On August 9 of this year, William Diemer passed away at the age of 88. Among many things, he is noted for is his book about Davis, “Davis from the Inside Out,” which is an interesting almanac of Davis’ key features.
Someone dropped by with a copy of the book, copyrighted in 2000. For some reason I fixated on the youthful photo of then-Davis City Manager John Meyer, who was at the end of his rather lengthy tenure as city manager.
When John Meyer took over as city manager in 1990, following the short tenure of Robert Traverso, he was the youngest city manager in California at the age of 33. But what really jumped out at me is that his salary in 1999-2000 was just $87,327. Across the page from him was Bette Racki, who was the city clerk at that point and she made just $49,836.
The current occupants of those positions make far more than that today. However, it is an important frame of reference because it shows that decisions that were made at that time were made during a very different frame of reference.
Indeed, two of the most critical policies that turned out to be devastating to the city’s finance occurred right around this time.
As we noted a couple of weeks ago, it was in 1999 that the city of Davis expanded their fire staffing from two stations of three on an engine and one station of four on an engine, to all stations having four on an engine.
At the time when the council unanimously approved the changes, it required the hiring of six firefighters at the cost of just $368,676. This means at that time, total compensation for a firefighter was about $60,000 a year and that figure “included the costs for turnouts, beds and lockers for the new firefighters.”
Now the cost of that policy is far higher.
As Mr. Rifkin wrote on August 15 of this year, “Based on numbers provided to me last week by city staff, the marginal expense of that additional firefighter on each truck in the 2011-12 fiscal year was $1.48 million. For the 2012-13 fiscal year the cost will be another $1.57 million. In five years it will be $1.94 million.”
Total compensation for firefighters over that period of time went up by between 150% and 200%. That compares unfavorably with even the increase of the city manager and city clerk, whose salaries doubled, or real estate values which did about the same.
It was only a year later that the council made the next critical move that at the time probably seemed relatively minor – adjusting pensions to 3% at 50. When salaries were at $30,000 to $50,000, this was probably a relatively minor decision.
But as the salaries have exploded over the past decade, and with retroactive increases, it means not only have pensions costs exploded along with them, but they are unfunded liabilities.
Unfortunately, the city has only preserved the minutes and resolution from those decisions – we cannot read the staff report or the fiscal analysis of it. Those wondering why we might need better records retention policies ought to pay attention to this point.
On November 15, 2000, a city council comprised of Susie Boyd, Sheryl Freeman, Sue Greenwald, Michael Harrington and Mayor Ken Wagstaff and led by Interim City Manager Jeanie Hippler, who took over for John Meyer, would approve a contract amendment to grant the firefighters 3% at 50 pension compensation.
However, even at that time, in a document from August 23, 2000, the city disclosed that the change in the present value of benefits was $2.47 million, including an unfunded liability of $1.87 million.
That initial unfunded liability was generated due to the fact that previous employer and employee contributions to the pension fund were assessed at the 2.5% at 55 rate. Now, retroactively, the pensions due to the firefighters would be 3% for each year of employee at the final year’s salary.
That last portion created a separate problem – probably largely unbeknownst to the five councilmembers in the fall of 2000. Each salary increase for the firefighters meant they were due additional money for each year of employment.
So, if the unfunded liability were really $1.87 when the average firefighter was probably making in the $40,000 range, imagine what it is now when they are making in excess of $90,000 per year?
Moreover, these decisions were also made a time when CalPERS (California State Employees’ Retirement System) was superfunded. So the cities (and employees) were not having to pay money into the fund at that time. But the eventual creation of unfunded liabilities began to eat up that superfunding. As cities and other governments increased their pension formulas, the funded went from superfunded to underfunded almost overnight.
The decade of the 2000s saw huge growth in salaries, and without back-filling the funding, money was being promised that was not paid.
We talk a lot about the unfunded liability of OPEB (Other Post-Employment Benefits) which is generally a term used synonymously with retiree health. The unfunded liability there for the city is about $60 to $65 million and the city will be using between 20 and 25 percent of its payrolls to fully fund those benefits.
It is relatively easy to see that, in hindsight, the ground was laid during good times when compensation for employees were at reasonable levels. The fact that salaries would absolutely explode in the 2000s decade was not foreseeable in 1999 and 2000.
Unfortunately, we are not privy to the debates and discussions and analysis because the records from that time do not have that level of detail and agendas and videos have long since disappeared.
What we did pull up was an article in the Davis Enterprise from November of 2000, which weighed in on a controversy that Union President Bobby Weist had with then-Councilmember Michael Harrington. Actually, it might be better depicted as manufactured dissent.
At issue was a statement from Mr. Harrington, reading, “I also understand that Davis’ practice is not to attack fires by going in, but to surround the building and pour water on it until the fire is reduced, then send in firefighters .”
