Commentary: Can We Restore Trust in City’s Finances and Governance?

City Hall

On Tuesday, PublicCEO posted a fascinating piece from Bill Britt of California Forward. The article was “Three Steps to Restoring Trust in a City’s Finances and Governance” and it told the story of how Michele Martinez not only promised “to restore trust” in her city, but “actually delivered on it.”

Mr. Britt writes, “Long after winning a seat on the Santa Ana City Council in 2006 with a reputation for pushing for more government accountability, Martinez has not only helped boost residents’ trust in city government, she landed a tangible result to show for it: a sunshine ordinance forged by a coalition of city officials and community activists who were impressed with Martinez’s personal commitment to city affairs.”

That was one thing that, even with the previous council, got little traction in Davis – a sunshine ordinance.

More importantly, the article lays out three steps that we will evaluate in a Davis context.

First, “Open your doors.”

The article notes, that a city’s “front door is its official website.” And if that’s true, perhaps the biggest debacle of the last regime was the botching of the city’s website. The city rolled out a new website before it was ready to roll. There were dead links, people could not find critical information and to this day, the website is cumbersome and difficult to use.

The city of Davis has brought in a lot of tools to help it better communicate with and interact with the public, but until it has a website that is easy to access and makes it easy to find important information, it will be difficult for the city to really gain the trust of the community.

Second, “Listen closely to those who aren’t happy.”

This is an interesting one. For a long time, I believe that the city of Davis under the council majority from 2004 to 2010 attempted to marginalize those whose were not happy. Not all of the time and not everyone. Those with political power and those who had issues that seemed to coincide with the council majority or their perception of the broader public had a bit more access.

But those who were deemed in the opposition to the council majority were not only marginalized, they were often subjected to cynical manipulation. For many, this served to undermine their trust in the community.

There was a comment made at the last council meeting when citizens became angry about the content of one of the council goals and there was irritation expressed by some on the council that people automatically assume the worst when sometimes there are honest miscommunications.

I think this really stems from history – recent history – where people really were being manipulated and cynically so, and they have countered that by becoming suspicious of the intentions of city staff and council.

If the city wishes to address this distrust, they have to rebuild trust and start by listening. And I think mostly, in the last four or five years, the council has listened. Sometimes, I think they have gone too far in the other direction and listened too much and backed down at a hint of opposition.

Third, “Invite them to partner with you to find solutions.”

Here I think we suffer from an opposite problem. Trust is a two-way street. The public has good reason to not trust city government, given the history of both city staff and city council. That said, I think that city council and city staff also have reasons to distrust segments of the population.

In the Santa Ana experience, the message was “trust us enough to help develop a sunshine ordinance.”

As Mayor Pro Tem Sarmiento points out, when elected officials make a genuine effort to reach out, the result is simply better government: “The importance of passing the sunshine ordinance was to let people know that they have a role in their government and hopefully we can convince them there are good results when they participate.”

The city and the community need to be able to partner together in order to form common trust, but the city has to be able to trust the motivations of those involved.

For example, the city would be well-served to partner with community groups on the planning of the innovation parks. Where the public has concerns about impacts of the parks, their partnership can help them overcome that.

However, I think there is a legitimate concern on the part of some that some will use this partnership not to further the parks, but as a way to sabotage them. This is a difficult problem to overcome and trust needs to be established.

In short, I think the problem in Davis is that there are segments of the population that do not trust the government and the government does not trust segments of the population.

That is the key problem we face in this community, and it will become a bigger and bigger problem.

The biggest issues on the table are the city budget and the proposed innovation parks.

As we noted last week, a Davis Enterprise editorial pointed out that, while the city faces a long-term financial crunch, the solution is tax revenues that the innovation parks could generate.

However, in his column this week, Rich Rifkin points out that “higher revenues alone will not solve the fundamental problem with how our city does business.”

The critical factor, he argues, is “[h]ow the city manages the growth of its expenses, particularly its hourly labor costs.”

