Should the Councilmembers Get Increased Compensation?

Council-newIn the next four months, the Davis City Council is going to ask most, if not all, of its employees to take salary, retirement and benefit concessions in their round of bargaining that is ongoing.

At the same time, we have believed for some time that the councilmembers, given the work they perform and the hours they put in, are under-compensated for their service to this community.

The question for us is not if there should be a salary and increased compensation, but rather when is the appropriate time to do it.  Unfortunately, given current laws, the council is very constrained as to when and how and how much they can increase their own compensation.

Moreover, having to vote on their own compensation, even if it is a future compensation, is unseemly, and going into an election with three incumbents facing the voters, this should be a very uncomfortable subject.

According to the staff report for this week’s council meeting, “Government Code authorizes the City to provide Council members with an annual salary based on the city’s population.”  Salaries can be adjusted every two years and they would become effective only after a new council is seated in July.

They are constrained somewhat in how much they can increase their salary.  According to the staff report, “The amount may be increased up to 5% each calendar year since the last adjustment, non-compounded.”  However, “The Davis City Council has not adjusted its compensation since April of 2000, when the monthly salary was established at $669.49, or a total of approximately $8,034 per year.”

Staff recommends that “the City Council review the amount and consider whether there is interest in adjusting it, since the last increase was over a decade ago.”

Staff adds, “The City Council could increase the annual salary amount anywhere from 0% to 60% (12 years x 5% per year), or to a total of $1,071 per month. The City Council may choose to adjust the salary anywhere along the spectrum between 0% and 60%, via a Council-adopted ordinance.”

According to state law, any changes must be done prior to elections and would be effective after the June elections and once the new City Council is seated, or July 2012. In order to have something take effect for the 2012-2014 council, the current council would need to introduce an ordinance at the April 17 meeting and pass a second reading at the May 1 meeting.

If the city council were to choose to change their annual salary, “the cost to the City may range from $0 up to a maximum of $24,120 per year.”

While the Vanguard is sympathetic to ultimately raising council compensation, we believe that this is not the appropriate time to do it – at a time when the council is asking city employees to sacrifice and take concessions.

However, there are two changes the Vanguard does support.

According to the staff report, the Government Code establishes a limit on compensation for city councilmembers.  However, again, “the cost to the City may range from $0 up to a maximum of $24,120 per year.”

Specifically, “Any amounts paid by a city for retirement, health and welfare, and federal social security benefits shall not be included for purposes of determining salary under this section, provided that the same benefits are available and paid by the city for its employees.”

However, while the council is eligible to receive health benefits, they may “not elect to receive a cash-out payment in lieu of health benefits without running afoul of Government Code section 36516’s salary limitations.”

Thus Councilmembers could not participate in the city’s cafeteria cash-out plan that other employees receive.

However, the city attorney argues, “In 2006, the Attorney General held that contributions in lieu of health benefits paid directly to a 457 deferred compensation account was not the same as a cash payment and could therefore be provided to Council Members notwithstanding the compensation limits.”

At present, “The City provides new employees with health benefits, or if the employee has health benefits from a different source, the employee may elect to receive a $500 monthly contribution cash payment.”

The City Attorney believes, “The City can provide a $500 monthly contribution to a Section 457 deferred compensation plan on behalf of City Council members who do not use the City’s health insurance benefits without violating the statutory compensation limits.”

And she cites a number of other cities who have similar plans.

The Vanguard understands roughly four of the councilmembers are unnecessarily receiving full health care benefits, when they could opt for the deferred cash out.

The city’s analysis is that changes to the current health benefits could result in savings to the city.

The current health benefit costs the City approximately $1,500/month per person. Allowing a council member who currently opts for City coverage to choose a $500/month deferred compensation option in lieu of the health benefit would save the City approximately $1,000/month.

The total savings could be as much as $60,000 annually.

Because this is a benefit that all city employees currently receive, in fact, the city’s goal is to make the $500 per month a uniform benefit as opposed to the current $18,000 per year for some employees, we believe it is fair that the councilmembers realize the same benefit and enable the city to save considerable money.

In lieu of increased salary compensation, the Vanguard would support raising the amount of travel expenses.  More than one councilmember noted the small amount of the travel fund and the fact that councilmembers have to largely pay out of pocket to attend even regional conferences and meetings, for which the City of Davis is a due representative on these bodies.

Councilmembers should not have to pay out of pocket for doing work on behalf of the city.  The Vanguard would like to see a full layout of expenses, the current travel account, and see how feasible it would be increase that amount.

