In yesterday evening’s Davis Enterprise, Rich Rifkin had an interesting article about 10 necessary reforms the council needs to make with regards to employee contracts. While I think this is a good start, I would probably recommend something somewhat different.
This column starts with an evaluation of Mr. Rifkin’s suggestions, and then goes on to make some of its own suggestions and overall comments. My hope is really not to provide definitive answers but start a community conversation about how to approach our contract negotiations.
Along the sames lines, I think we need to look at pensions for those making 3% at 50 (which is of course both police and fire) and those making 2.5% at 55 which is upper management.
With those points in mind, let’s view Mr. Rifkin’s suggestions.
“1. All city employees have to start paying the employee share of their pensions. It makes no sense to charge taxpayers with this $1.7 million annual bill.”
I certainly favor employees picking up an increasing portion of their pension contribution. I do not go as far as Mr. Rifkin here, particularly for those employees making closer to the average salary. Certainly those making 3% at 50 and 2.5% at 55 should be contributing to their pension. I’m less willing to say that for the average rank and file worker.
“2. Any increase in the pension rates charged by CalPERS in future years must be offset by equal reductions in employee salaries and benefits. That sounds adamantine, but the only alternative will be to fire scores of needed employees.”
Again, that sounds good if the employee is making $100,000 per year. But we have employees who make as little as $30,000. The average employee only makes in the $60,000 range.
“3. For the next four years, there can be no salary increases for any city employees. From 2005-09, the council inflated city salaries far beyond the Consumer Price Index. A wage freeze will help to bring us back to sustainability.”
This is close to what I’ve proposed which is a cap on all wages while we are in the economic crisis. I would then continue to cap wages for those in the upper brackets for at least four years and afterwords, cap salary increases to the rate of inflation.
“4. All employees who received pay raises greater than 25 percent over the past four years need to have their base salaries decreased at least 8 percent beginning July 1. Firefighters, for example, got a 36 percent salary hike in their last contract.”
Again, we would have to look at see who is included in that group. I would probably want a salary floor of at least $80,000 before agreeing to any kind of cut. The other problem of course is that you have to get these groups to agree to it in collective bargaining.
“5. For all new hires, the PERS pension formulas must be reduced to sustainable amounts. That means no more than 2.5 percent at age 55 for police and fire. For everyone else, the new formula should be no greater than 2 percent at age 60.”
We should look at this proposal, we are already asking for increased employee contributions, I am not certain that we need this on top of the other.
“6. The city of Davis can no longer pay for the cost of medical, dental and vision care for retirees under age 65. If someone who is healthy chooses to retire young, he can pay for himself until he qualifies for Medicare.”
I am not comfortable with this one. What I might look into is some kind of shared plan, where the employees pick up some of the costs. I also hope this is a moot point within the next two years. This is another example of why I think a universal health care program actually saves the government money in the long run.
“7. We need to stop paying overtime to all employees who are managers and supervisors. The city of Davis gave one police sergeant $50,000 in overtime last year; we handed a fire captain $37,000 for his. High-paid managerial positions like police sergeant and lieutenant, fire captain and division chief, public works supervisor and parks supervisor need to be treated accordingly. They should not be costing us $1 million extra in overtime – yet they are.”
I agree.
“8. Davis needs to cap the number of paid holidays at five per year per employee. We currently grant every employee the day off for at least 12 holidays every year – in some cases it’s 14.5. The great expense in this is not shutting down offices; it’s paying those who work Presidents’ Day and Dec. 24 and Jan. 15 double-time.”
I probably do not support this.
“9. We need to get rid of all union bank hours. These are hours the city shockingly pays employees to not work for the city but to conduct the business of their unions, including taking trips out of town. How in the heck are union bank hours in the interest of the taxpayers?”
Here is what the Union Bank of Hours is supposed to fund:
“The purpose of this Union Hour Bank is solely to provide educational training and development opportunities to UNION members and should not involve conducting or participating in other agencies’ unions activities.”
I do not have a great problem with that. What I do have a problem with is that the city did not make the union account for how those hours were used.
“10. We need to stop basing pay and benefits packages on what other cities give out. While a survey sounds benign, the result is deadly. One irresponsible agency raises its pension formula, and every other city in the survey is compelled to follow suit. That is why so many cities in California are facing bankruptcy. The relevant question is not how much Fairfield is paying its people. The question is how much can Davis afford?”
Yes!
As one can see, I take a somewhat nuanced view from Mr. Rifkin. I think he heads in the right directions. My chief point of departure is that he wants to implement much of this for every employee, I personally do not believe the problem is those employees making $30,000 to $70,000 per year. I think it is those making over $100,000 and getting either 3% at 50 or 2.5% at 55. That is what I think is going to kill the city.
I have no desire to balance the budget on the backs of someone making $60,000 per year in Davis. Those making $90,000 in salary and overtime alone cost the city $11 million in salary and overtime and nearly $15 million in total compensation. That’s where I focus my efforts, not on those making $60,000 who are struggling in this economy just like the rest of us.
The other problem I have is that we do have a collective bargaining process, and so you can list off your ideal list of reforms, but you have to get the employees to agree to them. That is another problem altogether.
Here is an Op-Ed from the Claremont newspaper published on March 27, 2009:
“Claremont’s city employees deserve a lot of credit for their reasonable approach to the economic downturn and the pressure it has put on the city’s budget. In response to the $2 million deficit that the city’s finance department projected for the 2009-10 fiscal year, all six unions and associations that represent Claremont’s employees agreed to reductions in payroll and benefits totaling $1.16 million.
As taxpayers dumbfoundedly watch their elected leaders at state and federal levels fail to grasp the need for collective belt-tightening, it’s gratifying to see such an example set by elected leaders and public servants on the local level.”
This is really the type of effort we need locally.
