‘We just decided to put it on hold while we deal with the budget issues,’ said Human Resources Administrator Melissa Chaney. ‘There’s nothing pending right now.’
That means the seven people heading up the city’s departments are operating under the old contract signed in 2005. Under that contract, the city budgets about $1,478,000 for salaries, health benefits, unemployment, workman’s compensation and other items for the city’s top employees.
‘Right now, we’re just trying to figure out where we are with the budget and what ramifications are with the current budget and the current fiscal situation,’ Chaney said.
More interesting is that several of the bargaining units in Davis have to renegotiate their contracts this year. The city is facing a $1.5 million shortfall this year and up to $3 or $4 million for next year.
The retirement benefit issue has been a heavy topic of conversation on the Vanguard in recent months. The Enterprise article mentions Antioch has gone to a two-tier system which has dropped the formula from 2.7% at 55 for current employees to 2.5% at 55.
The other possibility is that the employees themselves are asked to contribute more to their retirement than they presently do. That is probably going to have to occur as the CalPers system which had been superfunded during the early part of this decade is now running in a deep hole with the struggles of the markets and other problems.
The two-tier system is generally strongly opposed to by public employee unions, so increased contributions for all might be the way to go.
One pressure that the current city management staff and the council are going to have to fight is going to be the pressure placed on them by the bargaining groups to simply extend the current contracts for a few years until fiscal times are better. That would enable employee groups to wait out the current economic downturn and essentially punt on the tough issues.
Instead the city needs to take advantage of this crisis to fix the structural problems with the compensation system–particularly retirement pensions.
The city is going to need to be tough in negotiations this time because there are not only current bargaining issues of a looming budget deficit for the city, but there are structural problems that will end up further stressing the city’s fiscal condition.
As the Vanguard reported last summer, employee salaries rose 50% from 2000 to 2008. Total compensation to employees went from $27 million to $49 million over that period. However, retirement pensions fueled by the increase of the pensions to 3% at 50 for public safety have risen nearly six fold over that time. It is that factor that will further strain the city, especially as it has employees retire at 50 and 55 meaning the city may end up paying pensions for decades after retirement.
Is the city prepared to drag out these negotiations until they solve the problems in the contracts?
Looming ominously is a quote from HR Administrator Melissa Chaney:
“We haven’t sat down with any of the bargaining groups. We would probably be looking at sitting down with them at this time of year, we just haven’t done it yet.”
One of the big questions is the extent to which the bargaining process can have transparency. Bargaining itself occurs behind closed doors. However, the city is looking into ways to make the process more transparent.
Under past conditions, the bargaining took place behind closed doors, a contract agreement was reached and the item was placed on the consent calendar for approval by the city council. That means that unless someone pulled the item off the consent calendar there would be no public discussion of the contract and the only time the council saw it would be at the end of the process.
Some possible changes include a status report to the council on the bargaining process given through out negotiations. Having a public presentation at some point along the way about the contract. Requiring the council to approve contracts like they do city ordinances–a full public hearing on the first reading and then a second reading.
One of the important ideas here is to sufficiently put public scrutiny into the process that both sides realize and recognize they have to defend the contract that they have arrived at. What has happened in the past is that the agreement is made behind closed doors and then the city staff become de facto advocates for the contract. That has produced some extraordinarily generous contracts over the last eight years and has allowed city employees to reap huge benefits at the expense of taxpayers and other projects.
The city in addition to the budget deficit in the general fund also is running about $13 million short on a variety of projects–often repairs and infrastructure upgrades–they have referred to these as unmet needs. Part of the reason for the unmet needs is an increasing portion of the general fund goes to city employees.
The city is facing very serious issues and it will be vital that the public be engaged in this process as they are really the only oversight the city has on contracts to public employees. The Vanguard will continue to press for ways to make this process more open and transparent in hopes that the interests of the taxpayers and citizens of Davis are represented in the process.
