1 trillion gap between benefits they have promised and the assets to pay for them, according to a report published on February 18th by the Pew Centre. Even this may be an underestimate. Pew used data from the states’ fiscal year that ended in 2008, the most recent for which comprehensive figures are available, so the $1 trillion does not include losses from late 2008 and early 2009 (or the partial rebound since then). In 2008 state pension funds lost more than 25% of their value. In some states the downturn has prompted reform. Those that failed to act now face even bigger problems.

Public employees are lucky: 84% of them have defined-benefit (DB) retirement plans, which guarantee a pension based on final salary and years of service, compared with a mere 21% of private-sector workers. In addition most plans are sacrosanct, protected by state constitutions. If a state has promised a pension, it must pay.

The recession battered all states’ pension funds, but some were less equipped to take it than others. Colorado and California were among those that increased benefits in happier days, failing to consider that the market might succumb to gravity. In 2003, during the tenure of Governor Rod Blagojevich, Illinois issued $10 billion in bonds to pay for its pensions. The state then diverted some of the proceeds to the budget. In later years Illinois postponed payments to the funds, taking cheerfully named “pension holidays” instead.

The downturn may not bring about the apocalypse. States have the assets to pay for benefits in the near future. In 2008 pensions were 84% funded, above the recommended 80% minimum. States smooth out investment swings over several years, allowing them some time to recover. Nevertheless, $1 trillion is a huge hole to fill. Health-care liabilities were only 5% funded as of 2008. Delaying the funding of benefits and pensions now will make the burden much heavier later.

The good news is that many states have responded to the downturn with reforms. New York, for example, has raised the retirement age for new hires. New Hampshire is among those to require that new workers contribute more of their salary to the pension fund. Georgia and Nevada have changed their ways of calculating benefits. Most of the recent reforms are relatively modest, though. Since the recession began, no state has abandoned DB plans completely. Still, Susan Urahn, managing director of the Pew Centre on the States, argues that small reforms can make a big difference over time. In 1989 Minnesota raised its retirement age from 65 to 66. That has saved $650m over the next two decades.

Although some states are making progress, others have done little and a few have made matters worse. Illinois has America’s most underfunded pension system. In January the state took the easy option, issuing another $3.5 billion in pension bonds. Such bonds are not always disastrous, but Boston College’s Centre for Retirement Research points out that most governments are already in severe debt when they issue them. In the aftermath of the recession, some states will continue to inch towards sound management. Others, though, seem to be drifting more in the direction of Greece.

[Ouch]

I am tired of hearing how those who can afford to live in Burlingame should not be concerned about pay and benefits for our City employees that is well above their peers. We have more employees per capita than these other cities and they get paid more than their counterparts. It begs the question: WHY? The unions must view us as a bunch of whining rich kids. Holly-not sure how much you pay for mortgage of property taxes but I sure don't want to pay any more to insure that our police officers can continue to collect $200K a year for a lifetime after they retire. This to compensate them for patrolling the mean streets of Burlingame. Renegotiate and share services!!!!