City Manager Restructures City Hall and Presents New Budget

City Manager Dirk Brazil at his first meeting
City Manager Dirk Brazil at his first meeting

The following is the City Manager Dirk Brazil’s transmittal letter on the new budget which lays out both his reorganization of city hall as well as his view on the upcoming budget year.

Presented for your consideration is the proposed Annual Budget for Fiscal Year 2015/16, a period that covers July 1 through June 30. The Budget is the primary policy document adopted by the Council that establishes the service levels and capital projects to be provided to the community by its city government. It establishes the financial and human resources devoted to accomplishing community goals and objectives as reflected by the City Council. It provides a logical structure to organize its various programs, projects and other expenses. It provides a system for control of its revenues and expenses. Finally, the Annual Budget is a document widely available to the public and others interested in the operations of the city government.

The 2015/16 Proposed Budget is what I am calling a transitional budget, bridging a period of drastic cuts and program changes to a period of relative stability and, ideally, long term fiscal prosperity. While the many changes since 2008 have resulted in a stronger, more fiscally responsible organization, we must be continuously mindful of our long-term infrastructure needs, citizen expectations for high service levels to maintain a certain quality of life and the need to ensure the City is responsibly addressing our long-term fiscal obligations. This budget proposes no major cuts nor funding requests for large, new initiatives, providing instead minor funding to address Council Goals and Objectives (See Attached) while maintaining a healthy 15% General Fund Reserve.

Total All Funds Revenue for FY 2015/16 is budgeted at $301,524,747 with General Fund revenues totaling $52,109,371. This total includes a full year of sales tax generated as a result of the 2014 voter approved additional ½ cent sales tax increase. Sales Tax revenue for FY 2015/16 is budgeted at $13,802,537, an increase of $714,353 over the FY 2014/15 Adopted Budget. One time revenues include approximately $6.6 million in State Transportation Improvement Program (STIP) funds. The transportation funds will be used in projects on Mace Blvd., L Street and 3rd Street and will be augmented with monies set aside by the City for transportation infrastructure rehabilitation. The Safe Routes to School program is also receiving $222,000 in grant funding for FY 2015/16.

Total All Funds Expenditures for the City in FY 2015/16 are proposed to be $292,960,564 with General Fund expenditures totaling $51,429,715. This is an increase of $3,291,838 over FY 2014/15 Adopted Budget values, $2,900,000 of which is related to a streetlight retrofit project that is funded with loan proceeds. Total capital expenditures account for $165,448,474 of the proposed All Funds budget with three projects accounting for 83.2% of the budget; Waste Water Treatment Plant Facilities Improvements ($55 million), Surface Water Pipelines Project ($15.8 million), and Davis Woodland Water Supply Project ($66.9 million).

With a positive balance of revenues to expenditures, the current proposed budget is showing growth in fund balance for the first time in years. After several measures to cut costs, reduce citywide positions and enhance revenue this is a welcome scenario. While we want to celebrate the fact that we will not need to propose further cuts for the current fiscal year it is important to stress there are still challenges ahead as we continue to address the long term needs of the City.

FY 2015/16 Budget Assumptions/Changes

The current expenditure assumptions include no MOU increases for open contracts as we are just now beginning the process of negotiations with employee bargaining units. Planned increases to the retiree medical and CalPERS pension costs are included in the budget, as well as any increases associated with contracted services and utility payments.

City-Hall-Structure-2015-16

There are a series of reorganizational adjustments included in the FY 2015/16 budget. Offices within City Hall are being reorganized to provide greater access for the public. The City Manager’s office will now be centrally located providing easy access for the public and employees. Community Services offices will once again be located within City Hall and provide a localized, easy to find office. Utility payments, building permits, and other city services remain in City Hall. Included in this reorganization is the creation of two Assistant City Manager positions to replace an existing Assistant City Manager position and the Deputy City Manager and Community Development Director positions. One Assistant City Manager will oversee Community Development and Sustainability, Parks and Community Services, and Public Works while the second will have responsibility for the programs within the City Manager’s Office, Finance, Human Resources, and Information Systems.