—David M. Greenwald reporting
A news item said that Obama is freezing federal salaries. Salary limits or reductions appear to be inevitable for state employees. Local business are cutting salaries and jobs. If the city and school district can’t bring budgets in line with salary freeze or reduction, they will look out of line and incompetent.
The city should follow the example set by President Obama-salary freezes for anyone whose total compensation exceeds 100,000
That’s almost a given. But frankly we need the city to do far more than that.
Anonymous 7:48 am – They are incompetent. The economy might not be in good condition right now, but city is still millions in the hole because of poor management and council members who are beholden to the special interest of firefighters.
1. Last night the Davis Enterprise had an interesting article . 2. The Enterprise article .Is this blog owned by the Davis Enterprise ?
…The city is going to need to be tough in negotiations this time…So is the school district.
Davis VFDEveryone should think about that, it is a huge part of the solution. There are few cities in America that could put together a better, more professional and well organized Volunteer Fire Department.
…The other possibility is that the employees themselves are asked to contribute more to their retirement than they presently do….More? More? What do you mean by …more…? City of Davis employees — save cops and firefighters, whose pensions are even more lucrative — don’t pay one cent toward their pensions. By saying they ought to contribute more makes it sound like city employees are currently paying something to CalPERS….The two-tier system is generally strongly opposed to by public employee unions, so increased contributions for all might be the way to go….It really does not matter that public employee unions …strongly oppose… two-tier systems. What matters is 1) that the trajectory of the present system is toward insolvency, 2) that it is illegal to reduce the pension formula for existing employees, and so 3) we have no choice but to institute a more reasonable formula for new hires. The absolutely worst thing our city council can do is care what union bosses think. It’s time for the city to consider the interests of all of the people of Davis, including the taxpayers and the city employees who won’t have jobs if we go bankrupt.
…We haven’t sat down with any of the bargaining groups. We would probably be looking at sitting down with them at this time of year, we just haven’t done it yet….This says to me the city is going to punt on the issue of forcing tough negotiations. Putting infrastructure and employee benefits in an …unmet need… category, then pronouncing a balanced budget, only a year later to turn around and say we have a budget crisis is more punting. And the city’s bankruptcy may be the end result of City Council and City Staff’s unwillingness to tackle the problem.
…The city should follow the example set by President Obama-salary freezes for anyone whose total compensation exceeds 100,000….On Tuesday the city council will approve a new contract with Bill Emlen, the city manager. It probably will not merit discussion, as it is on the consent calendar. However, the contract is notable in three respects: 1) It freezes his salary;2) He still makes much less than the …business manager… for the school district; and3) He will not be required to move to Davis before 2012.The Davis City Manager is paid $158,700.00 per year plus benefits. Compare that with the compensation the DJUSD just gave to Bruce Colby.I realize that there are some who don’t think Emlen is doing a great job. Those ninnies go on sites like this and anonymously take pot shots at him. I disagree with them. From my perspective, albeit as an outsider, I have confidence in Bill. I know that the job of city manager is very hard; and that he works very long hours; and that I’ve been told personally by senior staffers that Bill is well-liked and respected by the people below him.I can’t imagine that the job of …business manager… for the school district entails nearly as much responsibility or anywhere near the hours the city manager puts in. I would not argue that $158 thousand is chump change. Rather, paying a …business manager… as much as our profligate school board is paying Bruce Colby is a huge ripoff to the taxpayers and to the teachers who won’t see that money.Regarding his residence, the staff report says, …The amendment extends the time frame for Bill Emlen to relocate to Davis through June 30, 2012. The amendment also provides that, if prior to 2012, the Council modifies the current city code requirement for the city manager to reside within the City, then he would not be required to relocate….