Now I am assured by city staff that the City of Davis is in negotiations with its employee bargaining groups. One of the focuses is how can these labor contracts assist the City in dealing with our significant fiscal challenges. The suggestion has been one of optimism. There are claims that employee groups have come forward with various proposals and ideas that would enhance our overall fiscal outlook.
Great.
The only problem is that I really do not believe them.
What reason has the city given me to trust that this will be done properly? I look at how the Grand Jury report was handled, I look at how the current situation in Westlake has been handled, I look at our long growing list of unmet needs, Councilmember Sue Greenwald has been warning people for as long as I have been watching that this is unsustainable and that we have to do something about our pension system and our unfunded mandates, and those pleas have frankly fallen on deaf ears.
I look at any number of things going on in this city, and I just don’t see a reason for the benefit of the doubt.
If the city wants my confidence, this needs to happen in a much more transparent way. It needs to happen out in the open to as much degree as possible. The city needs to lay some cards out for the public to see. We need to see that you are fighting for us, rather than capitulating. Because to date, there is zero evidence that this is taking place.
I need some evidence that the city really understands what we are facing both short-term and long term. All of the discussion I have seen have tried to paper over and to some extent (maybe even a very large extent) whitewash the very real problems we face.
So while I disagree somewhat with Rich Rifkin, at least he lays some cards and concrete ideas on the table.
Unfortunately this is all in the hands of city staff behind closed doors. Nothing good is going to come out of that arrangement.
—David M. Greenwald reporting
I agree with Rich on the number of holidays issue. The private sector certainly does not get as many paid holidays as the public sector. I got six paid holidays when I was working for a private business. I think there is a real savings to be gained in reducing the number of paid holidays.
The City Council is not capable of making employee compensation decisions because the labor unions have funded most of the current council members’ campaigns. This financial conflict of interest is the reason that there should be an outside, contracted for entity to make the decisions. The city attorney is currently not a City employee, so this outside entity could be retained. I think that we need to hire an accounting firm to present income and expenditures for the City residents. Since there is a shortage of funding available, I recommend taking half the money going to the City Attorney and spending that on this outside accounting firm.
We also have to do something with the excess City employees in the planning department and building inspectors. We need people to oversee the budget and a lot of the planning department is qualified to do this work. They should be transferred to a budget oversight staff and start planning the City’s future. Having people sitting at their desks with no meaningful work while the City dies is a bad idea.
Would someone please clarify for me what “3% at 50” means? or 2% at 60? etc.
Thanks.
Refresh my memory, don’t city employees also get cash if they don’t use the medical benefit, e. g, spouse plan? That if true seems terrible for taxpayers.
WDF:
For each year that an employee works, they get three percent of their salary. So if they retire at age 50, they could get 30 time 3% or 90% of their ending wage if they get 3% at 50. If it’s 2.5% at 55, then they get 2.5% upon retirement at age 55. The average state worker gets 2% at 60 or 65 by comparison.
First off I think David pointed out that with the police the high overtime was actually paid mostly by private businesses hiring security at apartment buildings and events.
3% at 50 is partially funded (9%) by the employees. I also wonder if sue will take her medical or will she help the city and turn it down.
Last year about 70,000 of the 600,000 in police overtime came from private sources. So it doesn’t appear mostly.
LINK ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=1129:city-saves-money-by-plugging-a-hole-in-extra-duty-police-program&catid=58:budgetfiscal&Itemid=79[/url])
Sorry I was speaking of the high amount to one to four officers/sergeants. Also not paying overtime to supervisors is not in line with FLSA. That is set by federal law to protect the workers.
While Rifkin raises some points his column made it sound like some sort of demand or for us or against ultimatum. Of course this is something most columnists shy away from since the only power they hold is the ability to influence public opinion. Rifkin also seems to think that unilateral labor contract imposition is the answer to all budget conflict without realizing that he is playing with dynamite. I think you guys; Greenwald and Rifkin, should run for office if you want to make demands. Its easy to say impose unilateral contracts when you are not the true decision makers who need to deal with the fall out from such radical labor decisions.
I think Rich’s pronouncements put the cart before the horse. Before we outline solutions we need to know what the problem is. I think the key to issues of pay, benefits and pension is to know as precisely as possible the future costs of those benefits and pensions. It is then necessary to budget for costs, with actuarially sound projections of what it will take to fund such costs in a sustainable manner. It is incomprehensible to me that public entities have been allowed to have such enormous amounts of unfunded liability. To have intelligent policies you must know future liability and address those future funding issues now.
There also needs to be clearer accountability for all workers in city government. This begins with with managers having well-defined goals and solid metrics to assess the accomplishment of those goals. When there is no “bottom line”, it is crucial to know what you are aiming for, and how closely you have come to the target.
My experience has been that while people are willing to work hard, and want to do a good job, workers want their good work acknowledged. If the only acknowledgement that people receive is the paycheck, that becomes their only focus. If a culture exists that you can slide by doing little or nothing, but risk getting in trouble if you take the initiative to do something, then it is clear that effort gets minimized. We need to constantly contribute to a positive culture of public service, and thank folks who do a good job, and encourage initiative.
Observation. I recall all of the pieces about police racial profiling. Based on Rich’s latest article I think he has elevated himself to an entirely new/special class. I think he should walk – everywhere.
Seriously. the list is a nice laundry list, but the focus needs to be on #5 and #6. That is where the money is. Why are the pension formulas changing just for new hires? – if you want to confront the problem then go for it!
The bottom line is this:
1) Labor negotiations take place behind closed doors – as allowed by law. Until the law changes, we will never have transparency in the labor negotiating process.
2) Firefighters contributed to the campaigns of the City Council majority. The City Council majority has been bought and paid for by the fat cat city employees.
