The city of Davis will ostensibly be passing a budget on June 23, 2009. Included in that budget will be about 15.5 FTE positions cuts and another 1.5 million dollars in the tiered program reductions. Total savings to the city will be 3.4 million dollars and the budget will on paper be balanced.
As we look more closely at the budget, one is likely to become skeptical about the plan.
The bottom line on these revenue forecasts is that in the out years the deficit will actually grow, although even that is a bit misleading as it does not appear to factor in the initial cost savings from this year. Other words, it does not appear we will need to cut the full deficit each year to balance the budget.
That’s the good news. The bad news is that it is actually relying on a slow growth in revenues each year. In fact, it appears according to this model, only one year, this one, will there be an actual revenue decline. How realistic is that? Given the state of the California economy, given the fact that many Davis residents rely either on state jobs in Sacramento or Jobs through the university, and both of those sectors are looking at substantial budget reductions, it does not appear that this is a reasonable model.
The balanced budget this year relies on largely three factors. First $1.49 million in the tier reductions. This is largely nickel and dime stuff that will result in loss of services and programs to Davis residents. We can probably debate some of this stuff, perhaps some of these cuts are good and needed.
The bigger concerns though come with another nearly $1.7 million in costs which results from reorganization of city staffing which will result in roughly $626K in savings, reduction in overtime for another $150K, and some indirect cost recovery.
Not built into the model is something that we will find out on June 16, 2009 and that is what we will do with fire staffing. As we reported earlier, the city has contracted with Citygate to do a fire staffing study and their results will come out on June 16, 2009.
The other portion of the cost savings will be the city’s hope that we can save $850,000 through new labor contracts. That sounds like a lot until you realize it is roughly a 2% reduction in current total compensation costs.
Obviously this is subject to negotiation, but the city is largely letting employee groups, particularly at the top end off the hook here through the proposed TIER reductions.
Put it this way, state workers are facing at least a five percent pay cut along with layoffs. The county is far worse. So the city is going to largely cut programs that it provides to the public to the bone and barely touch employee compensation–something that it frankly needs to get a handle on anyway.
And yet, if the city can start to get a longer term handle on spiraling employee costs, unfunded liability, pensions, etc., then it might be worth it to only gain a 2% budget reduction through the labor negotiations. But unless this is addressed in a sufficient manner, we are really looking at punting the problem through the tier reductions.
One of the interesting graphics that was presented on May 26, 2009 was the staffing trend in the city. We can see that from 99-00 until 2007-08 staffing increased modestly from 428 to 464.
On the hand, total employee compensation increased over roughly that same time from $27.3 million in 2000-01 to $49.0 million in 2007-08.
It is that trend that we have to find a way to reverse if we want to make meaningful changes to the city budget rather than simply the tier reductions which do not deal with any of the structural and long term problems we are facing.
Unfortunately, we are in the dark about much of this. The first time, we will really get a sense for what might be coming is on June 16, 2009 with the Citygate report. That report will help us shed light on the issue of fire staffing and whether we can provide the people of Davis with roughly the same level of protection for less money.
We will not know much of anything about the $850,000 in labor contracts, other than perhaps the fact that we have capped our cuts by through that number out there. These negotiations are crucial to the future sustainability of the city. And it is not merely about short term savings or even salaries, it is about fixing the other issues of unfunded liabilities and pensions.
We do not hold out an optimistic view for this process, but we hope we are proven wrong by what is to come.
—David M. Greenwald reporting
And what about unmet needs?
Aren’t the staff reductions in unfilled positions so fairly inocuous? I see little or mo effort do ‘change the way we do things’ as was brought out in the Vanguard panel, do you?
Will CC debate or discuss the labor contracts publicly before voting? Lemar has said he will not vote for something less than meaningful and full isn’t that right?
This proposal makes no fundamental changes. It appears they aren’t listening…
[quote]Will CC debate or discuss the labor contracts publicly before voting?[/quote]My expectation is they will, and that before the contracts go to the council, the Finance & Budget Commission will examine them thoroughly.
However, I don’t expect these contracts (all due to expire on June 30) to come before the council for at least another 3-4 months, if that soon. My sense is that the city is asking for reforms, but the labor reps are not budging. Labor (I think) feels that by just delaying, they will be better off. They can keep everything they got in past agreements by operating on the old contracts. That is what the Dept. Heads have done for the last year. Their deal expired on June 30, 2009.