Somehow, this was interpreted by the firefighters to mean “he [Michael Harrington] believes all Davis firefighters are cowards.”
30 off-duty firefighters filled the chamber as Mr. Weist explained, “It has never been a policy of the department not to attack a fire from the inside.”
“That is the only way that you’re going to be able to put a fire out, is to get to the seed of the fire,” he said.
While Mr. Harrington apologized, calling his wording “awkward,” at the same time Mr. Weist took issue with a statement from Mr. Harrington that read, “I understand that we have recently added close to $1 million in annual costs for the new firefighters …”
As the paper noted, “Six firefighters were added to the department, but not at a cost of $1 million. A new station is estimated to cost $1 million.”
While Mr. Harrington may have confused the costs of the additional firefighters with the cost of a fourth fire station, which would be the subject of much lobbying for the next decade, Mr. Harrington was right even at that time to be concerned with the costs of the 2 in/2 out and four firefighter policies.
And while Mr. Weist rightly pointed out that the policy of the fire department was to attack fires from the inside when necessary, it is worth noting that, according to Interim Chief Scott Kenley, we are only seeing about five such entries a year.
Moreover, it’s clear that Mr. Weist overplayed his hand by bringing 30 firefighters down to the station, a show of force clearly meant to intimidate the council and distort what Councilmember Harrington actually said.
Mr. Weist called the statement that firefighters do not enter a building a “slap in the face” to firefighters in Davis and all around the country.
He added, “What Councilman Harrington has said is that firefighters in Davis are cowards, and that’s how every firefighter in this city has taken it.”
Mr. Harrington, in his response in the article, would say that he “wanted to know if the ‘two-in, two out’ program is a cost-effective way of carrying out the department’s mission. He said it was his goal to better understand the reason for adding six firefighters to the work force, rather than turning to mutual aid capabilities.”
That article, which is the only real record of the discussions of that time, is very interesting in that Mr. Weist clearly overplayed the grievance, initiated a huge show of force, and forced the council or at least one member back on his heels.
In the end, Mr. Harrington was proven correct for his concern. However, not only would the firefighters win the day, but they would win the decade. They got their 3% at 50 in that contract and their next contract would see a massive increase in salaries with an aggregated total increase of 36% between 2004 and 2008.
The firefighters would also succeed in winning the council. Beginning in 2002 and ending in 2008, firefighter-backed candidates would win every seat but Lamar Heystek’s in 2006 and Sue Greenwald’s in 2008.
In 2004, they backed Sue Greeenwald over Michael Harrington. Mr. Harrington would lose that election, although the firefighters may have regretted their support for Ms. Greenwald.
—David M. Greenwald reporting
[quote]led by Interim City Manager [b]Heanie[/b] Hippler[/quote]That would be “Jeanie”. Highbeam, might be nice to correct a spelling of someone’s name, particularly when that someone served the City for ~ 30 years.
[quote]So the cities (and employees) were not having to pay money into the fund at that time.[/quote]WOW! how to judge the veracity of that quote. True: Employer’s share of contributions were at or ~ 0% at that time; False: PERS was not receiving the employees’ share; True: for a number of reasons, including the fact that the employer’s share was set ~ 0%, the City was paying the employee’s share to PERS. I’ll be charitable, and attribute the error to David thinking that the City had the same experience as UCD, whose employees included Sue Greenwald’s husband.
highbeam is a volunteer, and gets to the articles as soon as possible – am starting now. Remember that they are posted first.
Highbeam, I truly respect you and what you do. No “tone” was aimed at you. Have a wonderful day (but, only if you are so inclined!)
Thanks, I’ll try!
David: thanks for the walk down memory lane.
However, similar forces are still at work, significantly hurting city finances and taxpayer interests. Staff and the JPA proponents tried to ram through the water project last fall, and failed. The political appointees to the Water Advisory Committee are still working with staff to push through a large project without sufficient transparency and analysis.
The referendum forced a process that resulted in the City dropping from 20 million gallons a day project, to 12 mgd.
I am confident that the 12 mgd is still 2x what is needed, if even that.
The extra water is for ramping up urban growth in Davis and Eastern Yolo County.
The current project being pushed by staff and Woodland and the JPA is too large, mostly not needed, and too expensive.
The Chair of the WAC amended the motion by adding in a request that the CC look at smoothing the necessary rate increase spike; that can only be done using borrowing, to be charged against the taxpayers. If the CC majority and staff are so set on this project, make it clear and transparent and justif the need, and put honest, open rates on the ballot that do not involve the excessive borrowing that the CC and WAC and current staff are now contemplating.
If the project is so good, and so necessary, put the full rate increases out there and see if the voters agree.
What I see behind the JPA project is similar to the 3% at 50, 4th fire fighter crew, etc etc: done mostly in the dark, using friendly consultants and staff who drive the policies and projects forward, to the detriment of the CIty and its residents.
