At Monday evening Finance and Budget Commission meeting, the City’s Finance Director Paul Navazio briefly updated the commission on the status of the employee bargaining. While Mr. Navazio did not get into specifics, overall he seemed to present a rather bleak picture of the prospects that there would be agreement any time in the near future.
He remarked that if the process went along much longer, the prospects of the city being able to realize savings from the process would be greatly diminished. At the end of June, the Council by a 3-2 vote passed a budget the reflected $1.25 million in savings from employee compensation cuts or less than a 4% overall cut.
The city staff and council majority relied heavily on cutting city services and going short-staffed to close what was then a $3.25 million budget deficit. The problem with that approach is that the budget deficits are likely to occur for the next five years according to the very conservative projections from the finance director. That means the city is not going to temporarily go short-staffed and cut services, but rather on a more or less permanent basis. That is going to severely stress employees and diminish the quality of services to the public–the people paying the bill.
Some of these cuts include the elimination of the Professional Standards Sargent position in the police department. The Professional Standards Sargent which is an extremely important position especially from the standpoint of community relations. The department has worked hard over the last few years to restore relations with key segments of the population. All of the council acknowledged at the time of the budget decisions acknowledged the improvement in public service, and yet they have put some of that at risk by making cutbacks that may be pennywise, but could prove to be pound foolish.
All of this occurred before the city took an additional $4.5 million hit as the state raided local governments to close another $2 billion deficit. $3.2 million of that is coming out of the Redevelopment agency which will minimize the impact on the General Fund. However, the city was planning to participate in a loan securitization program, a program that would mitigate, to the greatest extent possible, the impacts of the State’s borrowing of FY2009/10 property tax revenues.
However, a large part of the budget passed in June was based on gaining a degree of savings ($1.25 million) from the employee bargaining process. All of the employee bargaining groups have had their contracts expire. By law the process is taking place behind closed doors. Many have argued that the city needed to build some transparency into the bargaining process, but that has not occurred.
As a result of the process, the public has very little way of knowing exactly what has transpired behind closed doors or where the process stands other than the brief tidbit that the Finance Director has offered.
Are we now at a point where we can declare impasse? What has the city offered? These are all questions that cannot be evaluated without more information.
Part of the problem that the Finance Director acknowledged last night is that the city has primarily focused on closed the immediate deficit. That means that issues addressing the $42 million in unfunded liability for retiree health insurance have not been addressed. Nor for that matter has the city looked deeply into way to deal with impending increases in pension costs as a result of record losses by PERS. PERS is implementing a rate-smoothing plan that will rely heavily on huge returns upon investment over a 30 year time horizon, but if those returns never materialize, we could have a huge unfunded liability for pensions unless we address that issue.
On a separate but related note, the city is bringing back in mid-October discussion on fire staffing changes. The Citygate report back in June recommended a number of staffing changes. Reading between the lines it appears that the city may be prepared to go to the Batallion Chief model in exchange for changes in rules for response time and staffing cuts.
The findings of Citygate suggested that with a mutual aid agreement with UC Davis, the city area would have enough staffing to avoid an additional station in Northern Davis. Moreover, a more realistic response time map focusing on 7 minute response time rather than the unattained five minute policy would allow the entire city to pretty much be services by those four stations (the fourth being UC Davis) in a timely and safe manner.
The Citygate restaffing plan would swap out the Operations Chief, the Training Chief, and the Prevention Captain and replace them with one Fire Marshal and three Batallion Chiefs. The cost to the city would be nearly $200,000 per year. They would then offset that by reducing the amount of relief staff from 3 per shift, to two per shift and use overtime when needed to cover the balance of those costs. That would produce a savings of around $360,000.
In short, what Citygate does is reduce the amount of staffing in the city and thus the service provided in exchange for more high salary positions for fire personnel. The fire department has been lobbying for the creation of the batallion chief model for a long time and it looks like they might get it.
One point of note however may be that the city may exclude current personnel from those positions and require that the batallion chiefs be hired from outside of the department. That was suggested to me in a conversation with Mr. Navazio around the time of the Citygate report. But that seems highly speculative.
