Lost in the chaos of Tuesday is the fact that an important discussion took place and will need to be revisited since the council adjourned without taking action. I think it is important to note at the outset here, that I was surprised the discussion took the turn it did because in my view, the line drawn in the sand should have been with the management group and fire not PASEA.
From the standpoint of fairness, I certainly could not support a system where fire and management got a better deal than the 125 or so employees that make up the PASEA bargaining group.
In fact, this is a bargaining group of people who will in the end pay for the fact that the city has implemented unsustainable policies to public safety in the form of pensions as well as to management. I suspect that if the city has to adjust its policies it will do so not on the backs of fire or management but rather on the backs of the rank and file and that is most unfortunate.
However, to me, it is pretty clear that if the city does not fix its pension and retiree medical system, we will become insolvent down the line.
The people of PASEA deserve good pay and benefits. These are not the people in city government that deserve to have to take seven furlough days and a five percent pay cut. These are among the people who can least afford that.
The issue of the cafeteria cash-out has come up in every single discussion of contracts. The problem is that the city of Davis made the inexplicable decision to allow employees whose spouses have medical insurance to cash out for the full value of their coverage. The point of the benefit is to make sure that people receive medical care. The city could provide an incentive for the employee to use the spouses insurance by granting a 25% cash out.
In fact, as we reported last week, Davis is extraordinary in the amount it allows employees to cash out. Most cities give between $200 and $500, but Davis gives nearly three times that amount per month.
Councilmember Souza has always made an issue of the fact that few employees use the benefit. However, in PASEA, it’s like 53 of 125 employees that utilize the full benefit. In fire and management it was a very low number, which suggests that this benefit being cut will disproportionately harm the rank and file rather than those at the top. Citywide, the cost to the city is $4 million. That money could be used as Councilmember Greenwald pointed out a few weeks back to close the unfunded liability on retiree medical. Unfortunately, by doing so, we would be harming the very employees that could least afford it.
The other issue that needs to be address is the structural change. Up until now, other than safety groups, employee groups do not pay into their pension funds. What this contract purports to do for the first time is to add in employee payments to the pensions. First year they contribute 1%, the second year 2%.
Sounds good, right? Well it turns out they are doing that to offset a 1% additional pay increase in year 2 and a 2% additional pay increase in year 3. As Paul Navazio said on Tuesday night, it is a wash in terms of commitment. So the structural change is simply a swap of money in one spot for money in another spot.
The truth is, that the only way structural change is going to likely come for pensions is the implementation of a two-tiered system whereby they can reduce the current obligations of 3% at 50 for safety and 2.5% at 55 for other employees but only for new employees.
My complaint all along here has been that the city has their opportunity right now. The city’s deficit gives it the leverage and the political will to make tough choices. Instead of fixing the problems or even setting us on the path to fix the problems down the road, we have essentially implemented very small changes that are not sustainable long term.
Councilmember Souza brags that this is the first time in fifteen years that we actually reduced salaries and benefits. We actually have not. Other than for fire, salaries are untouched. We have simply implemented furloughs as a cost savings measure. Moreover, we have not actually reduced benefits, we have simply transferred money from one place to another.
The city in fact understands that the current system is unsustainable. But the council majority lacked the will to force a better deal. Moreover, the bargaining process probably does not lend itself to such a deal. Even an imposition of impasse is a temporary fix, it would only implement a one-year contract rather than a multiyear deal.
We can see how difficult such concessions are to gain. The school district has had three straight years of layoffs. It has had to cut four multimillion dollar deficits. And only now, after the announcement of potentially 88 position cuts is there actual consideration of concessions. Before then, the bargaining groups preferred layoffs. The city has not laid people off yet. They have had retirements. They have left positions open. But they have not had layoffs.
However, with or without concessions there will be a day of reckoning for the city when it’s unsustainable policies come home to roost. They seem well aware of that.
