On Tuesday night, the Davis City Council agreed to four-year labor agreements with two employee groups including PASEA (Program, Administrative and Support Employees Association) and the city’s Individual Management group – both of whom had contracts that expired in July of 2017. The new contracts will be in place until June 30, 2021.
In a release, the city noted, “One of the key goals of the City Council was to focus on the total costs the City incurs per employee, rather than to focus solely on salary. In that light, the contracts provide both for a 2% annual cost of living adjustment for the duration of the contract, an amount already included as an assumption in the City’s long term fiscal model, as well as a cost sharing mechanism to address unanticipated increases in pensions costs.”
This includes what they are calling “an innovative cost sharing approach.”
Beginning in July 2019, employees in each of these groups have committed to paying an amount up to 1 percent of their salary if pension costs to the city are higher than what’s been projected by CalPERS (California Public Employees’ Retirement System) and included in the city’s long-term fiscal model.
Likewise, if the CalPERS costs are less than currently expected, the employees will receive up to 1 percent in additional salary.
These cost/saving shares will be ongoing. This agreement acknowledges the city’s total costs to compensate employees and results in employees taking a shared risk in those costs and benefits, in addition to the 8 percent of salary most employees in these groups already pay directly toward their retirement costs.
During public comment on Tuesday, Alan Pryor pushed back, complaining that the item was hidden on the consent calendar.
“I have been a real opponent for granting what I think are extravagant and unsustainable compensation increases, particularly as consent calendar items,” he said. He said that they should have put this as a regular item, “particularly in light of the fact that just two weeks ago citizens voted on parcel tax measures, one of which passed, one of which failed.”
He argued that every time the voters have approved a parcel tax or sales tax measure, “the council has turned around and given all of that tax money and then some to the employees.” He said that “no one on the council disputed that.” He added that this was “just two weeks after the election” and criticized them for not having the courage to put this out there prior to the election.
Following public comment, the council pulled the MOUs off consent and then pushed back against some of the contentions by Mr. Pryor.
Mayor Pro Tem Brett Lee agreed with Mr. Pryor that these items should have been agendized as regular items. But he disputed that there was an attempt to hide anything. He pointed out that council
has been dealing with these MOUs for nearly a year, and there was simply fatigue on the part of council to discuss them more at this time.
“It ended up on consent, not because we were trying to hide anything,” he said. “It’s really sort of council fatigue at this point.”
Brett Lee noted that the parcel taxes required two-thirds votes “because they specified exactly where the tax monies would go.” Brett Lee did note that “one of the things about maintaining the parks is that it does require staff. So the fact that some of the parks tax money can be used to fund park employee salaries should not be a surprise. It’s clearly stated in the language of the parcel tax.”
At the same time, he pointed out that the ballot language is clear about what they can’t spend the money on.
Brett Lee added, “I just take personal offense that somebody’s going to come to public comment and basically make a bunch of false accusations, when the reality is quite different.”
Robb Davis noted that the city has taken an innovative approach here, putting into the contract that if CalPERS costs outstrip the city model, “the employees will contribute not just one time but in an ongoing way to the pension costs.”
He said that “no council has done that before. No council has created the transparency around a fiscal model and no council has gone to workers and said we need to have a conversation not about base salary, but about total compensation.”
Mayor Davis said that if someone wants to complain that the city has lacked transparency, “then they simply have not been paying attention.
“We have changed the conversation with bargaining groups in the city about what it costs the city to increase salary,” he said.
Councilmember Lucas Frerichs laid out numerous projects undertaken by the city and said, “Guess how that happens folks – it’s by city employees.
“All of those things that I raised do not happen magically,” he continued. “They happen because of the city employees that work every single day to keep this city running.”
As he explained, the projects that voters are approving are in fact completed by city employees and, therefore, while the project money is earmarked for specific purposes, one of those purposes is to pay the employees who carry out the work.
Finally, Brett Lee noted, “These are not extravagant contracts.” They call for a 2 percent COLA for four years – which is what was projected in the Leland Model.
“This is what holding the line looks like,” said Mayor Robb Davis about the contracts. “This City Council has taken seriously the challenge of controlling City costs. While it is a complicated process over which we do not have complete control, we are confident these contracts strike the right balance between maintaining a competitive and talented workforce to provide services to the community and achieving cost control over total compensation.”
According to the city, “The total cost of both agreements for the first year is $191,000. The second year cost is $580,000, an amount anticipated in the long range forecasting model and consistent with the approved budget for FY 18/19. The total amounts for the final two years of the contracts will be dependent on the cost share agreement.”