The truth is, there are a large number of people in this community who have paid very little attention to the city’s finances over the years and when polled last year, most did not recognize the state of the city’s finances.

However, for those paying attention, many are waiting for the next shoe to drop. They fully expect the current council to increase employee compensation. A lot of people are reluctant to support the innovation parks for this very reason – believing that they will simply become a way to increase compensation to the firefighters and other city employees.

On the other hand, even the more hawkish councilmembers have told me directly that the city is not going to go back to the days of 2009. We are not going to see double-digit compensation increases for any bargaining unit.

The more likely outcome will be a small but incremental increase.

The bottom line here is that many remain concerned with the long-term fiscal viability of the city and, even during the most hawkish period of deficit reduction, Rich Rifkin argues that at best we have only made “the picture less bad.”

He writes, “A few council members have made small differences in cutting this or that here and there. But at the very same time, every one — including those who have pushed cuts — has ignored the relationship of the growth of labor costs to the growth of city revenues, where unit costs continually have grown faster.”

The trust factor will inhibit the city’s ability to sell innovation parks to the public, which in turn will inhibit the ability of the city to make ends meet and perhaps hire the quality employees that they believe they need.

Can we restore trust? I am increasingly skeptical about that, as I feel in the past year we have moved back from significant gains.

—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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24 Comments

  1. Topcat

    In my opinion, the best way for the council to restore trust would be to honestly address the financial situation of the city and adopt a narrative that Davis needs to “live within our means”.  This may require additional cuts in personnel and services and there will certainly be howls of protest at these cuts.  We all need to face up to the fact that  we have been overspending.  Like a family that has been running up credit card debt, there comes a time of reckoning.

    For those who say we can grow our way out of trouble, I am very skeptical.

    1. Miwok

      Sometimes you have to decide what kind of people run your City, elected and unelected, even appointed.

      Do you want people who commute like most of your fast food workers, in and out, easily replaceable, and tell them exactly that by constantly harping they are the reason the budget is out of whack, OR

      Hire people who can afford to work here long term, even live here, have a vested stake in the success of the community for themselves and their children and family?

      I know where I work now, veiled threats from Management about cutting costs are constantly thrust about with no regard about the morale of the people working there. They have pride in the outcome, but you know if management could find someone a dollar cheaper, they would hire them and even if the program suffers, they saved a buck, quality be damned. Lots of anxiety there.

      1. Davis Progressive

        “Hire people who can afford to work here long term, even live here, have a vested stake in the success of the community for themselves and their children and family?”

        there are basically two groups of people that get hired in a city like davis.  ambitious people who come here, do a good job, but are going to leave when the next opportunity arises.  lifers who are less ambitious, some might see mediocre, and they come here and get peter principled until they reach a point of their limitations and then end up being part of the problem.

        i don’t have a good solution unless the city is willing to pay a lot more for compensation than they are.  and as we saw with dirk brazil, even raising the amount of pay is not enough to insure a good cm.

        1. hpierce

          “…  and as we saw with dirk brazil, even raising the amount of pay is not enough to insure a good cm.”   Actually, given length of time served, I’d think St Pinkerton would be a better example…

        2. Frankly

          I agree with your assessment of “two types of people”, but see a clear remedy to the problem of lifers getting to the Peter Principle.   It is to eliminate defined benefit pensions and replace them with defined contribution retirement accounts.

          There is a well known 8-year itch related to job perspective and motivation.  When a person starts a new job he/she is naturally motivated and enthusiastic.   If the job is a good fit and there are new challenges and good management and a reasonable system of accurate recognition and reward, then the employee can generally power through the points where personal enthusiasm gets challenged.  Ideally as we work later in our careers, we advance in performance and responsibility and we also make more money and get to take more time off to recharge.   But there is going to be a percentage of people that end up in a job circumstance that is no longer motivating for them.  When that happens the analogy is like carrying a bag of rocks around while doing the work.  When management asks for a greater contribution from these lost-motivation employees, to them it just feels like another rock is added to the bag.  Change is resisted.  The employee becomes desperate to feel better, or at least to prevent any greater slide to feeling worse, and starts to demand placebos.  And the primary placebo is compensation.   The mindset is like this: “I really hate my job, but I have to convince myself that I like my job, and if they pay me enough I can do that.”