3) City Mgr Bill Emlen is a shill for the Council majority (as is his toady Finance Director Paul Navazio), a poor manager, and spineless to boot. Emlen very often does not act in the city’s best interest. But then why should he, he doesn’t live here (even tho he is required to by his contract), and could care less.
4) The unions do not have to listen to or agree to any of Rich Rifkin’s suggestions. It is my understanding that the City cannot retroactively decrease employees’ rate of pay, or benefits, etc. Help me out here, what can be retroactively done w/o employee approval? Anything? If not, then all these suggestions are so much hot air, even if laudable.
If Davis doesn’t reign in its out of control spending, it may find itself declaring bankruptcy like Vallejo, w the bankruptcy judge renegotiating employee contracts.
I would like to see Rich’s list copied and handed out at all future budget meetings and particularly in the “secret meetings” with the unions. The unions are the problem, they are a disaster for this city.
[i]”I’m also by nature a union supporter.”[/i]
I don’t have any prejudices, pro or con, with regard to unions. My bias is to do what is right for the city as a whole and save the jobs of people who will be fired if we fail to reform, now.
[b]”1. All city employees have to start paying the employee share of their pensions. It makes no sense to charge taxpayers with this $1.7 million annual bill.”[/b]
[i]I certainly favor employees picking up an increasing portion of their pension contribution.[/i]
Keep in mind that there are two parts to the pension payments: part 1 is the employer’s share; part 2 is the employee’s share. The employee share is capped at 8% of salary for 2.5% @ 55 employees. [u]All I am calling for is to have employees pay the employee share.[/u] Nothing more. Currently, safety employees in Davis pay this amount. The taxpayers pay the employee and employer shares for non-safety.
[b]”2. Any increase in the pension rates charged by CalPERS in future years must be offset by equal reductions in employee salaries and benefits.”[/b]
[i]Again, that sounds good if the employee is making $100,000 per year. But we have employees who make as little as $30,000. The average employee only makes in the $60,000 range.[/i]
I have no problem with excepting lower paid people in this regard, if the money is there. But we have a $2 million or so tsunami heading at us in 2011, and therefore making exceptions means firing dozens of employees in 2012. I think it is preferable to have everyone take a small hit than a few losing their whole jobs.
[b]”4. All employees who received pay raises greater than 25 percent over the past four years need to have their base salaries decreased at least 8 percent beginning July 1. Firefighters, for example, got a 36 percent salary hike in their last contract.”[/b]
[i]Again, we would have to look at see who is included in that group. I would probably want a salary floor of at least $80,000 before agreeing to any kind of cut.[/i]
No one making under $80,000 got a raise in excess of 25% in 2005.
[i]The other problem of course is that you have to get these groups to agree to it in collective bargaining.[/i]
No, you don’t.
[b]”5. For all new hires, the PERS pension formulas must be reduced to sustainable amounts. That means no more than 2.5 percent at age 55 for police and fire. For everyone else, the new formula should be no greater than 2 percent at age 60.”[/b]
[i]we are already asking for increased employee contributions, I am not certain that we need this on top of the other.[/i]
This would only apply to future hires. It is illegal in California to lower the PERS formulas for ongoing employees.
[b]”6. The city of Davis can no longer pay for the cost of medical, dental and vision care for retirees under age 65. If someone who is [u]healthy[/u] chooses to retire young, he can pay for himself until he qualifies for Medicare.”[/b]
[i]I am not comfortable with this one. What I might look into is some kind of shared plan, where the employees pick up some of the costs.[/i]
We need to stop encouraging early retirements. The problem is not just the $250,000 it costs to pay for the health care of a healthy retiree from 50-65 who chooses to quit working at age 50. The problem is that we then have to pay the salary, pension and health care costs of the person who replaces the young retiree on top of that. My idea would not deny someone the right to retire young, or the right to be covered by the city’s health care plans. It simply would not force taxpayers to buy his health insurance before he reaches normal retirement age.
[b]”8. Davis needs to cap the number of paid holidays at five per year per employee. We currently grant every employee the day off for at least 12 holidays every year – in some cases it’s 14.5. The great expense in this is not shutting down offices; it’s paying those who work Presidents’ Day and Dec. 24 and Jan. 15 double-time.”[/b]
[i]I probably do not support this.[/i]
Keep in mind that in addition to the 12-14.5 paid holidays, most veteran city employees also get four weeks of paid vacation. Even though that exceeds (by about a week) what most people working in the private sector get, I didn’t call for any reduction in vacation time. So with 5 days of paid holiday, the taxpayers will be paying for 3 weeks (in cases of new employees) to 5 weeks to workers who will not be working each year. That is more than generous.
[b]”9. We need to get rid of all union bank hours.”[/b]
[i]I do not have a great problem with (union bank hours). What I do have a problem with is that the city did not make the union account for how those hours were used.[/i]
Can you tell me how it benefits the taxpayers to give the fire department union, for example, 1,104 hours (in 2008) to conduct union business on city time? These guys only go to work 9 days in 27. Let them conduct union business on their own time.
[i]My chief point of departure is that he wants to implement much of this for every employee, I personally do not believe the problem is those employees making $30,000 to $70,000 per year.”[/i]
First, no full-time city employee makes $30,000 a year or less. Not one. Second, my motivation is to save the jobs of those who need them. Fiscal irresponsibility is ultimately going to cause a lot of people (not firefighters or cops) 100% of their jobs.
[i]The other problem I have is that we do have a collective bargaining process, and so you can list off your ideal list of reforms, but you have to get the employees to agree to them.[/i]
The city is obligated by law to bargain in good faith. They are not legally obligated to get the unions “to agree to them.”
