Council Candidates Talk POU, Budget

Four of the Davis City Council Candidates met on Wednesday night for a candidates' forum sponsored by the League of Women Voters.
Four of the Davis City Council Candidates met on Wednesday night for a candidates’ forum sponsored by the League of Women Voters.

Last week, the League of Women Voters held a candidate’s forum. Rochelle Swanson was unable to attend due to her obligations at Cap-to-Cap. Last week, we covered the League questions, today we will cover a select few from the audience.

Question 1: Do you support the proposal for a city owned energy program to replace PG&E?

Daniel Parrella: “No, I don’t support the current plan the books. I don’t think that the Davis Municipal Utility Division is a realistic plan right now, there’s just too many political realities in the way.” He cited general opposition for “the $600,000 loan from that wastewater fund the general fund at this time.”   He supports public power in the long run as a good idea for the city. “I look at what Marin County and Sonoma County have done with their community choice aggregation program. I think it’s far more politically realistic. They have modest savings.” He added, “The difference primarily between the DMUD and the CCA is that while DMUD requires us to buy out PG&E its entirety with the community choice aggregation PG&E retains the transmission infrastructure. We essentially just pay them to use their lines to distribute the power through. I think it’s a better way to go right now and I think that the $6000 loan, it really hurt the public trust which I’ve been talking about, it did more to harm than good.”

John Munn: “If we were going to in the future consider a public electric utility, I’d want to know that it was going to be as reliable as what we have or better, and that the rates would be competitive or lower than what we have.” He said, “So reliability and competitiveness are two of the keys for the city ever even thinking about this. I do have a concern on the current the proposal that the availability of lower-cost power just doesn’t seem to be out there. Where are we going to get hydroelectric power. Some of the lower-cost power is nuclear power, of course that’s not in great political favor and it may cost more in the long run. But it’s certainly not available to us either. Maybe some of the gas generator power iss less expensive at this point. Have to investigate that. But, for the most part the sources of power that are available are more expensive.”

Sheila Allen: “I think now is not the time to move forward with this plan. I do in the long run the long run agree that it would be great to investigate local public utility. The concern that I have is the spending the funds at this time.” She added, “$600,000 has been a decision that has been made by the city council, so I think it’s very important that we as a community and hopefully me as a city councilmember, make sure that that money that was spent was spent well and that the information that we received from it will be best utilized going forward. I’m also one other interesting thing about it is I’m very interest in a diversified power source and perhaps we can work with PG&E to try to reach that goal.”

Robb Davis: “It’s clear that widely dispersed production and transmission of electricity is our future, with local control. Why, because we need to build resilient energy systems. Large investor owned utilities is a model of the past. It does not create resilience, and it doesn’t create lower costs.” He continued, “How we get there is the question. When we begin to walk is the question. I don’t know how we’re going to get there. I don’t know if anybody does.” He added, “We have people in this city who have the knowledge and experience and desire to help trace out an innovative approach that maybe we can’t even imagine yet. There’s no reason to wait because these people are willing to give us their time for free. These are not just willing citizens these are experts in the field. The time to start talking about what the collective future looks like is today and we can do it because we have willing citizens who will step up and provided it low or no cost.”

Question 2: Aside from overconfidence in the national economy, what choices by the school board and the city Council and put this in the red now? Have there been any misplaced priorities?

John Munn: “It’s really primarily choices that were made for employee compensation and benefits that are now growing really out of the city’s control as CalPERS is trying to recover some of their investment dollars that they think they’re going to need in the future to pay for the retirements in the system right now and the fact that the city offers very generous health care benefits and has to pay for that. Those costs keep going up every year.” He stated, “Most of the money for Measure O is going to be used in order to support the increased health care and pension costs that have come to the city since their last budget cycle.” He continued, “Really its health care and pension costs that are driving us into the red.”

