Can City Hold Line on New Employee Contract Negotiations?

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We have been talking about this for months, but the Enterprise is starting to see the light of day on the issue of city contract talks with six of the employee bargaining units with the city.

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.

This creates an awkward position where the city staff become the de facto advocate for the contract.  That puts city staff into an awkward position and puts the council in a bind if they question the deal.

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

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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30 thoughts on “Can City Hold Line on New Employee Contract Negotiations?”

  1. Anonymous

    [i]”Often what has happened in the past is that the first time either the [b][u]council[/b][/u] 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.”[/i]

    That is absurd. The Council provides negotiating parameters to designated representatives and ultimately has to sign off on any deal.

    Reasonable people can disagree on compensation levels and the closed-session requirements of labor negotiations, but to suggest that the council knows nothing about such negotiations is ridiculous.

  2. Mike Hart

    Well done analysis. The inherent problem remains of the way the process works, no one with anything at stake actually negotiates against the unions, who have everything at stake. I am glad to hear that a majority of the council recognizes the need to change- hopefully we can see a roll-back on employee costs to more reasonable levels.

  3. Rich Rifkin

    [i]”Firefighters got a flat 32% salary increase.”[/i]

    This number is mathematically incorrect, though not by a huge amount.

    Thirty-two percent does not mean anything. That was derived at by adding together the four increases in pay to the DFD:

    June 20, 2005 10% Salary Increase
    June 19, 2006 8% Salary Increase
    June 18, 2007 8% Salary Increase
    June 30, 2008 6% Salary Increase

    However, the increases in pay are compounded. The actual increase was 36%:

    $100.00 x 1.10
    $110.00 x 1.08
    $118.80 x 1.08
    $128.30 x 1.06
    $136.00

    [i]Police officers got a 10% cola and then a 16% increase for sworn officers, but only 7 to 7.5% for non-sworn officers.”[/i]

    There is absolutely no difference to the taxpayers or to the employees whether the increase in salary is called a COLA or called a salary increase. My sincere belief is the only reason these increases are disaggregated is to make the pay raises more palatable to the public.*

    This is how the 28.6% pay increase breaks down that was given to the sworn police officers in 2006 (a year after that fire contract was signed):

    $100.00 x 1.09
    $109.00 x 1.06
    $115.54 x 1.06
    $122.47 x 1.05
    $128.60

    [i]”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. This creates an awkward position where the city staff become the de facto advocate for the contract. That puts city staff into an awkward position and puts the council in a bind if they question the deal.”[/i]

    Awkward shmawkward.

    The city council has all the power to change the process. It’s a cop-out for the council to blame the staff for the process. The council created the process. If the deal that is negotiated between the city manager’s team and the union reps is not to the liking of the council, the council can vote it down after the fact or make clear in advance to its team just what the council is willing to accept.

    The fact is that we, the voters of Davis, have been electing members of the council who have not prioritized fiscal responsibility in labor negotiations. (Sue Greenwald is maybe the one exception in the last 20 years.) It is not the case that the current council is worse than previous councils. This trend goes back to the 1980s, when a philosophical change took place and council after council decided to greatly increase the cost of government in order to benefit city employees.

    If we expect fiscal responsibility from our city councils, we are going to have to elect different people.

    * I asked Melissa Chaney, the human resources director, why COLAs and salary increases are separated in contracts. Paraphrasing, she said “it’s done that way to bring our pay packages in line with comparable agencies. If we estimate a 4% per year cost of living increase, we put that in the contract. But then if our employees will still be 6% below what their comps make in other cities, we will add the 6% salary increase to the contract. The net effect is the same as a 10% per year increase.” I told Melissa I thought that made no sense. If you look at the COLAs in the various MOUs, they are all over the place. They seem to be just made up numbers. I don’t recall her reaction to my disbelief.

  4. David M. Greenwald

    Good info Rich. So those numbers actually understate the real increase.

    If the COLA actually meant something, rather than varied across the board, it would have been somewhat helpful. And I still think it is because it shows just how much salaries increased above and beyond the cost of living increases that get factored in.

  5. Rich Rifkin

    I don’t have any idea if [a href=”http://californiapensionreform.com/initiative_summary.htm”]this initiative[/a] will ever make it to the ballot, but I think if it does and passes, it will make a difference with regard to our long-term public pension problems in California.