—David M. Greenwald reporting
Thank you Alan Pryor.
I agree with Brett Lee that the items should have been agendized. I disagree with Alan Pryor and others about what Alan called “extravagant and unsustainable compensation increases.” Given the past history of labor contracts for certain city employees and the future costs driven in part by CalPERS, this council’s agreements are reasonable and are a step in the right direction to keep the city solvent. I suggest Jim H. read the financial forecast prepared by the city as part of the budget package. Sober reading to say the least.
“future costs driven in part by CalPERS” this is interesting phraseology and I see it used widely. My understanding is that this generally refers to CalPERS projections of what it costs to keep commitments made by the city.
If the cost of providing benefits that were requested by the employees grows then the “finite world” principle means that there will be less to give in terms of raises. Am I missing something?
I have a couple of observations on these comments:
1) Current Salary Increases Begat Future Pension Cost Increases – Every penny given by the Council in salary increases in turn increases our future pension costs. There is the old saying, “When you are in a hole over your head, the first thing to do is STOP DIGGING!” Yet our Council just keeps on digging by granting more and more salary increases like clockwork no matter how much of our infrastructure is crumbling.
2) Our Employee Salary Costs are Extraordinarily High Compared to the Private Sector – As was reported in the Ballot Argument Against measure H, the average total compensation package (salary plus benefits) for City of Davis full-time employees was $124,954 in 2016 (the mean total compensation was only a few thousand less per year). It further reported that “Current average municipal employee salaries are more than twice that in the private sector“. Both of those are true statements. And that does not even take into account the very, very generous benefits given to municipal employees making the average total Davis municipal employee compensation compensation much greater than twice the local private sector . I would suggest that widening the spread between very well compensated municipal employees and the private sector is “extravagent” by any criteria.
3) We have now Locked in these Salary Increases No Matter what the Economy Does and how City Revenues are Impacted – I believe that locking in 4-year guaranteed salary increases when the economy is objectively near the top of a historical economic boom cycle is foolhardy. Remember how City revenues collapsed during the last financial crisis starting in 2008 and the City was forced to start laying off low-cost employees so they could retain those with the most union seniority making the most money. That was also preceded by a period of high employee compensation growth. There are also a couple of old sayings that are also appropriate here…”Those that ignore history are doomed to repeat it” and “A definition of insanity is doing the same thing over and over but expecting a different result each time“. So, yes, I believe that locking in salary increases at a time when the economy boom is expected to dramatically slow, if not shrink, is “unsustainable”. Why did the City not simply enact only one or two year salary increases instead of binding our financial hands over a longer term?
Two problems with that, which leads to dismissal of credibility to to all the rest… a ballot argument is not “a primary source”(pun unintended) as to ‘fact’… yet, here is cited as such… second, for a given classification, haven’t seen credible documentation that given total compensation in the private sector (they are NOT transparent!) including salary, SS/Medicare taxes, SDI, 401 contributions, contributions to health care, other compensation (bonuses, etc.) that your argument is valid… gotta’ compare “total comp” with total comp. Private sector keeps that all “close to the vest”… giving folk the opportunity to say that public compensation is “way over the top” (may well be true for certain classifications)… plus the private sector has it’s own unfunded liabilities as to what employers/employees pay towards SS and Medicare… an inconvenient truth… that all of us will eventually be asked to pay for…
Response to No. 1: Your solution to this? No increase?
Response to No. 2: And that number ($124,954) is the average salary (including benefits) of bargaining unit employees? Maybe using the average is not the best indicator of the level of salaries. Averages are easily skewed by outliers. I bet if we looked at the median city salary it would be a bit lower. And I agree with another poster about relying on ballot arguments as the source of truth.
Response to No. 3: If history is any teacher, we are overdue for a recession (some estimates suggest the country has one every seven years). There is an argument to be made that knowing what our costs are for the next four years is better than having to renegotiate in the middle of a recession. The city also “buys” some stability by having contracts that the unions have agreed to rather than build enmity and distrust. Things we have too much of already.
Didn’t we go through this not all that long ago when the council was criticized for not putting a pay raise on the agenda?
No, they were criticized for putting it on consent just as it occurred here.
Does anyone realize that the item was indeed “agendized”? With staff reports and text of the proposed agreements made available to the public more than 3 days before the meeting? Can someone explain why it had to be a “Regular” item, instead of “Consent Calendar”?
