It has been nearly nine months since City Manager Bill Emlen left the City of Davis for Solano County. The search for a new city manager has been a well-kept state secret.
If this budget cycle was a test run for Mr. Navazio, then he is in a bad position.
While Mayor Joe Krovoza did not call out the city manager by name on July 28, he might as well have. The Mayor emphasized that this was not a new proposal that the council had pulled out of left field. But rather the product of numerous discussions and workshops that had occurred since November.
He said, “My concern is that the issues that I raised in November didn’t make it into the budget proposal.”
Clearly, this is pointed directly at the Interim City Manager.
He discussed specifically the issues of OPEB (Other Post Employment Benefits), of CalPERS, and spoke about transportation. Each of these, he pointed out, had a special workshop, council gave direction and the budget proposal brought back by Mr. Navazio and staff did not address any of them.
In addition, Mayor Pro Tem Rochelle Swanson was unhappy that the initial budget was too rosy. As I have argued for several years, the budget has been sterilized, where critical assumptions are left out to hide the true nature of the budget crisis.
The old council ate it up with a spoon and swallowed the Kool-Aid served by then-Finance Director Paul Navazio, probably under the direction of City Manager Bill Emlen.
However, this year, with no Bill Emlen and a new council, we saw a staff proposed budget with no mechanism to start addressing pensions or unfunded liabilities, and limited funds for road repair, that again painted an unrealistic picture. In the out years of the budget Mr. Navazio prposed even had a small surplus.
But the budget assumptions were completely unrealistic. They did not account for full funding for roads, despite the intention by the new council to fully fund roads. They assumed a flat rate of salary for employees for the next five years, which is completely unrealistic. They assumed no increase in the pension costs. They assumed no change in health care rates. They assumed no downward revision of the PERS rate of return.
But this council, unlike the previous council, which was either blind to the reality of the numbers or willing to allow the numbers to provide them with cover to do nothing, saw through the numbers and, step by painful step, forced the interim city manager Mr. Navazio to play ball by their rules, not his own.
So now you have a council majority that is frustrated, at least publicly, by this cat and mouse game.
However, as I mentioned last week, if it is not Paul Navazio, the city council has a dilemma. You see, the one area where the city is not overpaying right now is at the city manager level. The City of Davis is almost at the bottom, compared to other comparable cities, in terms of compensation. And it is a problem for hiring a new city manager.
Under better conditions, I would be a proponent of hiring a city manager that we liked, even if it required a raise.
Now Sue Greenwald points out that “it is difficult to know what kind of city manager someone would make based on a few hours of interviews.”
I do not necessarily disagree with that view, having hired people, some of whom turned out great, others less so. But I still think you have to make the best decision that you can.
This week we perhaps see more evidence that this is also playing out behind closed doors. There was an item on for Thursday entitled, “Discussion Regarding City Manager Compensation” where they recommend approving “a salary range for the position of City Manager.”
It is interesting that that could be a closed session item, but I suspect the discussion would have had to involve current candidates. I suspect this is another clue that the council is considering raising the limit for compensation for city manager, which again implies the council is leaning away from Paul Navazio – again sheer speculation on my part.
The current city manager makes just over $150,000 per year. It would not kill our budget to hire the next one at $180,000 or even $200,000.
At the same time, you are asking the employees to take concessions, how do you do that if the city manager is making 20 to 40 percent more than his predecessor? How does that city manager look the employees in the eye and ask them to take pay cuts? How does the city manager look the employees in the eye and say we want you to take pay cuts even though we just approved a huge pay increase for the city manager position?
I argued strongly against hiring Chancellor Linda Katehi at $400,000 for the university at a time when people were being furloughed and laid off. People argued her position was underpaid in comparison to the private sector and that may well be, but when you are in times of cuts, you have to throw out the external comparison book and look only internally.
Apparently, the idea of hiring an interim city manager to be a hatchet man for a couple of years is out, so that leaves us with a huge dilemma.
We either hire Paul Navazio to be city manager at his current rate of compensation or we have to roll some dice.
As one person put it, “You want a retired city manager who, guided by the collective wisdom of the council majority, kow-tows to them, but is the terminator with employee groups, willing to accept a two-year limited term, in which he/she is expected to correct the errors of a decade or more and do it all on the cheap ? Good luck with that.”