    Among other responsible changes, this initiative, called “THE PUBLIC EMPLOYEE BENEFITS REFORM INITIATIVE” would reduce the pension formulas to sustainable caps:

    Police Officers and Firefighters 2.2% x highest ave salary x years of service @55
    Other Safety 1.8% x highest ave salary x years of service @60
    All other Non-Social Security 1.5% highest ave salary x years of service @SS Age
    All other Social Security 1.0% highest ave salary x years of service @SS Age

    Notice that it gets rid of the nonsense of basing the startng pension on the last year’s salary alone. That creates a corrupt incentive to move people to top positions just before they retire.

    It would also force cities like Davis to fully fund their retiree medical liabilities: “Public agencies are required to make full payments to their pension and retiree health care funds each year, regardless of their funding status. Money may not be taken out of pension or retiree health care funds for any purpose other than providing the benefits for which they were established. These protections apply to all funds, including those set aside for current public employees.”

    The public employee unions are great at winning elections in California, so I wouldn’t count on this passing, if it makes it to the ballot.

  6. David M. Greenwald

    Rich:

    If this is the initiative I think it is, there is a serious problem. It allows for retroactive reduction of pensions. The problem with that is that it pits current employees against retired employees and the retired employees do not have union representation and will not have a say in such an action. For that reason I oppose this measure, again if it is the one I believe it is.

  7. Question?

    “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.”

    Question: Can we change things in mid-stream? I know it has been said on this blog we cannot reduce bloated city staff salaries, because the contracts were already bargained for and in place – essentially written in stone. So my question is can we change the amount of contribution to PERS, so that current employees must share the cost of PERS by 50%, or move towards 100%? Or would this just be for new hires?

    Also, why aren’t the COLAs fixed throughout the state/nation? It should be tagged to a federal number, or something like that, so that the COLA is consistent over all and means something. If it is nothing more than someone’s best guess/hidden agenda, it is a meaningless figure and should not be used.

    “Awkward shmawkward. The city council has all the power to change the process. It’s a cop-out for the council to blame the staff for the process. The council created the process. If the deal that is negotiated between the city manager’s team and the union reps is not to the liking of the council, the council can vote it down after the fact or make clear in advance to its team just what the council is willing to accept.”

    Amen to this comment. It hits the nail right on the head! We already know Navazio cooked the books for incumbents Saylor and Souza’s campaigns, to make it look as if Davis had a balanced budget (shifting road repair and employee benefits into an “unmet need” category) – when it was clear we didn’t. Now Navazio is wringing his hands a la Chicken Little, and saying the sky is falling, the sky is falling.

    The City Council knows exactly what it is doing, and the Council majority has been sticking its neck in the sand for some time now about city finances, bc developers have paid into their campaign war chests. More development, the more city services are needed that we can’t pay for anymore. The Council majority knows precisely what it is doing – trying to run for higher office (Saylor, Souza) by promoting developer interests, or interests of anyone that will contribute to their campaigns (e.g. firefighters).

  8. Rich Rifkin

    QUESTION: [i]”So my question is can we change the amount of contribution to PERS, so that current employees must share the cost of PERS by 50%, or move towards 100%? Or would this just be for new hires?”[/i]

    This was the topic I addressed in my February 18 Enterprise column. You would do well to read that to understand this issue.

    The way the CalPERs funding system works is they distinguish between an “employee share” and an “agency share”. The “employee share” is a percentage of an employee’s base salary, depending on which formula his pension is based on. Every bit beyond the “employee share” which is needed to fund the account is considered “agency share.”

    For employees on 2.5% @ 55, the formula all city of Davis employees other than cops and fire have, the employee share is 8%. Thus, someone whose base salary is $100,000 has an “employee share” for his pension of $8,000.

    The amount charged by PERS for that employee’s pension (this year) is $20,481.36. Thus, the “agency share” is $12,481.36. If the amount PERS charges goes up to $68,000, the “agency share” would go up to $60,000, while the “employee share” would remain flat at $8,000.

    Under the current contracts, non-safety employees in Davis pay nothing toward their “employee share.” That 8% is picked up entirely by the taxpayers.

    What absolutely must happen to help correct our structural deficit is that non-safety employees must start paying that 8%. That would affect current and future employees.