Guess some believe that every step, every offer/counter offer, the detailed minutes of every meet and consult meeting, should have been on a CC regular calendar… OK, guess we could try that… public comment for each and every step… or go a step further, and a ‘vote of the people’ for any MOU approval?
Fact is, “Consent Calendar” items can always be “pulled”, and the public can always comment on “Consent Calendar” items, ‘pulled’ or not (at the meeting, or before)… which has always been SOP, and ‘worked’ in the present case…
It is clear that we are we are here today with this problem of massive and growing unfunded city employee benefits because of the conflict of interest that exists between politicians and the government labor cartels that are allowed to freely spend campaign money and provide free campaign labor for the benefit of the politicians.
Everything related to political decisions on city employee compensation should have the highest standards of public disclosure applied.
These decisions are a step in the right direction, but are far too little too late.
And all previous CalPERS management needs to be investigated for fraud and collusion having set dishonest 7.75% and 7.50% rates of returns. Ironically they are all retired now with six-figure pensions.
And you feel that did not occur? What would you have wanted done differently? Please be specific, if you can…
And please justify that “cartel” canard…
At most, in Davis, that canard can only apply to one small group of city employees… at most…
Considering the impact to the residents of the city, I believe we need a new Measure P (for “pay”) where the voters have to approve any city employee pay increase. But they absolutely should be regular agenda items.
Cartel: “a coalition or cooperative arrangement between political parties intended to promote a mutual interest.”
As a consumer of private sector goods/services, I propose your concept be expanded,to cover consumer voting for any private sector compensation increases… after all we are all consumers of goods/services…
Salary increases in the private sector, impact me and mine…
Ironically, union “cartels” have been more prevalent in the private sector…
Yet, you have postulated that Davis employees are a cartel, yet have offered no evidence that they have acted as such… whatever…
The public does vote on private sector compensation in their choice of products and services and the need of the private business to remain financially viable because unlike the business of government, private sector business does not have and endless ATM of tax increases they can enact to keep taking other people’s money.
The public sector has no competition. They can provide the crappiest service possible and then threaten to make it worse unless we all pay more.
Yeah, Jeff… that explains Microsoft, Apple, Lehman Bros., pro sports, and other private sector compensation/costs…
And, you too have a choice… Dixon, Woodland, Winters, West Sac, Wyoming… consumer choice… to be sure…
You may not like the compensation provided by these private entities, but they are mostly fiscally sustainable entities so their compensation levels are within their ability to afford.
If you haven’t noticed, the City is running an annual deficit, so any increase in Total Compensation for City employees is promising funds we don’t currently have, which isn’t exactly an example of either cost containment or fiscal responsibility.
Already am. Opening a business in Winters soon. The roads are better and the city has a pro-business ethos.
But I think your point is off a bit. There are discrete services provided by the city. Some of those like policing are unique to municipal government and not easily provided by outside service providers. However, almost everything else can be handled by outside service providers for a lot less and for what would likely be better service.
Most city employees are good people that work hard and have an interest to provide good service to constituents. But there is a malady of performance mediocrity that infects the whole as there are no incentives to strive for doing more with less… to be replaced by incentives to get your ass in a seat for 30-35 years so you can get a good pension. It is a system problem. Now, I don’t mind that problem as it is a common system problem that is not easy to solve and it is what it is. What I have a problem with is that we are compensating these employees (in terms of total compensation including the value of their pension and other retirement benefits) at 2x to 3x what a comparable employee in the private sector will receive.
I’m happy with Microsoft and I think their new pricing model where I pay a flat rate every year and we get their newest software on a half dozen PCs and three Macbooks is a great deal. I just got a new iPhone X for about half price after Verizon offered me almost $500 off when I “traded in” my iPhone 7, Lehman Bros. had been gone for over a decade, I don’t attend or watch pro sports but a lot of people do (who pay hundreds for a seat at the game and $10 for each beer don’t seem to care if the guys running around make millions).
Saying we have “a choice…” and can move to “Dixon, Woodland, Winters, West Sac, Wyoming… consumer choice… to be sure…” is like telling a guy working for a sawmill that he has a “choice” to shop at the “company store” at his mill or the “company store” run by the same company a mile down the road. If I never give a penny to Microsoft, Apple of Verizon again there is no problem, but If I decide that I am going to stop paying taxes I’ll loose my property and/or go to jail…
I have a lot of friends in the private sector and it seems like the plan is to just hope and pray that no one figures out that there is no way to give the benefits that were promised to every employees and the older ones are hoping that they can just make it to retirement and lock in the cash flows before someone realizes that without a miracle (or a World War that destroys most factories outside the US) there is no way that even a 50% increase in CalPERS payments from cities will “fully fund” the pensions.