One thing that is clear after attending the Finance and Budget Commission meeting two weeks ago–the public needs to know what is happening at a lot of these commission meetings. I vowed at that time to attend regularly the Finance and Budget Commission meetings to monitor the state of the city’s finances.
—David M. Greenwald reporting
Of course PERS has probably recovered 50% of its stock market losses if they sell today.
There is a very simple solution:
1. Have an accountancy firm come up with what the city can safely afford to pay its employees in a sustainable way. This means covering retirement costs without increasing the costs to the public etc. Sue Greenwald can review their work if the city staff doesn’t feel up to it.
2. Provide this to the city staff as their new agreement.
3. If they don’t like it- they can work for Vallejo…
I am simply amazed at the crooked process that we allow to be conducted on our behalf. There is zero reason to have this done in secret. It would greatly simplify the mess if it were dragged into the light.
I would assume the negotiations are stalled bc the bargaining units are unwilling to take the less than 4% cuts. Unbelievable. Pure arrogance. this is what gives unions a bad name…but then the city is not exactly a tough negotiator either. They are recognized as weak beyond belief. Why do you think the fire dept is going to probably get what it wants, despite bankrupting the city?
Pull the trigger and make the City’s pay and comp packages sustainable in the long term, or start watching your tax measures going down at the polls. If you guys won’t do it for political reasons, we will do it for you.
Does transparency equal open to the public? Open to the media? I don’t think that this would be appropriate. Would anyone really like the next conversation with their employer over their pay and working conditions be open to other people in your office and customers off of the street? Ask for a raise and have your employer hold a public hearing to discuss it? That’s just nuts.
I can only imagine negotiations with Sue Greenwald in the room. That’s punishment enough.
To all who have posted so far: you know what they say about assumptions!
[i]”While Mr. Navazio did not get into specifics, overall he seemed to present a rather bleak picture of the prospects that there would be agreement any time in the near future.”[/i]
Some months ago, Ruth Asmundson spoke from the City Council dais at the start of a meeting — I quoted her in my column — saying there had been some kind of agreement in the labor negotitions and she would have an announcement “soon.” Yet months have passed — one of the labor contracts expired in June of 2008! — and no announcement has been made, and word I am getting (from members of the CC) is that no deal is close.
I get the sense in talking to members of the City Council and staff — though I have not spoken with Bill E. or Paul Navazio specifically about this for a while — that there is absolutely no interest in declaring an impasse. What puzzles me is why not?
An anonymous poster on Vanguard has said I am off-base about declaring an impasse, saying there are terrible risks associated with it. (For the record, if the City declared an impasse ([url]http://law.onecle.com/california/government/3505.4.html[/url]), it could then “implement its last, best, and final offer.” In other words, all of the terms the Council wants from a deal would become the new contract.)
Yet if we don’t declare an impasse, and we let the old (unaffordable and unsustainable) MOUs remain in place, the City will ultimately provide far less in services and may some day face bankruptcy (depending on what happens with CalPERS’ rates).
There is another option in the California Code ([url]http://law.onecle.com/california/government/3505.2.html[/url]) which allows a mediator to come in and settle the contract dispute: [i]”If after a reasonable period of time, representatives of the public agency and the recognized employee organization fail to reach agreement, the public agency and the recognized employee organization or recognized employee organizations together may agree upon the appointment of a mediator mutually agreeable to the parties.”[/i]
If that is not too expensive, and our Council lacks the guts to declare an impasse, then maybe mediation is the way to go. What is not acceptable is to keep reducing city services, all the while the city is paying its remaining employees more in total compensation than we can afford for the long-term.
[quote]I can only imagine negotiations with Sue Greenwald in the room. That’s punishment enough.[/quote]I don’t believe Sue is in the room when the negotiations take place. The way the procedure works (AFAIK) is this:
1. In closed session, the 5 members of the CC meet with City’s labor negotiating team (LNT): the City Manager, the Asst. City Manager and the Director of Human Resources. The CC members tell the LNT the terms and conditions of the contracts the City Council wants in the labor contracts;
2. The LNT (without the CC present) then meets in private* with representatives of the labor groups, hearing what the labor reps want and telling them what the CC wants;
3. The LNT then reports back in closed session to the CC how the negotiations are going, what the labor reps have said and so on. The CC then directs the LNT to meet again with the labor reps;
4. Once a deal is agreed upon between the LNT and the labor reps, the MOU is drawn up and ultimately heard in open session of the City Council. At that point, the CC has to vote approval of the contracts. In the past, this has been done as a “consent calendar” item, without any public debate or comment. I don’t think any member of the city council has ever voted against one of the city’s MOUs with its labor groups.