    Safety employees — cops and fire — have a different formula, 3% @ 50, which is much more lucrative for them. Their “employee share” is 9%, which accounts now for about one-fourth of the cost of funding their pensions. Safety employees in Davis are required to pay their employee share. However, in order to cover that, the city gave them a 9% raise (in addition to other increases in pay) a decade ago, and then regular percentage raises on top of that, so in effect, taxpayers have been covering that, too, by way of much higher wages.

  9. David M. Greenwald

    Question?:

    The good news is that the contracts are up this year, so we don’t have to change midstream. But the answer is only if the employees are agreeable to that. A CBA is a contract between the city and employees, it cannot be altered unless both sides agree to it.

  10. Rich Rifkin

    [i]”But the answer is only if the employees are agreeable to that. A CBA is a contract between the city and employees, it cannot be altered unless both sides agree to it.”[/i]

    David, do you know what happens legally when the contracts expire? If no new agreement is reached, is it not the case that the employees become “at will” and the city can offer any take-it-or-leave-it terms it likes, including deducting the employees’ share of their pension costs?

    I know that the city cannot reduce the formulas under current state law for existing employees. But I don’t know of anything which would stop the city from requiring all non-safety employees to contribute their share to PERS once the contract expires.

    As far as the next contracts go, the terms are negotiable. The city doesn’t have to start from the premise that the employees get all the benefits provided in previous deals. If the council believes it is fiscally irresponsible to no longer pay the employees’ share, the council can let the unions know that and say, “We won’t approve a contract without employees paying their share.”

  11. David M. Greenwald

    I’m not an expert on labor law, Cecilia would probably have a better answer on this. But I would guess that there is a difference between a CBA and the individual employees contract that would preclude them from becoming at will and certainly there are laws to prevent the imposition of such a settlement, otherwise that’s what management would always do. You’d have to start with the MOU between the city and the employee bargaining groups, the contracts, and then labor law.

  12. Sue Greenwald

    Finally, the mainstream press is becoming aware of the public pension problem, and its potential effect on our economy.

    See today’s article in Bloomberg’s: Hidden Pension Fiasco May Foment Another $1 Trillion Bailout: http://www.bloomberg.com/apps/news?pid=20601109&sid=alwTE0Z5.1EA

    The sad part is that good defined benefits are critical to a decent quality of life, but by pushing the package too far, public employees have undermined the entire system.

  13. David M. Greenwald

    Sue I think the last part of your comment is right, I see the same line in Aaronson’s comment on unions:

    “In my view, and as I would argue is borne out by the labor history in this country, unions have acted as a critical brake on the powers of
    management to unilaterally impose working conditions on employees. Before the rise of unions (and the Intervention of State and Federal governments), many workers faced workplace conditions unimaginable today. However, it is also the case. as we have seen demonstrated from time to time, that when the power of a union is unchecked. it can work terrible damage on the ability of the workplace to function successfully. A balance between unions and management is critical for the success of both.”

    I think we have lost the balance on pensions for some bargaining groups over the last ten years. I’m still struck by the disparity between what city employees on the high end get and what the people that Cecilia represents who make in some cases a third or a quarter of their salary get.

    People wonder why I seem anti-labor on one hand and pro-on the other hand. The reason is some get far too much and others get far too little.

  14. Concerned about spending

    “but by pushing the package too far, public employees have undermined the entire system. “

    You probably did not intend to assign blame, but it reads as though you think the employees did something wrong. What is broken? the lack of push back. City Managers and City Councils have undermined the system by caving in to too many employee demands.

  15. David M. Greenwald

    “City Managers and City Councils have undermined the system by caving in to too many employee demands. “

    I certainly agree that one of the big problems has been that staff and council have done this.

  16. Rich Rifkin

    [i]”The upper management employees as opposed to the rank and file are to blame.”[/i]

    There is blame to go around. However, I wouldn’t start with upper management. I’d start with ourselves, the voters of Davis who elected people who put a special interest ahead of the public interest, and we failed to pay attention to the problems those bad decisions of the council were going to cause….

    I think there is also a problem driven by our campaign finance system which gives special interests an incentive to game the system. While all city of Davis labor groups have this same incentive, only the firefighters have actually acted unethically. But the ethics issue does not end with the givers; it’s even worse for candidates to the city council to take money from a special interest with whom they need to negotiate.

    Many anti-growth activists have been concerned over the monies given to candidates by developers, because developers indirectly make money off of the city, and can profit if a council makes a decision which favors them. However, that is at least indirect (though unethical); and in a regime governed by Measure J, the decisions of the council are not the final word on peripheral developments.

