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The latest report from the Santa Clara County Civil Grand Jury concludes that employee costs for the county’s 15 cities continue to grow at an unsustainable rate, while cities make up for it with service cuts and employee layoffs.
“In order to attract qualified workers during the dot-com boom, the cities, flush with revenue, increased wages and benefits, especially pension benefits, with unrealistic expectations that the economy and the stock market would continue to expand. These increases are largely guaranteed by union collective bargaining agreements,” the report said.
But now tax revenues are decreasing and cities are using their reserves and cutting services to keep up with rising employee costs, the report said.
“Wages and salaries climb, even as the economy struggles,” the report reads.
“Pension and health care benefits have risen substantially since 2000. Vacation, holiday and sick leave policies are overly generous and exceed those of private industry. Cities need to negotiate, approve and implement considerable cost containment measures so that employee financial obligations do not continue to escalate.”
City Council member Mike Kasperzak said the problems in the grand jury report sounded familiar.
In Mountain View, which faces a $4 million budget deficit this year, officials often say they are ahead of other cities in reducing employee costs, having instituted a two-tier system in 2006 to lower the cost of retirement benefits for new employees. This year, the city seeks to reduce by $1 million the over $2 million in raises scheduled for employees this year.
But the city’ unions got something in return for the two-tier system in 2006, to the chagrin of Kasperzak and other conservatives on the City Council, who warned it would lead to budget problems in the future. Non-public safety employees got a pension rate increase from “2 at 55” to “2.7 at 55” meaning retire as early as age 55 and receive 2.7 percent of your highest annual salary multiplied by the number of years worked for the city. After 30 years of employment, that comes to 81 percent of your highest salary.
For public safety personnel, rates increased to “3 at 50,” meaning they can retire at age 50 and receive, for example, 90 percent of their salary after 30 years of employment.
In an effort by city managers to collectively reduce those costs, city manager’s associations in San Mateo and Santa Clara Counties pledged in a July 2009 letter to reduce the growing cost of city employee pensions. Mountain View City Manager Kevin Duggan gave a copy of the pledge, which he supports, to the Voice.
The pledge says that Public Employee Retirement System Investment losses, combined with higher payout rates in city union contracts have caused a “dramatic increase” in pension contributions from city budgets. Pension costs rose in Mountain View from $2.8 million in 2000 to $7.7 million in 2010.
Duggan, who made $294,000 last year, recently told the Voice, “My pension doesn’t make any sense.”
I suppose this is another opportunity for a Mtn View Voice editorial on how the Grand Jury reports are “a dime a dozen” and if we want top flight Library executives (for instance) we have to pay almost $200,000 a year.
This public employee pay & pension cost issue is an amazing non-issue to most people. Perhaps because the only way to correct it is to engage local governments for a difficult and politically risky battle with our own public servants. It could happen if we can find some politicians with integrity and courage. And pigs will fly too.
Hmm..cushy job, pretty much lifetime employment, huge benefits, immune from the economic ups and downs that the private sector (read: most tax payers) face. Whats not to like? And, to boot, the politicians continue to toss (our) money at these folks in order to buy their votes on election day. Ever feel like your the monkey in the “other cage” – the one that keeps getting shocked while the first monkey gets all the rewards?
I have a suggestion. have the municipalities file bankruptcy and renege on all the outrageous pensions and benefits. Its already bad enough that these folks are now paid more than their equivalents in the private sector, yet have much more job security and less accountability – lets not have them kick us in the teeth on the way out the door with their pensions.
While there may be some argument for some austerity measures in some areas of public service workers, where are the similar measures to require some austerity -i.e. greater personal income tax rates – on those “workers” at the top of the employment pay ranges?
The inequities in our tax system are a greater problem than “overpaid” police personnel (who might wind up taking a bullet for one of us)
We need to remember not all City employees make what the City Manager
makes. The employees who work on the front line keeping the parks beautiful, the water working, city facilities up-keep and downtown a place you want to go are paid far less. In fact they could go get a job in the construction field that pays more. We need to remember…not all is equal, and we can’t broad brush the issue.
It’s worse than you think. The last CalPers report said its retirement fund for state and local employees was about $55 billion. But this was using CalPers’s own accounting methodology. Stanford University published a study of CalPers, CalStrs, and the UC Retirement System that used the same accounting standards that private pension funds are required to use. The recalculated deficit of these 3 funds—$500 billion. That’s right, half a trillion. It amounts to about $14,000 for each citizen of the state. If you are a part of a family of three, your family’s share is $42,000. If you Google “stanford study calpers retirement systems” you can see the Stanford study, CalPers’s response, and other discussions.
