Friends with Benefits - Part 3

The benefits that accrue to civil servants have attracted the County civil grand jury's attention.  If you missed Part 2 of our story click here.  Scroll back further for Part 1.

In the August 11 San Mateo Daily Journal, it is reported:

The city of San Mateo disagrees with a civil grand jury finding that staff, unions and city councilmembers all benefit when wage and compensation packages increase for its employees.  Cities must rein in employee costs through tiered benefit systems, renegotiated union contracts and cuts to the number of workers when possible, according to the civil grand jury report.

San Mateo will also not turn to ballot measures as recommended by the civil grand jury to ask voters whether a two-tier retirement and health care benefits system for new hires should be implemented.

“This recommendation will not be implemented,” the city responded. “The City Council believes the ultimate responsibility to establish compensation is appropriately determined by the elected representatives of the community.”

I suppose you would have to read the whole report in hopes of discovering why the San Mateo City Council believes that--and a short news article can't quite get us there.  But we will peel the onion one layer at a time.  It was encouraging to read in the same article that

The city also agrees that days off, salary increases and the ability to accrue and cash out sick leave can be contained.

But once again, it appears you would have to read the full report to understand how they "can be contained".  The "how" is important to Burlingamers since the basic labor negotiating strategy throughout the county is to assert "but City X pays its employees Y dollars".  And the Y spirals each year.  Sometimes the spiral resembles the rest of the economy and sometimes it doesn't.

Comments

[Leucadia Blogger]

"Sometimes the spiral resembles the rest of the economy and sometimes it doesn't." Has you town ever seen it spiral down with the economy?

How much would these staffers be making in the private sector?

[JROC]

Not so much a question of how much they make in the private sector, although, it is worth exploring. The real issue is the lifetime benefit packages that saddle cities with huge expenses for many years to come. The real issue is the benefits packages, age of retirement, and how these are funded. Do any private sector employees retire at 55 with 90% of the total comp package in the last year? No comparison....we must pursue new contracts with fully funded retirement packages. Why is this not on the candidate's websites? Political third rail.

[Holy Roller]

The comparing of one sector to the other without understanding the dynamics of infrastructure is tunnel vision.
Electricity, water,sewage,gas, trafic,fire,law enforcement, garbage pick up,traffic control,schools, parks, easements, trees, pest control, building code, etc.etc.
You can not run a city with a core group of employees that are called out by ManPower Inc. Here today gone tomorrow.
To run a City you HAVE to be able to depend on the people who maintain the integreaty of the "Big Machine" 24/7.
Like in nature, everything is connected. When one part fails, it effects the others.
I think that is a big reason Cities pay their employees well.
A City has to do everything it can to keep the "Big Machine" running. As well as have "back up plans"
Otherwise you could end up facing a New Orleans/Katrina disaster.
A city employee is a very valuable asset.
How they are managed is a different story all together.
I really think this "jag" The Post Newspaper has been on the last couple of years regarding the cities of the Penninsula has only been to sell advertizing. They are publishing front page sound-bites, for the people who stand in line in coffee shops.
"If it Bleeds, it leads."
The post publishers know this.
Lots of people have lost thier jobs in the last 2-3 years. Health care costs are ubsurd. People are angry.
The Post Newspaper has found a group of people for us to blame. When you are out of work, losing your health insurance, and are forced to make painful life style changes, whose fault is it? City workers? State workers?
Adolph Hitler did it. Rush Limbaugh does it.
The Post Newspaper is in business for only ONE THING, SELL ADVERTIZING.
They do not care about "us."
They are not enlightening us for a better world.
Only that we might buy something from one of their clients.
Hey,I like reading about gun fights, Dick Cheny, the police beat,and the HMB Pumpkin Festival like anyone else standing in line at a coffee shop.
But after thinking about what I have shared on this site this evening, I will never pick up The Post again.

[Holy Roller]

Hey JROC,
Have you ever heard of a Canadian TV program "Trailer Park Boys?"
A main character is named JROC.

[leucadia blogger]

A city employee is a very valuable asset.

No, a good city employee is a valuable asset. The question is, how much do we need to pay our staff to retain a happy group of valuable assets? If we pay too much there won't be anything left to hire new valuable assets in the future (or present in some cities)

Yes, you can't just look at yearly salary. You must compare lifetime compensation and consider health care, pension, and early retirement. The early retirement option is the one thing that is hard to quantify.