    By contrast, the real money decisions the council makes regard the salaries, benefits and pensions of city employees. It’s not true, and I have never said, that most of these decisions were influenced by contributions from city employees (other than firefighters) to members of the council. I think the members of the council — who we elected and who have voted for pay raises, benefits plans and pension programs that we cannot afford — thought they were doing the right thing.

    They did all of this in secret, without public input and without any public testimony, analysis or debate. Because they hid behind the closed-door system (and continue to do so), they did not have the benefit of the general public or the disinfecting power of sunshine to straighten them out as they dug this hole deeper and deeper. If this financial crisis is to be solved, it would help to change the system, bring it out in the open, have the council be honest about how bad things are right now, how much worse they will be in a few years, and have members of the public play a role in finding a solution which serves the public interest, even if that conflicts with the special interests of some employees of the city.

  17. Sue Greenwald

    I should add that I am mainly concerned with the strains that the enhanced pensions of local government and public safety. To my knowledge, (please correct me if I am wrong), school districts, the non-public safety state and the University do not have full retirement benefits at 50 and 55, and most of these employees contribute to their pensions. The problem in these public sectors has been one of mismanagement — for example, suspending employee contributions when running a surplus rather than saving for the downturns.

  18. martin

    I think that we need to consider that CALPERS doesn’t know whether they can honor the pension obligations using their current financial management techniques. If they are wrong, taxpayers have to pay the difference:
    Chronicling civil-service life for California state workers
    March 3, 2009
    CalPERS, other pensions, overstate return estimates and understate costs
    Bloomberg.com has this [http://www.bloomberg.com/apps/news?pid=20601109&sid=alwTE0Z5.1EA&refer=home] story that contends many public pensions are overstating expected returns and understating their future costs. The story includes references to CalPERS:

    The nation’s largest public pension fund, California Public Employees’ Retirement System, has been reporting an expected rate of return of 7.75 percent for the past eight years, and 8 percent before that, according to spokesman Clark McKinley.

    Its annual return during the decade from Dec. 31, 1998, to Dec. 31, 2008, has been 3.32 percent, and last year, when markets tanked, it lost 27 percent.

    “It’s pitiful, isn’t it?” says Frederick “Shad” Rowe, a member of the Texas Pension Review Board, which monitors state and local government pension funds. “My experience has been that pension funds misfire from every direction. They overstate expected returns and understate future costs. The combination is debilitating over time.”

    Rowe, 62, is chairman of Greenbrier Partners, a private investment firm he founded in Dallas 24 years ago.

    … Calpers’s McKinley declined to comment on Rowe’s views.

    We asked CalPERS’ spokeswoman Pat Macht to respond. Here’s her e-mail:

    Beware of the anti-pension ideologues who come out of the woodwork during market downturns. Like vultures, they prey on the highly charged and negative investment environment, looking for ways to convince you a temporary performance downturn will be typical for all time!

    They know — but don’t tell you so — that we set our rates based on a fiscal year investment return. They don’t tell you that our assumed rate of return is made based on advice from a range of experts within CalPERS and within the industry and that it is regularly evaluated every two to three years in public session. They don’t tell you what you would learn from a textbook on pension management: that some years investment returns are as expected; other years, they will be more than expected and yes, some years they will be less than expected.

    They don’t tell you that over the last 24 years, we have exceed our assumed rate of return 17 times, and eight of those years were more than double the 7 3/4 percent assumed rate of return.

    (And here’s an interesting fact: For five years after the Great Depression, there were multiple double digit return years.)

    We will withstand the market swings, with our goal in mind: to achieve our assumed rate of return averaged over many, many decades. That’s what we are designed to do. That’s the math that matters.

    Patricia K. Macht
    Assistant Executive Officer
    Office of Public Affairs

  19. Question

    “The good news is that the contracts are up this year, so we don’t have to change midstream. But the answer is only if the employees are agreeable to that. A CBA is a contract between the city and employees, it cannot be altered unless both sides agree to it.”

    So if I catch your drift, there is no incentive for city employees to contribute anything to their pensions. It is entirely up to the city to hold firm, and insist for the good of the citizens of Davis that city employees pay their fair share of their pension (whatever that “fair share” should be). So my next question is, what happens in this Mexican standoff if neither side can come to an equitable agreement?