          The problem with this is that “pay me enough” is a constantly increasing demand.  Feel good when you get the raise, but then it wears off and you will demand the next one to feel good again.

          It escalates.  It infects the entire work culture.  Even new employees get sucked in to this tendency to resist change and demand more compensation.   The “excellent organization” converse of this is empowered and motivated employees working collaboratively and creatively to constantly promote and adopt change that helps the organization be more successful.

          And then there is the job-locking tendency of defined benefit pensions.

          The mindset for that is: “I have to do my time to get my pension… I cannot afford to quit even though I am miserable.”

          By converting to 401k style retirement benefits we would eliminate this job-lock tendency and give the miserable-feeling employees a path to quit and do something different.  Then assuming we match up the total compensation of all to a market rate, we would encourage more private-public career crossing… injecting more private sector know-how into the public sector and more public sector understanding into the private sector.

          Eliminating defined benefit retirement benefits and changing them to defined contribution and setting compensation equal to the overall labor market (public and private) would remedy many of these problems we have with unsustainable government.

        3. Davis Progressive

          ” It is to eliminate defined benefit pensions and replace them with defined contribution retirement accounts.”

          i don’t think your solution really addresses that problem.  i think people who lack motivation will exist in any system, they simply won’t be guaranteed to get a set amount of their pension when they retire – so what?  if anything, you end up with even worse employees under that scheme.

        4. hpierce

          Some observations:

          My dad worked in the private sector, several jobs, and worked for one employer for 33 years.  Had a pension, retiree medical, and social security.  Met his needs, and he did well.  Contributed a lot to charities. Left a decent ‘estate’.  Most of his career was “blue collar”.

          Some propose that since they don’t have pensions, no one should.  They should rely on defined contribution systems, and accept all “market risks”.  Even though more and more private employers are contributing nothing as a “match” (401’s, etc.), except for the legally mandated SS/MC.  Nice.  Yet many of these same folk, decry public pension systems, particularly because the assumptions on “investments” are too high… too much “market risk”… go figure.

          Social Security is the first, government, ‘Ponzi scheme’ that I’m aware of.  Yet, Mr Reagan made sure that every dollar that someone gets in ‘Government pensions’ will offset anything they ‘earned’ in SS (frankly, so much for the private/public employment choices).  Under current law, that would also likely be true for government 401 (more likely 403) “defined contribution” systems.  Let’s just abolish all pension plans (to the extent they still exist), SS, and eliminate every public AND private post retirement benefits.  After all, we should ‘all die in the saddle’.  Those that don’t, should have some basic benefits.

          Some commenters have indicated that salaries/total comp, particularly for professionals, should be tied to the mean/average of the private sector.  Irregardless, apparently, to skills, contributions, contractions in the economy, etc.  That might save money.  It would certainly help in DJUSD… the private sector/private/parochial schools pay much less.  But is that the right thing to do?

          Perhaps everyone should have salaries capped at $15/hour, with no benefits.  Might work.  If doctors, etc, were paid at that rate, it might even out.  But, practically, suspect not.

          Some of the commenters decrying City compensation are employed by/funded by the taxpayers.  The H word comes to mind.

        5. Frankly

          You do understand that with defined contribution plans the employee is 100% vested in everything in his/her account… and so does not get penalized by leaving a job he/she no longer likes, right?

          I think you and others that cling tightly to public-sector benefit practices don’t see a big enough picture to recognize the negative consequences.

          When you think about the history of unionization it was initially for repetitive labor… manufacturing jobs or low-moderate service jobs.   Those jobs are inherently bound to cause low employee motivation and the feeling that “this is just a job”.  Also, these employees are already job-locked over the lack of marketable skills.  However, for the variable work, knowledge work employee… this would be a destructive orientation toward work.  Destructive for the organization as the work culture is impacted by a growing inventory of poorly motivated employees locked in waiting for their pensions to kick in…. and destructive to the employee that cannot leave a disliked job because of the heavy financial implications of allowing that final pension payout to suffer significant discounts.