What would change the math would be if the city would declare an impasse. (I don’t think the city will do that.) After an impasse is declared, the city would then have the right to impose its last, best offer (including all reforms and pay cuts and so on). Our city — not just the city manager and his people and the city council, but our citizenry as a whole — is probably not tough enough to try that tactic. The labor reps know that and thus will continue to delay.
[quote]Their deal expired on June 30, 2009.[/quote]Check that. Their deal expired on June 30, [s]2009[/s] 2008.
FWIW, I told Bill Emlen last week that he should update the public at tomorrow’s city council meeting as to where things now stand with the labor MOUs. Because we are so close to the expiration date, I told him he should give us an idea as to when he thinks the new contracts will be produced. I also said that he should explain the impasse procedures, if they are apt to come about.
He didn’t tell me that he would announce anything tomorrow night. He said, “No agreements have been reached, but discussions have been productive. I think it is premature to begin discussing impasse. I appreciate your suggestions on keeping the public informed and there are several avenues where that might occur in the next couple of weeks.”
Rich:
You seem to believe that impasse is a simple and straight forward process. It’s not. The most likely outcome would be lengthy litigation and usually the city would not prevail. That’s why it is used only rarely and with very limited success.
“No agreements have been reached, but discussions have been productive.”
Emlen-speak. Spin.
[quote]You seem to believe that impasse is a simple and straight forward process. It’s not. The most likely outcome would be lengthy litigation and usually [u]the city would not prevail[/u]. That’s why it is used only rarely and with very limited success.[/quote] First, what do you mean by “very limited success”? Second, if you can cite a reliable source which proves your point, please do so. I’m happy to learn more about what happens in California when an impasse is reached. Your just (anonymously) telling me “the city would not prevail” doesn’t prove a thing.
Impasse is kind of murky and difficult to implement.
Usually what happens is if one side or both declares impasse, a mediator will be brought in to work on reaching a deal.
Braun Consulting represents employers, here’s what they say about implementing impasse: “One of the points of interest in this case is just how far the NLRB and courts will go to protect a union’s right to continue bargaining and to give the appearance that the union is a viable force in the workplace. Whenever an employer is contemplating bargaining to impasse it must use extreme caution prior to implementing its offer. “
Here’s another example, April 7, 2009 the city of San Diego and Mayor Jerry Sanders:
“Sanders informed the City Council in a memo late Tuesday that talks have stalled with the white-collar Municipal Employees Association, the city’s largest union with nearly 4,700 members, and the Police Officers Association.
The mayor also sent a memo Monday to inform the council that an impasse had been reached last week with the city’s other three labor unions: the American Federation of State, County and Municipal Employees, Local 127, which represents about 2,000 blue-collar workers; the Deputy City Attorney’s Association; and the International Association of Firefighters, Local 145.
The city must still meet one last time with each union this week to see if any further progress can be made. If no deals are struck, council members will hold a hearing next Tuesday to consider approving the impasse.
Once an impasse is approved, the city could then impose contracts on the unions.”
So what happened?
April 18, 2009:
“At the request of San Diego, California Mayor Jerry Sanders, late Tuesday night the City Council voted to declare an impasse in contract negotiations with two of the five labor unions representing 10,500 city workers. This declaration means that the city will be free to impose drastic pay and benefit cuts at will upon workers in the Police Officers Association and the American Federation of State, County and Municipal Employees (AFSCME) Local 127.
In last minute negotiations, an impasse was averted with the three other unions: The San Diego Municipal Employees Association, San Diego City Firefighters Local 145 and the Deputy City Attorneys Association. The unions agreed to similar pay and benefit cuts as those that will be imposed on the Police Officers Association and AFSCME workers. Initial reports are that the Firefighters Local 145 has accepted $5.8 million in wage and benefit cuts; the details of the other contracts have not yet been reported.
Throughout the day, hundreds of workers from the five unions protested at City Hall against the unfair cuts and the breakdown in contract negotiations. Tuesday’s City Council meeting began with dozens of city workers testifying in front of the council, demanding a halt to cuts.
