Vanguard Recommends 10 Percent Across the Board Pay Cut For Department Heads and Management Group –
The interim city manager has proposed a budget with two tiers of cuts to services for the public. However, neither the interim city manager himself nor his staff, nor members who signed the MOU as “Individual Management Employees” have seen their salaries go down since 2007, prior to the beginning of the latest economic downturn and budget cuts.
With a more realistic ten percent cut, the city could save between $300,000 and $570,000 on salaries, depending on which employees the city wants to include in the cuts.
Our rationale for such a move is the following:
First, rank and file employees will be asked through the MOU process to take pay decreases and, in particular, accept radical changes to their retirement pensions. The leaders in this city must lead by example if they want to set the right tone.
Second, the city leaders have not taken an appreciable pay cut since 2007.
In fact, the Vanguard analysis shows that the employees in these categories are making collectively over $600,000 more in 2010 than they were in 2007. While some of that was due to promotion, the numbers show that for the typical employee they are either making as much or slightly more than they were in 2007.
Third, salaries soared over the last decade. What we have seen, however, since the economic downturn, is that the number of employees is in absolute terms the lowest it has been since 1997. The per capita ratio of employees to population is less. However, employees are still making what they were in 2007.
While employees have given away their Cost of Living Allowance, it is not clear how much the cost of living has risen since 2007.
The bottom line is as follows:
The taxpayers have been asked to extend the half-cent sales tax, which mainly went to pay for increased salaries.
The city government is operating at its lowest employee levels in two decades.
The city is proposing drastic cuts to city services in tier one and tier two.
The management wishes for rank and file employees to take pay cuts or retirement cuts.
If the city expects the taxpayers to extend their parks tax and other revenues, then the city leadership has to lead by example.
In tier two, the city is proposing about $485,000 in cuts. That includes eliminating certain positions. Cuts to the Police Ombudsman (which makes no sense). Closing a community pool, among other things.
And yet those cuts will only produce $150,000 for our roads which are in desperate need of repair. Paul Navazio this week has admitted that the budget assumptions do not include provisions for bringing road maintenance up to where it needs to be.
However, if the city is looking to cut another $300,000 to $600,000 it should start at the top.
Here is the breakdown of potential cost savings, and the figures are in the thousands.
There is a large variance in the salaries of employees, and we have only listed those making over $90K, but there are 11 people in the “management” bargaining group making under $80,000 per year. A lot of them are planners or analysts.
While we included the analysis for people making $90,000 or more, we should point out that there are five individuals making $89,000 and another making $87,000, which might serve as a better cut point.
For the group making under $87,000 you are looking at an additional $40 to $80,000 in savings if you include them, but there are a number of reasons not to.
If the city wishes to start cutting services, I think they first have to take substantial paycuts on their own, commensurate with what UC Professors, top school administrators, and state workers need to cut.
The buck starts at the top. Then City Manager Bill Emlen, at the beginning of the process, took a contract extension that was flat. At the time that seemed generous, but it has produced a great amount of anger from employees being asked to take pay cuts.
It is worth noting that Mr. Emlen received about $158,000 in his final year. Paul Navazio is taking essentially the same salary at $154,000. Slightly lower than his predecessor but a huge pay increase from the $132,000 he received in 2007.
In the meantime, Police Chief Landy Black has been fighting to save positions in his department that are slated to be cut, in part due to the loss of grant money. And yet, he has taken a healthy pay increase and we have been told it may be higher than the amount that it shows on paper.
In addition, his Assistant Steve Pierce and his NO.3 Darren Pytel have each taken pay increases at a time when rank and file police officers have been and will be asked to take pay cuts.
There is no bigger supporter than the Vanguard of the Police Chief and what he has done to change the culture of that department. Nevertheless, from the standpoint of leadership and the budget, it is a problem.
The Vanguard recommends the city department heads who are not part of a collective bargaining unit quickly take an across-the-board 10% pay cut, effective the coming fiscal year.
The Vanguard further recommends that the management group, at least those making over $87,000 per year, take a similar pay cut and lead by example.
At that point they will be in far better position to ask the rank and file to make the concessions needed to keep the city fiscally solvent.
—David M. Greenwald reporting
Contra the prevailing wisdom around here, I see no need to reduce salaries and benefits for any staff – including management – at least until the City sees fit to hire someone qualified to negotiate a union contract/MOU.
*Professional* negotiators on both sides of any labor agreement realize the need for stability over the long term, and can be extremely creative [i]as long as there is trust across the table[/i]. Start there.
David… do your figures include the salary reductions due to furloughs in the 09-10 & 10-11 fiscal years?
My understanding is that there were not salary reductions in these groups. The bottom line is that most managers are getting as much if not somewhat more than they got in 2007.
And my point Neutral is that you cannot do that without setting the example early from managers that times are tough.
I guess times don’t seem so tough to Navazio et al .
When Bill Emlen agreed to take no salary increase, that was clearly illusory, since it was clear he planned to leave anyway. Typical of him. The city cannot expect the rank and file to take pay cuts, while management continues as if there were no recession/fiscal crisis. It is as simple as that…
Nice article dmg…
Glad all city workers gave back percentages of their pay , took furlough cuts , and received no raises , so that these people could continue with no setbacks in their financial life .