Similarly, look at the Grand Jury report yourself also….there you find that the “front line” Mtn View employees mentioned above have a median total compensation that grew from $79000 to $123000 in 10 years. Our “first responders” have a median total compensation that grew from $106,000 to $190,000 in 10 years. Compare that $190K to $131K in Los Altos, $146 in Palo Alto. First responders to the trough do pretty well, retirement at 50 with 81% of highest salary. Wow!
Outrage would be an understatement when I read this article and oter articles how the police/fire/mid-level managers/city managers/attorneys pay themselves like private companie executives and live lives like the sheiks of kingdoms. How unethical are these people. These people were stealing tax payers money legally just like the looters in a riot or actually worse. I can’t wait to see the system go completely bust and these people end up with not even a penny.
This is as bad as I feared. Thank you MV Voice.
I’m tired of hearing how much risk firemen and police put themselves in thereby justifying their inflated salaries.
Pay the police what we pay our military to risk “taking a bullet.” If we did, you’d be surprised at how much we would save. Same for fireman.
I’m a public employee. All I have to say to all you private sector employees is this:
You.Are.All.Suckers.
I don’t do squat, I make an OK living at it, I have an awesome pension, I am never in danger of being laid off, and as long as I simply show up to work, I can’t be fired. I don’t get bonuses but I do get to cash out my sick leave when it’s all over.
Oh, and I get lifetime health insurance. For free.
I love my job.
I’m a private sector employee. I sit in a cubicle all day and send emails and talk on the phone. Nobody would really even notice if I didn’t show up to work at all. I make no positive impact on anyone around me. In fact if my entire company vanished off the face of the earth there would be a half dozen others still around that do basically the same thing. I make a decent living but derive no personal satisfaction from what I do. I hate my job.
I have this to say to all public employees:
I wish I had chosen a profession dedicated to service to my community.
As all of you anonymous armchair quarterbacks sit in your glass houses and throw stones ask yourself what contribution to anything of worth you have had. I don’t think most public employees would have any difficulty answering that.
I was a Federal civil servant for a little over 40 years under the Civil Service Retirement System and got what I thought was a very generous pension: 71% of my high-three-years average salary, with survivor benefits for my wife. (But no Social Security.)
Congress decided in the ’80s that was too generous and started the Federal Employees Retirement System for all new employees (now the majority). This system is slightly more generous, but now a significant part of it is funded with employee contributions to a 401(k)-like system. (And it now includes Social Security as another part.)
The City (County, State) could also decide their retirement system needs to be revised. As James said, “And pigs will fly too.”
To John the man, thanks for trying to pose and speak for public employees. I am a public employee and I can tell you that I don’t just sit and collect a check. I bust my butt to get the job done and to get it done well. My co-workers are the same. We strive to provide a high level of service to the public and sitting on our butts wouldn’t accomplish that. Be careful what you say, like someone said above don’t broad brush the issue, there are many levels to this and we are people too with families to support. I can tell you I’m not living like “sheiks of kingdoms”. I live modestly and barely have enough to cover the monthly expenses just like everyone else in the Bay Area.
Funny… I never said I was speaking for anyone but myself. Do you normally read that much into what others write? I sure hope not, but I suspect you do.
The compensation models for government seem to be:
1) Uncapped salaries, doubling every 12-15 years
2) Salaries based on number of years of employment, not merit
3) Pensions based on high years’ salaries
4) Pension COLAs increase payouts, regardless of CPI
So .. it does not take more than 30-40 years before public sector salaries are significantly larger than equivalent private sector salaries.
And the pensions payouts (for a 30-year period) generally amount up to twice what the employee makes from actually working, as shown in the example below–
Using a COLA of only 2%, public safety retirees receive the following payouts:
Total Pension Payouts
Pension
$100K–10-Years: $1.1M | 20-Years: $2.5M | 30-Years: $4.1M
$150K–10-Years: $1.7M | 20-Years: $3.4M | 30-Years: $6.2M
$200K–10-Years: $2.2M | 20-Years: $5.0M | 30-Years: $8.3M
Police and Fire Department employees are routinely drawing over $100K in the larger CA cities. Their pension is 90% of their high salary. In another decade, or so, the public sector will totally bankrupt the private sector with their pension demands.