Local press described the City Council vote as “unexpected” because Democrats, who were backed by the labor unions in their elections, occupy six of the eight spots on the council. The unanimous vote to declare an impasse came at 10:25pm, after hours in a closed-door session by the City Council.”
What will happen?
Well this apparently isn’t the first time that Sanders has tried impasse as a route to take.
He did it in fact in August of 2008 and lost.
“The California Public Employees Relations Board ruled Friday that Sanders, acting on advice from City Attorney Mike Aguirre, didn’t bargain in good faith with the city’s unions, nor did he follow proper impasse procedures as the city worked to implement the program, dubbed “managed competition.””
So will he ultimately prevail–who knows.
It seems to be pretty much business as usual. No real attempt to address underlying structural problems that are creating budget deficit. It is time to fire Bill Emlen (the ostrich who sticks his head in the sand so he doesn’t have to actually look at what a budget mess the city is in), and get someone in there who knows what the heck to do…
Even Navazio is not counting out bankruptcy for the city of Davis…
[quote]The unions agreed to similar pay and benefit cuts as those that will be imposed on the Police Officers Association and AFSCME workers. Initial reports are that the Firefighters Local 145 has accepted $5.8 million in wage and benefit cuts[/quote]That is your example of why declaring an impasse is a bad idea for a city? [quote]The California Public Employees Relations Board ruled Friday that Sanders, acting on advice from City Attorney Mike Aguirre, didn’t bargain in good faith with the city’s unions[/quote]That is a hugely important point. It is directly written into the state law. Both parties must “bargain in good faith” before declaring an impasse. (Arbitration is not required, unless it is written in the contracts.) I would have to assume that in the case of our fair city, we have bargained in good faith. Our negotiating team has (I am reliably told) met “dozens of times” with the opposing sides. That still does not mean we are at an impasse. No one is publicly talking. It’s possible they are very, very close already. However, if this drags on for 3-4 more months and no deal has been reached — one contract expired 12 months ago, by the way — then I should think that the city should impose its last, best offer, if that means setting our budget on a more sustainable course and protecting the jobs of employees who are needed but will have to be fired without reforms.
This is the applicable state law: [quote]If [u]after meeting and conferring in good faith[/u], an impasse has been reached between the public agency and the recognized employee organization, and impasse procedures, where applicable, have been exhausted, a public agency that is not required to proceed to interest arbitration may implement its last, best, and final offer[/quote]
I’m not arguing that it’s necessarily bad, it’s that it’s tricky.
Here’s the problem: what constitutes “good faith.” Because you have to be able to win a PERB board hearing.
[quote]I’m not arguing that it’s necessarily bad; it’s that it’s tricky.
[/quote]No doubt. [quote]Here’s the problem: what constitutes “good faith.” [/quote]I obviously don’t know. (I’m not a lawyer.) I would expect, though, that Harriet Steiner does.
I should add that I expect the city to continue negotiating no matter what up to the expiration date. At that point, though, I think, at the very least, Emlen should prepare to “exahaust the impasse procedures;” and let the labor reps know that he won’t allow them to stall endlessly*, if various reforms are necessary to sustain the city’s fiscal health.
*I don’t know that is what the labor reps are doing. For all I know, new MOUs are just a couple of days away.
“Our negotiating team has (I am reliably told) met “dozens of times” with the opposing sides.”
Again, either bad, or distorted information?.
Implied is that (plain english) that the Council’s team met with each of the employee groups “dozens of times”. Or, if there are 6 employee groups, could that mean that each group has met with the Council team as few as 3-4 times each? Often the first meeting in negotiations is a “meet and greet”… no substance… let’s see… 6 X 4 = 24. 24 is two dozen. OK Rich… you’re right on… the negotiations have been too protracted… let’s demand impasse procedures…
[quote]if there are 6 employee groups, could that mean that each group has met with the Council team as few as 3-4 times each?[/quote]There are 4 employee groups whose MOUs expire in 3 weeks. The Dept. Heads’ contract expired a year ago. I don’t know how frequently the negotiations are being held. However, I was informed they have been ongoing ever since the Dept. Heads’ deal expired. Also, the city’s negotiators and the city council have been meeting at least once a month for the last 7-8 months discussing options for not only those 5 contracts, but also the two police MOUs which expire in 2010. (No one on the inside has told me anything actually said in any of these meetings. So when I say the council has “discussed options” regarding all 7 MOUs, I presume that based on the listed agenda items, which lists the 7 labor groups, including the police.)