MV: [i]”It is my understanding that the City cannot retroactively decrease employees’ rate of pay, or benefits, etc. Help me out here, what can be retroactively done w/o employee approval? Anything? If not, then all these suggestions are so much hot air, even if laudable.[/i]
Nothing can be done retroactively. I have not called for any retroactive changes. Every modification in policy I suggest would take place beginning July 1 of this year.
MH: [i]The unions are the problem, they are a disaster for this city.[/i]
There is no provision in any contract won by the unions for its members which the current or past city councils did not agree to willingly. Even though I object to the activities of the fire union in our elections (and more to the candidates who take their money), I don’t blame the unions for the city’s terrible fiscal problems. It is the unions’ duty to try to get every last penny and perk for their members. However, it is not our duty, as a city, to give them every last penny or to pay for their “union bank hours.” I think Davis (like many other cities, counties and the state) has dug itself in a whole because it lacked the balls to not give in to union demands. It’s as if we hired a defense attorney who is working on behalf of the prosecutor.
Rich: even if you wait until after July 1, you still have to get the city employees to agree to a collective bargaining agreement.
I’ve received maybe 15 emails asking about union bank hours. For the record, know that only two associations in Davis, the DCEA (120 hours) and the firefighters local (1,104 hours) receive them. PASEA (PROGRAM, ADMINISTRATIVE AND SUPPORT EMPLOYEES ASSOCIATION) gets no union bank hours. The Davis Police Officers Assoc. gets no union bank hours. None of the other bargaining groups with the city (which are not unions) get anything similar to union bank hours. The entire idea of union bank hours is a rip-off to taxpayers.
“I personally do not believe the problem is those employees making $30,000 to $70,000 per year. I think it is those making over $100,000 and getting either 3% at 50 or 2.5% at 55. That is what I think is going to kill the city”
Split the difference and let’s say $50,000 per year. Then it takes two to make one $100k bogeyman. Then consider that the ratio of benefits to pay is higher with lower-paid employees. Since family healthcare costs are the same for an employee at any pay level. Although certainly higher-paid employees cause greater impacts with overtime, there are other criteria to consider at all wage-levels. Playing the wage-class exclusion game will limit valid considerations.
One potential solution for the overtime problem is change the classification of all senior-level employees to exempt (salaried). Worker-friendly Federal and State labor codes and IRS rules make this difficult, but not impossible. It requires the employer to change the job performance expectation to goals instead of specific tasks, and then allow significant discretion for how the employee carry out their job to meet the stated goals. In the private sector, most professional-level (i.e., highly-compensated) employees are exempt from overtime. However, a great many work more than 40-hours per week when necessary. Today, more than ever, it is necessary. The motivation of these employees is to help their company stay solvent so that they get to keep their job. Conversely, the motivation of unionized labor seems to be bleeding their employer to death.
Rich:
“None of the other bargaining groups with the city (which are not unions) get anything similar to union bank hours. The entire idea of union bank hours is a rip-off to taxpayers.”
I find this interesting. You go from stating a fact–to reaching a conclusion that is not supported by the fact. Just because no other bargaining groups in the city have anything similar to union bank hours, does not mean it is a rip-off to taxpayers. It may be, but that is a subjective conclusion on your part. A variety of unions have similar clauses worked into their contract. The question is what they do with their time–the problem I have is we don’t know the answer to that and apparently the city has never bothered to ask. That’s a problem. Once we find out the answer, I will be in a better position to judge whether it is a ripoff to taxpayers. I don’t know.
“Split the difference and let’s say $50,000 per year. Then it takes two to make one $100k bogeyman. “
They are not bogeymen, it’s simply a number game. And trying to find way to reduce cost. By hiring two workers at a lower rate, you get more things done for the same cost.
[i]”Rich: even if you wait until after July 1, you still have to get the city employees to agree to a collective bargaining agreement.”[/i]
It depends on what “impasse procedures” each contract has in place. In the case of the police (and maybe fire), they will have to go to arbitration first. That is not the case with any other bargaining groups in Davis.
It’s the same state law which applies in the case of the school district. (In fact, it is the very reason why the school district, in January, sent notice to the DTA that the district would not be obligated to maintain the current salary schedule after July 1.)
Here is what I was told verbatim: “Gov’t Code 3505.4 says IF after meeting and conferring in good faith, an impasse has been reached and impasse procedures have been exhausted, [u]the agency can unilaterally implement its last, best and final offer[/u].”
The city has been negotiating in good faith for many months now.
[i]”Just because no other bargaining groups in the city have anything similar to union bank hours, does not mean it is a rip-off to taxpayers. It may be, but that is a subjective conclusion on your part.”[/i]
Tell me, David: How is it in the best interests of taxpayers in Davis to pay for 1,104 hours of work time for firefighting service, when in all of that time, no work for the city of Davis is being performed?
Second, I never said that because other bargaining groups don’t get union bank hours that that is the reason why it is a rip-off. It’s a rip-off because we are paying these people to work, and they are not working for us for all of those hours. They are spending that paid time doing activities which are not benefitting the people of Davis. I don’t have a problem if a union member wants to attend a union function. That’s his right. And he can do that on his own time, not while he’s being paid by me.
Rich: Impasse is a really tricky thing and even with it, it still requires the cba process (hence the good faith part) and compromise (again see good faith clause). You ought to see how often an agency has successfully implemented its last, best and final offer before you hang your hat on it. Also you would have to know what they are offered. Good faith would not be established btw, if the city simply dug in on the points you are advocating. I will argue that there is no way the city could impose your contract using that clause.
“Tell me, David: How is it in the best interests of taxpayers in Davis to pay for 1,104 hours of work time for firefighting service, when in all of that time, no work for the city of Davis is being performed?”
It all depends on what they are doing with that time. The problem is still that we do not know the answer to that. BTW, they’ve never used close to 1104 hours, not that really changes anything.
