I always find it interesting to read Rich Rifkin’s column. I often find them interesting and good in pointing out tidbits that I had not considered, even as I, as often as not, disagree with his analysis and/or conclusion.
I was very interested to read his thoughts on the budget, because despite the fact that we are in general agreement on the problems facing the city, we disagree on whether the budget as enacted last week is a good thing or bad thing.
On the one hand, although I probably would have voted against it, I am left to ponder a few key points here when assessing its value for evaluation of two new councilmembers.
First, the vote took place in the first two months of their tenure before they really found their footing. Second, it was the culmination of many other contracts I opposed, but still in line with them. Third, if we were to take a stand against this one, we would be punishing a group that got considerably less in the last round of MOUs than the firefighters.
I may in the end disagree with them, and indeed agree with Mr. Rifkin when he writes, “Only Councilwoman Sue Greenwald had the sense to vote against that contract, which did not change the pension formulas for new hires, did not discourage 50-year-olds from retiring, did not make a dent in our massive retiree medical debt and did not reform our medical cash-out policy for continuing employees.”
But when it comes to evaluating the councilmembers, I think they need to be judged by the totality of their work, not by one vote.
Mr. Rifkin writes: “Because of their record with the police contract, it is surprising that Krovoza and Swanson are now receiving so much credit — including a laudatory editorial by The Enterprise this week — for their September plan, where they propose to cut another $2.5 million in labor costs this fiscal year.”
The reason that they are getting so much credit is simple: this budget that was just passed moves us in the right direction and bucks a whole large number of trends. Moreover, they passed the contract in the face of two weeks of intense push-back from public employee groups – a factor that Mr. Rifkin completely ignores, at least in his column.
Finally, getting to the crux of his argument, Mr. Rifkin writes that we will have made “city services in Davis much worse without bringing about any needed reforms.”
I agree with Mr. Rifkin that this is a possibility.
He then argues, “The theory of the September plan is this: They want to reopen the employee contracts, including the one Krovoza and Swanson voted for, and rework them in favor of the taxpayers by the end of September. All of the city’s current deals expire June 30, 2012. The council majority — finally — seems to understand that we cannot survive under the terms of our contracts.”
He continues, “But that presents a fairly obvious problem: Why would the labor groups agree to alter the contracts when those contracts are biased in their favor?”
He adds, “When the city’s labor groups reject the notion of reducing their salaries, their cash-outs and their other benefits before their contracts expire, the September plan will result in the city having to fire 25 or more workers to save that $2.5 million.”
This is essentially the same line of reasoning that Sue Greenwald used in voting against the budget in last week’s council meeting.
But I disagree with both.
First of all, I think there are critical changes that can take place and be put into place in September that do help things. One thing is that this puts pressure on the city to do as Mr. Rifkin suggests, moving from four firefighters to three on each truck.
I understand that firefighters are concerned with the force and weight argument, but seventy-five to eighty percent of California’s fire stations have three firefighters on an engine and the move, according to Mr. Rifkin, would save the city $1.275 million. For now I will accept his number as true.
He has argued that this cannot be implemented by September 30.
He writes, “It is impossible that in the next two months we could make this sort of change in staffing. A top executive with the city told me last Friday that the firefighters union would have just cause for a grievance, because their contract requires that this sort of change be done on a ‘meet and confer’ basis. It’s not something the City Council can put in place in September.”
He is probably correct. But I think putting this budget out there makes it more likely that the council will adopt that, because the move gets them halfway to the $2.5 million number.
I also believe the city can put pressure on its top managers and department heads to take an across-the-board cut, and a 10% cut would free up $500,000.
None of these are magical, but guess what, neither are contract negotiations. In the past, the suggestion has been made that we could simply declare impasse. But that has failed to work with the Davis City Employees Association. For one thing, it only can impose a contract for a single year. For another thing, as we see with DCEA, the process gets tied up in the courts.
The suggestion has been made that the $2.5 million in cuts this year will lesson the pressure for future cuts, but that should not be the case. According to our calculations, the city really needs to cut $7 million by 2015.
Along those lines, the $2.5 million might strengthen the city’s hands, because, while the unions and bargaining groups might be willing to take their chances with 20 layoffs, it is less likely they will want to repeat the experiment.