In addition to the two Assistant City Manager Positions, a series of other reclassifications and human resource changes are included in the FY 2015/16 budget. The Parks and Community Services department has reinstituted a Parks and Community Services Director position as well as Office Assistant II to support the needs of the department and the public. Additionally an Office Assistant position at the Senior Center has been increased from 75% to 100%. The Public Works department is replacing the unfilled General Manager position with a City Engineer position, as well as making adjustments to the Water and Wastewater divisions to better manage workload as the City transitions to new requirements. The Water Division added one full time Water Quality Permitting Specialist and the Wastewater Division increased the salary range for the Lead Laboratory analyst based on new duties, reclassified a WWTP Electrician to a Senior Electrician, replaced a Water Division Water Quality Supervisor with a Water Quality Permitting Specialist and reclassified a Senior Office Assistant to an Administrative Aide. Wastewater also added temporary part time salaries on a onetime basis to assist with Phase II of the Collection Section Improvement project. Currently the City has one Administrative Analyst working for both Public Works and Community Development. FY 2015/16 will include a separate Analyst position for each department.

On the public safety front are enhanced recruiting options for the Police Department. We have worked diligently to recruit and hire the most qualified candidates to maintain a safe community. Competition with hiring and training practices of other jurisdictions makes it difficult for Davis to recruit and retain high caliber officer candidates. To assist in this effort the FY 2015/16 budget includes the addition of temporary part time Community Service Officer and Police Officer Trainee positions as well as a total of $16,000 for tuition reimbursement enhancements, $6,000 of which is offset by additional revenue from the Commission on Peace Officer Standards and Training (POST).

All of the changes will help staff to fulfill our mission to serve the public effectively and help mitigate some of the challenges generated over the past several years as we have had to reduce positions through retirements and attrition.

Unfunded Liabilities/Ongoing Needs

We have worked to address several unfunded liabilities over the past few years including Other Post Employment Benefit (OPEB), also known as retiree medical, and deficits in the Leave and Fleet replacement funds. Currently we are fully funding the OPEB costs based on the calculations of an outside actuary, one of the few jurisdictions in California currently at full annual funding. The Leave Fund and fleet replacement liabilities are currently being brought to full funding as part of a 7-year refunding plan. FY 2015/16 will be the second year of this effort. Information Services infrastructure is another area where we have identified future replacement needs not currently funded. Additional replacement costs have been added to the FY 2015/16 budget to begin to address the need to have replacement funds in place for all of our Information Services servers, switches, and other background equipment critical to maintaining our ability to provide services.

We also recognize there are additional areas that still need to be addressed. Maintenance of our transportation infrastructure, specifically pavement conditions throughout the City, needs to improve. In 2014, as an interim step, Council authorized an annual allocation of nearly $4,000,000 for road maintenance and rehabilitation. FY 2015/16 continues this allocation. And while this funding has been instrumental to keep our road work moving forward, it may not be sufficient to maintain an appropriate Pavement Condition Index (PCI). In addition, we have retained an outside consultant to assess our parks and facilities needs and specifically identify our unfunded replacement needs. Currently we are working to improve our parks irrigation system to help conserve water while maintaining our parks beauty and value. This is the second year of a five year effort, with a City set-aside of $500,000 per year.

In addition, we are updating our Master Fee Schedule and Development Impact Fees. With the Master Fee update we can be sure we fully understand the costs associated with delivering services to the public and providing Council with guidance when deciding the level at which fees are set. The Development Impact Fee update will ensure we fully understand the mitigation fees we need to collect from development within the City. Both of these studies will be completed in FY 2015/16.

The General Fund Reserve

The current General Fund reserve policy is set at 15% of General Fund revenues. The current budget estimate for FY 2014/15 and the Proposed FY 2015/16 budget show the City ending with a reserve of 15.55%. This policy is currently under review by staff to confirm that it identifies a proper value for the City’s reserve. This project will be completed in FY 2015/16

Based on the most current forecast, we are showing signs of recovery after years of challenges borne out of the most recent recession. Property tax receipts are showing healthy increases and the addition of the ½ cent sales tax revenues and ongoing expenditure reductions have turned previously negative fund balance projections into positive territory. We must act prudently and responsibly, however, as there are still needs and services yet to be fully addressed. I am, however, cautiously optimistic as we continue to move beyond the challenges of the past.

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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68 Comments

  1. Davis Progressive

    “The City Manager’s office will now be centrally located providing easy access for the public and employees. ”

    somewhere hpierce is applauding.  i’m not sure why that was such a big thorn in the side of the employees, but whatever.

  2. Davis Progressive

    “We have worked to address several unfunded liabilities over the past few years”

    who is this we?  not you dirk brazil.  the previous council and city manager who you now disparage did that work.  but there is no mention or praise for that.  very telling.