        6. Frankly

          My dad worked in the private sector, several jobs, and worked for one employer for 33 years.  Had a pension, retiree medical, and social security.  Met his needs, and he did well.  Contributed a lot to charities. Left a decent ‘estate’.  Most of his career was “blue collar”.

          I have less of a problem with collective bargaining for blue collar work… low-medium skilled and repetitive.  The reason for this is that these employees generally don’t have much market value for what they do.  They cannot easily quit and find more suitable work because 1. they don’t have the skills and experience to do that work, and 2. there are boatloads of low-medium skilled people willing to take their job.

          And employers might exploit this situation to drop compensation to a level that is not socially sustainable for the workers.

          The problem though is that the unions can accumulate too much collective bargaining power and demand compensation increases that are not economically sustainable for the company.  And today with a much more competitive global market, it is not the same as when our parents and their parents unionized for better wages and benefits.

          But I think unionization of skilled labor is unnecessary and a mistake.  And pensions are a nuisance with respect to optimum employee performance and employee job satisfaction.

          You might not understand the damage that can be done by only one disgruntled employee.  In management best practices, if you find an employee that does not want to be there, you either remedy that problem or you must get rid of that employee.  Otherwise he/she will metastasize discontent into the entire organization.

        7. hpierce

          Frankly, I tell you three times… I abhor most ‘unions’ (except for the one I have with my spouse — over 35 years).

          I’ve read of defined contribution plans where the employer declared bankruptcy, and so the employees only had their contributions, and some that actually ‘lost’ portions of those, and had to rely on public “insurance”, and at less than a dollar for dollar.  Yes, they can be ‘penalized’.  And the investment ‘private market’ can penalize them further.  Don’t you agree?

          For most of the rest of your rhantoric, I leave alone, as you seem obsessed with “unions”.

          You ask me to acknowledge that private employees can take their retirement benefits elsewhere.  Yeah.  PERS covered employees can’t, unless it’s to another PERS/PERS equivalent agency.  If they have worked for the employer for less than 5 years, they are not vested in the employer contribution.  Zero.  When they retired, the pension is drawn from the employee contributions FIRST, and then from the employers.  So, if an employee retires after say, 30 years, dies a year later, without choosing a lower benefit option that covers a ‘survivor’, PERS and taxpayers get a “bonus”.  Nice.

          You didn’t address the fact that some folk pay into SS for 20 years, work for a public employer for 20 years, and see zero SS benefits.  Nice.  Benefits taxpayers, particularly those in SS.  Very ‘private sector’ of you.

          You lump all public/city employees in the same basket. Some are ‘unionized’, most in Davis are not.  The City required employee ‘associations’, some of which require nominal due, others, not.  Most city employees are not represented by an entity outside their own ‘ken’.  I know you will ignore this, but perhaps others will understand.

          Am convinced you “don’t know jack” about highly competent, professional employees in government service, who have, as a “calling” chosen public service, but accepted lower salaries, higher benefits, more stability.  There are the outliers who ‘game the system’, but in my experience they are no more common than the ‘suck-up’, ‘brown-nosed’, etc. folk in the private sector.

           

           

           

  2. Davis Progressive

    i’m one of those convinced that the current council will raise total comp unless we give them a reason not to.  i don’t think government has earned the trust of the people and i don’t think they will until they tell people what they are going to do and carry it out.

    1. hpierce

      Definitely… your argument should also extend to State, Federal, County and other government employees, and those in the private sector who contract for services to government entities… any increases in medical coverage costs, SDI, etc., PERS contributions should be fully absorbed by the employees.  You do agree, right?

        1. hpierce

          Of course… we should not focus on other levels of government, as they don’t affect our ‘pocketbooks’.  And, certainly, not your employment situation..