Sheila Allen: She stated that the school district is not in the red and “it never was in the red. There was a high potential for it to go in the red, but because of the careful planning that we had as a team, with our administration and with the school board, we were able to stay in the black the entire time.” She continued, “I don’t think anyone in this room or anybody who was sitting up here on the city council or the school board knew about the world-wide economic collapse.” She stated, “There were compensation decisions that were made in a different environment than what we are currently in, that’s a difficult thing to pull back from. It’s something that can and had to be done going forward.” She argued that if we had a single-payer universal health care system, we would have much more money that we could spend on health care.

Robb Davis: “I think not focusing on maintaining the infrastructure that we build is a serious problem.” He continued, “It’s just a responsible of us. I think we think we have to fix that.” On pensions he stated, “Yes we know that there was too much generosity. I think the thing that frustrates me is that it didn’t take, one of the most studied things in economics is the business cycle. We know that not putting money away in good years will come back and bite us. We didn’t do that. We can’t do that going forward. We need to recognize that there will be ups and downs and the sustainability that we need to achieve needs to account for those realities.”

Daniel Parrella: “I will say with unfunded liabilities it’s clear that what you don’t know can hurt you. I think I that one of the candidates mentioned the economic recession is a big part of it. I don’t think it had anything to do with it, quite honestly.” He stated, “We were floating in money in the early 2000s, yet there was a city council there spending just over million dollars on roads.” He stated, “Obviously it was a matter of misplaced priorities but what happens with the roads in particular there was over a decade – I’ll say from 2001 to 2011 we only spent about $12 million and realistically we should have been spending about $60 million.” He noted that we didn’t know the backlog until 2012. He added, “We have other unfunded liabilities like parks, storm water, fleet replacement, pools, that just like roads, we have no idea.”

Question 3: How do you feel about outsourcing city services as an approach to reduce staff compensation costs?

Sheila Allen: “In general I am not supporter of outsourcing city services. There are some public goods that should be provided by public employees, that being said depending on – I would look at each issue on a case-by-case basis so there may be a limited role for some outsourcing.”

Robb Davis: “I think outsourcing – and I say this unfortunately – I think it has to be on the table. But I don’t believe it’s a talisman. It’s not a panacea that’s going to solve our problems.” He said, the big problem with outsourcing “has to do with quality of work, ownership.” He added, “Talk to our city employees, they’re owners, they’re stakeholders, they take pride in their work.” “So I will put it on the table, but I want to make sure that we have quality assessment in place for every outsourced job, so that we can compare the quality of the work pre and post, and be honest with ourselves if we’re not achieving the quality and go back to city employees if we need to.”

Daniel Perrella: “As a general rule, not an overwhelming fan of outsourcing. The reason for that is looking back at the last labor negotiations; we got five out of the seven employee groups to sit down with us, sign contracts with us. We negotiated in good faith and came to an amiable solution.” He continued, “If we sign labor negotiations with these groups and then go all grim-reaper on the rank and file, and lay them off in droves, and bring in private contractors in order to do the work for them, they will no longer negotiate with us in good faith.” He noted going forward, “we have to have good working relations with employee groups.” He said the idea of laying off employees and bringing in private contractors, “I think does more harm than good.”

John Munn: “Everything needs to be on the table when we can’t pay our bills. At that point in time, I think we’re in a pretty strong negotiating position, actually. Perhaps the public employees will be more willing to negotiate if they think someone else might end up doing their jobs because the money is just not there to keep going the direction we are.” He added, “I don’t think any of us like the idea of laying people off and going to outsourcing as concept, but as an economic reality we can’t ignore it.”

Question 4: Over the last five years, city employee head count has been reduced twenty-two percent, 102 employees, but expenses have increased, why is this true? What would you do as a city councilmember to address this problem?