Will services be cut? Probably. But 20 employees, which would be the high end, will not cripple Davis’ ability to provide the public with good services.
In the end, I agree with Rich Rifkin and Sue Greenwald, we need critical structural changes including slowing the growth of city compensation, raising the age of retirement, and lowering the pension burden on the city. Where I disagree is that I think pushing this forward now puts everyone into the right mindset for the next round of negotiations.
The city employees now know that the city is serious and the council is not going to bow to pressure from employee groups. That is a strong message that needed to be sent. The era of business as usual is over, declared new councilmember Dan Wolk, and we are now entering the era of shared sacrifice.
It is now up to city employees to determine how they will share their sacrifice, but we need to start by understanding that $2.5 million is not the end of the cuts, it is indeed the very beginning
What this budget attempts to do is move us in the direction of funding that $7 to $10 million, incrementally.
What it purports to do is to put $850,000 into transportation to pay for road repair. The road repair issue stems from the loss of state and federal grants and other one-time funds. Even with that funding, the city was only at $850,000 per year in funding for road repairs. This was creating a backlog of deferred maintenance. At the present rate of trajectory, the city was looking at roughly $15 to $20 million in deferred maintenance costs. This puts the city back on track to at least to keep up with current demands.
Second, it takes $500,000 and puts it towards pensions. Some argued that this was premature, but why wait when you know it is coming? At worst you are cushioning the blow, and if you do not need it, it could be put into retiree health.
Retiree health is the last part of this equation. The city has moved toward fully funding what is now a $60 million unfunded liability. It will take at least 30 years funding it at $4 million additional in funds to fully fund the retiree health program. $1 million will now go toward that, which will help close the gap sooner and reduce the city’s costs.
What has happened is a perfect storm, with increased employee compensation, increased obligations to pensions and retiree health, combined with the collapse of revenue streams, which have necessitated the city to get a handle on future costs or risk bankruptcy and massive job loss.
Unfortunately, the city employees make up 80% of general fund spending and $7 million represents roughly 20% of the spending. That means that other than perhaps a few cost-cutting measures that the city has not employed outside of employee costs, most of the reduction will have to be borne by the employees.
Employees can do their part to reduce the need for layoffs. I have already laid out ways for the city to reduce costs through an across-the-board ten percent pay cut to department heads and managers, along with reduction in fire personnel staffing. Employee concessions could include taking up a greater share of PERS costs and a second tier for PERS rates, which would be a longer term solution to this problem.
Had the council not acted now, the problem would have been worse and the impact to city employees more severe and sudden. Previous councils and city management did little favor to the employees by deferring the costs and thus the pain of cuts.
—David M. Greenwald reporting
Rochelle and I were sworn in on Tuesday, July 13th. The DOPA contract was presented for approval on Tuesday, July 20th. That said, we were elected on June 8, 2010. By late June we were being briefed on all of the major issues coming up, so I had a good month to decide on the DOPA contract.
Regarding the DOPA contract itself, I wasn’t interested in voting down a contract negotiated in good faith within the framework of the last set of MOUs — simply because the DPOA was the last group willing to sign, but had not reached closure a few weeks earlier. In addition, the terms were acceptable within the MOU framework presented to the DPOA and to which our other groups had agreed, save DCEA.
The DOPA contract was a very clear message to me personally that I needed to be totally on top of the next MOU process that would take place during my tenure. That has most certainly taken place.
Rochelle and I were sworn in on Tuesday, July 13th. The DPOA contract was presented for approval on Tuesday, July 20th. That said, we were elected on June 8, 2010 and by late June we were being briefed on the major issues coming up. So I had a good month to decide on the DPOA contract, yet it was a very busy time, as it always seems to be on Council.
Regarding the DPOA contract itself, I wasn’t going to vote against a contract negotiated in good faith within the framework of the last set of MOUs – and simply because DPOA was the last group willing to sign, but had not reached closure a few weeks earlier. In addition, the terms were acceptable within the MOU framework presented to the DPOA and to which our other groups had agreed, save DCEA. Call that fairness; call it whatever.