In this economy, you could cut staff pay by 25% and there would be very little staff turn over. That screams that we overpay our staff at the expense of our cities' futures.

How often are poor performing union staff members in Burlingame fired? Ever? So on top of being overpaid with platinum pensions they have jobs for life?

[JROC]

So Holy...they should be paid more than the private sector and have these outrageous retirement packages because they take care of critical infrastructure?

I guess in some cases maybe but are trees or sidewalks critical? What is a reasonable salary (and retirement package) for a maintenance worker? clerk? engineer? arborist? a bus driver? A station clerk at BART? Is collective bargaining the best way for this to be decided?

[JROC]

A few years back I tried to find how much the City spends on retired vs. active employees and I couldn't make it out. Is it broken down anywhere?

Oh and JROC has to do with my initials not the "Trailer Park Boys." Is the show any good?

[LB]

JROC,

Ask the city's finance department for the most recent operating budget, financial plan, and last audited financial statement (is it online?).

You'll learn a lot about your city that way. In there, you should find out how much the city puts aside each year for the pension plan contributions. If they only put in the minimum that CalPers is asking for, it isn't enough. It isn't enough by a long shot.

http://www.pensiontsunami.com/

[Holy Roller]

I do not know what a city employee should be compensated for what they do.
I am glad they are here and available.
Do you think a Burlingame Police Officer should be paid more than a City of Oakland Police Officer? They do. Lots more. Do you think the Fire Fighters(State Employees) in the Santa Cruz Mts. right now should make less that ONE HALF of what a Burlingame Fire Fighter makes?
What about health care?
I bet everyone who looks or contrbutes to this site has health care.
Life is not always fair. You have to work with the tools you have to make the best of things.
That is why I live in Burlingame.
You get what you pay for.
And you know what? All those City Workers salary and benefits have no impact on my life at all.
The City of Burlingame Elders also believe that we are getting what we pay for. Or things would be otherwise.
No City Elder would ever shrink away from confronting abuse of employee unions. That is a myth.
Those Elders do the best they can, using common sence to bargin contracts.
I doubt if there has ever been a seated council that was ever intimadated by a union.
They are very savy people and that is why they are there.

[BC]

The Comprehensive Annual Financial Reports through June 30, 2008 are on-line. Go to the city's website, then to Departments, then to Finance, then to Budgets, etc.

The retirement stuff is on pages 70-72 (make sure you are looking at the page numbers listed on the actual report and not how your computer might paginate it.)

On page 72 the CAFR said the city pays for retirees' health care on a pay-as-you-go basis (i.e. out of the general fund each year). For the year ending June 30 2008, the city spent almost $2 million on retiree health care. I think I saw somewhere that this past year it was projected to go up by almost 25% to $2.5 million. I'm sure that this number will rise rapidly in the next few years as health care costs rise and the city employees, most of whom are not young, start to retire in greater numbers.

The pension costs are a little harder to read. The percentage of payroll for police, fire, etc. is listed in the report and the percentage of payroll went down dramatically in the year ended June 30, 2008. I believe that the year ending June 30, 2008 was the year that the city took out a $30 million+ bond to pre-fund the pension contributions to CALPERS. I'm not exactly sure how that is working -- if the city still pays CALPERS in addition to the $30 million prefunded amount. (I think it does). There have been many articles elsewhere talking about how CALPERS wants to increase contributions to its plans because of market losses -- not sure if that impacts us because we pre-funded or not. But somehow, I suspect that it does and that we, also, will be asked to pay more because of bad investment decisions by CalPers and the market losses in general.

The city is paying interest each year on this $30 million loan that it took out to pay for the pensions that had not been previously funded. I think I read somewhere else that the debt service was expected to be $3.5 million this past year. Maybe somebody else can read the statements and decipher how much of that interest is related to pensions.

[BC]

Holy Roller,
The unions contribute to the campaigns of those who run for office. They expect something in return.

Voters should look carefully to see which candidates are endorsed by unions, by persons holding higher office or by people and groups who do not live in Burlingame. All expect something in return for their donations. To quote my old pal, Pee Wee Herman, connect the dots, la, la, la.