In summary, the Vanguard believes that salary compensation at this time would be a political nightmare, given the state of current bargaining and budgetary considerations.  We believe ultimately in raising the salary.

The Vanguard believes that the $500 in lieu of health care is a no-brainer and that the council, instead of a salary increase, should analyze the need for travel expenses and adjust appropriately.

—David M. Greenwald reporting

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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  1. 91 Octane

    I agree with the vanguard. If they are expected to do a job, they should be paid for it. If they are not paid, then they have no other incentive but to work another job, thus not devote themselves fully to city business. That doesn’t seem a good thing to me.

  2. hpierce

    There should be a “published” summary of Council compensation/benefits on the City’s website, where MOU’s for other employees are. David has covered two aspects: salary and ‘cafeteria’, which I assume includes life insurance & LTD. Not mentioned is whether there are contributions by City and/or CC members towards PERS or PARS. If there are, what would it take to ‘vest’ any sort of benefit after leaving the Council? Like-wise, is there any post-service medical benefit provided? How much, and what is the period of service needed to ‘vest’ this benefit?
    Admittedly, in the grand scheme of things, the costs of thse auxillary benefits is small. I still think we should have easy access to know what those benefits are.

  3. SODA

    I agree being a CC member is time consuming and important but I do not think we will attract 5 full time CC members and wonder how many hrs they do put in or have to. I do not agree they should get health or retirement benefits. CC. Service should be for a relatively short time and not a career. I realize this may be a provocative statement but so be it. And I agree with the Vanguard that this isn’t the time. To be now would be mirroring the regents and CSU trustees.

  4. 2cowherd

    What if – instead of increasing their compensation – they were allowed to use that increase to hire an assistant?
    I believe the County Supervisors each have an assistant

  5. Frankly

    [i]”Councilmembers should not have to pay out of pocket for doing work on behalf of the city”[/i]

    Absolutely agree as long as they are not just doing work for their Party or their relection campaign.

    I agree with SODA… that the gig should be for a relatively short time and not a career. This is representative governance folks. It is public service to be on the CC. When it starts to look and feel like a career choice, it is time to step down.

  6. JustSaying

    So, we’ve set up a system that gives an employees $18,000 a year extra if they don’t accept our health program? What are the conditions?

    It seems as though this is intended for UCD-covered family members. Given an option, most people would opt for the university coverage which is far superior to most government plans and a better deal (especially if the city employee already is covered by it).

    Is this also an option for people who have no other coverage? Would we be encouraging a young, newer employee to forego health insurance by dangling an $18,000 bonus for non-participation? Is that one unintended consequence here? On the other hand, could a family end up with a lesser plan than the city’s because the city offers such a cash option and the other spouse’s plan doesn’t?

    If we offer $18,000 in lieu if health plan participation, do we end up with sicker, older folks with larger families in the pool we send to the health insurance provider(s)? If so, this $18,000 benefit provides all the wrong incentives to our own employees.

    In any case, who came up with the idea that the city shouldn’t get the money? Or, at least the bulk of it when employees already are better covered by another plan?

  7. JustSaying

    I’d rather pay council members a fair salary plus actual expenses for travel (or a reasonable per diem if easier), pencils and other necessities of doing the work. Let the councillor decide whether to join our health plan and, if so, pay the $18,000. Let them select and pay for their own retirement plans, which most already have. This means a significantly higher salary than we give now and no “secret benefits.”

    There might be some state law that requires we provide health and CALPERS coverage city council members that would prohibit this more open, more flexible reward system. If so, I don’t have any problem with the tiny increase suggested after more than a decade with no increase.

    Given the incredible restrictions noted above, and the council’s historical inability to get anything done, we never have to worry about turning into another Bell, CA. It’s the firefighters we need to be watching.

  8. hpierce

    [quote]Is this also an option for people who have no other coverage? [/quote]No… one of the rules to get cafeteria cash out is to have the employee demonstrate that they have evidence of coverage.

  9. Rifkin

    I could be convinced that we need to pay members of the Council more than we do now.

    I am fully aware of how much time those people normally put in (particularly the members of the Council who don’t also have full-time jobs). It’s not just the 6 or so hours for open-session Council meetings. It’s also the 12 to 15 hours most of them spend preparing for meetings. (I get calls all the time from members of the Council asking me my take on this issue or that, when those members of the Council are doing their prep work.) When the City is in litigation or negotiating labor contracts, the Council also has frequent closed-session meetings, and the members have to prepare for those. And members of the council tend to have frequent 2 x 2 meetings, many out of town, to prepare for and attend. And council members very often will go to the meetings of various commissions. (At our HRMC meetings, which normally go 3 hours, Stephen Souza attends and when procedural questions arise, he has been very helpful, given his vast experience on the Council and on commissions before that.) And Council members very often must spend hours attending community activities and travelling to events out of the area.