Thanks regular city workers for doing your part !
[i]And my point . . . without setting the example early from managers[/i]
And mine is that it is patently obvious that neither the Council nor management staff is capable of doing the job. If either group had what it takes we wouldn’t be having this ‘conversation’.
Neutral: I’m not ready to conclude that yet. I think the new council may be. But they are also going to hire an outside negotiator.
[quote]Neutral: I’m not ready to conclude that yet. I think the new council may be. But they are also going to hire an outside negotiator.[/quote]
It will be interesting to see what an outside negotiator does in relation to management salaries. What does the negotiator say to the argument from rank and file city workers “How come we have to take cuts and management doesn’t?”
When we move to total comp–as the firefighters contract now is based on and all others will have to be moved to–the pay cuts will be automatic. There is almost no other choice unless we end up firing every last cop and shutter every park and greenbelt.
Revenues are stagnant or falling. We need revenues to cover three aspects of labor cost: salary; pension; and medical benefits (including retiree medical).
Pension costs and medical benefit costs are going up at a rapid rate. So one thing has to give. And that will be salary. The added benefit of cutting salary is that it also reduces the funding cost of pensions.
One possible option, if the employees don’t want salary cuts is to get rid of employee health care, including retiree health care (for those who have yet to retire). However, I doubt most employees would prefer this option.
And before anyone jumps in and says, “What about just getting rid of medical care cash outs?” That is not nearly enough. Not even close. Moreover, if we keep our luxury medical plans and get rid of the cash outs entirely, we won’t save any money. Those now cashing out will simply switch to one of the City paid for medical plans.
A bit of news–the CA Assembly today passed the municipal bankruptcy bill written by the firefighters’ union. It won’t stop any local governments from going bankrupt. It will, however, make the process much slower and more expensive. It has to still pass the Senate and be signed by Gov. Brown. It’s a terrible, terrible bill; and of course our terrible, terrible member of the Assembly voted in favor of it. (Mariko Yamada, of course, is funded by the unions, like all Democrats.) It won’t do anything, but I would like to see our City Council take a vote condemning Mariko and the other Democrats who voted in favor of this terrible bill. Of course our Council lacks the balls to take such a vote.
Rich ,
“””” Of course our Council lacks the balls to take such a vote.””””
Rochelle and Sue will be happy to hear that .
[quote]Pension costs and medical benefit costs are going up at a rapid rate. So one thing has to give. And that will be salary. [/quote]
Layoffs would be another… altho we still have to pay retirement/medical for those laid off, would we not? I’m a bit murky on this issue…
Retirement stops when they are laid off. Medical would be covered if they are vested.
RICH: [i]”There is almost no other choice [b]unless we end up firing[/b] every last cop and shutter every park and greenbelt.”[/i]
RICH: [i]”So one thing has to give. And that will be salary.”[/i]
I intended to convey here the notion that, unless we fire a lot of staff, salaries will have to be lower.
ELAINE: [i]”Layoffs would be another… “[/i]
When Lamar Heystek was on the Council, he stressed this point. He said that unless we restrain our total labor costs, we would end up laying off a large percentage of City workers and the result would be a smaller staff making a lot of money providing far fewer services.
My presumption, based on what has taken place over the last 3-4 years, is that once we have chopped all of the programs which help the poor, the young, the very old and the handicapped, the City will start firing cops. I think the last people to go will be the all mighty firefighters, even though we are overstaffed there by 33% right now.
[quote]My presumption, based on what has taken place over the last 3-4 years, is that once we have chopped all of the programs which help the poor, the young, the very old and the handicapped, the City will start firing cops. I think the last people to go will be the all mighty firefighters, even though we are overstaffed there by 33% right now.[/quote]
Joe Krovoza put out there the idea of going to some volunteer firefighters. It will be interesting to see if he pursues that line of thinking, and if he does, how far he will get…
” Joe Krovoza put out there the idea of going to some volunteer firefighters”
While I also find this idea interesting, the doctor in me can’t help but want an evidence based approach to this question with safety as my primary concern. I would want to see a number of comparisons including : a comparison of structures lost to fire,
Economic losses (as well as savings), number of injuries/deaths among the public, professional firefighters, and volunteer firefighters in communities with all professionals vs a mix of professional and volunteers before seriously considering this option.
[quote]Department Heads and Other Managers Have Not Taken Pay Cut[/quote][quote]David… do your figures include the salary reductions due to furloughs in the 09-10 & 10-11 fiscal years? [/quote]
[quote]My understanding is that there were not salary reductions in these groups. [/quote]
A manager who had a salary of 100k “forfeited” ~ $4,600 in FY 2009-10; ~ $2,300 in FY & will have at least 3 furlough days in FY 2010-11. (This does not apply to Dept. Heads)
I recall a quote that a “reporter” once used that ‘facts should not interfere with a good ‘story’…
[quote]Retirement [benefit contributions] stops when they are laid off. Medical would be covered if they are vested. [/quote]This may or may not be an untruth… once an employee leaves service with the city, they are not covered for additional contributions for retirement, nor additional contributions for medical. Under the previous provisions, if they did not retire FROM the city, the City had no obligations for retiree medical benefits… not sure if that is the case now.