We are now beginning to see top management drawing $300+K a year, and in the case of Santa Clara County Medical Staff, many well over $400K a year.
Virtually no one in government management understands this, because they have “outsourced” the management of pensions to CalSTRS and CalPERS.
This is a mess .. and needs to get cleaned up pronto.
Beth:
You forgot to add that you don’t need to save for retirement since you’ll just keep right on getting the same pay check and benefits when you retire thanks to us private sector taxpayers who have to budget and save.
Unless MV declares bankruptcy, the taxpayers of MV are stuck with these overly generous salaries and pensions. As a result, we’ll see our taxes increase and our city’s infrastructure and services decay. :-{
I do not want to see lower quality employees working for Mountain View. If the city has the budget to buy up property all over the town then they are not in any budgetary problems and are playing a smoke and mirrors game. This article is another example of the problem where the city and county top staff are pointing the blam elsewhere and are looking to scare their employees. I am glad I am not in the public sector.
The irony of this forum is that when you watch a council meeting on the budget, the ONLY people in the audience are the employees. Last year only one resident spoke up. If we are as upset as we say we are, we should send emails to the council saying enough is enough and go and say so in public at a council meeting.
My staff sources tell me that CM Duggan will deliver a balanced budget but the majority of council will not support sustainable finances.
Lisa, what makes this forum ‘(ironic)’ vis-a-vis city council meetings? I don’t think you really understand what you wrote or maybe you don’t understand the definition of ‘irony’. Care to try again?
@Lisa: The employees in Chambers during Council meetings are there because it’s their JOB to be there. They’re working. You’re right about the abysmal apathy of the general public, most of whom refuse to be involved in the process of governing, instead preferring to carp online in forums like this, where their whining and complaining accomplish nothing.
@karanak: I never knew that looters could legally root during riots. Thanks for that info. I’ll remember that next time I’m in a riot. Could be lucrative.
Kanank – I agree in quite the same way as you do, but with a slight perceived difference in the mechanism of their theft. We probably do need to go bust, but with the foxes watching the hen house in bankruptcy court, all the furry critters will come out without a loss at all. All the taxpayers will still be writing the big checks. I wish it were different, but I can’t see that yet happening. However, going bust would be a good start. How can we file?
People who so-called “carp” here are most likely the ones that vote. They are the ones that are tracking the issues and getting involved by commenting and voting.
Shut up and go apply!
We’re STILL going to have to reduce the pensions, and NOT just for new employees, but for FUTURE years of service for CURRENT employees. That, and the free or near free retiree healthcare are the ROOT CAUSE of NJ’s financial problems. Specifically, we need : (1) reduced pensions for CURRENT employees (2) a HUGE reduction inn retiree healthcare subsidies with retirees paying AT LEAST 50% of the cost (3) Smaller government …. outsource almost everything
City/County compensation is a bit much. retire at 50? 91% high year? full medical? salaries over $200K? compare that to the federal compensation: 1% of high-3 avg * yrs of service w/ retirement at 63… salary for a world renowned scientist? well under $200K, and no stock options. I, for one, think federal compensation is generous, that is why it is called SERVICE. there is pride, responsibility and, yes, SACRIFICE that goes along with being a civil servant… the tradeoff is that you have job security. It is not for everyone, and should never become a path to riches. Time to reel public compensation back in… maybe the cities should just mimic the federal GS scale and FERS compensation model? Are the public employee unions ready to make the case that the largest employer in the country (US govt) significantly underpays its employees? I think most people would be disgusted.
I think Lisa my be onto something. I agree we should be demonstrating the fact the city management is only worried about themselves. We are like a bunch of sheep being led off to slaughter. Unless the citizens of M.V. gets off their behinds, we deserve what we get. “WE” do elect the people making these decisions. It’s like having the fox watch the chicken house. If a chicken come up missing once in a while will would notice. I know that there was a article in the Palo Alto newspaper a while back stating that in Palo Alto after six years of service that member was entitled to medical benefits for life. In Bell, Ca. it was reported that city council members were paid 100K per year. Does M.V. pay pay its city council? The San Jose Mercury News also reported our police chief held down both his position and that of the fire chief for a year and was compensated an additional $200K. If he has enough spare time to do both jobs maybe just maybe we don’t need the fire chief. That’s a savings of approximately a quarter million dollars savings right off the bat. Look at Sunnyvale where the city has public safety officers which serve as both police officers and fire fighters. It’s time the city learns how to do more with less.