P.S. I doubt that Howard or anyone else can name a single private sector job under $150K (at the top .01% there are some crazy pay packages that the rich and connected get their board member pals to approve) today that has a higher salary and pension that a similar government job…
“And, you too have a choice… Dixon, Woodland, Winters, West Sac, Wyoming”
What “Howard” seems not to realize, despite his self proclaimed knowledge of all things Davis, is that we are paying city council members to preform a service. Since they are employees of the electorate we have every right to offer feedback on their work.
I believe that it is easy to be critical of our City Staff compensation and yet it is very difficult to find the right balance. I believe that the City Council and the 2 Employee Associations have “found a balance that works”. The approach of “sharing” if CALPERS benefits/costs increase is innovative and in the City’s and Tax Payers Best Interest. Both the Council and the City Employees are to be congratulated.
As a tax payer and voter I believe that the process has been done correctly. Just because something was on “consent” in no way means that it was being hid. This has been going on for longer than a year and you could read and express you opinion about all of the minutiae if you wanted to.
With shrinking unemployment and increasing wages in the regional economy …maybe the critics will look back 4 years from now and say the 2% annual increase was a “bargain”.
We have good people working in the City. Let’s pay them well and keep them and the Council focused on “public service”. There is nothing to apologize for and no need to be defensive. Wage and benefit bargaining and negotiation is hard work and not everybody is going to be 100% Satisfied. Good Job!
Amen.
And yet we objectively have the worst road conditions in the entire region…how is that a “good job” on a comparative basis?
Maybe the city council should just stick to what they are good at… overpaying city employees… and leave the road repair to private industry.
https://www.distractify.com/humor/2018/06/12/Z1zckFb/dominos-fixing-roads
While I understand that the CC has been working on these MOUs for some time and may feel some ‘fatigue,’ that work was all done in closed session (appropriately so) and as a consequence, the community has only had access to the resulting agreement for a few days. As Total Compensation accounts for the vast majority of the City’s General Fund budget, changes to Total Comp. are always significant.
If the CC majority believes they have negotiated a good deal for the community, then they should demonstrate their respect for that community by explaining their decisions openly as part of a regular agenda item. This is especially true if they want to demonstrate their new ‘transparency’ or highlight their “innovative approach.” In my opinion, placing MOUs on the consent calendar is both disrespectful to the community and a missed opportunity to build trust in the CC majority.
But State workers pay 6-7% (I now forget which) of their salary toward their pensions. I am always annoyed that city and UC employees dont.
Almost all City employees pay 8 %, and perhaps 9% (and potentially more) depending how things go (under the new MOU’s)… some City employees pay more (public safety folk)… don’t know where you are getting your “facts”… suggest you ‘change channels’… the City employee contribution rates can be found on-line… won’t opine as to UCD or DJUSD contribution rates…
Your post is, factually, in error…
If the cite you referenced was “honest” (am thinking ‘error’ in wording, not intended to be ‘dishonest’) that would be worded as a “1% INCREASE in employee contribution…” thereby negating at least half of the salary increases, as to “take-home” pay…
The self employed in pay 12.4% toward their “pension” aka Social Security, while most people employed by someone else split the 12.4% with the boss paying 6.2% and the employee paying 6.2%.
The self employed also pay 2.9% for Medicare while most people employed by someone else split the 2.9% with the boss paying half and the employee paying half.
Any idea if the city, state or UC workers (or the city, state and UC) pay in to Medicare? I’m also wondering if anyone knows if the city workers still get cash if they don’t go on the city health care plan.