        2. Davis Progressive

          so in your view we can only discuss city employee compensation if we discuss compensation at every level of government?  even though the davis city council only deals with city employees?

        3. hpierce

          DP, re:  your 12:41 post.  Read my words.  I never said we can’t discuss anything!  As a wise person (you?) said, ‘methinks you doth protest too much’.

  3. Frankly

    I’ve read of defined contribution plans where the employer declared bankruptcy, and so the employees only had their contributions, and some that actually ‘lost’ portions of those, and had to rely on public “insurance”, and at less than a dollar for dollar.  Yes, they can be ‘penalized’.  And the investment ‘private market’ can penalize them further.  Don’t you agree?

    401k plans are pretty iron clad with ERISA laws protecting the employee.  Company contributions go account that is overseen by a custodian, a plan administrator and a fiduciary.  A fidelity bond is required.  There is an annual audit and tax return.

    If a company dips into 401k money that is part of the employee’s vested funds, the company would be breaking the law and other parties would also be culpable.

    1. hpierce

      Thank you for the clarification, which I appreciate, yet,

      “If a company dips into 401k money that is part of the employee’s vested funds, the company would be breaking the law and other parties would also be culpable.”  And so what would be the recourse for an employee if that happened?  Would they be made ‘whole’?  at what expense? I actually mean that as fair questions.  I just don’t know.

      I know there are those who would try to set aside pensions and/or retirement benefits in the public sector (via ‘bankruptcy’)…. how much more so in the private sector?  Also meant as a ‘fair question’.

      1. Frankly

        From the DOL website:

        The Employee Retirement Income Security Act (ERISA) protects your plan’s assets by requiring that those persons or entities who exercise discretionary control or authority over plan management or plan assets, have discretionary authority or responsibility for the administration of a plan, or provide investment advice to a plan for compensation or have any authority or responsibility to do so are subject to fiduciary responsibilities. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan’s investment committee.

        The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. They also must avoid conflicts of interest. In other words, they may not engage in transactions on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, services providers, or the plan sponsor.

        Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.

        Pensions and 401ks are both covered under ERISA.  Plans must be audited annually.  There is no more or less risk of malfeasance for the funds in a pension and the funds in a 401k or 403b.   They all have trustees responsible for decisions and responsible for protecting the funds for their indented use.  However, they can abuse that authority.

        The point though is that with defined contribution style plans there are a lot of safety controls and they are no more risky than are defined benefit (pension) plans.

        I would say there is less risk for a 401k over the life of the fund because employees can take it with them to the next job, and roll it over and rollover funds to IRAs and other retirement investment vehicles.   However, with a pension, the employee does not own or touch the funds at any point until he/she gets a benefit payment.  In that case the employee is fully reliant on the trustee for as long as the employee requires the benefit.

      2. Frankly

        Also, most companies that have a 401k are required to have a Fidelity Bond:

        A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

        So let’s say a company owner or manager that is the trustee for a company 401k abuses her authority to illegally withdrawal money from the 401k funds.  First note that ERISA requires that employees get a regular periodic accounting of their funds and so employees would note a change in their fund balance.  And also note that an annual audit is required and this would also uncover any mis-allocation of funds.  But let’s say the manager does this and skips town before anyone else sees it.  And by the time they catch her she has spent all the money on designer shoes and handbags and there is no recovery.  In this case the Fidelity Bond would kick in to reimburse the company for the losses and the company would use those insurance proceeds to make the employees whole again.

  4. Frankly

    Frankly, I tell you three times… I abhor most ‘unions’ (except for the one I have with my spouse — over 35 years).

    35 years for me too (married my wife when she was ten ;).

    But mine is a partnership and not a labor union.  Neither of us can collectively bargain and strike without risk of being “fired”.

    1. hpierce

      (trying to be humorous)… did not one of you “labor”?  Can you think of situations where a partner might go “on strike” and risk being divorced (‘fired’)?  Feel free to ignore, but had to “go there”… best to you and your beloved. I wish you both many more years of ‘partnership’.

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