Rich:I was under the impression there was some contribution from the employees to Pers now. But technically, 5% would be more than the current rate even if it is zero.As for this:…It really does not matter that public employee unions …strongly oppose… two-tier systems…….The absolutely worst thing our city council can do is care what union bosses think. …In general, I’m on your side on this. However, there is still a collective bargaining process and so it does matter if the public employee unions are strongly opposed to a two-tier system. My general belief is that the problem lies not with the unions of most of the bargaining units but rather with the willingness of city staff and past councils to give them far more than they should have. Note that I said most rather than all.I agree with you on the rest though. We need to fix this system, we cannot simply extend existing contracts, we have to make tough choices even if that drags the bargaining process out for some time.
…I was under the impression there was some contribution from the employees to Pers now….Nope. The city pays 100% of the agency share and 100% of …the employees’ share… for all on the 2%@55 program. Only cops and firefighters (3%@50) pay their …employee share…….the problem lies not with the unions of most of the bargaining units but rather with the willingness of city staff and past councils to give them far more than they should have….I completely agree. I have no problem whatsoever with a union trying to get all it can for its members. A union’s job, correctly so, is not to look out for the city’s interests. It advocates only for its membership. The problem is when the city council does not adequately fight for the interests of the taxpayers and citizens who depend on government services. That is what the council must do from this point forward.
Can the city negotiate for different retirement options? For example, employees pay all costs and keep existing plans or return to 2% @ 55 and the city pays the costs.
The city has some leeway in the bargaining, whether they can get an agreement or not is another question.
*…The city is going to need to be tough in negotiations this time…So is the school district. *No the DTA has already indicated they understand the problem and will work with the district to avoid pink slips in the future. The city issue is far greater and the bargaining groups–or rather one bargaining group is a much greater problem.
…For example, employees pay all costs and keep existing plans or return to 2% @ 55 and the city pays the costs….One thing the city cannot do is reduce the pension plan for existing employees. For those who have 2%@55, now, they cannot legally be changed to something like 1.8%@55 or 2%@65. They are guaranteed no worse than 2%@55. However, the city can adopt a different structure — say 2%@65 — for new office workers. I’ve never met a fairminded person who thinks it is reasonable for desk workers to retire at 55 with a lucrative taxpayer funded pension and benefits. Many of these folks are going to live another 40 years on the dole.
‘I can’t imagine that the job of …business manager… for the school district entails nearly as much responsibility or anywhere near the hours the city manager puts in.’Not to dismiss the issue but have you ever sat around and listened to some of these parents whine, scream, and carry on about their ‘genetically superior’ child not getting the special treatment it deserves? You couldn’t pay me enough to deal with these people!
I believe that the City of Davis should care about their employees, whats wrong with treating your employees with respect and dignity ..I believe that all employees wherever they work show up to do a good job and excel at what they do ..Believe me there doing a lot more good and positive work , than this negative blog ..
Mr. Rifkin (as well as Councilmember Greenwald) seem to have no clue… they both advocate a 2% @ 65 plan… no such thing, at least under PERS… see http://www.calpers.ca.gov/index.jsp?bc=/member/retirement/service-retire/benefit-charts/localformulacharts.xml… will this info stop these two from saying that’s what miscellaneous employees had until a couple of years ago? or what they or new employees should ‘revert to’?… I doubt it… this is not the only incorrect/untrue they have been/are spouting… the author of this blog has obviously never checked …facts… presented by those who share his politcal/social views…
Is that really having no clue or simply not fully understanding the PERS system. I think both of them know a considerable amount about the budget and have a concern about the longterm viability of our current pension arrangement. If you disagree with that view, I’d be interested in hearing your view. If not, and you simply want to throw insults out, I don’t think you are going to convince a lot of people on here.
How about they participate in SS and take their chances with 401k’s like the rest of us?