Robb Davis: “I do want to say that that 22% troubles me, because I’m concerned that we end up with a staff that doesn’t match our service needs. Most of that 22% has been through attrition. Most of it has not been strategic in any way.” He continued, “We’ve talked about the reasons why we can cut 22% and still have cost increases. It’s known – pensions, other post-employee benefits, medical care – the options for bringing it under control are limited.” He added, “We’ll do what we can but we need to acknowledge there’s no single silver bullet that’s going to take care of that reality. Considering how we might grow that revenue is something that needs to part of that conversation.”

Daniel Perrella: “Controlling the labor aspect of that, realistically labor negotiations are the only way to do that. We think we made a lot of success in the last labor negotiation, we reduced the cafeteria cash out from upwards of $1900 down to $500, got them to take a bigger employee share, we defined overtime… all of those in my eyes were fiscally responsible things to do.” He continued, “We have two years left until the labor negotiations begin, and again it’s the same thing. We need to start chipping away at these a little bit more in order to bring costs in line.”

John Munn: The answer is the “increased costs of benefits.” “CalPERS and health organization costs are going up and they’re charging us for it. That is what drives the difference between losing numbers of employees but increasing the total cost of employment.” He continued, “The solution for that… employees are eventually going to have to pay more to access the benefits that the city provides them access to. More revenue is going to help, but we have to be very careful that if we get more revenue that we’re going to constrain its use to pay these costs in a way that we then don’t incur further costs down the road, which means that they have to be directed more towards benefits and less towards salary.”

Sheila Allen: “It’s going to take a fair and balanced approach going forward.” She continued, “The primary reason that our costs have gone up while our employees have gone down, have been out of our control.” We noted that the Finance and Budget commission is “going line by line through the budget.” She added, “Something we haven’t talked about is engaging the other jurisdictions like the county and the state and UC Davis to bring in partners because maybe some of the services that are core services that we want to provide could be a partnered service (that) both sides would share.”

—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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9 Comments

  1. Frankly

    John Munn and Daniel Parrella win question #1. Munn correctly wants to make sure that “that the rates would be competitive or lower than what we have.” Parrella just demonstrates the strongest knowledge of this subject matter. However, should he win, he should be careful to not over-technocrat this policy issue. Good leadership is driving from the back of the bus… steering the required collaborative team to an optimum destination. Technocrats too often fall in love with their own intellect and ideas and can make mistakes shutting out other ideas and valid criticisms… and that can lead to lower quality outcomes. Better to be the smartest person in the room facilitating a collaborative decision.

    Robb Davis wins question #2. He correctly brings up the failures to address our infrastructure maintenance and he correctly explains business/economic cycles and why it is important to manage through the boom years to cover us in the bust years. More on “lean operations” later.

    Robb Davis and John Munn share the win for question #3. Robb mentions the need for service-level quality management within any outsourcing contract. Munn raises the correct point that having outsourcing as an option improves our labor contract negotiating leverage for city workers.

    Robb Davis and John Munn win question #4, but barely. They both mention additional revenue but they don’t mention how (tax increases or economic development.) Robb gets extra kudos for explaining that we have not cut any strategic city resources to date… that the cuts have been mostly attrition. Munn gets kudos for reminding us that new revenue needs to be prevented from again going to increase pay and benefits. Allen gets a nod for this question mentioning the opportunities to partner with other jurisdictions for potential cost savings.

    But ALL of these candidates get a big “F” for failing to emphasize the need to grow our economy.

    I get the distinct sense that either these candidates are no in support of peripheral business development, or that they are afraid of the political repercussions for being labeled pro-growth.

  2. Davis Progressive

    some thoughts:

    “The difference primarily between the DMUD and the CCA is that while DMUD requires us to buy out PG&E its entirety with the community choice aggregation PG&E retains the transmission infrastructure. We essentially just pay them to use their lines to distribute the power through. I think it’s a better way to go right now and I think that the $6000 loan, it really hurt the public trust which I’ve been talking about, it did more to harm than good.”

    i assume that’s supposed to be $600,000, but parrella makes really interesting points here with regards to a cca. pg&e might be less opposed to a plan that paid them for the lines. i do think the public trust issue is weird, but it’s an interesting alternative.

    but sheila allen makes an interesting albeit self-serving point that on the one hand she argues now is not the time and on the other she argues that the decision has been made. the decision to spent the money has been made, but other deals are being worked out.