I understand why the meetings between our LNT and the labor reps are private. I have no problem with that. However, the idea that the City Council has to meet in closed session to tell the LNT what general terms it wants in the new contracts baffles me. If I were on the CC, for example, I would publicly exclaim, “I want these 10 reforms ([url]http://2.bp.blogspot.com/_-iCrgpX1jNM/SdQ8BiyRLII/AAAAAAAAAIc/-cvLU0eTMOY/s1600-h/10+reforms.jpg[/url]) as a point of departure.” Other members of the council could tell our LNT what they wanted. The LNT would then have to try to incorporate those ideas that most of the council wanted into its negotiating stance.
Ruth Asmundson, who has said that doing this in public is a terrible idea, thinks that an open session meeting would harm the City’s interests, because labor could use that public information to its adavantage. However, given how ridiculously bad the council has been in the past in giving away the store to labor — including the highest raises and benefits to the firefighters’ union which in turn funds the campaigns of certain members of the city council — her argument does not hold water with me. My sense is that a majority of this council and past councils have failed to advocate strongly enough for the taxpayers when telling the LNT what they want from the negotiations. Yet if they had to give their directions in public, they would be less apt to carry the water for groups like the firefighters, which seem to have corrupted them.
*The negotiating sessions between our LNT and the labor reps are not publicly noticed. However, the closed sessions of the City Council are. Ironically, each of these closed session meetings has at the top of its agenda time for “public comment.” But Lamar Heystek told me a few weeks ago that “no one from the public could ever speak at those meetings, because they lock the door and don’t let anyone from the public in.”
Note: the LNT is slightly different, involving our City Attorney, when the labor negotiations affect the contracts of Bill Emlen, Paul Navazio or Melissa Chaney. (I don’t know if Melissa, the Human Resources Director, is involved in the negotiations which affect her husband, who also is a city staffer.)
Anon1: I think transparency could take a number of forms. By law negotiations cannot take place in public. I called before the process began for the city to put into writing their end game–how the process would be laid out, how the city would inform the public. There could be briefings, updates, etc, all of which would be legal. But the city never did that. This is the same mistake they made with the Grand Jury Report and when it came time for that to come public they fumbled it all over the field. They will do the same here.
David
please comment on Rich’s post re: options there might be, e.g, declare an impasse and go to last agreed upon ters (would that be good? Am thinking no) or the other idea he had which seemed viable, outside negotiator which to me is better use of $20K than the senior survey.
Sure.
I’ve favored an outside negotiator from the start. I think it puts the management in a bad position to have to negotiate with the same people they have to work with. So I think that would be a good idea.
As a labor advocate I’ve been reluctant to declare impasse. I’m also leery that I don’t know what the last offer was from the city which will make it difficult for me to evaluate whether it would even help at this point. That said, I think the time is approaching now that that might become a more serious possibility to consider (though like Rich, I doubt it will ever happen).
Thanks David. For your views. I also was in favor of outside negotiator from the beginning conversations here. We are now months down the line. Could a CC member begin a discussion in open session around having an outside negotiator or is all discussion re the topic verboten in open council?
[quote]”the other idea he had which seemed viable, outside negotiator”[/quote]Just for the record, I do favor using a professional negotiator in place of having our city manager and two of his underlings* to negotiate on behalf of the taxpayers. However, what I mentioned above (9:28 am) is not about a negotiator. It regards the option that state allow permits labor and management in public contracts to employ (at 50-50 cost) a mediator, who would decide the terms of the new contract. This afternoon I spoke with a member of the city council who told me the risk with that is the mediator might side with labor and thus we would be faced with unaffordable contracts for the next four years and would not have taken any of the steps ([url]http://2.bp.blogspot.com/_-iCrgpX1jNM/SdQ8BiyRLII/AAAAAAAAAIc/-cvLU0eTMOY/s1600-h/10+reforms.jpg[/url]) necessary to solve our long-term problem ([url]http://1.bp.blogspot.com/_-iCrgpX1jNM/SaSNp12z8EI/AAAAAAAAAEk/IAlQiQwWK54/s1600-h/Davis+pensions.JPG[/url]).
