When a normally labor-friendly process largely upholds the city position in bargaining, it is a very bad sign for the two hold-out labor groups and a very good sign for the city. For a variety of reasons, some of which were laid out by the city’s representative on the three-member panel, the city cannot implement the recommendations of the fact-finding panel. However, the overall findings largely back the city’s position.
This is in marked contrast to the previous fact-finding session which looked at the 2009-10 contract. Here the city’s representative in the process was Samantha Wallace, who is a Community Services Superintendent for the city of Davis and works under the HR director, Melissa Chaney.
In her dissent she complained, “The recommendations by the Panel majority seem to simply rubber-stamp the DCEA proposals without logical explanation or rationale, and without even consideration of contrary positions and evidence in the record.”
But this report is more critical, as it examines the core structural changes – health care, OPEB, PERS, and cafeteria cash outs, finding in each case for the city, with apparently requisite attempts to cushion the blow by offsetting the cuts with wage increases.
The fact-finders found that the city of Davis “is not in desperate financial straits like many other governmental entities in California” but that they have “not much margin for error.” In a blow to DCEA (Davis City Employees Association), they noted that “DCEA failed to identify a source of money to fund generous pay raises or to retain lucrative benefits such as the PERS [Public Employees’ Retirement System] pick up and no employee contribution to health insurance premiums.”
The fact-finders noted that Timothy Reilly, who was hired by DCEA to analyze the city’s financing, “conceded that although the general fund is not broke, the City can reasonably target an unreserved general fund balance at 15%. Also, while he characterized the enterprise funds as healthy, he never opined that they contain excessive amounts of money. Finally, Reilly’s analysis did not consider the water, deferred maintenance and community service challenges confronting the City.”
Deferred maintenance by the city is largely how the city managed to stay afloat during the downturn. The good news is that this strategy kept the city out of traditional debt, but the bad news is that it greatly increased the city’s costs down the line to maintain roads and water.
The panel found that “the City rightly needs structural changes to the benefits afforded to employees, but it also has sufficient money to provide modest wage increases which are needed to partially cushion the financial sacrifices that the DCEA employees must make.”
There are two problems with the report. As Assistant Police Chief Darren Pytel noted in his partial dissent, the recommendations first fail to note that “DCEA has benefited greatly from the protracted negotiations in this matter” thus making the idea of further cushioning the blow a bit excessive, and, second, they fail to really understand the impact of the cushioning the blow on the city’s overall finances.
By stringing out the impacts over time and cushioning the structural changes with offsetting wage increases, the city would have to suffer in the short-term to gain the long-term structure needs.
As Darren Pytel writes, “I believe that these Recommendations fail to properly take into account that the City’s financial pressures in the coming years – some of them unrelated to personnel costs (e.g. funding of community services, addressing deferred maintenance and infrastructure needs, building a new water treatment facility, and addressing rising water costs) – will be significant. While I remain optimistic about the City’s financial situation moving forward, I believe restraint and caution are the orders of the day.”
But the bigger problem for the city is that any change for DCEA would lead to changes for all groups.
Moreover, why is the fact-finding chair rewarding DCEA for their protracted holdout, which has already benefited most of their employees over everyone else in the city?
Despite these issues with the fact-finding report, DCEA and eventually the firefighters are receiving bad news. The fact-finding has already found the most critical reform elements to be vitally necessary.
On cafeteria cash outs, the panel holds that the cafeteria cash out benefit is “ripe for reform,” noting as we have, “it is discriminatory. The cash payout in lieu of health insurance favors those employees who happen to be fortunate enough to have access to health insurance through another source. An employee who is unmarried or does not have a working spouse (or the spouse’s employer does not provide health benefits), must forego the cash and obtain coverage under the City’s plan. Thus, the benefit is inequitable.”
They do attempt to cushion the blow, extending the cuts further out than the city would prefer, but the writing is on the wall there.
The panel recommends on retiree health benefits “that the parties adopt the City’s proposal for retiree healthcare benefits,” however, they attempt to offset that with wage increases that would undermine the city’s short-term budget flexibility, especially when implemented across the board.
On the issue of employees’ contributions to PERS, “The Panel finds that a rather steep incremental pickup offset by a 3% wage increase through the four year agreement is the best solution to this very difficult problem.”
Again, the writing is on the wall for the pickup, but there is no way the city can offset all of these cuts in the short term.
All of the other employee groups have had to eat the costs – why is DCEA different?
From the city’s perspective, they have gained a lot here. An outside analyst has now looked at the city’s structural changes and essentially agreed with all of them.