They are in fact rolling the dice. If the city can implement a two-tiered system for pensions outside of the collective bargaining process, they can start to make the structural changes they need even though these contracts were lacking in serious reform. However, I am skeptical that they would be able to do so and I am more skeptical that they would be able to maintain it past the next contract. In other words, I still think they squandered their opportunity for reform.
Unfortunately given what happened on Tuesday, we have missed out on another opportunity to discuss these key issues and figure out how to make changes.
—David M. Greenwald reporting
David:
Given the amount of attention that the events on Tuesday will get, lets hope that people will also look at the issue.
The contract pension issues need to be dealt with now, not when they become insurmountable problems. To me our Fire Dept. is highly overpaid. They always try and justify their pay with they do a great and sometimes dangerous job, well so do many others of us in the private sector and most of us have seen our pay cut and benefits reduced. They need to face reality and make the cuts that’ll keep Davis solvent.
[i]The problem is that the city of Davis made the inexplicable decision to allow employees whose spouses have medical insurance to cash out for the full value of their coverage.[/i]
When did it make this decision, and who made it?
Okay, here is some more information on the crucial question of how Davis made the “inexplicable” decision to allow a cafeteria cash-out. Here is a quote from the 2005-2010 MOU for police officers:
[quote]Effective January 1, 2007, the City agrees to convert its existing cafeteria to one that qualifies under IRS Code Section 125. The regular and intended effect of the implementation of the plan, under current law, is to enable employees to choose between the receipt of benefits which are not subject to either State or Federal income tax and a cash out benefit which is subject to tax, but is not included in the employee’s hourly rate.[/quote]
I don’t know what the city had before this, and whether this is really the transition date when the city began cafeteria cash-out. Either way, (1) Sue Greenwald was on the city council when this MOU agreement was reached. It would be interesting to know what she said and everyone else said about it at the time. (2) This is not a decision that just hit the city out of the blue. It apparently has a connection to IRS rules for tax-free benefits.
It is important to look at the history of this benefit, because it is 10 times harder to revoke a benefit than to never offer it in the first place.
Just a thought, if I were a city employee and were receiving the cafeteria benefit because my spouse had medical benefits, or I was receiving medical benefits from say the military, which require a monthly payment, and the cafeteria cash out benefit was cut to say 25%, or even 50% I would prefer to cancel the cafeteria cash out and double up on my medical coverage. Especially Kaiser because this would reduce the copay amounts. How does this help the city if other employees felt the same way?
About time citizens realized that government employees were raking in the cash. It isn’t about the salary, it is all about the benefits. For too long cities have been allowing this to continue. Well, now it looks like the chicken has come home to roost.
David,
I gave an in depth analysis of the PASEA contract Tuesday night, which you chose to ignore. I focused on failure of the current contract, and on the need for benefit reform.
For anyone interested in the substantive discussion that occurred last Tuesday night, I will have an op-ed piece in this Sunday’s Enterprise. I have focused on the Management contract, because I didn’t want to imply that I approved of putting the burden of our needed benefit reform primarily on our lower paid workers.
Unlike the council majority, the University made its cuts, at least for its faculty and staff, in a progressive fashion.
[i]Unlike the council majority, the University made its cuts, at least for its faculty and staff, in a progressive fashion.[/i]
That’s a good point.
Unlike furloughs at CSU or the state government or the city Davis, the University of California implemented furloughs on a progressive scale. Compared to what CSU did, Yudof spared tens of millions of dollars in salary for lower-paid workers. In response to that, the strongest unions rejected any furloughs. Those unions and certain outside activists spared no praise for the progressive furlough scale, and instead blasted Yudof over executive compensation, which they also misrepresented as the highest compensation.
UC’s progressive furlough scale applied to management as well as to faculty and staff. It did not apply to coaches or doctors who might well be paid more than management.
I am not an expert in the details of city labor contracts. In particular, I don’t know what sorts of concessions are realistic. But in the abstract, I endorse progressive furloughs as good public relations.