The DPOA contract was a very clear message to me personally that I needed to be totally on top of the next MOU process that would take place during my tenure. That has most certainly taken place.
The fallacy of “kicking the can down the road” for yet another year is that it sends the message it is business as usual for the city. The underlying theme that will be taken home by city employees if delay had been implemented yet again: somehow the city will find the money to pay employees just as they always have. But that is not the reality – the funding to do that IS NOT THERE ANYMORE. It was important to send that message LOUD AND CLEAR NOW RATHER THAN LATER. It puts PRESSURE on the employee bargaining groups RIGHT NOW to get creative, more collaborative, in solving the city’s budgetary problems – and in effect to save their own salary and benefits. If the city does not address the budget mess, there will be no money for those employee salary and benefits down the line.
If some are so certain employees will do only what is in their own self- interests and not care about the city, why assume employees will be more cooperative about taking pay cuts a year from now as opposed to right now? Why not give employees the benefit of the doubt, instead of questioning/villifying their motives, and give them the opportunity to:
1) open up contracts sooner than later and voluntarily make concessions;
2) come up with creative solutions on how to save the city money through program changes; reorganization; any other ideas that can be worked out in a collaborative way?
And lastly, the die is cast. Why not let the process play out however it will, without insisting “this is hopeless”, “it cannot be done”, “the employees will only act in their own self-interest”, etc. ad nauseum – which will almost ensure things will NOT WORK OUT. If you remember, the city employees claimed they felt “disrespected”. With statements to the effect that they will only be willing to let recent hires be fired rather than take paycuts feeds into the claim of “disrespect” and gives union leaders the ammunition they need to NOT COOPERATE.
I would much prefer to give city staff the benefit of the doubt, give them a chance to see what they can do to address the budgetary mess, and allow their creative juices to flow. Let’s see if city staff rises to the occasion… but you have to give them the opportunity to do so, making it clear right here and right now that it cannot be business as usual.
It took the City years to get into this mess and it will take years to get out.
I don’t expect it to be a pretty (or totally rational) propcess, but at least we have four council members committed to doing something. Sue has been ahead of her time on these issues and I expect she will continue to be.
Reducing the fire fighter crews would seem to be the ultimate no-brainer. Let’s see how difficult it will be for us to get there and how hard the fire-fighters union will fight this. I expect they will fight hard, and ultimately lose.
Health benefits need to be addressed next along with excessive retirement benefits.
I have more faith in our council than I do in staff, and staff is also in a difficult piosition, since they are cutting thier own pay/benefits or those of their colleagues. This is a chance for the City Council to show leadership and do what they were elected to do. I think (hope?) they are up to the task.
[i]”Moreover, they passed the contract in the face of two weeks of intense push-back from public employee groups – a factor that Mr. Rifkin completely ignores, at least in his column.”[/i]
I think this is a fair comment. However, had I included the public display by city workers of their apparently widespread belief that they should not be asked to take compensation reductions any more than they have, that would have buttressed my conclusion rather than weakened it. And that, I believe, is a key difference between us. You (and those in favor of the September plan) are operating under the notion that we can achieve savings in cooperation with the labor groups. My assumption is quite the opposite–that they will not want to take any less from the deals they already have in place, deals which will not expire until June 30, 2012.
Wu: [i]I think (hope?) they are up to the task.[/i]
Doubtful. Beating the dead horse: unless and until the City Council decides to hire more outside professionals, the same people that created this mess and poisoned the atmosphere will negotiate the next round.
It is *possible* to create a ‘master agreement’ with all employees (in effect creating a single community of interest), with breakouts for wages, hours, and working conditions, but at this point not very likely. The concept is too foreign, and makes too much sense.
[i]”I also believe the city can put pressure on its top managers and department heads to take an across-the-board cut, and a 10% cut would free up $500,000.”[/i]
I suspect you are informed in your opinion on this by the actions of the leadership of the DJUSD, some of whom (if I recall correctly) took a 5% pay-cut.
A few differences I might point out:
1. At least in salary, the top school district employees, justifiably or not, make a good deal more than the top city employees. For example, our last city manager–and I presume the current city manager, though I don’t know what he is being paid now–had an annual salary roughly $50,000 less than the superintendent of public instruction. (I should note I am estimating the numbers, not having the figures at hand.)