Hmmm… not meant as an insult, but when people who in print (Rifkin's column awhile back) or in a public forum (Ms. Greenwald @ CC meetings) state 'as fact' that the city had 2% @ 65 until a couple of years ago, when the "true" facts are the city had 2%@6o prior to 1978, went to 2%@55 ~ 1996, & 2.5@55 recently, are they accountable for having their 'facts' straight? I came to the conclusion that they were either ill-informed or "worse"… I gave them the benefit of the doubt, but perhaps I should have worded it more gently. Consider that an employee who joins City of Davis service @ age 23 (assuming 4+ year college degree) and retires at age 55 will have (now) a 80% pension after 32 years of service (they would have had 64% under the earlier plan) with no Social Security benefit. Assume a similarly trained/qualified employee spent 10 years in the private sector (qualified for Social Security) & then joins the city @ 33 retires at age 55 will have ~ 51% pension after 22 years of service, has Social Security, BUT their Social security is reduced from what it would otherwise be, due to the 'government' pension. It's generally agreed you need 80% of final salary to 'survive' retirement.BTW… if an employee works 20yrs for another PERS agency, then joins the City, the City only pays towards the portion of the benefit for the years of City of Davis service.Another "fact" is that the increased cost of the improved retirement benefit came out of cost of living adjustments (COLA) that otherwise would have shown up in the currently expiring contracts. The Council demanded language that said that any costs for the additional benefit would come from the COLA's. That is to say, the city is currently, for most employees, paying no more than they would have for employee compensation. In addition, some members of the Council (G?), even to agree to go this far, demanded an additional 1% "premium" to be deducted from the COLA's from one or more of the bargaining groups for some reason (which they got). So the change resulted in a 1% "gain" to the city. I could cite the website for all of the readers to verify the veracity of this, but it is on-line at the city website under HR MOU's, and I have already given more documentation of my facts than many (most?) of the other contributors to this blog. Thus, today's current situation with the City's finances is not primarily due to the change in retirement formulas for non-safety employees. It's the economy, David.Is that to say that city employees should be immune to the economic breakdown? NO. Neither should they be the scapegoat… I hope that clarifies my previous comment.What remains open in my previous comment is whose "facts" (Emptyprise, City's, contributors to the blog) do you challenge and/or research? I've given you everything you need to honestly evaluate mine…
…Thus, today’s current situation with the City’s finances is not primarily due to the change in retirement formulas for non-safety employees. It’s the economy, David….I clearly disagree with you. These issues in fact have been brought up before the economic collapsed.The current deficit, I agree is attributed to the budget deficit.However, the fact still remains that there has been a steep increase in employees salaries and benefits and the city was already concerned about the fiscal situation before the economic collapse.We essentially had a deficit before this, we just placed that deficit into an unmet need category. We’ve had a discussion on unfunded liabilities for quite some time. This crisis was predictable and frankly the economy helps us by allowing us to restructure the contracts and pension system in a more sustainable and responsible way.
Anonymous @ 9:22 asked about SS & 401 k's… if an Davis city employee has no SS history (worked for a PERS agency since original hire or, hasn't been in SS, I believe, in last 10 years) they may be ineligible for SS until they work 10 MORE years of on the private/covered side. Most 401's provide for an employer's match, to a limit. Those of us who invested in 457's (some govt's version of the 401k's) have gotten hammered as well, but we never got an employer's match at any level.
…How about they participate in SS and take their chances with 401k’s like the rest of us? …A lot of reasons at this point preclude that possibility.
Anon 7:53 writes: …Mr. Rifkin (as well as Councilmember Greenwald) seem to have no clue… they both advocate a 2% @ 65 plan… no such thing, at least under PERS……I concede that I was not aware that this was not a PERS option. The link you provided did not work, but I believe you. I never, of course, said we should go to 2%@65 under PERS.There is another option — Davis could institute a 401K program entirely outside of PERS. That is what the City of Pacific Grove has done….will this info stop these two from saying that’s what miscellaneous employees had until a couple of years ago?…No one ever said that. You’re hallucinating.
