The report found that Santa Clara County cities awarded generous retirement pensions, health benefits and regular pay raises to their unionized employees during Silicon Valley's economic boom years, perks which they are now contractually obligated to make. Now, those cities must make severe cuts in services to pay those employees.
The gist of City Manager Kevin Duggan's written response to the report was that the city agrees that personnel costs are too high in many respects, and that Mountain View was among the first cities to take cost cutting measures, including a two-tier system where certain new hires have reduced retirement and health care benefits.
"We should go ahead and toot our own horn a bit," said council member Margaret Abe-Koga. "I think we have a lot of best practices here in Mountain View that we can share with others."
Council member Laura Macias agreed. "Here's a chance to do some bragging, since we have controlled costs a lot," she said.
Council member John Inks was the most critical, saying that Mountain View has done "a pretty good job" keeping employee costs down, but contended that the city's employee compensation costs were still "well above average" compared to other cities in the county.
Duggan responded to a list of recommendations and assertions in the report. Here are some highlights:
• The city agrees that cities should retain the ability to "adjust or withhold" pay raises "based on current economic data. Increases in compensation need to be more directly tied to a variety of factors, including the ability to pay," Duggan writes.
• The city disagrees with the grand jury's finding that pay raises are often arbitrary, because "step" increases are given as an employee gains experience and skill.
• The city agrees that health insurance cost increases exceed the city's revenue growth and that city employees do not contribute enough to their health care costs.
•The city agrees that partly because of stock market losses and an aging workforce, healthcare and retiree pension costs are the "most problematic and unsustainable" costs the city is facing.
• The city is analyzing recommendations to increase its retirement age and to create a second-tier retirement pension benefit for new hires.
• The city is implementing a recommendation for increased outsourcing, with private contractors being used for janitorial services, park maintenance and patrol, "professional services" and possibly golf course operations.