[i]” A variety of unions have similar clauses worked into their contract.”[/i]
I challenge you to name me one union which operates in a competitive industry which has “union bank hours.” The only unions that could get away with this rip-off (for very long) are government unions or those in the uncompetitive private sector which make money off of government contracts. I don’t accept the excuse that “others are doing it, too.” That’s how we got into this mess.
Rich: I don’t know enough about unions in competitive industry to answer your question. What I do know is that competitive industry is not always right and I am not willing to use them as the model for how to treat employees as a general rule. Regardless I’m simply in this case refusing to make a judgment before I have all the facts as to what it entails.
It is refreshing to see the beginning of an honest debate on a topic that underlies a financial cliff that is being approached by Davis and many other municipalities. All the views above reveal opinions far more informed than typical.
I studied this problem last year and concluded that there is no positive outcome. There is simply no possibility that the combination of politicians, unions, press and legal structures that we have in place will allow a solution.
So what will happen? I see two possible solutions:
1. Bankruptcy. This is almost inevitable in Davis’s future. And it is not such a bad solution. Bankruptcy allows the discarding of untenable contracts and debts. I would not be a buyer of any California municipal debt for this reason. And if I were a union employee, I would not be counting on that pension being paid off at the rate promised.
2. Saved by inflation. Inflation rates of 10%, 20% or 30% a year are not unlikely given the massive increase in the money supply guaranteed by the policies of the Bush and Obama administrations. Such inflation may cut back real wages enough to save the city. However it is more likely that the city will make counteracting actions that undo any benefits of inflation.
[i]”Rich: I don’t know enough about unions in competitive industry to answer your question. What I do know is that competitive industry is not always right”[/i]
Competitive industry (by definition) must always be right in this sense: if they make wrong decisions (and the taxpayers don’t bail them out), they go bust. Just to repeat myself: I don’t fault the unions. I don’t fault the unions for asking for any provisions. I fault the people who are supposed to be fighting for the taxpayers, but clearly have not. If both sides had always stood up for the parties they are supposed to represent, a happy (sustainable) middle-ground would have been reached. All of the reforms I suggest are moves toward a middle-ground, where city employees, working for the citizens of Davis, have stable, well-paid, well-benefitted jobs that the taxpayers of Davis are happy to afford. When we overpay and overbenefit and give away rip-offs like union bank hours, we get to a point (as we are now) where the city is bleeding red ink, where services (such as safe roads) are not provided, and where the long-term stability of many city jobs is lost.
“Competitive industry (by definition) must always be right in this sense: if they make wrong decisions (and the taxpayers don’t bail them out), they go bust.”
That view certainly ignores a good amount of history including the struggle for labor to organize and the fight for good working conditions.
I certainly don’t think a lot of private industry has gone bust by mistreating its workers.
[i]I certainly don’t think a lot of private industry has gone bust by mistreating its workers.[/i]
Paying workers good money to actually do the work they are paid to do is not mistreatment. Paying workers to not work, but instead to attend union meetings, including meetings out of town, is a recipe for bankruptcy for any truly competitive company. Keep in mind that private businesses fail all the time. They usually fail because they make decisions which don’t serve the bottom line. Those bad decisions include many things unrelated to organized labor, of course. Of all the terrible decisions made by the bankrupt Wall Street companies, none of them had anything to do with being too lax with (so-called) organized labor. It had a lot to do with boards of directors being too lax with workers in pin-striped suits. The directors of these public companies, much like our city councils of the past, failed to look out for shareholder interests; in doing so, they allowed the managers of their companies to make too much money taking inordinate and incomprehensible risks. You might note that in the Wall Street firms which are run as partnerships (not stock companies), they have largely weathered the storm. The difference is that the directors of those companies would have been putting at risk their own fortunes, not the fortunes of remote stockholders.
Obviously Rifkin doesn’t know what he is talking about in the above post.
Thank you Rich Rifkin and David Greenwald for bringing up this absolutely essential dialogue in uncertain times. I read in the paper the other day that a company in Davis was hiring. They salaries were as follows:
$9.00/hour for front end help
$11/hour for assistant manager
Still to this day, people on the lower rung of the ladder are getting barely above minimum wage. They can’t afford to live here even in “low income housing.” Yet we still build more low income housing complexes that serve the owners, landlords, property managers, and police and fire unions. The more “low income housing” that we build costs more for the city and low income earners than anything.
The cost of a 2 bedroom apartment at the 60% level is 889/mnth. Now tell me, how is it possible that someone making 11/hr be able to suppport a family and pay that kind of “low” income rent.
It’s all stastistical wizardry. THe federal government gives more money to communities that have a certain amount of “groups” of the population. THe only reason why fair housing is pushing for more “low ” income housing complexes that are no where near affordable, is because the city wants money from the federal government. Low income people that are forced to live in substandard expensive housing in Davis are simply statistics and slaves there to serve the economic interests of rich people in Davis and corrupt property managers. The davis police department is part of this corrupt web of slavery. They gloss over the actual statistics of how much crime is actually hapening so they can get more funding and add more police officers to their ranks. They make soooooo much overtime and trust me, the money’s NOT coming from businesses. It’s coming straight out the the city of davis tax fund. Yolo county is corrupt to the chore. Corrupt republicans come here cause it’s a great place for them to scam the tax payers. It’s time for the corruption to stop. If our elected officials are not going to do anything about it, then we need to replace them with honest officials. It’s time to expose how the Davis Enterprise has been working with some councile members to bring these companies and non profit entities in, and expose how they have been profitting off of Davis tax payer’s good trusting nature.
“Obviously Rifkin doesn’t know what he is talking about in the above post.”