That is precisely the dilemma that the council faces.
And yet, this city has been lucky before. The police department was in crisis following the tenure of Jim Hyde and yet was able to find Landy Black at a reasonable price. The fire department was in a different type of crisis following the exit of Rose Conroy and yet was able to find a strong interim Fire Chief in Bill Weisgerber.
Can the city catch lightning in a bottle again? Or will the next city manager continue a long line of failures, following on the heels of Jim Antonen and Bill Emlen?
In many ways this selection is even more important than the selection of Dan Wolk as city councilmember. The City Manager runs the city, implements the policy of the city council and together must address the critical issues facing the City. The hiring of this city manager may very well make or break the legacy of this reform minded council.
—David M. Greenwald reporting
Reposted from Earlier Blog
I disagree with your assessment of Paul Navazio. I think you are evaluating him on a single issue which is that he did not come in with a slash and burn budget right off the bat. The City Manager’s job is not just to wring as much concessions as he can out of the bargaining units assuming the most dire of economic forecasts (remember that he has not even had the opportunity to even bargain with them yet). Rather the City Manager’s job is to perform a delicate balancing act representing 3 constituencies – the public, the city employees, and the City Council.
I think his budget presentations have been thoughtful, transparent, above-board, and faced the reality that we have a citizenry who demands top quality city services AND there is nothing he can do about the public employees’ compensation until he gets to the bargaining table again. And as to his assumptions that PERS ARR rates will remain the same, he has to reasonably use those rates to prepare a budget until PERS formally announces new assumed ARRs and contribution rates. Whether you agree with the PERS ARR number or not, that is the number he has to deal with when presenting his initial budget.
I think the real question is whether or not Paul realizes that it is a game-changer if those PERS ARR rates are reduced. But he has shown that he understands the dire implications if that happens and has acknowledged that the subsequent millions of dollars in extra pension related expenses will have to be offset by cuts elsewhere – at least until the City gets back to the bargaining table with the unions. But I think to overly slash the City budget now because some in the community think we “might” have to cut more in the future risks a real battle with citizens who have come to rely on the level of services the City provides. And Paul has to serve this citizen constituency also.
And the fact that the Council has to prod him into making certain revisions or assumptions to get the budget to reflect their goals is nothing untoward. This is exactly as the process should unfold when draft budgets are prepared and revised to reflect the diverse wishes of different members of the Council remembering that our Council certainly does not speak with only one voice. If facts and circumstances change in the future then our budget changes accordingly.
I think you should look beyond this single budget issue you are so focused on and whether or not Navazio’s budget reflects your particular economic understanding when calling for a new manager. My general take on his “overall” performance is that he is doing a very good job under a very difficult set of conditions he has inherited. Not only was the budget and employee compensation problems he inherited hugely problematic and not of his doing, but there was also a huge public relations problem he got with the new job. And that is that a lot of citizens just felt that the employees were there to serve their own interests and not the interests of the citizens. This was due to an attitude fostered by the former City manager who seemed to build a wall between the Staff and the citizens. Each thought that the other was the “enemy” instead of fostering interactions that build common ground and move the ball forward.
I, for one, have noticed a discernable shift in the general attitude of City employees since Paul has assumed the reins. I think they are becoming more open, inclusive, and are now trying to do things differently once they clearly understand that is what the citizens and new Council want. That, in itself, is a huge paradigm shift from where things were only 1 year ago. And I think the citizens of Davis see this and are slowly becoming more trusting of their City employee leadership. I attribute this to the model that Paul is setting.
I think fostering a sense of trust in our government is the most important near term change we needed in Davis and I just trust Paul to make fair, balanced, and objective budget recommendation and to relay the implications of these recommendations to the Council, the employees, and the citizens of Davis in an honest manner.
That said, I have no idea how good Paul is as a day-to-day manager of the huge City bureaucracy he inherited nor to I know how well he can muster the troops and negotiate broad based pension reform packages later. The jury is still out on those counts.
But in terms of his honesty and integrity and the degree of trust I think he as earned from employees and citizens and even the Council, that will be very, very hard to find in a replacement manager.