"Hmmm… not meant as an insult, but when people who in print (Rifkin's column awhile back) or in a public forum (Ms. Greenwald @ CC meetings) state 'as fact' that the city had 2% @ 65 until a couple of years ago, when the "true" facts are the city had 2%@6o prior to 1978, went to 2%@55 ~ 1996, & 2.5@55 recently, are they accountable for having their 'facts' straight?"A second poster making this same false claim against me? I challenge you to quote me ever making any sort of claim like that in my column. I’ve never referenced anything about what we had before we adopted our current formulas with CalPERS.
…BTW… if an employee works 20yrs for another PERS agency, then joins the City, the City only pays towards the portion of the benefit for the years of City of Davis service….That’s true, but irrelevant. The City of Davis picks up where the previous employer left off, same as when someone moves from Davis to another agency.The theoretical danger for Davis is when someone is hired very near retirement age: meaning 50 for safety workers or 55 for everyone else. Such a person could be on the Davis payroll for next to no time at all, retire, and then for the rest of his/her life collect retiree medical benefits — all paid for by Davis taxpayers. If the person is married, the spouse gets the benefits, too. And if the retiree has a child at home under 22 years old, the child gets the full benefits. These include full medical, dental and vision. Under the Kaiser family plan, that costs the city about $15,000 a year. Once the person reaches age 65, MediCare pays some of that cost. But it doesn’t seem quite in the taxpayers’ interest to have an employee work for the city, say for a few months, and then get this benefit for the next 40 years.
…Thus, today’s current situation with the City’s finances is not primarily due to the change in retirement formulas for non-safety employees. It’s the economy, David….This is complete nonsense. The problems with the city finances predate the economic downturn. A year ago, well before Lehman Brothers or any talk of recession, the city was at least $3 million in the hole, unable to pay for necessary road repairs. The problems have been exacerbated by the economy. But they began a long time ago with the overly lucrative retirement plans and the massive increases in salaries. In the last go round, just for example, most city employees got raises of around 18%. The firefighters famously got more than twice that much in a raise.Also, for twenty years, the costs of medical/dental benefits have been going up 10% or more a year. Unlike in the private sector, where employees have shared in this burden, or even absorbed the increases completely, or gotten worse benefit programs, as with the school district, city employees still get a top rate medical-dental-vision plan that they taxpayers pay for.While it is true that this inflation in costs is not the fault of the employees, it remains the case that employing them is much more expensive because of it.
Unionized state employees have already had their pay cut, effective this February. The governor calls it a 2-day a month furlough, but it is nothing more than a 10% pay cut (since the workload has not been cut). If the state can do that without engaging in collective bargaining, it should be pretty easy for the city and school district to balance their budgets on the backs of their employees too. (Or is the governor like the President — that if he does it, it is not illegal?)
Robin: unfortunately the state budget is going to have to balanced on all of our backs. It is simply that big.There are only two ways to balance a budget–you either raise revenue (i.e. taxes) or you cut services, service are someone’s job or at least their salary.I was on KPFA yesterday talking about the California budget and the other guest pointed out that if we cut all state spending to colleges and closed all the prisons, it would still only get us halfway to a balanced budget.The city is not in that bad a shape. Short term, I don’t think we can balance the budget based on employee cuts to city. But we are going to have to re-structure the contracts. For one thing, CALPERS is in a steep hole right now, so someone is going to have to pick up the 9% shortfall–either the city which has no money or the employees.
Rich Rifkin is so …right…… in his Enterprise column he only advocated for a 2% @65 formula that doesn’t exist…
On this rare occasion I agree with Rich Rifkin. Unions create an offensive smell in the Public Employee sector. The most current odious unions are the firefighters union and the seiu. Both of them are public thieves……..
I have a solution for the current city budget crisis. We copyright the word, …transparency,… and charge a royalty fee each time this word is used and repeated in a Vanguard column. All fees collected are direct deposited in the city coffers. Within a matter of weeks the city will be flush again.Seriously, please, can we find an occasional synonym for for this worn-out word.