2. If I recall correctly, the give-backs by the top DJUSD administrators came on the heals of a pay increase. So what they were giving back was only a part of the gain they just had received.
3. While the total comp is very high (in my estimation) for our top administrators and some others in the city administration, not all of those who are in the “management group” make a great amount in salary. And while it is nice to have a $150,000 or more total compensation, they do have to live off of their salaries. So those who are “managers” and making in the range of $80,000 to $100,000 and who have not had much of a pay increase in the last few years will, I believe, be unwilling at this point to take the 5% pay cut you suggest they should.
Correction: “unwilling at this point to take the [s]5%[/s] [b]10%[/b] pay cut you suggest they should.”
[i]”But that has failed to work with the Davis City Employees Association. For one thing, it only can impose a contract for a single year.”[/i]
You’re mistaken about the imposed contract only lasting one year. Here is the applicable law. The part underlined explains what is significant about one year:
[i][b]3505.4.[/b] 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, a public agency that is not required to proceed to
interest arbitration may implement its last, best, and final offer,
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 [u]the right
each year to meet and confer[/u] 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.[/i]
[i]”For another thing, as we see with DCEA, the process gets tied up in the courts.”[/i]
Maybe I am wrong about this, but my view is that the DCEA situation demonstrates the futility of a labor group fighting against the imposition of the city’s last, best offer. The actions of the DCEA have simply served to harm the members of that association, and I think that will serve as an example for the others of what not to do.
Is DCEA operating without a contract?
[i]” But 20 employees, which would be the high end, will not cripple Davis’ ability to provide the public with good services.”[/i]
Cripple is too strong of a word, here. However, losing a number of police officers will make Davis less safe. Losing a number of parks maintenance workers will harm the quality of life for those who walk the greenbelts and enjoy our parks. Losing life guards, others who work with children or the elderly and so on will make life worse for those who rely on city programs.
Also, I think 25 cuts ($100,000 each in total comp less retiree medical) is a more realistic number to get at $2,500,000, as long as the cuts are not made in response to a fire department staffing change. Keep in mind that at least some of the contracts–the DPOA contract I know for sure–say that any layoffs due to budget concerns must come from those lowest in seniority. That means those who make the least money. And logic and history tell me those with no political power will get the axe first.
JOE: [i]”I wasn’t going to vote against a contract negotiated in good faith within the framework of the last set of MOUs – and simply [u]because DPOA was the last group willing to sign[/u], but had not reached closure a few weeks earlier.”[/i]
For the record, it really had nothing to do with “willingness” on the part of the DPOA. Rather, it was the case that all the other labor agreements but the police contracts ran from July 1, 2005 – June 30, 2009. All of those were signed late or, in the case of DCEA, imposed. The last police contract started a year later and ended a year later than the others (July 1, 2006 – June 30, 2010). That is why the DPOA contract fell in your lap.
Another thing is that, where the fire contract actually had some important reforms, such as capping the growth of total comp, the police contract lacked even that. So in the framework of the most recent MOUs, you could have demanded that much. Your council colleague Sue Greenwald certainly saw reason to turn down an unreformed deal.
DON: [i]”Is DCEA operating without a contract?”[/i]
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.
It is my understanding that the DCEA is operating under the terms of their contract which expired June 30, 2009. But perhaps what I think I know I don’t know. I will ask someone at the city manager’s office and post what I find out, when I find out, if I find out. Then I will know what I know.
ELAINE: [i]”If some are so certain employees will do only what is in their own self- interests and not care about the city, why assume employees will be more cooperative about taking pay cuts a year from now as opposed to right now?”[/i]
Starting July 1, 2012, the city council has the right under state law to impose the terms it wants to. I make no assumption whatsoever that “employees will be more cooperative about taking pay cuts a year from now.”
In fact, I don’t think the council needs to impose any pay-cuts at all. What they need to do is cap the growth of total comp. Under that rubric, the employees may prefer to adjust what they get in non-salaried benefits in order to keep their pay the same.