Any explanation? You think the boards of directors of Bear and Merrill did a good job of oversight? Let me tell you the answer–they did not. Did the private partnership investment banks do a better job of managing risk? I don’t know. However, I notice that those private equity banks are not requiring TARP money, so it would seem the answer is yes.
“By hiring two workers at a lower rate, you get more things done for the same cost.”
David, that is over-simplification. Typically, lower-wage workers are incapable (either temporarily because they do not yet have enough experience and/or skills or longer-term because they lack some necessary traits). Otherwise the low-wage worker would eventually be a high-wage worker. This is like saying two minor league players will produce more than a major-league player. It rarely works that way.
[i]”Low income people that are forced to live in substandard expensive housing in Davis are simply statistics and slaves there to serve the economic interests of rich people in Davis and corrupt property managers.”[/i]
The best thing which could be done with housing for low-income people in Davis would be 1) build a lot more apartment complexes with no price controls; and 2) give housing vouchers directly to low-income people that could be used the same as cash to rent a unit from any willing landlord. (The money for the vouchers could come from the billions HUD and local govts are now handing to developers.)
Building more units will increase the supply of housing, and thereby lower rents for marginal (older units). The city of Davis, of course, cannot do what I suggest in No. 2. However, I think more poor people would be helped by housing vouchers, as they are helped by food vouchers, if HUD would copy the model of the Dept. of Agriculture.
It is true that the people who get to live in low-income housing benefit by it. But only those who get those units (and those who build those units) benefit from them. As such, low-income housing fails to help poor people as a class. Housing vouchers and a greater general supply of apartments would help (almost) all poor folks.
It is an oversimplification. But the sports analogy is that getting rid of an overpriced veteran can often be a good strategy.
My point is really, if you are looking to save money, you have to look at limiting salaries at the top end. I think there are ways we can do that without harming the quality of service. This is the time to do it, because all cities are in the same boat as we are, if not worse.
“You might note that in the Wall Street firms which are run as partnerships they have largely weathered the storm.”
How would you know Rifkin? If they are privately held they wouldn’t report if they lost money. Only by looking at bankruptcy filings would you possibly be able to figure it out.
So you are really talking out your you know where Rich although I would direct you to http://www.ml-implode.com where they keep a list of, now up to 341, lending institutions that have gone out of business or filed for bankruptcy. Of course unions probably have nothing to do with this at all, but rather the poor decisions made by people who spoke the same sort of free market jiberish that you love to worship.
Even David is now trying to tell you Rich that its not as simple as your simple minded approach of unilateral imposition of contracts suggests but somehow reality never bothers you. As I said earlier why don’t you run for office and if you get elected then you can see what happens when one party in a negotiation makes unilateral demands.
[b]”You might note that in the Wall Street firms which are run as partnerships they have largely weathered the storm.”[/b]
[i]”How would you know Rifkin?”[/i]
Good question. I’m reading (about half way through) a great new book, called House of Cards, by William Cohan. He discusses extensively the difference in risk taking behavior between partner-owned investment banks and publicly held investment banks. His point (and it’s well-documented) is that, when you are risking other people’s money, you (generally) take undue risks. He doesn’t say, by the way, that all publicly held investment banks engaged in this risky behavior. Some did not. But what Cohan demonstrates is that, largely due to the neglect of boards of directors, the corporate managers of publicly traded investment houses took risks that they never would have taken, had the money at risk been their own. Cohan is also my source (though it’s not in his book) that no TARP money has gone to a partnership investment bank.
If you’d like to hear Cohan explain it, you can listen to this five-minute clip from bloggingheads ([url]http://bloggingheads.tv/diavlogs/18530?in=06:40&out=13:56[/url]). He’s interviewed by Felix Salmons of Marketmovers.
[i]”So you are really talking out your you know where Rich … its not as simple as your simple minded approach.”[/i]
If you are going to call me names, at least have the guts to put your own name to your cowardly and calumnious charges.
[img]http://blog.newsok.com/bamsblog/files/2009/03/william-d-cohan-house-of-cards.jpg[/img]
Simply building more apartment complexes will not solve the issue of high rents. There should be rent controls on top of vouchers. Every year the rental housing association work together to collectively charge higher rents. They have a monopoly on prices. When housing prices were going up, so were rents. Now that housing prices are going down, rents are still climbing. Why is it that fed is working to put a floor on housing prices, but when they were shooting through the roof, they did nothing to put a ceiling on rents. In the earlier part of last year, jon berkely managemnt, choc, smha and other low income housing complexes lobbied for legislation to change the tax credit formulas so they could continue to charge higher rents even in times economic distress. tax credit properties were based on the median income, so when median income rises so does rents. now that median income has dropped rents are not going down with the rents. so many low income ppl are expected to pay exhorbidantly high rents even in so called “low” income units. It’s got to stop. they get so much money from the governemnt and the city of davis just gives it out to these developers and property managers, even when they routinely violate fair housing laws and retaliate against tenants who complain about the rising cost of housing and stagnant wages.
they’ll go ahead and build more houses Rich, but they won’t lower thier rents because they pay bribes to public officials who vote to change the TCAC formulas that ultimately benefit the managers and landlords.
Then they show up to city council meetings begging for more projects claiming that there are still too many homeless ppl. Ask any homelss person if he can afford to live in a 1 bedroom unit who’s rent is 350 or more. Someone on public assistance or general assistance wouldn’t be able to afford to live in a “low” income unit and this is why there is homelessness.
ps. the housing voucher that you’re talking about sounds good and is good, it’s called section 8 but there’s a limit to the voucher and many places in davis are just simply too expensive and the voucher doesn’t cover rents here. it’s out of control and i’m all for rent control at this point. rent control for 50% of the units out there. that’s the only way the voucher program would work otherwise landlords will continue to keep raising and raising the rent simply because they can. it’s 1500/mnth now average to rent a house 2/ bedroom. apartments are 1250. How do they expect ppl to expect to pay that? rich or poor. If they were rich they’d have enough money to buy a house and would be protected by the consistent outrageous increases in rent in davis.
poor ppl can’t live here nor can they work here. the system is set up to serve the rich. Bottom line. we are all slaves in a system. That’s the real truth of the matter.
we’d rather spend loads of money imprisoning and punishing people than truly helping them help themselves.
slavery is alive and well. Thank God everyday you’re not the unlucky one to be enslaved. Pray for those that are trapped. We’ve got alot of growing and learning to do.