I, for one, would urge the Council to not rush for change just to say they have made a change. Paul Navazio is clearly a huge step up from Bill Emlen. Based on his performance so far, I think he should be at the top of the list of candidates for the permanent job.
You raise some good points Alan and I agree with you that “Paul Navazio is clearly a huge step up from Bill Emlen.” I also should mention I personally like Paul, but this is not personal. This is a policy issue.
The way I see things, Bill Emlen came from planning, I saw a lot of attention from Bill to planning issues. He tended to defer more on fiscal matters. Paul will in many ways be the opposite, and that is a reason I have looked at this issue.
Not to mention this is really the seminal issue that this council will have to face and the next city manager has the duty of reorganizing this huge city bureaucracy.
Already I have seen a number of issues where the council has had to go toe-to-toe against the city manager to direct change. Already I have seen councilmembers frustrated that the city manager has not incorporated earlier feedback into the budget, but also other areas.
[quote]And yet, this city has been lucky before. The police department was in crisis following the tenure of Jim Hyde and yet was able to find Landy Black at a reasonable price. The fire department was in a different type of crisis following the exit of Rose Conroy and yet was able to find a strong interim Fire Chief in Bill Weisgerber.[/quote]
In this abysmal market, there is no reason the city cannot find a decent manager for a reasonable salary (i.e. the same salary Bill Emlen was receiving). If we can do it with the police and fire chief, we can do it for city manager. We do not have the funding to do anything else – and it would send the wrong message to the bargaining groups if the city offers significantly more in the way of salary/benefits to a new city manager.
David,
What other areas are you referencing ?
[quote]They assumed a flat rate of salary.[/quote]
My two-cent’s worth, and probably overpriced at that: It is true that under an existing contract that includes longevity increases, salary expenses are bound to go up unless you have a very old workforce that is already at the maximum step. But I don’t think it is inevitable that contracts in the near future are bound to be set higher overall. As all state employees and many in other government agencies are aware, salaries have not been increased for a number of years, and in many cases have been reduced. For salary, the commitment to the employee is limited to the term of the contract. Retirement, however, is a lifetime commitment–much like a marriage, but without the possible benefit of divorce. That is why it is so important to make retirement benefits fair, but conservative. Personally I think a hybrid defined benefit/defined contribution is a good idea.
I’m of a simiar mind-set to Alan. Navasio is managing many issues simultaneously . . . as he should be. The single issue of the budget should not be the sole determinant . . . especially since there probably is no ggod answer to it, and anything brought forward woul have been subject to criticism.
IMHO, I think that there is so much wrong with this analysis that I don’t know where to begin.
First, we had an open session meeting on City Manager compensation last week, with a very lively debate.
I tend to agree with Alan Pryor, Matt Williams and E. Roberts Musser.
I think it is unfair to lay our problems at the feet of the interim city manager. As Rich Rifkin pointed out, we got into the situation we are in because of ten years of council direction — direction that I fought every step of the way. I don’t think that Paul Navazio was given “clear” instructions to change course. He can do nothing about the current labor contracts, and we as a council give direction on future labor negotiations. He continued with the reorganizations begun under Bill Emlen, but reorganizations cannot be done overnight, and he has been hampered by his interim status and the fact that he doing two jobs at once.
I cannot see how we can justify raising the salary of the city manager when we are cutting the salaries of everybody else. The city manager is a generalist job, not a specialist one. Many people could do the job well, and it is impossible to predict who could and who couldn’t based on a few hours of interviews. Really impossible.
There are good reasons NOT to start off with a high salary. City managers contracts often include severance pay. If you hire a new city manager from the outside based on your three hours of interviews and that city manager is not a good fit, we have to pay a huge severance. If a city manager does an astonishing job — that would be the time to increase the pay for retention purposes.
Local government and special district compensation packages are far higher than those of state and federal workers with similar jobs. If cities and counties are going to avoid bankruptcy, we are going to have to stop the practice of boot-strapping up the management total compensations by comparing the salaries with each other, rather than with comparable state and federal salaries.
To give you one example: The other day I looked up the salary of the executive director of the State Water Resources Control Board. This agency has a budget of close to a billion dollars and a scope of authority that far exceeds its budget. It oversees the water resources of the entire state — a state with an economy larger than that of all but six countries. Yet last year’s salary of the executive director was only $126,000, and the benefits less generous. The situation is similar for other state and federal management public employees.