  3. Davis Progressive

    on the second question, no one seems to really understand the timeline of events. no one talked about the decision to go to four on an engine, 3% at 50, or the massive salary increases in 2005.

    i really have a problem with this statement by sheila: “I don’t think anyone in this room or anybody who was sitting up here on the city council or the school board knew about the world-wide economic collapse.”

    here’s the thing, no one knew about the economic collapse but in 2007 and 2008, the vanguard, rifkin, sue greenwald and others were warning that the current pension/retirement/salary situation was unsustainable. the economic collapse was not the cause but rather the catalyst.

    the term unfunded liabilities really refers to the opeb and pers promises made by the council. the roads were an unmet need that was deferred due to the loss of state and federal funding and the lack of council prioiritization.

    the outsourcing answer was interesting, but if measure o fails, there is no way around it.

    i like robb davis’ answer on cuts by attrition. the truth is the council and city were not prepared to make tough choices in 2008 and 2009. they seemed to assume a short-term downturn and thought they could manage the crisis by furloughs, attrition, and deferred maintenance. those roosters are coming home to roost, but they were warned even in 2008.

    finally we have the ironic or perhaps hypocrisy of sheila allen when she says, “Something we haven’t talked about is engaging the other jurisdictions like the county and the state and UC Davis to bring in partners because maybe some of the services that are core services that we want to provide could be a partnered service (that) both sides would share.”

    you mean kind of like shared management for fire sheila? oh wait, you oppose that.

    1. Frankly

      you mean kind of like shared management for fire sheila? oh wait, you oppose that.

      Oh yeah. Thanks for reminding me. She seems to be talking out both sides of her mouth on this. Or else she is only willing to target cross-agency mergers for those departments not filled with unionized campaign contributors.

      1. Davis Progressive

        that seems to be her entire campaign – seizing on the seemingly popular distrust of pou’s, fifth street, other issues, speaking about a balanced approach without delving into specifics as to what that approach looks like.

  4. Frankly

    Here is good read related to the principles of lean operations and the public sector…

    http://www.mckinsey.com/insights/public_sector/applying_lean_production_to_the_public_sector

    The problem preventing us from being able to extract greater production value per unit of labor cost of our public sector business is driven by defined benefit pensions and over compensation.

    In every business there will be a percentage of employees that end up not being a good fit for the organization. In some cases workers will simply burn-out having maintained a strong work-effort to overcompensate for the drop in enthusiasm they experience over time… again because the job was never a great fit to begin with.

    But they cannot leave the job.

    They cannot leave because:

    1. They are paid greater than market wages for their skills and they are unwilling or unable to take a pay cut for a job better matching their true desires/interests.

    2. Even if they are willing to leave the job, they get locked into a situation where the value of their vesting in their defined benefit pension is too great for them to leave.

    So, when compared to the private sector, in the public sector we end up with a higher percentage of workers lacking the enthusiasm and drive to accomplish difficult work. And that translates into a public sector management view of labor and productivity being much less elastic than does the private sector.

    Doing more with less is a foreign concept with public sector management. It is the standard principle in the private sector.

    So how do we move this beast?

    We need to start transforming our defined benefit pensions to defined contribution retirement accounts. Government employees should be able to seek need employment elsewhere without having to take a giant financial hit to their retirement plans. Also, we need to do mark-to-market studies on employee compensation and pay government employees what their peers in the general labor market are making. This then prevents the situation where people over-stay their career choice for money only.