The only change they have made is to try to cushion the blow or, in the words of Darren Pytel, “water” them down, at least in the short term.
The city has no reason to do this. They now have clear sailing, really, both with regard to DCEA and the firefighters, to implement their last, best and final deal.
The good news for the city is that they have escaped the financial ruin of many others. The bad news is that with the bills coming due and limited opportunity for revenue increases, the city has no margin for error.
—David M. Greenwald reporting
David wrote:
> Deferred maintenance by the city is largely how the
> city managed to stay afloat during the downturn.
> The good news is that this strategy kept the city
> out of traditional debt, but the bad news is that
> it greatly increased the city’s costs down the line
> to maintain roads and water.
It is no surprise to anyone that roads and buildings don’t last forever and in the private sector CapX and or Reserve for Replacement is a real line item in every budget.
Year after year I see politicians (of EVERY) party avoid spending money on deferred maintenance and not reserving ANYTHING for CapX or major asset replacement so they can give the money to their friends (aka the people that make totally legal campaign and PAC contributions).
We need to make changes to the laws if we want to force government (at all levels) to reserve for the costs that WILL come or they will just keep spending the money today and hoping to borrow or float bonds to pay the bills down the road.
P.S. Most of Davis is still “new” (as far as cities go) and like a newer car there has not been a lot of big expenses. We can think of the new water system as replacing the water pump and heater hoses that most people do on a car at ~100K. Just like anyone that manages a fleet of trucks knows that once you do the water pump and hoses it will not be long before you do the exhaust system it will not be long before Davis is spending a lot more money on sewer repairs (sewer repair is not something you can put off like road repairs)…
“The factfinders found that the city of Davis “is not in desperate financial straits like many other governmental entities in California” that they have “not much margin for error.’ ”
So the sky isn’t falling Chicken Little.
In a static universe your analysis of their analysis might hold true. However there are two points worth considering. First the economy is improving with university and state furloughs ending. Driving by target yesterday I saw lots of new construction that had been deferred through the recession. This should provide some increases to the city revenue stream.
Second, Davis is ripe for growth that can help us balance the books if only we embrace the economics of the 21 century over those of the 20th. Conservatives always argue we should grow our way out of our problems. The problem with their analysis is that they usually set their growth targets too high at 4%. Here in Davis if we go for adding value through development of our technology innovation we can go a long way to solving our economic problems through growth. We sit at the crossroads, if we stay on the path of if we don’t build it they won’t come the chickens will come home to roost with the last stop on the Tour de Cluck being Chicken Little’s coop. The choice is up to the community.
“So the sky isn’t falling Chicken Little.”
That’s a funny comment since the city has basically in the last few years taken all of the steps myself and some others were recommending back in 2008 and 2009. Your comment is laughable.
The City relies on a Parks tax and a Public Safety Tax. When are these two taxes up for renewal?
“The City relies on a Parks tax and a Public Safety Tax. When are these two taxes up for renewal? “
we just passed the parks tax, but we need to do another, more expansive one. we just did the sales tax, but it sounds like we will have another next year. not sure about teh public safety tax.
dcea got smoked on this one and the factfinder, which is generally pro-union, could only try to soften the blow.
[quote]The cash payout in lieu of health insurance favors those employees who happen to be fortunate enough to have access to health insurance through another source. An employee who is unmarried or does not have a working spouse (or the spouse’s employer does not provide health benefits), must forego the cash and obtain coverage under the City’s plan. Thus, the benefit is inequitable.”[/quote]
David, perhaps you could elaborate on this one a bit. One employee gets health insurance, another gets cash, where is the inequality? Is it the size of the cash payment that is in question or is it something else entirely? This type of cash-out has been standard practice in state and other governments for a long time and I am not aware of any issues surrounding it in those cases.
Good question.
So here’s the problem. Let’s say you and I are both employees for the city. My spouse has a job with health insurance. Yours doesn’t. I take the cashout, which right now is $1500 per month and use my wife’s insurance. You get insurance. So by dint of the fact that my wife has insurance, I get another $1500 essentially in salary.
So what they are proposing is capping that benefit that some get and others do not to $500. They hope that is enough to encourage the employee to use their spouse’s health insurance (saving money), save money on the lower pay out, and equalize the benefit to all employees.
This type of cash-out is standard practice, but Davis was the only city to allow the full cost to be cashed out. Most cities cap theirs to $500 which is what the city is proposing.