NEUTRAL: [i]” Beating the dead horse: unless and until the City Council decides to hire more outside professionals, the same people that created this mess and poisoned the atmosphere will negotiate the next round.”[/i]
I am told the City recently hired an outside professional to negotiate on behalf of the taxpayers.
Rifkin: [i]an outside professional[/i]
Yes, for one negotiation only, which I don’t believe is nearly enough.
David Greenwald has for some time advocated the idea of “streamlining the Cty’s management” as a mechanism for saving money. I think David is right in this regard. I have spoken with a number of mid-level city employees over the last 7-8 years who have told me that in their departments, the assistant department heads and similar personnel are a waste of money. Others have said we should be combining departments in order to get rid of one or more department heads.
Along these lines, Shneor Sherman sent to me a link from the state controller’s office ([url]http://lgcr.sco.ca.gov/CompensationDetail.aspx?entity=City&id=11985724000&year=2009&GetCsu=False[/url]), which shows all positions in the City government and how much each made in salary in 2009 and some other related data.
What I suggest you do is look at all of those job titles which begin “assistant” or “deputy” that make north of $90,000/year in salary and ask how many people are being managed by those individuals? We are paying them as if they are managers, as if they are deciding city policy and hiring underlings and determining resource allocations and the like. But, as I have been told by other city employees, most of these folks with these titles are clersk, processing paperwork for their bosses.
That seems to me an area where we could streamline. If Joe and Rochelle are going to fire 25 people this September, at least they should be studying these sorts of job titles, as opposed to patrol officers and parks workers.
DCEA is currently operating under the imposed contract.
[b]David[/b], I think you’ve scoped out this pretty well. But, you’re outvoted–with Sue thinking this puts us on an illegal path somehow and Rich figuring this anticipates quick action that isn’t likely to happen and both suggesting (I think) that success here will somehow reduce the desire to make additional, necessary changes.
However, it’s difficult to see the drawbacks of taking this action because it doesn’t “solve the problem.” Even though it’s only incremental progress, it’s still progress.
[b]Elaine,[/b] I can’t imagine the unions will agree to much that will “solve the problem” either–regardless of when and how they’re approached. They’ve fought hard for their recent, dramatic pay and benefit improvements. They’re as aware as anyone that they’ll face much tougher negotiations from now on. It’s difficult to “blame” them for doing their collective bargaining effectively.
The rest of us need to accept that we have to live with lower levels of municipal services if we don’t want to pay more for them.
[b]Mayor Joe[/b], thank you for giving us your rationale. I don’t think we elected you to come in kickin’ ass on Day One. Respecting the process that already had pretty well finished this round makes sense. But, we’ll be watching to see that you and your colleagues will be “totally on top of the next MOU process….”
The sooner that you start implementing Rich’s suggestions (3-person crews, flattened management, etc.), the better our finances and services will be.
J BROWN: [i]”DCEA is currently operating under the imposed contract.”[/i]
I got a reply to my query from the City of Davis’s Human Resources Director. Here is what she told me: [quote]They are operating under the terms of the contract that expired in 2009…unless it was changed in the last, best, final offer imposed, then that over rides what is in the 2009 contract.[/quote] What that means is that the City Council was successful in imposing its last, best and final offer.
That was the course of action I had suggested they follow going into the 2009 and 2010 contracts, if the labor groups would not budge. But, what happened in closed session–I should note here that my source was not a city council member–was that the offers from management were themselves overly liberal to make a difference. In other words, the last, best offers advanced by the council did not have the serious reforms we needed. So even if the council had tried to impose its terms on the other labor groups (besides DCEA), the deals imposed would have been quite similar to the deals which were struck and approved.
NEUTRAL: [i]”Yes, (the city hired an outside negotiator) for one negotiation only, which I don’t believe is nearly enough.”[/i]
[img]http://home.comcast.net/~matchgame/3x5pictures/AverySchreiber3.jpg[/img]
Neutral is correct. Here is what the City of Davis’s Human Resources Director replied to my email inquiry: [quote]We have hired a negotiator to do the DCEA negotiations we are currently in, his name is Bill Avery from Avery and Associates. Council has not decided who they want for the next round of negotiations.[/quote] Considering that the other contracts do not expire until June 30 of next year, it strikes me as wise of the council to wait to pay for a new negotiator at this time for those deals.