    Any successful business owner/manager will tell you that the quality of people you hire, develop and retain is the single most important contributor to that success. It is not that there are necessarily bad people or good people… it is the question of “fit”. The need is dynamic and people change. What fits today may be different tomorrow. Any organization that ends up with a percentage of employees not a good fit and unable to change… will end up with a negative perception for doing more with less. In fact it would be a foreign concept to them… and instead they would naturally see the need to reduce the expectations for productivity in response to any staff cuts.

    Therein lies our biggest problem with government and it is why government continues to grow. It never gets more efficient… the productivity per unit of labor continues to fall and there is a constant demand to hire more labor as a result of this.

    We know how to reverse this, but there is not the will to do it.

    1. Davis Progressive

      while an interesting read, i think you put too much on the employees and not enough on the managers and elected officials. during good times, particular in places like davis, councilmembers have the incentive to expand benefits and increase salaries. why? because they make fewer waves, keep the unions happy, and the hope is that you don’t hang around long enough to pay the piper.

      heystek, saylor and asumundson were smart enough to get out before the piper came due, but souza and greenwald were not and were defeated last election cycle.

      1. Frankly

        I think you miss my point here. I am not attacking any employee. It is not their fault that they checked in the wrong hotel but then could never leave.

        Great companies try really hard to help these employees weed themselves out… for example, Zappos.com…

        Zappos, the online shoe-and-clothing store, has come up with one such trick. Its customer-service reps are central to the firm’s success, so Zappos wants to know that each new employee is fully committed to the company’s ethos.

        That’s where “The Offer” comes in. After a new employee has completed a few weeks of training, Zappos offers them a chance to quit. Even better, the quitter will be paid for their training time and get a bonus representing their first month’s salary—roughly $2,000—just for quitting! All they have to do is go through an exit interview and surrender their eligibility to be rehired at Zappos.

        What kind of company would offer a new employee $2,000 not to work?

        A clever one. “It’s really putting the employee in the position of, ‘Do you care more about money, or do you care more about this culture and the company?’ ” said Tony Hsieh, the company’s CEO, in a radio interview. “And if they care more about the easy money, then we probably aren’t the right fit for them.”

        Mr. Hsieh figured that any worker who would take the easy $2,000 was the kind of worker who would end up losing the firm a lot more in the long run. By one industry estimate, it costs an average of roughly $4,000 to replace a single employee, and one recent survey of 2,500 companies found that a single bad hire can cost more than $25,000 in lost productivity, lower morale and the like. So Zappos decided to pay a measly $2,000 upfront and let the bad hires weed themselves out before they took root. As of this writing, fewer than 1% of new hires at Zappos accept “The Offer.”

        For existing employees, many companies offer early retirement options as a way to weed out employees with low-commitment and/or low job enjoyment. The thinking is… if an employee wants to take early retirement… they are generally not a good fit.

        The way to look at this from the other end… it is in fact a bit unethical to trap an employee into a job they do not like or that is not a good fit just because they cannot leave without significant monetary harm. They should be completely free to quit to find more enjoyable work and be replaced with another employee that is a better fit.

    2. Tia Will

      Frankly

      “Doing more with less is a foreign concept with public sector management. It is the standard principle in the private sector.”

      I know that this is a basic tenet of your philosophy, but I simply do not believe it is true. As General Medical Officers working with the public health service, we worked much harder, and did far more with far less than I have done in any other aspect of my medical career all of which has been in the public sector.

      Every time that there is an increase in class size, teachers do “more with less”. This is true in both public and private schools and having had my children in each, I really do not believe there was substantially better teaching at either one or the other. Both the public and private schools had excellent, mediocre, and substandard teachers.

      Cut backs in school nurses is another classic example of doing more with less. In this case school secretaries are taking on functions of school nurses, often putting children in possible danger not from their lack of dedication, but from their lack of medical experience and judgement.

      Your assertion that doing more with less is a foreign concept simply does not reflect the reality of many public sector jobs despite your heart felt belief that this is true.

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