[LB]

"Those Elders do the best they can, using common sence to bargin contracts."

Just like in Vallejo? Just like Enron by the Sea (San Diego)? Just like every other city in California that is going to be unable to support city services in the future because of the weight of pension AND unfunded health care benefits for retires that would happily work for less. Give the government workers 401ks like the rest of us and cut pay by 25%.

No one would leave the city, so you could keep your valuable assets and leave the city in better shape for our children.

[LB]

As for electeds acting in our best interest, read this:

http://www.californiapensionreform.com/?p=299

The public employees admit they are paid unfairly too much. Take a read.

[Holy Roller]

Do you think teachers get paid to much?
Does the teacher who does Physics/mathamatics deserve to be paid more than the home economics and PE teacher.
They do not. They recieve the same.
Does a teacher who works a "school year" deserve to get @ 3 months off a year? Even though they work @12-15 hours a day during the year, without overtime?
I do not believe any one would admit that they are over compensated for what they do for a living.
That is unless their managers/supervisors do not do their job.
Vallejos' problem was the Police and Fire Departments OVER COMPENSATION PACKAGE.
Not the sewage worker, or custodian.
It is the PUBLIC SAFETY UNIONS that are bringing cities to their knees.
Blame 9/11.
9/11 was a long time ago..
By the way, President Bush wanted to privatize Social Security...
NEVER FORGET!

[Disgusted with Government]

The SM Daily Journal reports today that the city council is going to discuss its response to the grand jury's report on pay and benefits tonight. This is the report that concluded that city employees are overpaid and receive excessive benefits. The grand jury also concluded that political pressures have played a role in the excessive costs. (Unions fund campaigns and city council people are endorsed by party members holding higher office who expect them to "toe the party line" on decision-making). The grand jury suggested that in order to rein in employee compensation, cities should consider ballot measures or a citizen task force on compensation.

According to the SM Daily Journal, the Burlingame council is going to agree with the conclusions that say city employees are overpaid and given excessive benefits. The only conclusion that it will disagree with is that pay and benefits should be subject to citizen oversight.

Here is the quote from our mayor: "The city believes that, rather than ballot measures, the more effective approach would be to continue the education of all stakeholders regarding these issues,” Mayor Ann Keighran wrote in the draft letter.

What education? And why would the city council be able to correct the problem now, when it hasn't been able to do so in the past. This sounds like political double-talk to me. Yes, we'll agree now to avoid controversy and then, dear unions, we'll do whatever we want in the future.

[commuter]

Disgusted - speak up at the meeting.

[Disgusted with Government]

Sorry for the cynicism, but I don't think it would make any difference.
Look at the BART negotiations as an example. Ninety percent of the public was furious with the BART unions, yet our representatives (Leland Yee and Jerry Hill) actually wrote BART management to "go soft" on the unions.
I think it's more important to "speak out" at the ballot box -- no votes for folks who can't see the public's interest beyond the special interests.

[Account Deleted]

The City Council just addressed the recent San Mateo County Grand Jury report on escalating employee costs. You can view it via the Council Meeting Videos section of the city's website (8/18/09 meeting), and scroll directly to agenda item 8b (yellow box below the video on the left hand side of your screen). You can also access a PDF copy of the corresponding Burlingame staff report by clicking on "SM County Grand Jury report" on the agenda (right hand side of the screen).

[Account Deleted]

And here's the aforementioned San Mateo Daily Journal article, in advance of the Council meeting (which was 8/17, not 8/18 per my prior post):

City: Salaries, benefits are unmanageable
August 17, 2009, 10:24 PM Daily Journal Staff Report
Controlling employee costs is difficult and solutions should be worked out, according to a proposed response before the Burlingame City Council regarding the San Mateo County civil grand jury’s recommendations.

The civil grand jury report was released in early June and the 20 cities in the county are required to respond to the report within 90 days. Burlingame is the fifth to respond after San Mateo, San Carlos, Belmont and Foster City. Tonight, the council will discuss a proposed response which agrees with most of the grand jury findings and recommendations.

Cities must rein in employee costs through tiered benefit systems, renegotiated union contracts and cuts to the number of workers when possible, according to the civil grand jury report.