[quote] Sue Greenwald was on the city council when this MOU agreement was reached. It would be interesting to know what she said and everyone else said about it at the time.[/quote]The cafeteria benefit was in place long before I was on the council. I was not presented with any compelling facts that would indicate that it was against the city’s interests to allow the employees to maximize their tax advantages. If there are any facts concerning this adjustment that were not brought to my attention, I would appreciate any new information.
Around 2007, I was spending my time trying to keep the council from adopting the enhanced retirement formula for non-public safety employees. This enhancement alone costs the city about 4% of salary. I had argued against this enhancement during the previous contract negotiations and prevailed, but lost the second time around. I explained during both negotiation rounds that the enhanced formula was unsustainable, that it was particularly dangerous because it would be legally binding for generations regardless of changing circumstances, and that it would lead to a two-tiered system with the younger generation being left with fewer benefits in order to pay for the enhanced benefits of the older generation.
Tragically, that is exactly what is happening.
Sue, if you could only speak with as calm a demeanor as you write. You get so juiced up on the dais I can barely even understand you. You act like a jock watching a sports game. I suggest the Noam Chomsky or Lamar Heysteck (hey they’re both linguists!) intellectual approach. Take a deep breath and think about what you want to say before you say it. Save us the effort of interpretation!!
Sue, I also meant to say: stop always playing the role of victim. It works against you. If you make the issue about YOU, it changes the playing field and thereby the rules. Keep the rules on YOUR SIDE, and your argument will actually have a chance.
Sue: You’re entitled to submit your own analysis of what happened on Tuesday. I’m not obligated to quote you as I did not quote anyone else either. No one else got to make comments during the meeting, therefore we can wait for comments until the item is completed and everyone has had their say.
Greg, I believe most of UC’s unions have come to an agreement regarding furloughs/paycuts for staff employees. The cost savings is being achieved with a little more flexibility in how it is being achieved for Staff.
David: What do you think about the idea of paying future City Council members a full time salary?
I’m guessing about $100,000 per year plus 20% benefits — for a total cost of $600,000 per year — should be sufficient to attract a large high-quality field of candidates. The proposal could be paid for by an across the board salary/benefits reduction for all personnel making more than we decide to pay the City Council members. Since the sitting Council would have a conflict of interest in this matter, it would need to be put on the ballot by the voters.
I see many advantages in going to professional representation at the Council level. First and foremost, the average quality of the individuals serving the community would go up dramatically. The biggest barrier to entry right now is that most people need to put food on the table. With a paid Council, one can imagine a much wider pool of highly qualified and/or professionally accomplished candidates.
Under this scenario, we would need to go to a yearly election cycle, with a two year tenure and some sort of built-in recall provision (so that too much deadwood doesn’t sit on the dais consuming resources). In addition, the public would need to take the campaign process (i.e. job interviews) much more seriously. But with all the obvious downsides, I can’t imagine an outcome worse than the Mickey Mouse situation that currently exists.
Any thoughts?
I’ve always supported the idea of real salaries for councilmembers. Part of the reason Lamar is leaving is that he has to work a job on top of this. A lot of qualified people cannot afford to not work and don’t have time to have two jobs. I think that’s a reason why we have so few candidates this time. I’m not sure $100,000 is the way to go, but that part is debatable.
Per state law, real salaries for the city council would require a ballot measure. The city council would have to explain to the voters where the money would come from, and why they deserve it. I agree that it should happen, but it’s a tough reform.
Greg: So it looks like we already have three votes. 😉
The money could come from budget cuts from the senior and/or highly paid staff who would now have other elected officials helping to proactively manage the city. While I don’t know the actual budget numbers, I’d guess that $600,000 is probably less than 2% of current payroll (???), so perhaps you spread the cost across the entire city workforce. We, the electorate, are obviously in charge and can make these decisions as long as we don’t violate any existing state laws.
With respect to the Council explaining why they deserve to be paid, all sitting members would need to stand for re-election … so it becomes a much more abstract debate.