    However, the City budget at any given time is a zero sum game*. More to one means less to another. So if you want to increase the amount given to the Council, I think it is fair to ask where you are going to cut to get that money? How many City workers will have to be laid off to accomplish the pay raise for the Council? How many programs will have to be cut?

    Again, making this kind of a shift in usage of funds may be perfectly justified**. But at least make it honestly, spelling out whose ox will be gored to get it done.

    *Over time, the revenues into the City are not fixed. They tend to grow at around 2.5% to 3% per year (or more during housing booms). What might be the most reasonable approach to raising Council pay would be to assign a share of the General Fund revenue growth some years out to higher nominal pay for the Council. In other words, if the GF now has $30 million in income and four years down the road it has $33.8 million, the present Council could assign some percentage (say 0.025%) of the increase in revenues to higher Council pay. At least that way, they won’t have to take money away from say, the police department, which already had been targetted to paying our cops.

    **I would be more convinced of the justification of increasing the Council’s compensation if A) [b]we were not attracting quality candidates[/b] to run for City Council. However, that is not the case. This year, in my opinion, we have five extremely good candidates for the three seats. This might be the best field running in the last 20 years; or B) the low pay to the Council [b]resulted in corruption[/b]. Political science will tell you that when you offer low pay to people in powerful positions, it can lead to situations where those people are vulnerable to bribery. Mexico knows this extremely well. Its police have traditionally been terribly underpaid. But each officer knows the system: Write a lot of tickets, make a lot of arrests, and settle accounts with the person you have ticketted or arrested, so you get your pay corruptly. The sargent who assigns patrols to officers also knows the system. He gives out assignments based on how much money his officers give to him, as a share of the bribes they collect.

  10. Ryan Kelly

    Does the City continue to pay life-time health coverage for “retiring” council members, who work for the City for 5+ years (elected to at least two 4 year terms or appointed, then elected for 5+ years)? Can they continue to “cash out” after they leave office after the 2+ terms, if they have other health insurance coverage?

  11. JustSaying

    “So if you want to increase the amount given to the Council, I think it is fair to ask where you are going to cut to get that money.”

    Good point. Here’s an idea: Stop allowing commissions to obligate city funds on their own for studies and staff work on ordinances that David reports city council members have said they aren’t about to approve in the form they’re being evaluated by staff.

    How many firefighters does it take to pay for our entire city council? (Please, no cheap jokes about how much they used to PAY for our entire council!)

    One wonders whether increased pay would make any difference in who runs for these offices. But, the more important issue is whether we’re paying those who do serve adequately for their service. I don’t think we’re there yet.

    We dismiss arguments about all kinds of dumb city initiatives, saying, “it’s just a small amount.” This certainly falls in the “too small to worry about” category.

  12. Rifkin

    [i]”So, we’ve set up a system that gives an employees $18,000 a year extra if they don’t accept our health program? What are the conditions?”[/i]

    Members of the Council cannot directly get any amount for a cafeteria cash-out. They can get full health coverage, but no direct cash if they are covered elsewhere. I don’t know enough about any individuals now on the Council to comment on who takes what, but you can imagine if, say, one member is employed by the university or employed by a nearby county and so on, those members get their medical coverage through their jobs.

    This language comes from tomorrow’s staff report: [quote]Although they are eligible to receive health benefits, council members may not elect to receive a cash-out payment in lieu of health benefits without running afoul of Government Code section 36516’s salary limitations. 83 Ops. Cal. Atty. Gen. 124 (2000). As such, Council Members may not participate in the City’s Section 125 Plan because a “cash-out” option is typical under such a cafeteria plan, like the City currently offers its employees. [/quote] There is a caveat to this: Members who don’t take the City’s medical plan can get value from it [i]indirectly.[/i] As I understand it, this amount (up to $500 per month) goes to their retirement plan with PERS. I am not exactly sure how this works. I do know that in order to qualify for a pension of any amount, a worker or a member of an elected body must have his position for at least five years. So if you take someone on the Council who served only one term, a Lamar Heystek or a Mike Harrington or a Ted Puntillo, for example, he does not qualify for any retirement benefits or pension from his service on the Council.