The report’s recommendations include creating a two-tier retirement and health care benefits system for new hires, renegotiating contracts with unions to modify current benefits for existing employees, beginning competitive hiring practices like cross-training and outreach programs and reducing the need for staff by streamlining services.

Burlingame’s proposed response includes a number of clarifications regarding retirement formulas, salaries for current employees, how pensions are funded and benefits for current employees.

The draft letter has the city agreeing with all but one of the eight conclusions.

The last conclusion suggested political barriers resulting from negotiations could be eliminated through public involvement and ballot measures.

“Employee agreements are subject to council approval, and are approved at public meetings. The city believes that, rather than ballot measures, the more effective approach would be to continue the education of all stakeholders regarding these issues,” Mayor Ann Keighran wrote in the draft letter.

Another area of contention for Burlingame officials was the suggested creation of a citizen task force looking at wage benefit and city staffing.

City officials are supportive of working with the San Mateo County Municipal Employee Relations Committee, which is comprised of city managers, human resource directors and finance directors from several cities to develop information that will help cities understand the dynamics of employee costs and recruitment while providing options for such situations.

The council meets 7 p.m. Monday, Aug. 17 at City Hall, 501 Primrose Road.

[Account Deleted]

Groups grappling with how to fix public employee costs
September 08, 2009, 08:51 PM By Michelle Durand

Local policymakers made news when they formed a task force to tackle ever-rising public employee costs that they say form the majority of each city’s budget — and often their budget quagmires.

But a year before the Compensation Task Force began, another group of city staff and managers quietly gathered to address the same challenge of balancing union desires with finite city resources. That group, the San Mateo County Municipal Employee Relations Committee, has a list of 47 recommendations and hopes coupled with the task force’s own ideas. Now, Peninsula cities can have new-found strength not to bend in contract negotiations.

If they don’t, cities will continue bringing revenue-raising taxes to voters, risk slashing services to the bone and draw the ire of residents who feel they are the ones made to pay too much for government workers’ pay, benefits and retiree needs.

The topic of employee costs is not new but reached a fever pitch after the San Mateo County Civil Grand Jury concluded that the county’s jurisdictions must use tiered benefit systems, renegotiate union contracts and cut workers when possible.

Shortly after the grand jury released its report, the CTF formed, giving a group of seven elected officials in the county a forum for brainstorming ways to fight public employee expenses and — ideally — bring those ideas back to individual councils for consideration and the San Mateo County Council of Cities which includes all 20 cities in the county.

The CTF is better equipped to do that than the MERC because staff can’t directly address certain labor relation matters and doesn’t necessarily have the political clout to push change, said MERC head Jim Nantell.

On the flip side, the MERC can consider recommendations that might be politically unsuitable for leaders worried about re-election support by labor groups.

In fact, at least half the grand jury recommendations — like cutting wages and multi-tier benefit systems — are probably not amenable to labor groups but echo those suggested by the MERC, Nantell said.

“They brought a lot of heat. But the jury report, from our standpoint, elevates the situation so that along with what we’re saying, employees understand the gig is up,” he said.

The bottom line is that cities have continued to increase employee pay for groups like fire and public safety based on the market rather than on a city’s ability to pay, Nantell said.

Cities, worried about competing with neighboring jurisdictions, continue to approve union contracts beyond their affordability. If one city has 3 percent at 55 retirement benefits, others believe they must to stay competitive. And, when one city acts, the ripple effects are felt throughout the Peninsula. The 3 percent at 55 allows certain public employee groups to retire at age 55 with 3 percent of their wages per year worked.

“It’s getting out of control,” Nantell said.

In April 2008, Burlingame and Hillsborough ran into that problem as they negotiated the fire contract. The frustrated Burlingame City Council realized it couldn’t make a change on its own and the MERC formed to promote a regional response, Nantell said.

The idea is that cities are more likely to stay strong in cutting wages and benefits if they are not alone. Decisions must be made individually to avoid accusations of collusion but the hope of both the MERC and the CTF is that each city will agree to reverse policies that allow costs to rise.

Although there is no guarantee either the MERC or CTF will cause a reining in of costs, Nantell said they can’t not try. He said it is also up to the public, too, to let their respective city officials know that they want to see some action taken to protect limited budgets.

“It’s not sexy stuff but they need to be diligent and weigh in,” he said.