Compare this to the compensation for city managers of small towns. At the special meeting on city manager compensation, the council majority passed a range, the top of which was over $200,000 (I forget the exact number), with a total compensation likely to be over $260,000. This is for a city of 66,000 with a budget of around $100,000 – one tenth that of the state job which pays $126,000.
David, you acknowledged that you opposed hiring Linda Katahi at $400,000. Yet the University budget is $2 billion dollars, compared to a $100 million budget for our little town – orders of magnitude higher.
It has been argued that our City Manager compensation is “below market”. I argued that we are using the wrong definition of “market”. A salary set by “market” would require a process whereby we identify a significant pool of qualified candidates (since it is a generalist position and we have no way of knowing who will turn out to be good at the job, this is reasonable) and hire the one willing to do it for the lowest salary.
Instead, what we do is define “market” by comparing our salaries to the salaries that other local government managers are making. I believe that this more accurately describes “cartel” pricing than “market” pricing.
My suggestion was a compromise approach whereby we identify a reasonable number of promising candidates, and offer the job to the one who will accept it at the current CM salary. If we don’t someone to take it at that price, we can reopen the search and cast a wider net.
Without even looking, I talked recently with a very well qualified candidate who told me that she would have been willing to accept the job at the current salary in order to move back to Davis.
We can’t have it both ways. We can’t claim that we want to balance the budget by reducing management compensation, and then offer a massive pay increase to the city manager.
I should emphasize that our current City Manager salary is about $168,000 a year, which would mean a total compensation of roughly $230,000 a year.
Sue: I’m not arguing for raising the city manager’s salary, I explained in terms similar to you why that would be problematic, on the other hand there is no simple solution that I can see.
“In this abysmal market, there is no reason the city cannot find a decent manager for a reasonable salary”
That’s an interesting point.
So here are several questions:
1. What did we advertise the City Manager position at?
From what I can tell, it was said to be commensurate with experience and negotiable.
2. Did we attempt to recruit to the current salary?
3. How many applicants applied at the current salary?
I don’t know the answer to 2 and 3.
I think that we are going to need a very different approach if we are going to get off the local government management salary escalator. This is a generalist position, and we are going to have to get out the word that we are serious about hiring very well educated, highly intelligent people without experience specific to the job. Just as councilmembers must get up to speed immediately, so can city managers. I think we should broaden the qualifications, do serious outreach to convince people that we really mean it, and set a salary at the current $168,000 (total compensation around $230,000).
That’s a darn good salary.
There are many incredibly talented and very highly educated people in our community who are underemployed, but they would never apply unless we made it clear that we would seriously consider hiring people without experience specific to the job.
Bill Emlen was a planner when he was hired as city manager. Yet the city manager does very little actual planning. For some reason a planning director was considered more qualified to be a city manager than a person from another field. I don’t necessarily agree with that.
Back in the 1970’s, PH.D.’s in math and philosophy were recruited to work as executives in banking and finance (and no, they were not the ones who caused the problems in the industry). It was felt that highly intelligent and educated people with a fresh perspective might do a better job than the standard MBA who had worked his/her way up through the ranks.
I think we have to be innovative. The problem is not insurmountable. The times call for new approaches.
I’d like to see you lay out a plan and initiative for the recruitment and hiring of a city manager. I don’t think it is too late particularly given the salary issue.
I didn’t get anywhere with my colleagues when I merely made a motion to offer the job at the current CM salary to a list of the current crop of top-rated candidates and make it clear to them that we would hire the first of these finalists to accept it, and that if none accepted it, we would slowly raise the salary until one did. This would have been a modified market-based approach, rather than a cartel-pricing approach. I actually made the motion and it failed 4-1.
Given the results of last week’s attempt, I would be surprised if I could succeed in having the search re-opened with conditions I described above.
[quote]”I, for one, have noticed a discernable shift in the general attitude of City employees since Paul has assumed the reins.”[/quote]Could be, but the performance during the recent discussion about swimming pools suggests they have some room to grow.
It was obvious the Mayor would have appreciated the staff work that had been requested. Instead, the questions and comments went on and on, leaving too little time for more significant budget issues.