  13. JustSaying

    Clarification: Not that they’re “serving adequately,” but are we’re “paying adequately” the people who are serving. No reflection on their work, only how much we value it.

  14. JustSaying

    Rich, sorry I wasn’t clear with my question about how [u]employee[/u] health insurance “rebates” operate. Howard answered one of them (that employees have to show proof of some coverage in order get their $18,000). The whole concept seems not in the best interest of the city. And, I wonder whether it is good for every employee who makes the $18,000 choice.

  15. JustSaying

    Wouldn’t the PERS contributions from a four-year city council stint (Lamar Heystek or a Mike Harrington or a Ted Puntillo) get counted if the person ends up eligible for PERS pension through any other PERS-covered service?

  16. Mr.Toad

    Almost all of the recent or current members have had jobs and its fair to assume that the ones who are employed are employable and the rest have been retired or are unemployable so I’m not opposed to an increase in general but there is one problem that I see. Any increase should be put in place before the filing deadline to run. If the logic is that more money may attract other candidates then it follows that it is unfair to put in the increase after the gate is closed.

  17. Rifkin

    JS: [i]”Rich, sorry I wasn’t clear with my question about how employee health insurance “rebates” operate. Hortense answered one of them (that employees have to show proof of some coverage in order get their $18,000).”[/i]

    I am not sure that you do understand how the partial cash-out it works. My apologies if my explanation (see below) is not news to you.

    Hortense: [i]”No… one of the rules to get cafeteria cash out is to have the employee demonstrate that they have evidence of coverage.”[/i]

    That is only true when you are talking about the full cafeteria cash-out, and exactly how much the full cash-out is worth depends on the bargaining unit. The fact is that most City employees now get their medical coverage from the City and most get a partial cafeteria cash-out in addition to that.

    Take, for example, a firefighter who is married, but has no kids and gets the City to cover his medical plan and the same for his wife. Say he chooses the plan called “Blue Shield Net Value” for “Bay Area” residents. (A number of our firefighters live in the Bay Area. That is not that big of a deal when they get 20+ days off each month.)

    Last year, this firefighter’s plan cost $1,162.48 per month*. The cap for each firefighter was in 2011 was $1,694.76. The difference for him is $532.28 per month. For the year the difference is $6,387.36. The fire contract awards an 80% cash-out for unused benefits. So this firefighter, in addition to getting his and his wife’s full medical premiums paid for by the City, also gets $5,109.89 (80% x $6,387.36) in cash.

    I’ll give one more example: Take a person who works in the City Maanger’s office who made $10,000 in salary per month in 2011. Her cafeteria cap in 2011 was $1647.40. Say she was single and selected the plan called “PERS Select” for the Sacramento region. That plan cost $458.27 per month. The difference for her was $1,189.13 per month. For the year the difference is $14,269.56. As a miscellaneous employee, her contract awards a 90% cash-out for unused benefits. So this $10k/mo. office worker, in addition to getting her full medical premiums paid for by the City, also gets $12,842.60 (90% x $14,269.56) in cash.

    The reform I have advocated is this:

    1) For all employees who get no coverage from the City, give them a $500 per month or $6,000 per year cash-out. Why that number? Because that is roughly the cost of the cheapest plan offered by CalPERS. That $500/mo. limit now is in effect for all recent hires, but does not apply to anyone hired one year ago or more;

    2) For all employees who get medical benefits from the City, there should be no cash-out, unless the benefit is worth less than $6,000 per year. If their plan, say, costs $5,850/year, then that employee should get $150. Otherwise, no cash to anyone taking his medical insurance from the City.

    Over a short period of time, those reforms will save the City millions of dollars.

    *I don’t have the 2012 numbers in front of me, but the idea is exactly the same, only the costs have gone up.

  18. JustSaying

    We’ve been over this before, but I don’t understand why there would be ANY cash out in either case. The employer kicks into to health insurance costs for employees, from a list of plans or from any plan an employee finds. Why should ANY cash be available after the city contributes its share? It seems like just a way to boost salaries. And it seems it might encourage employees to pick a health plan based on how much payout they’d get, rather than on which plan would best cover them.

  19. Rifkin

    [i]”Can you explain why you used that example?”[/i]

    I had in mind one particular employee and used the actual numbers of that unnamed person’s cash-out.

    That said, the $12,842.60 in partial cash-out that employee got in 2011 would be exactly the same for any other misc. employee, regardless of salary, if any other were single and chose the same healthcare plan. The cash-out would be more if the person had coverage through a spouse.

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