Despite the fact that you compare apples, to bananas, and to oranges, I’ll answer a part of your questions…
City employees, hired after ~ 1986 pay the employee share of Medicare… same rate as anyone else… Medicare is weird… never paid any significant sum into MC… yet, because of my spouse having enough credits, I’m covered, and my government PERB will drop big time, when I go onto MC (mandatory)… they will only pay for supplement to MC…
As to SS, have paid a bunch into that, and will not see one cent (you can thank me later) not enough credits, and even if I did, my SS benefit would be reduced dollar for dollar by my gov’t pension… zero… nada… zilch… can’t even claim it as a “charitable donation”…
For those who choose self-employment… that was a “choice”, right?… if you didn’t figure those costs, and profits, retirement assets, medical and medicare ‘supplement’ costs into your “business plan”, the rates you charged, what can I say other than “bad call”… and you can’t stand to see others do better than you? Tried to do the “self-employment” for a year… after income, SS, Medicare taxes, liability insurance, etc., ended up having a net profit that would buy me a six-pack, if it was “on sale”… realized that was not something I wanted to continue… to each their own… I take full responsibility for that error… do you? Or are you just a “victim”?…
Meant to add, but timed out…
I agree that City employees should get no add’l compensation if their family premiums are covered elsewhere… but they still do, up to $500/month… that should be ended, unless proved that it is not needed…
Thanks for answering my questions, I don’t know where you got the idea that I was a “victim” since I’m doing better than most people after years of self employment (even a little better than my retired and soon to be retired Bay Area firefighter friends and relatives who have all done pretty well)…
P.S. I would like to see Davis take a look at the hidden “gifts” like the $6K a year for anyone who is married to someone with health insurance and I’m wondering if the Davis Fire Department has any ~$50K trucks that they let people commute in. My best friend is given a truck that he drives on his long commute adding about $6K a year to his (high) salary since he does not have to pay for gas on wear and tear on his own cars or trucks. I was recently in Wildhorse and spotted a ~$50K F350 with the logo of an East Bay FD on the door and the dad of my son’s friend that lives across the street told me the guy uses it on his ~150 mile round trip commute from Davis to the East Bay…
Busted!
Oh, and many self employed, pay less than 12.4%… “wages” over ~ $127,000 have zero SS tax… a “lie by omission”?
MC and SS are less “fully funded” than PERS, and even STRS…
Despite demographics, the fact that SS benefits goes up with full inflation (PERS is capped for most at the lowest of inflation, or 2%, as to COLA’s for retirees)
In recent years, there have been years where PERS pension increases have been 0 – 1.4%… if we get to 10+% inflation, as I’ve seen in my lifetime, PERS retirees (most have a 2% yearly ‘cap’ on pension increases) will be f’d big time, but SS folk should expect the govt, will cover them (“guaranteed” inflation protection, no statutory limits) … until the SS system gets stressed more, and if nothing is done to address that… which will probably mean more income taxes…
Those of us for whom SS is an important piece of our retirement planning aren’t so sanguine about the “guarantee” behind SS. The folks who are vehemently opposed to the whole concept of SS currently control all 3 branches of the Federal government and are actively working to dismantle the system.
There is no “guarantee” that anyone gets Social Security (even if they made the maximum SS payments for most of the past 30+ years).
In a 5-4 decision, the U.S. Supreme Court ruled “there was no contractual obligation for the government to pay out Social Security benefits”.
Congress can change the program like raising the retirement age to 70 or cutting off payments to anyone with $100K in assets any time they want (I predict they will not only raise the age again but add some kind of asset or income test before I ever collect a penny).
I’m no fan of the party led by orange hair that “control all 3 branches of the Federal government” but retired “deplorables” (aka the GOP voter base) is a big fan of Social Security and I would be surprised if Jim can post a link to even one current GOP lawmaker (that has not announced they are retiring) who says they are “vehemently opposed to the whole concept of SS” and “are actively working to dismantle the system”. If anyone in the GOP really said that they would have a harder time getting re-elected than a Democrat in CA that wants to put Mexican kids in cages and jail all currently married gay guys after passing new sodomy laws…
Very few of them are stupid enough to actually claim that they’re opposed to Social Security. Look at their actions, not their words (though their code phrase is usually “entitlement reform”).
Paul Ryan is their most presentable poster boy. Mick Mulvaney (though no longer a lawmaker) is their pit bull, and he’s presently doing plenty of damage without making any new laws.
I’m no fan of the GOP or Paul Ryan (who has announced he is retiring BTW), but I’m hoping that Jim can post a link to these (so called) “actions” where a GOP bill passed and cut social security benefits to seniors (or partially “dismantled the system”). I’m sure Jim can find a bill that didn’t go in to law but he needs to remember that most bills that come to the floor for a vote that don’t pass are just “political theatre” (like the 70 times the GOP tried to “repeal” Obamacare):
http://www.newsweek.com/gop-health-care-bill-repeal-and-replace-70-failed-attempts-643832
The Dems and GOP BOTH keep increasing spending but the GOP will at times “pretend” to want to cut spending or have “entitlement reform”. Bill Clinton’s actual “entitlement reform” reduced spending more than any reform that went down under Reagan or either of the Bushes (it was the second Bush that gave Seniors on Social Security free prescription drugs)…