  20. David M. Greenwald

    It gets tricky if you reach impasse. Sometimes, the management will try to impose a contract on a bargaining group. That rarely seems an effective encounter.

    I suggest that the city go to the mat on it and wait two years if necessary. That will keep the current contract in place, which means no employee raises at all. At some point they’ll reach an agreement, but it’s going to be hard fought.

  21. Question

    “It gets tricky if you reach impasse. Sometimes, the management will try to impose a contract on a bargaining group. That rarely seems an effective encounter.

    I suggest that the city go to the mat on it and wait two years if necessary. That will keep the current contract in place, which means no employee raises at all. At some point they’ll reach an agreement, but it’s going to be hard fought.”

    I can’t picture Bill Emlen going to the mat for taxpayers. He doesn’t have the backbone.

  22. Rich Rifkin

    [i]”I can’t picture Bill Emlen going to the mat for taxpayers. He doesn’t have the backbone.”[/i]

    It’s not about Bill’s spine. He works for the city council and will of course do what they want. The question is the position and perseverence of our elected officials and the obstinance or flexibility of the workers.

    Check out my blog at: [url]http://lexicondaily.blogspot.com[/url]

  23. Question

    “It’s not about Bill’s spine. He works for the city council and will of course do what they want. The question is the position and perseverence of our elected officials and the obstinance or flexibility of the workers.”

    The City Staff and Council majority form an unholy alliance, IMHO. They strongly support one another at the taxpayers’ expense. That is the crux of the problem, and Bill Emlen is very much a part of that problem. I would suggest the Council majority had better pay attention to the taxpayers pocketbooks a bit more, or this city will end up bankrupt like Vallejo.

  24. Correcting the Record

    I keep hearing it suggested that employees pay their fair share of the pension contribution to help balance the deficit. What is being overlooked is that what the employer has been paying of the employees’ contribution (8%) has already been factored into the total compensation for that employee group and essentially has resulted in the employee not getting as much in salary.

    It isn’t so much the salary that is negotiated, it’s the total compensation of the package that is negotiated. And that’s what is compared with other jurisdictions’ employee compensation packages when it comes negotiations time. If you understand that dynamic, you realize that if the employer’s share of the pension contribution goes up then the amount of the total compensation that might have been available for salaries (or benefits for that matter) is effectively constrained. (Historically, in Davis, employees have foregone salary increases that they might have expected to have received in exchange for enhancements in other parts of the total compensation calculation.) Conversely, if the employee pays more of the pension contribution and the city as the employer pays less, then the likelihood is that there would be a salary increase to keep compensation competative.

    A simple example (totally fictitious numbers):
    First with city paying the employees’ share (the scenario that seems to upset some folks):

    Salary 1000
    Employer share of pension contribution 200
    Employee share paid by employer 80
    —–
    Total Compensation (what the City pays) 1280

    Second example with the employee paying their share, but the compensation package kept competative to retain and attract quality employees. (A few people will come to work for the City of Davis for its intrinsic rewards, but most have families to support and futures to plan for. So, if they aren’t paid what they’re worth, they’ll go elsewhere and the City will end up with lower than quality employees.):

    Salary 1080
    Employer share of pension contribution 200
    Employee share paid by employer 0
    —–
    Total Compensation (what the City pays) 1280

    Notice that under the “Total Compensation Model” the total compensation remains the same and the employee salary must go up (or some benefit must go up) to compensate for the benefit that the employee is no longer receiving.

    It’s naive to argue for employee’s to pay more for their pensions as the mechanism to reduce the cost to the city when total compensation is really the critical figure when it comes to both measuring the city’s expense. That, as well as the fact that total comp is what negotiators on both sides of the table during bargaining sessions focus on during the monetary part of the negotiations.

    Hope this cools the uninformed rhetoric and gets people focusing on realistic and intelligent options to balance the budget. What is being suggested about “employee share” is not going to have the desired effect and people will be just as angry when it’s all done. So, focus on the correct formula, not the one inspired by ill-informed anger.

  25. madame shoes

    I’ve been trying to find out who’s in the 100k club with regard to the teacher’s union. Isn’t this info supposed to be public as well?

  26. Still Tired of This

    Yes it is public record. But the max salary for teachers is well under 100K, so other than administrators, you are not going to have any 100K members of the teachers union.

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