Change starts right here at home. We can’t sit around and wait for our President to change the world. He’s gonna need a little help. I am however disgusted that we’re bailing out these banks, so they can take our money and turn it around and lend it back to us with interest. ironic isn’t it. I wouldn’t be surprised if the banks are collectively owned by the mafia.
Of course the real answer is to open the floodgates and build all sorts of housing; Senior, low income, student, high income, market rate, affordable, apartments … Bring it on!
If you know anything about the Sec 8 voucher system, you understand its limitations and inherent problems. Like anything else, housing vouchers are NOT the panacea to lack of low income housing…
The problem w out of control city employee salaries and benefits is that it is largely a done deal. The unions do not have to agree to a change, which makes much of what Rich Rifkin suggests unrealistic. The City Council majority, bought and paid for by the firefighters union, w shill Bill Emlen as manager, is not going to get tough w labor negotiations. Bankruptcy is what we are facing everyone, if something isn’t done soon.
Funny tho, the public safety unions would not bargain in Vallejo, even when they saw the City Counicl meant business about declaring bankruptcy. The unions rigidly stuck to their positions, until it was too late. When the unions finally saw the writing on the wall, and were willing to make some concessions, the City Council told them to take a hike, allowing the bankruptcy to move forward – and LET THE BANKRUPTCY JUDGE RENEGOTIATE THE CONTRACTS. I suspect that is what might very well happen in Davis if the unions/city staff don’t get a clue.
In the know… As concerned as I am about our future, we are in a much different position from Vallejo at this point. For one thing, Vallejo was spending a much higher percentage of its entire budget on public safety than we are. That gave Vallejo less room to wiggle when times got tough. If we need to make deep budget cuts, we can do so without firing cops or firefighters. We will have to fire workers in parks & rec, public works, planning, etc. My reform scheme, unlikely as it may be, is designed to protect those people (and all of us who benefit from their good work).
“The unions do not have to agree to a change, which makes much of what Rich Rifkin suggests unrealistic.”
The unions have to agree to change any contracts they have already signed. However, we are fortunate. All of the contracts (save police) will expire. The unions cannot prohibit the new contracts from including change. They have no veto over the new deals. I have a hope, still, that a compromise will be reached. They don’t want to see Davis have to make massive job cuts in two years.
[s]The unions have to agree to change any contracts they have already signed.[/s]
The unions DO NOT have to agree to change any contracts they have already signed.
Who are you and what do you do Blog Boy ?
Let us answer that , an unhappy , frustrated , person who is very full of himself only .
Who does nothing more than typing what he thinks are solutions to nothing that he knows anything about .
Sorry Blog Boy you lose again !
Rich, I am sorry but a city can not unilaterally make changes to a contract with out meeting and confering and coming to some agreement. If they do then the city end up in a costly court battle that they will loose in the end.
Also as far as Vallejo Unions go. The Police association gave up money for three years prior. It was this past year they said enough. In the mean time the city shuffled the b udget around to remove some 80 line items off the “general fund” and to special line items thus increasing public safety’s share of the budget, ohh btw the judge has removed the police from the bankruptcy at case….. vallejo issues really go back to april of 1991 when they declared the shipyard was closing and the city went full steam ahead. They really are blaming the unions for being finacially stupid. Howabout the council take blame for not being the parent…..
Clarification:
Currently, public safety employees are qualified to receive 3% of highest year’s salary for every year worked (which includes years at other PERS agencies and, I believe, military service — you can check that one out) at the age of 50.
ALL other city employees eligible for city benefits receive 2.5% at 55, NOT JUST MANAGEMENT.
Partial anwer to question from My View:
(I don’t have time to read all the answers, so I apologize in advance if someone has already answered the following question:
“It is my understanding that the City cannot retroactively decrease employees’ rate of pay, or benefits, etc. Help me out here, what can be retroactively done w/o employee approval? Anything? If not, then all these suggestions are so much hot air, even if laudable.”
Salary, vacation, employee contribution to benefits, etc., can all be renegotiated at the expiration of a contract. One of the exceptions is the basic retirement formula, i.e., 3% at 50 or 2.5% at 55. Every current employee is entitled to retain the current formula. Hence, a 23 year old employee who is vested will receive the 2.5% or 3% at age 55 or 50, respectively, until the day they die. This commitment could last 75 years for our youngest employees.
This is why I fought so hard against lowering the full-benefit retirement age of our employees who do desk work to the age of 55, from what was then 60. I explained my concerns over and over again to council in closed and open session for years.
I explained we should not make a change that would encumber future councils for three generations. I literally pleaded that this change would ultimately lead to a very unfair two-tiered system in which future generations of employees would end up with no defined benefit plan, or with an inadequate retirement plan, in order to pay for the unsustainably generous plan we were about the grant to the current generations of workers.
I lost the battle during the last round of contract negotiations.
Another clarification:
It is important to remember that there are certain things that I might like to see but that are not allowed.
For example, I have been told that we cannot require that employees pay differing percentages of the required employee share graduated by income. I have been told that within each bargaining group, the employee contribution to the employee share of the PERS payment must the same for every employee. We cannot, for instance, agree that police officers who make over $90,000 pay the employee share out of their salary, while the city continues to pay the employee share of the PERS contribution for those who make less.