I’ll make sure to put the word …transparency… in our charter, just for you.
Synonyms for transparencySorry, I could not find synonyms for ‘transparency’.Source: http://www.synonym.com/synonyms/transparency/
Rich Rifkin is so …right…… in his Enterprise column he only advocated for a 2% @65 formula that doesn’t exist……It exists, just not under PERS. Davis can go outside of PERS, as do some other public agencies, such as Pacific Grove.In terms of how much the taxpayers have to shell out on a monthly basis to fund these pensions, it doesn’t make a difference if the minimum age is 55 or 65. The 2 percent part guides that. The fiscal problem with encouraging age 55 retirement comes from the unfunded free retiree medical, which costs the city a tremendous amount of money.If a perfectly healthy, able-minded desk worker retires at 55 instead of 65, for 10 years the taxpayers in Davis will pay not only for his (and his family’s) medical benefits, but the taxpayers will also pay the same expense for his replacement.From what I have been told by senior staff for the city of Davis, most employees don’t retire at the earliest date they qualify for retirement. However, those who do, often take new jobs elsewhere. A 50 year old cop, for example, can retire from the City of Davis, draw a full pension and receive taxpayer-funded free medical, dental and vision care for himself and his wife (and a child), all the while he goes on to work full-time as a criminal or civil investigator (usually for a law firm), making another nice salary for the next 15-20 years. A lot of …retired… city managers, city engineers, city finance, human relations, etc. folks go on to 20 year careers as full-time public-sector consultants, where they live very well on a taxpayer funded pension, free medical, and a large income from their consultancy business.
…I realize that there are some who don’t think Emlen is doing a great job. Those ninnies go on sites like this and anonymously take pot shots at him. I disagree with them. From my perspective, albeit as an outsider, I have confidence in Bill. I know that the job of city manager is very hard; and that he works very long hours; and that I’ve been told personally by senior staffers that Bill is well-liked and respected by the people below him….Well I have no confidence in Bill Emlen. It is under his watch that we have DavisFireDepartmentgate; UnmetNeedsgate; and a circle the wagons mentality that protects City Staff at all costs. I’ve been on the business end of that sort of thing from Bill Emlen, and let me tell you, it is not a pleasant place to be. He will protect his staff at whatever cost to the city, using whatever tactics are necessary.
Can Mr Rifkin cite his source re: Pacific Grove? It’s not readily avail. from their web site… hp
Technically I was his source……Pacific Grove to put retirement plans on ballotBy KEVIN HOWEHerald Staff WriterArticle Last Updated: 07/25/2008 01:35:32 AM PDTPacific Grove voters will be asked in November whether the city should abandon the state Public Employees Retirement System and offer a defined contribution 401(k)-style retirement program instead….
Yes, David alerted to me what was proposed in Pacific Grove late last summer. I don’t recall if he wrote anything about that on Vanguard, but you should note that the initiative was passed overwhelmingly by voters, there, directing the city council of Pacific Grove to move all new employees to 401K plans and leave CalPERS entirely.
…It’s not readily avail. from their web site…For what it’s worth, I just looked at the PG website and they have a lot of information on there about that city leaving CalPERS. Although this was composed prior to November’s vote, you can learn quite a bit reading this memorandum on this topic. An interesting revelation to me is that by leaving PERS, the City of PG will get a refund of approximately $10 million. Because their MOU with the PGPD, Pacific Grove will not be able to fully exit CalPERS before 2010, when that MOU expires.The motivator to leave was to allow the City of PG to control its costs. That will be a big deal for our budget in the next few years, when the huge losses suffered by CalPERS since October, 2007 — both in housing and stocks — force the rates CalPERS charges to Davis to go up substantially. PG won’t have to pay that bill.–Rich