One of the big questions that will need to be determined is the extent to which this process will have transparency. Often what has happened in the past is that the first time either the council or the public knows about the contract is after the city’s “negotiators” usually the city manager, HR person, and finance director reach agreement with heads of the employee bargaining units.
On the other hand, Davis conducts its negotiations in sessions closed to the public to ensure good-faith bargaining.
The city may be looking for ways to increase the transparency and bring the public and the council into the discussion before an agreement is reach in private between the two sides. But that will require some skill and fortitude if that ends up being the city staff’s true intent.
The most powerful piece of evidence supplied by the Davis Enterprise is the graphic that shows the results of negotiations from four years ago. We are talking about an extraordinary escalation in just salaries. The graphic doesn’t even include benefits or pensions.
What the graphic is shows clearly is that each of the bargaining groups got a sizable salary increase above simply the increased cost of living.
Who got the biggest increases? Public safety hands down. Remember that public safety gets 3% per year of service when they retire at age 50.
Police lieutenants received a 16% cola and then an additional 13 to 29% percent salary increase. WHich means at the high they received a whopping 45% salary increase.
Firefighters got a flat 32% salary increase.
Police officers got a 10% cola and then a 16% increase for sworn officers, but only 7 to 7.5% for non-sworn officers.
The city employees association and program and administrative staff got an 8% cola and then a 7 to 18% percent salary increase. Management got a 9 percent cola with an additional 8.5% to 11%.
The department heads got a 5% cola and then a 7 to 18% cost of living.
And the city manager took no raise in this latest round a month ago–but that’s misleading because it does not include the salary increase in the previous contract. That is comparing apples-to-oranges.
Several of the councilmembers remain outspoken about the need to get city salaries under control. The Vanguard has argued that we need to cap salaries for those making over 100% and contain salary increases to inflation once we are out of the current budget crisis.
Councilmember Lamar Heystek to the Enterprise:
“Our next budget needs to reflect a substantively different approach. We cannot attempt to perpetuate an unsustainable compensation structure for much longer… This year’s budgeting process needs to include some tough questions for our bargaining groups and management. This should not be about cutting services, but about how we can keep our service intact by doing things differently.”
Councilmember Sue Greenwald to the Enterprise:
“Right now, if employees have the same contract, the same (cost-of-living adjustment) increases and the same essential terms that they had during the last round of negotiations, then we will be bankrupt in less than a year and a half, given our finance director’s current assumptions about revenues and expenditures… We’re in a bind… We have to, by law, do good-faith bargaining, so I cannot talk about the specific things that I would like to see at this point. But I think there’s a paramount importance of keeping the public informed.”
Councilmember Stephen Souza to the Enterprise that the employees understand Davis’ budget dilemma in terms of the $2.4 million deficit this fiscal year and larger deficits in subsequent years.
“I think that the employee negotiations will have an impact, positively, upon the city’s upcoming budget… I think all of our employees realize that we are in a tough financial situation and they’re willing to do what’s necessary to ensure that they keep not only their own jobs, but so we can reduce impacts on all employees… It’s a matter of all of us realizing it’s a shared responsibility.”
But do they really understand not just the short term budget deficit, but the longer term structural problems that make these type of contracts unsustainable? Early evidence suggests that some employee groups may not. And they may wish to balance the budget on other departments backs rather than their own.
The Enterprise goes on to discuss one plank of the problem–the problem of lack of shared costs to Cal PERS. Right now, the city of Davis pays 100% of the costs to non-safety officers pensions. That comes to roughly 8% of their base salary a year.
Other cities have begun to modify this arrangement. Some are now paying 4% of the base costs–basically sharing the costs with the employees. Vacaville is moving toward a process where the employees have begun paying half of the cost this year and the full 8 percent of the cost next year.
If Davis could take on this approach, it would go a long way toward solving the pension problem. It would make such salary increases less damaging to the city because it would no longer be a double-whammy hit–the immediate hit on the budget followed by the pension hit.
The city has already looks towards moving from the pay-as-you-go model to fully funding. At the state wide level, PERS estimates that such a switch would save the state up to two billion per year. At the city level that would mean savings for the city in the long term as well.
But the bottom line is that the city can no longer afford to give such huge salary increases above the rise in the cost of living. There has been a vertible arms race type increase in the city contracts. Each city has moved to try to outdo the other in hopes of retaining their employees. The result is a death spiral increase that is self-perpetuating. Such increases eventually brought about the bankruptcy of Vallejo. Vallejo was simply an early warning sign.
The real question is whether the city has the political will to hold the line on new contracts. That will be a key question as we move forward in this process. The other key question will be the degree to which there will be transparency and oversight over the process. The ability for the council and public to scrutinize the trajectory of these talks will be paramount if the city is to get their fiscal house in order.
—David M. Greenwald reporting