Also, if they are happy with the work of Mr. Avery (and or his associates), they will likely go back to Mr. Avery for those other deals. But the Council should take the time to judge Mr. Avery based on his work and his results. They might find that they would rather hire someone else to do the other MOUs.
I find the HRD response puzzling: [i]”unless it was changed…”[/i]
Well, was it, or wasn’t it? Wouldn’t she know?
[quote] But, you’re outvoted–with Sue thinking this puts us on an illegal path somehow[/quote]That is not at all what I think or what I said.
Don,
I think what she meant was:
[i]”They are operating under the terms of the contract that expired in 2009 … [s]unless[/s] [b]except insofar as[/b] it was changed in the last, best, final offer imposed. Then that overrides what is in the 2009 contract.”[/i]
In other words, very little did change from the 2009 contract, but some small things did (which, because I never asked, I don’t know which parts those were).
One thing which I believe has remained the same is the salary schedule for everyone in DCEA. That is, they have not gotten a raise in the last two years. Everyone else did (though in some cases, those raises came on the heels of pay-cuts).
[quote]Elaine, I can’t imagine the unions will agree to much that will “solve the problem” either–regardless of when and how they’re approached. They’ve fought hard for their recent, dramatic pay and benefit improvements. They’re as aware as anyone that they’ll face much tougher negotiations from now on. It’s difficult to “blame” them for doing their collective bargaining effectively. [/quote]
It is not necessarily a matter of what the “unions” will agree to, it is a matter of what city employees and the CC can collaboratively work out between now and Sept 30… let’s give them a chance… But IMHO, the bargaining groups are a lot more likely to be cooperative/reasonable when the time comes, now that they have gotten the clear signal from CC that it cannot/will not be business as usual…
But the CC had to start the more stringent budgeting process somewhere… so why not sooner rather than later? Only time will tell who was “right”… we need to let the matter play out without trying to sabotage the effort…
In a City Staff report which I never read before ([url]http://cityofdavis.org/meetings/councilpackets/20100525/07C DCEA Impasse.pdf[/url]), I found the list of items in the imposed contract for DCEA which changed from their 2005-09 deal:
[b]o Furloughs — [/b]12 furlough days FY 2009/10; all furlough days to be taken before June 30, 2010.
[b]o Cafeteria Health Benefits –[/b] City to contribute to cafeteria health plan at calendar year 2010 rate for the Kaiser plan available through CalPERS for Employee +2 plan.
[b]o Cafeteria Cash-out Provision –[/b] Current Employees: Cap at CURRENT (2009) Cafeteria Benefit, New Employees: Hired after January 1, 2010 – Cap cafeteria cash-out at $500 / month
[b]o CalPERS Retirement –[/b] RETAIN language re employees agree to pay up to 3% increase in CalPERS employer contribution rate. (Employees pick up .453% FY 2009/10)
[b]o Overtime –[/b] City to implement modifications to overtime provisions in current MOU to be more consistent with a 40 work week. Paid time off (sick, vacation, comp time) will not be considered time worked.
[b]o Tool Allowance –[/b] Increase tool allowance for Equipment Mechanic series from $325.00 per year to $500.00 per year
[b]o Unit Determination –[/b] Upon Council approval move Lab Analyst Series to DCEA from PASEA
[b]o CalPERS Retirement –[/b] Set election to amend CalPERS Contract effective January 1, 2011 to reflect Highest Three-Year Average PERSable compensation as basis for calculating retirement benefit (instead of highest one year). Election to be held by June 30, 2009.
[b]o Retiree Medical Benefit –[/b] Implement vesting period for CURRENT employees with CalPERS vesting at State Contribution Level
The staff report notes that the changes imposed upon DCEA were essentially the same as those accepted by other bargaining groups: [i]”… the City’s final proposal for a three-year contract (which was very similar to the PASEA and Management agreements, related to structural changes and furloughs) as well as the City’s last, best and final offer.”[/i]
Rifkin makes many predictions about how things will play out. i look forward to seeing where he is right and where he is wrong.