[quote]OK Rich… you’re right on… the negotiations have been too protracted… let’s demand impasse procedures…[/quote]I have never said the negotiations are too protracted at this point. However, I believe the primary solution to our budget mess is going to be found in reforming the labor deals. We spend most of the city money on labor, salaries, benefits and retirement. We need to solve that situation. Therefore, if the labor groups and the city cannot reach a deal (i.e., they reach an impasse), then I think it is important at that point that the city take appropriate measures to fix the problems and reform the agreements. The longer the delay, the worse the long-term budget crisis will get. (Keep in mind, that without the recession, we face a $42 million liability for retiree medical care that we really have no good way to pay for. That’s the kind of thing that needs to be addressed ASAP.)
Police, Fire, DCEA, PASEA, Dept. Heads, Misc. Mgt. — I count 6 negotiation groups… you refer to 7… who am I missing? City Council? BTW what salary/benefits is the Council expected to “bring to the table”? When, or do, they vest ‘retiree medical’?
BTW Mr Rifkin… did you ever determine if City employees hired prior to 1986 are covered by Social Security or Medicare, yet? I bet you, NOT…
[quote]Police, Fire, DCEA, PASEA, Dept. Heads, Misc. Mgt. — I count 6 negotiation groups… you refer to 7… who am I missing?[/quote] 1. Fire
2. Department Heads
3. Management
4. PASEA
5. DCEA
6. Individual Police Lieutenants
7. All other police [quote]When, or do, they vest ‘retiree medical’?[/quote]Once a person qualifies for a PERS retirement, he is eligible for a full retiree medical benefit. To qualify for a PERS retirement, the person has to have worked for a PERS-contracting agency or agencies for at least 5 years and have reached retirement age, 50 for safety and 55 for all others.
Normally, people who retire don’t do so after a very brief stay with their last employers. However, a person could have been, for example, a 52-year-old police captain in Roseville, serving on the Roseville force for 25 years, who is then hired by the City of Davis as our Chief of Police. Say that person worked for just 6 months for Davis and then decided to retire.
Davis would have paid very little of his career salary or his pension payments. However, Davis would be on the hook to pay for his full retiree medical plan for him and his dependents until he reaches as 65, when MediCare pays approximately half of the bill. Also, by that age, it’s less likely he will have dependents covered, so the amount Davis taxpayers would have to pay after age 65 would be closer to one-third as much as we pay for someone who is say 52 and has a wife and a child under age 22.
If you make reasonable assumptions about this kind of retiree, you can figure out the Net Present Value of his retiree medical, which we will owe for having employed him for 6 months: about $477,000 if he lives to age 90. Only $372,000 if he dies at age 80.
What NPV means is this: How much would it cost us today to buy a bond (paying 3 percent compunded annual interest) to cover the costs of this one guy’s retiree medical plan?
Because it’s roughly $400,000 (even for someone who only worked for Davis for 6 months), it’s not a sustainable program.
“Our negotiating team has (I am reliably told) met “dozens of times” with the opposing sides.”
You are “realiably told”? By whom? Bill Emlen? Like he has a lot of credibility!
I simply cannot understand how such (seemingly) intelligent citizens can be so easily distracted.
The proposed City budget includes cuts in various departments, but none (think I’m right on this), in Fire.
Can someone please give me answers to two questions to justify the huge, “untouchable” Fire Department budget?
1) Why do our firefighters follow ambulances (using huge amounts of gasoline, energy & dollars), when the EMT ambulance personnel are fully capable of handling Non-Fire medical situations?; and
2) Why do citizens deify firefighters & argue that they should be paid huge salaries? In my opinion, they’re essentially macho “cowboys,” who hardly ever “fight a fire.”
The proponents of high-paid “firefighters” will argue that our town will burn to the ground unless we pay these cowboys more than a full professor on campus or the most accomplished teacher in our schools.
I just don’t buy it. All firefighters should take a 10% pay/benefits cut in the new contract. If they refuse (and threaten to leave), I say thanks, farewell and good luck. I guarantee, if those “fighters” positions were opened up to the general public, we would have a huge pool of applicants, resulting in a very effective, less-costly Fire Department.
Maybe it’s time to clean house.