    1. hpierce

      “not you dirk brazil.  the previous council and city manager who you now disparage did that work.”  Ok, may have missed the original post by David, but can’t find anything “disparaging” in the memo. Can you elaborate?  Must be too dense to see it without direction…

  3. Davis Progressive

    We also recognize there are additional areas that still need to be addressed. Maintenance of our transportation infrastructure, specifically pavement conditions throughout the City, needs to improve. In 2014, as an interim step, Council authorized an annual allocation of nearly $4,000,000 for road maintenance and rehabilitation. FY 2015/16 continues this allocation. And while this funding has been instrumental to keep our road work moving forward, it may not be sufficient to maintain an appropriate Pavement Condition Index (PCI).

    interesting acknowledgement, waiting for the plan.

  4. ryankelly

    Love the physical changes.  It makes sense to have services with high citizen interaction (Community Services)  in City Hall and move behind the scenes work to other offices.  It makes sense to have the City Manager’s office more accessible to the public and staff.  It inspires a certain level of pride to walk into this historic building to do business with the City.  I can imagine that this has an affect on how the employees relate to the public also.

    The reorganization of positions seems to be easier to understand.  It is clear who is in charge of what.  I hope this serves the employees better.

    The road work cannot wait.  It is getting really bad.  Riding a bike, especially at night, is getting to be extremely hazardous.  I’m not talking about yard waste piles.  I can see those piles.  It is where I think there is road, but there is not, that is the problem.

  5. Sam

    I can’t wait to see what the labor unions are going to ask for in the new contracts after the City budgeted in a 0% increase. Doing the math, the average firefighter costs $192,365 per year, average worker in the police department (not just officers) cost $151,860 per year and the average employee in “Administrative Services Department” costs $130,042. Keep this in mind when the “morale” complaints and “In City X they make more” comments start being reported.

    1. Matt Williams

      Doing the math, the average firefighter costs $192,365 per year, average worker in the police department (not just officers) cost $151,860 per year

      It is very interesting looking at that math in light of the following questions …

      — When was the last time you personally interacted with a firefighter?

      — When was the last time the work of a firefighter added value to your personal life?

      — When was the last time you personally interacted with a police officer?

      — When was the last time the work of a police officer added value to your personal life?

      When I personally contemplate the first two questions, since I have not had a fire in my residence since Christmas Eve 1969 (when my house burned to the ground due to a furnace explosion), the answers to both are “Never since I moved to Davis in 1998.”  As a result, the services provided by the Fire Department and its employees are in effect a specific-benefit insurance policy.

      When I personally contemplate the final two questions, the answers are anything but “No.”  I interact with at least one police officer almost every week, and their actions often deliver tangible and immediate value to the quality and functioning of my life . . . and in addition to that value, they deliver the same kind of peace of mind insurance policy that the firefighters do.

      When I “do the math” I find myself scratching my head why the actions of the average worker in the police department is worth 21% less than the actions of the average firefighter.  It’s a puzzlement.

       

       

      1. Barack Palin

        When I “do the math” I find myself scratching my head why the actions of the average worker in the police department is worth 21% less than the actions of the average firefighter.  It’s a puzzlement.

        Matt, I agree with you, but I think a better way of putting it is why is the average firefighter salary 21% higher than the average police salary?  The firefighters are way overpaid.

        1. Matt Williams

          BP, your focus is on the cost, while mine is on the value. That is not to say that I disagree with your cost-oriented perspective … that is the perspective of a whole lot of Davis citizens who are saying “How the hell am I going to pay this bill?” My focus is on the value received, which is also the perspective of a whole lot of Davis citizens who are saying “What value am I getting for my money?”

          Those two questions are not an either/or proposition. They are both/and. “How the hell are we going to pay this bill and what value are we getting for the money we are spending?”

  6. Tia Will

    Sam

    I have no idea who you are, what you do, or what your income is. So please take this as a genuine question.

    Do you see these compensations as too low, too high, or just about right and on what basis are you making that judgement ?

    1. Frankly

      Average CEO gross compensation is $181,000.  And the average CEO has 25 years of experience, and advanced degree, and has had to work his/her way up from lower level positions… competing with others for promotions of the most capable.  Or else the CEO is the owner of a company that he/she founded… generally taking huge personal financial risks and working 12-16 hour days for years to see it succeed.

      So you tell us, is this city employee income too high, too low, or just about right.