CLARIFY: [i]”Rich, I am sorry but a city can not unilaterally make changes to a contract with out meeting and confering and coming to some agreement.”[/i]
Except in cases where “interest arbitration” is required by statute, if both sides have reached an impasse after meeting several times and bargaining in good faith, the agency (i.e., the City of Davis) can implement its last best offer and the employees have no further recourse, until a permanent agreement is reached. That’s the law.
[i]”If they do then the city end up in a costly court battle that they will lose in the end.”[i/]
The case law precedents you need to look at CLARIFY are County of Alameda, PERB Dec. No. 1824-M (2006) and San Joaquin County Employees Ass’n v. City of Stockton, 161 Cal.App.3d 813 (1984).
The statory code you need to read, CLARIFY, is Code 3505.4 ([url]http://law.onecle.com/california/government/3505.4.html[/url]):
“If after meeting and conferring in good faith, an impasse
has been reached between the public agency and the recognized
employee organization, and impasse procedures, where applicable, have
been exhausted, [u]a public agency that is not required to proceed to
interest arbitration may implement its last, best, and final offer[/u],
but shall not implement a memorandum of understanding. The
unilateral implementation of a public agency’s last, best, and final
offer shall not deprive a recognized employee organization of the
right each year to meet and confer on matters within the scope of
representation, whether or not those matters are included in the
unilateral implementation, prior to the adoption by the public agency
of its annual budget, or as otherwise required by law.”
SUE: [i]” I have been told that we cannot require that employees pay differing percentages of the required employee share graduated by income. I have been told that within each bargaining group, the employee contribution to the employee share of the PERS payment must the same for every employee. We cannot, for instance, agree that police officers who make over $90,000 pay the employee share out of their salary, while the city continues to pay the employee share of the PERS contribution for those who make less.”[/i]
You’re 100% right.
Rich: Key is still good faith and last best. I’m going to bet those case precedents that you site were pretty much outliers.
In fact, it looks in the Alameda case, the employees won an unfair labor practice in the end:
LINK ([url]http://www.mastagni.com/news/sp2006-6.html[/url])
Sue, Rich, David: When labor contracts expire, why is the city committed to continue negotiating with the union? Why can’t the city choose to contract with another entity or group of employees?
Because the union only controls the MOU with the city, not the individual contracts with the employees. The city hires the employees, not the union. Now in theory, they could let all of their employees go and try to hire new ones. There are sufficient challenges to that in a variety of ways. Some of those are legal. Also most of these are skilled workers, not unskilled.
Thanks David. Great topic and forum. In this tough economy, if the employess are unwilling to take compensation cuts during contract negotiations, the city should just pull the plug and enact layoffs. Get tough and make some sound fiscal decisions. To keep kicking the can down the road year after year without a contract indicates a weak city council.
“It is my understanding that the City cannot retroactively decrease employees’ rate of pay, or benefits, etc. Help me out here, what can be retroactively done w/o employee approval? Anything? If not, then all these suggestions are so much hot air, even if laudable.”
“Salary, vacation, employee contribution to benefits, etc., can all be renegotiated at the expiration of a contract. One of the exceptions is the basic retirement formula, i.e., 3% at 50 or 2.5% at 55. Every current employee is entitled to retain the current formula. Hence, a 23 year old employee who is vested will receive the 2.5% or 3% at age 55 or 50, respectively, until the day they die. This commitment could last 75 years for our youngest employees.”
Thanks for the clarification Sue. But will the City Council bargain effectively, in the best interests of the city? I very much doubt it. Am I correct in assuming the bargaining agent for the city will be Bill Emlen? Or is it the City Council? The City Council majority has been bought and paid for by the firefighters union, and Bill Emlen…don’t even get me started in regards to his ineffectiveness!
“Also as far as Vallejo Unions go. The Police association gave up money for three years prior. It was this past year they said enough. In the mean time the city shuffled the b udget around to remove some 80 line items off the “general fund” and to special line items thus increasing public safety’s share of the budget, ohh btw the judge has removed the police from the bankruptcy at case….. vallejo issues really go back to april of 1991 when they declared the shipyard was closing and the city went full steam ahead. They really are blaming the unions for being finacially stupid. Howabout the council take blame for not being the parent….. “
Now this is an interesting piece of information about the Vallejo mess. Sort of like the Davis “unmet need” debacle during the last election cycle. Paul Navazio, Finance Director for Davis, put employee benefits and road repairs in an “unmet need” category, then waved a “magic wand” and declared a “balanced budget – using “creative” (aka sleazy) bookkeeping as way to support the campaigns of then incumbents Saylor and Souza. If Davis ends up in financial trouble a la Vallejo, who will be to blame? The firefighters union – not any of the City Council (Saylor and Souza) who took union money, backed the firefighters unreasonable demands, etc.!
When do city council members come up for reelection? That seems the place to make changes with candidates who will work for the good of the city and its citizens in a completely transparent environment. No special interests. One wonders why Souza and Saylor want the job so bad. They put a ton of hours into it, have these late night sessions every week, no pay. I guess hoping to be the next political hack in Sacramento. Are these guys so insecure with their lives that they have nothing else going on. Career politicians.
“When do city council members come up for reelection? That seems the place to make changes with candidates who will work for the good of the city and its citizens in a completely transparent environment. No special interests. One wonders why Souza and Saylor want the job so bad. They put a ton of hours into it, have these late night sessions every week, no pay. I guess hoping to be the next political hack in Sacramento. Are these guys so insecure with their lives that they have nothing else going on. Career politicians.”
I’m sure they both have higher aspirations, w next step County Council, then on to the State Legislature. Dave Rosenberg was gotten rid of that way…and became an ineffective head judge of the Yolo County courts (as payback for political favors).