[quote]So what they are proposing is capping that benefit that some get and others do not to $500.[/quote]
That should be a no-brainer. The only ones who’ll complain about that are the public employees actually getting the $1500.
it’s not an illegitimate complaint. for someone making $50K per year, $1500 is a lot of money to be eating (well $1000 less so $12000 a year).
Thank you for the clarification, DP. Yes, they need to cap the cash out, $1500 a month is outrageous! $500 is extremely reasonable and is still much more than the cash value for state employees. Does that cash value also include dental coverage or is that even more again?
Davis Progressive wrote:
> for someone making $50K per year, $1500 is
> a lot of money to be eating (well $1000
> less so $12000 a year).
It sounds like the unions are not happy with a $500 bonus above and beyond the ~$50K job (with a big pension) that people in the private sector (with no pension) get paid ~$35K to do so they want to raise the sales tax on people making less them (with no pension or health care bonus every month) to get more money…
Davis Progressive
[quote]it’s not an illegitimate complaint. for someone making $50K per year, $1500 is a lot of money to be eating (well $1000 less so $12000 a year). [/quote
Yes it is an illegitimate complaint because the person that’s getting their healthcare from their spouse is still coming out $500/month ahead of the employee that has to buy their healthcare. Learn up.
“It sounds like the unions are not happy with a $500 bonus above and beyond the ~$50K job (with a big pension) that people in the private sector (with no pension) get paid ~$35K to do so they want to raise the sales tax on people making less them (with no pension or health care bonus every month) to get more money…”
First, they should get a union job.
Second, most people in Davis make more than $50,000.
Mr.Toad wrote:
> First, they should get a union job.
Easier said than done. The SF Chronicle has recently wrote that the odds of getting in to Harvard are better than getting a union job with BART (and mentioned that a huge number of BART employees are related) . Not long ago Oakland had over 1,000 people apply to become a union firefighter.
> Second, most people in Davis make more than $50,000.
I’m sure “most” (if not all) of Toad’s union friends make over $50K, but “most” people in Davis make less (not more) than $50K. The Wikipedia says that the per capita income for Davis is $22,937. There are a lot of people in Davis looking for work right now that would love to make $50K (even if they didn’t get an extra $1.5K a month extra)…
“per capita income for Davis is $22,937”
Per capita includes children and students many of whom make almost nothing. Median family income is a better measure.
Davis median family income 2009: $98,671.
http://www.city-data.com/income/income-Davis-California.html
“Easier said than done.”
Possibly because union membership has declined to almost nothing in the private sector since Reagan broke the Air Traffic Controllers.
“I’m sure “most” (if not all) of Toad’s union friends make over $50K, but “most” people in Davis make less (not more) than $50K.”
I hope my friends do well for themselves.
Mr. Toad wrote:
> Per capita includes children and students many
> of whom make almost nothing.
> Median family income is a better measure.
Median “family” income includes the total of all income from all the people that live in a home. Do you want to argue that since the median “family” income (that can include four or more people working full time) is $98K that “most” (more than half the people in Davis) make over $50K.
Many people in Davis, like my wife’s (Stanford-Hastings) attorney friend that is trying to pick up work she can do from home, or a contractor friend that has been having a hard time since 2008 “make almost nothing” but they are not happy about it.
Quite a few homes in Davis have Mom & Dad working full time plus a parent (often with Social Security and/or a pension living with them to help make ends meet and/or take care of the kids).
When you (like my wife) live in a bubble inside Davis and 90% of the people you spend time with not only have advance degrees, but advanced degrees from the top 20 schools in America it is easy to think that everyone is doing great.
I deal with a wider variety of people that most in Davis and I would be happy to take a bet with anyone that “most” people (even “most” people with jobs”) in Davis don’t make $50K. Sure some people make a lot more than $50K, but as I just reminded my wife a week ago when she asked if we could get a new ($100K+) MBZ GL63 (like her friend just got) that “most” couples don’t make as much as her friends (that went to Stanford-Law & HBS and both work 60+ hours a week)…
“Moreover, why is the fact-finding chair rewarding DCEA for their protracted holdout, which has already benefited most of their employees over everyone else in the city?”
“As Assistant Police Chief Darren Pytel noted in his partial dissent, the recommendations first fail to note that “DCEA has benefited greatly from the protracted negotiations in this matter” thus making the idea of further cushioning the blow a bit excessive,”
When referrring to DCEA benefiting from protracted negotiations, one important FACT has been overlooked. The city was found GUILTY of unfair labor practices! If the city had negotiated in good faith, DCEA would have agreed to a contract in 2010. SO if DCEA has benefitted in any way, it is due to the city’s unlawful actions at the bargaining table.
I think that’s a fair point as well.