Don: it’s all tied together. Same attitudes.
[quote]Unfortunately, the city has only preserved the minutes and resolution from those decisions – we cannot read the staff report or the fiscal analysis of it. Those wondering why we might need better records retention policies ought to pay attention to this point.[/quote]It is amazing to me that a city of our size keeps rather scant records of the governing process, yet keeps extensive records of buildings.
Why in the world would we not keep, at a minimum, the complete Council packet, agenda, minutes, and video file of every council meeting? Better yet would be transcripts of meetings. Many agencies, councils and boards keep transcripts.
It is often the case that actions taken by politicians have adverse effects many years down the road. If we wish to hold them accountable for those actions, we must preserve sufficient records to review and demonstrate what they did.
Memories can be short. Video files and documentation are forever….but only if they are retained for later examination.
[i]Don: it’s all tied together. Same attitudes.[/i]
It’s tangential to the main topic. When your reply is tangential, try to keep it brief. Like, one or two sentences. Thanks.
Don. The reality is that if it was a water discussion, Mr H would bring up fire-fighter crew size. It “is what it is”.
[quote]Unfortunately, the city has only preserved the minutes and resolution from those decisions – we cannot read the staff report or the fiscal analysis of it. Those wondering why we might need better records retention policies ought to pay attention to this point.[/quote]
I agree – better records retention is essential.
[quote]It is relatively easy to see that, in hindsight, the ground was laid during good times when compensation for employees were at reasonable levels. The fact that salaries would absolutely explode in the 2000s decade was not foreseeable in 1999 and 2000.[/quote]
Frankly, I don’t think it was that difficult to see that such salaries/benefits would eventually be unsustainable. Rich Rifkin and others have been saying it for years… Michael Harrington saw it, no?
“Moreover, it’s clear that Mr. Weist overplayed his hand”
How is this clear? Overplaying his hand would suggest that he somehow lost. He showed that he could easily negate a critic and then went on to bring his union more than 10 years of unbroken success at the bargaining table. Seems to me he played his hand (and his critics) to a T.
Mark: I agree, the FF and Weist played the CC and public to a T. Saylor is their political sponsor, and he flew the City Council coop just before the budget chickens came home to roost. He got his union political money and precinct walkers, and they got their massive increases in benefits and salaries, and we are all stuck with the consequences. Saylor did the same thing on the water project, and darned near succeeded. (Sorry, hpierce, but it’s all tied together, brother.)
David thansk for mentioning William Diemer.
I am glad that the work of William Diemer continues to be of service. He loved facts and Davis. I served with himn in the 1980’s on the board of the Santa Monica Co-op and then later the Davis Food Co-op. He was determined to leave a legacy through his research. He passed away recently and he is missed for his decades of public service.
His information does help us see that we were unthinkingly generous when some pro-active restraint would have better served our future.
David Thompson, Twin Pines Cooperative Foundation
Mark wrote:
> He (Weist) showed that he could easily negate a critic
> and then went on to bring his union more than 10 years
> of unbroken success at the bargaining table. Seems to
> me he played his hand (and his critics) to a T.
The Union will always have more of a reason to fight than taxpayers since when they get a thousand dollar raise we only get a few dollar tax increase.
I bet if we re-run the numbers today on the “unfunded liability” it will be much higher since the current yield on the 10 year treasury is only about 25% of where it was in 2000.
For every guy that retires at 50 with a $100K pension and health care we should have well over $5 million in his pension funs and we don’t even have close to that…
Michael H. “[i]Mark: I agree, the FF and Weist played the CC and public to a T. Saylor is their political sponsor…[/i]”
Sorry Michael, you can’t blame Don for this as you were the one on Council at the time. Remember, Don unseated you a few years later.
You were the one that Weist played by taking advantage of the close association of your foot and your mouth, and he continues to leverage the advantage you gave him.
Does anyone know where I can buy a copy of Diemer’s book? I had never heard of it until I read his obit some weeks back in the Enterprise.
[quote] (Sorry, hpierce, but it’s all tied together, brother.) [/quote]Respectfully, not it is not. I have no siblings, so you intrude my space calling me a “brother”. I call some non-related individuals ay “brother/sister”, but but that is based on spirituality. You are known to me as someone who used their office to influence city employees to coerce a property dispute/entitlement action on behalf of a friend/client, whatever. JS?
hpierce – I am aware of Mike forcing (coerced) gifts of land or portions of parcels for use by people other than the future owners for projects needing City Council approval. (Gift this land and Mike will vote to approve.) Is this what you are referring to?
Except I’m referring to a “failed” attempt… the staff person involved had integrity and ‘stood their ground’… but we all know that “staff” can’t be trusted…. yeah, right.
Rich:
http://www.amazon.com/gp/offer-listing/0967057205/ref=dp_olp_used?ie=UTF8&condition=used
For William Diemer’s book.