*I am not sure that a pro negotiator [i]ipso facto[/i] will do a better job negotatiating on behalf of the taxpayers than a city manager will. A lot depends on the personality of the city manager. We need someone who is by nature aggressive and persuasive. The other problem inherent with having city employees negotiating on behalf of the taxpayers is that before, during and after the negotiations, those city employees will be colleagues of the employees they are negotiating against. As such, they may be inherently biased in favor of their colleagues, which is not what most taxpayers would for in their advocates, were the people hiring a negotiator.
Typo: [i]”It regards the option that state [u]law[/u] permits …”[/i]
Again, cut to sustainable levels of pay and benefits, or start losing your tax renewals. A lot of us are serious about this, and will come out publically when it is time. We hate the large cuts in city services that are paying for maintenance of non-sustainable staff comp packages.
Could someone please tell me why the City Public Works dept is hiring electricians and arborists? Isn’t there a hiring freeze? And if there isn’t, shouldn’t there be? Is the City Mgr completely oblivious to the fiscal train wreck looming before us?
Wonder where Anon is getting their info… the electrician position is to fill a vacancy due to a retirement… should we shut down traffic signal maintenance? Should we pay overtime? Arborists are under Parks and General Services… Anon has shown his/her/its lack of awareness…
Many City employees have given up ~ 4.6% in wages since 7/31/09, as part of an interim agreement. Those savings are real… To date, only these employees and certain State (non UCD employees) have had these deductions (many other State workers have had more ‘taken’ w/o “agreement”)… in August, where there were two pay periods, the net decrease in salary was 10%… to my knowledge, UCD employees have had no deductions to date, so Sue’s husband is probably unaffected, to date… many were on full pay when they walked off for a day last week…
To date, I understand that DJUSD employees have given NOTHING, and in fact get a step increase (unless they have been in the district a very long time) this year due to a 20 step “merit” system. City employees have a 5 step ‘merit’ system.
Why trash city employees unless you’re prepared to trash all public sector employees? Anon… who is your employer, so I may know how to suggest a pay decrease to save my money, as mine is decreased?
[quote]Many City employees have given up ~ 4.6% in wages since 7/31/09, as part of an interim agreement. [/quote]Is this a reference to the furloughs?
One problem with the city’s labor packages is with many workers making too much in salary. (In some cases, this is because over the last 10 years, we have had a policy of title inflation, where a person with low-mid level skills was given a new title which came along with a much higher salary.) However, that is really only a part of the longer-term problem. Furloughs don’t affect the real problem of the city having to pay more and more to fund the pensions of its workers (with the real problem still 4-5 years off for pensions), the massive inflation of medical insurance premiums (unlike in the private sector, the public sector has not reeduced benefits or made its workers pay more to get them) and with unfunded retiree benefits.
So while I am sure it hurts to lose some salary from furloughs, they will not make a significant dent in our real problem. In other words, we are going to have to cut much deeper, if the City of Davis is going to get back onto a sustainable path.
Public CEO, this morning, published an interesting op/ed ([url]http://www.publicceo.com/index.php?option=com_content&view=article&id=670:Public-pension-problems-mount-for-local-ca-governments&catid=151:local-governments-publicceo-exclusive&Itemid=20[/url]) on the growing problems with public employee pensions in California. I encourage anyone who doesn’t know too much about the depths of this problem to read the piece.
Here are a few highlights:
[i]Much of the pension trouble can be traced back to the late 1990s and early 2000s, when state and local governments decided to significantly increase pension benefits while contributing little to nothing to pension systems. Pension fund investments were experiencing unusually high returns due to the “dot-com” bubble.