David: Do you think $100,000 is too high or too low? I was just extrapolating from a mid to low end executive salary discounted to account for being a non-career, public service job.
I’m aware of the Lamar situation — and this would certainly solve his particular problem. Whether or not he could prevail over a large slate of more mature candidates with established resumes is another question. I’m guessing he might, given his core support and prior service.
The thing that attracts me most to this type of idea is that candidates like Ruth and Sue would be culled from the Davis political process long before they get to the Council. As the situation currently stands, the Council is too heavily weighted with retires and non-working spouses who have the freedom to devote the necessary time.
“the Council is too heavily weighted …”
I’m speaking about the historical trend over the last 20 years. I recognize that there have also been cohorts of local business people (Souza, Forbes, etc), career politicians (Wolk, Saylor, etc), etc.
Davis Resident: You can’t expect to find an extra $600,000 in the city budget for a purpose like this one. It’s a fantasy to expect the city council to really manage the city even if you did pay them full salary. Arguably a full salary would be useful, if that’s what the county supervisors draw, but it just happens that they aren’t tied down by state law. I can’t imagine that a plan this big could pass a city measure, nor that the city budget office would offer much in the way of encouragement.
A less grandiose idea would be part-time compensation on the order of $25K salary plus some benefits. That wouldn’t be easy to argue before the voters either, especially in these bad budget times, but it would be at least plausible.
Greg: Your use of the words fantasy and grandiose suggests to me that you are not really interested in a substantive discussion of the idea. Just to correct two mischaracterizations of my point of view … Council and staff can easily find an extra $600,000 in the city budget if mandated by a ballot measure. I’ve managed budgets and there is a big difference between can’t and unwilling. Also, I didn’t say anything about turning over management of the city to the Council. My point is that, if we went from a volunteer to paid council, it could reasonably be expected that they play a more proactive role coordinated with the City Manager.
Regarding part-time compensation, in my opinion this would be worse than the current status quo. It seems to me that the main goal of this kind of initiative would be to incentivize working professionals to take a time-limited “sabatical” on the City Council. At the $25K level, I believe we would start to see a cohort of candidates that hope to live on their CC salary, as well as more non-working spouse and retirees that are drawn in by the prospect of at least some supplemental income. Under this scenario, I personally would oppose a ballot measure.
I don’t know where the sweet-spot is in terms of income, but in an environment where we pay some senior staff in excess of $150,000 I think it is “pound-foolish” to continue with the amateur-hour circus that currently exists. However it is accomplished, we need to restructure the City government.
Correct me if I am wrong, but I believe council members also receive the benefit of lifetime health insurance for free (the infamous retiree medical benefit) without any current (or future?) vesting retirements. That is quite a financial windfall if it is correct……
They do have vesting actually, it’s they have to serve five years. That is the only actual benefit that councilmembers get for their service on the council unless you count the $500 per month stipend they also receive.
Thanks for the info David-I wasnt sure and didnt want to state something not true. So, a council member can serve 2 terms and get full retiree medical for life? Hmmmmm, not sure how I feel about that. I will have to cogitate on it. So, after 5 years, can they get it while currently serving on council? If so and you count the 500.00 stipend and then add the health insurance (can they get it for themselves only or for spouse/family as well?) that is actually a fair bit of money. What is insurance for a single person, 600-700 a month? And a family is what, 1200-1400? So, if a council member is vested and gets family coverage, that is 1700 to 1900 a month they get for their services. Just saying…..they actually do get something for all their time/effort (as I fully believe they should).
Do they get any of the Calpers retirement benefits as well? Just wondering……
No, the only benefit they get is the health insurance. Personally I would support paying councilmembers a salary. I think it’s only reasonable that a person who serves on the council for two terms doesn’t go without health insurance. For example, I believe Julie Partansky had health insurance till the end because of her service to the city. I think that’s only right.
Things the make you go Hmmmmmmmm. Very interesting dontcha think?
wtf