Assuming pension funds could depend on extravagant earnings indefinitely, CalPERS and labor union officials convinced lawmakers that the state could afford benefit increases. In 1999 the legislature passed SB 400, which increased state workers’ pensions by as much as 50% and made the benefit increases retroactive. This action quickly proved to be short-sighted when the dot-com bubble burst and pension investment returns plummeted.
“This situation was caused by the actions taken by the state 10 years ago and it rippled out to local governments,” said Riverside County Supervisor Marion Ashley. “We’ve created an ongoing gilt-edged system that is far beyond our wage earners in this county to support,” added fellow Supervisor Bob Buster.
Now that the bills are coming due, state and local officials, as well as taxpayers, are increasingly realizing that [u]the more we spend to ensure the comfortable retirement of government employees, the less we have to spend on the programs and services citizens expect from their governments[/u]. We are finally reaching a day of fiscal reckoning.
It will take some political courage to admit that current government pension and retiree health-care benefits are unsustainable–and even more to implement the significant reforms needed to restore fiscal responsibility—but this fortitude is necessary to get California state and local governments back on the right path.[/i]
To for the record: the city open positions are listed, and these were just examples of open positions. No-one is trashing City or public employees – my point was why is the City hiring if there is a fiscal train wreck on the tracks before us? And yes, if the City can’t afford the employees, there must be decisions made about what we City Services we can and cannot continue. It’s not fair to taxpayers, and it’s especially unfair to City employees to continue on an unsustainable course. Hiring people now only to furlough or lay them off in the (near?) future is imprudent, and perhaps cruel.
This was not a personal attack and it’s regrettable you chose to see it as one. That’s certainly not the intent.
further, I can see the “oblivious” remark might be seen as personal. My apologies. The fiscal issue remains.
anon: misinterpreted your “tone”… fiscal issue remains… true, how to ‘handle’ is the question… other fiscal issues exist… schools (local & statewide (UC, state universities))… Social Security… Medicare… wars… my concern is focusing on City Employees (who pay taxes for all of those other public employees, and for those who contract with private folks doing work for the government) being asked to take the brunt of this… you’ve not said this, but others who regularly contribute do… being required (not yet, but I’m guessing sure thing) to pay taxes to keep medicare and social security afloat while I’m not eligible, is as much a ‘hot point’ as your concerns about your costs… yet, my original point remains, who is stepping up to “the plate” to mitigate (at some level) those issues… DJUSD has not, nor has the UC system (to my knowlege) actually implemented anything… I ask you Anon, does the firm you work for get any money from taxpayers? If so, should taxpayers dictate how much you earn?
anon: misinterpreted your “tone”… fiscal issue remains… true, how to ‘handle’ is the question… other fiscal issues exist… schools (local & statewide (UC, state universities))… Social Security… Medicare… wars… my concern is focusing on City Employees (who pay taxes for all of those other public employees, and for those who contract with private folks doing work for the government) being asked to take the brunt of this… you’ve not said this, but others who regularly contribute do… being required (not yet, but I’m guessing sure thing) to pay taxes to keep medicare and social security afloat while I’m not eligible, is as much a ‘hot point’ as your concerns about your costs… yet, my original point remains, who is stepping up to “the plate” to mitigate (at some level) those issues… DJUSD has not, nor has the UC system (to my knowlege) actually implemented anything… I ask you Anon, does the firm you work for get any money from taxpayers? If so, should taxpayers dictate how much you earn?
Wage inflation, title inflation, medical insurance premium inflation and unfunded retiree benfits (another type of inflation).
Now the challenge is how to deflate some of each of these.
I expect it will take the real threat of city bankruptcy before it can be done. There is not enough negotiating leverage otherwise. The best that will happen is to reduce but prolong the pain. That will likely be the labor-side negotiating strategy… to give up just enough to prevent complete city budget insolvency, including forcing service reductions. For this reason, I think opening up the proceedings to the public will be useful and necessary. The public will be impacted by the service reductions offered up, plus will care about the threat to future service cuts. I doubt that more will be made to feel sympathy for city employees… especially considering what is happening to UC employees and people that work in the private sector.