      1. Don Shor

        Average CEO gross compensation is $181,000.

        I guess if you measure the CEO compensation of every corporation, regardless of size, then it would be $181K. But:

        Average CEO compensation was $15.2 million in 2013, using a comprehensive measure of CEO pay that covers CEOs of the top 350 U.S. firms and includes the value of stock options exercised in a given year, up 2.8 percent since 2012 and 21.7 percent since 2010.

        I don’t think that when most people say “CEO” that they’re thinking of the doctor in private practice, the lawyer, or the small retailer who happens to be incorporated.

        1. Frankly

          Cherry picking your data just makes you partisan and not credible to debate.

          CEO is CEO.

          Your party wants to demonize the CEO, then take responsibility for it.

          1. Don Shor

            Cherry picking….not credible….Your party wants to demonize the CEO

            It’s hopeless trying to discuss things with you on the Vanguard because you insist on making bizarre partisan statements and personalizing everything. “My” party? I am a CEO. So are lots of owners of small businesses. We incorporate for a variety of reasons. As you know, a very large number of corporations are doctors and lawyers and accountants in private practice.

            There are about 4.5 million companies in the United States. I don’t know exactly how many are incorporated, but more than 80% of those companies generate less than $5 million a year in gross sales. So your data point lacks context. That was my point.

        2. Frankly

          And let’s cherry pick the highest compensated government employees instead of comparing the 17 year old recent immigrant wages to what a CEO makes.

          1. Don Shor

            I would be more than happy to see you set up a table comparing our public employee pay against private sector employees with comparable job duties. You’re probably uniquely qualified among Vanguard readers to do that.

        3. hpierce

          Don… don’t bother… Frankly is, frankly, on a rant.  He did not cite his source for that (CEO comparisons), although he did cite some sources for employee time off, but apparently didn’t want to correct for the hours/days most private sector enterprises give for paid time off (usually referred to ‘personal days’ whether needed for illness/vacation/religious observances, etc.) which I believe to be ~ 20-25 days per year.  For full-time employees.

          Let those who will, “rant on”, knowing that we can’t discuss the meat of their arguments while they’re in a “cherry-picking” mode.

          Frankly (frankly) has some good points [and he often does], but they get lost in his ‘spew’.

        4. Frankly

          http://www.aei.org/publication/despite-media-hype-about-ceo-compensation-the-average-ceo-last-year-made-only-178400-and-got-a-raise-of-1/

          http://www.payscale.com/research/US/Job=Chief_Executive_Officer_%28CEO%29/Salary

          What isn’t reported in all the left and union-dominated “greedy CEO, and poor worker” narrative is that the 1997 recession causes a precipitous drop in the wage gap between CEO and average worker.  And although it has started to rise again, it is rising much more slowly than 1988 – 1997/98.  The recession of 1997 knocked the crap out of CEO compensation and workers made up ground through to the Great Recession.

          It is only since Barack Obama has take charge that CEO pay is again moving forward to increase the gap between it and ALL workers.

          But that comparison is crap anyway because it does not control for years of work experience and education level.   Yes folks, we are supposed to get all wee weed up over the pay gap of a 55-year old CEO that has been working for 30 years, and little 18 year old Johny still flipping burgers while he goes to college.

        5. TrueBlueDevil

          Don and Frankly:

          How many CEOs do you think retire at 50 or 53? My guess is about 1-2%.  How about police or fire? I’d guess 50%?

          How many CEOs work 6-7 days per week? 98%? How many police or fire? 10%?

           

           

        6. hpierce

          “A CEO is a CEO”…. yeah, right, A CEO of a $1 million company with 10 employees = a CEO of a $400 million plus budget with over 400 employees… and you say you are in the business sector? If that is your equation, remind me not to do business with your firm.

      2. Tia Will

        Frankly

        It doesn’t tell me anything at all about whether or not it is “right”, because for me, how one builds their career is not all about the money. It is also about passion for one’s job, comfort level with risk taking, desire to advance a particular field of knowledge, importance of location to the individual and a whole host of other factors. I do not reduce worth of compensation to a single factor as you seem to.  Thus the question since I had no idea how Sam views the issue prior to his or her response.

    2. Sam

      I see the amount of compensation very high when compared to similar jobs in the private sector. Even for jobs that don’t have a direct comparison on the private sector (firefighter) you can tell the compensation is to high when 300 people will stand in the cold for 24 hours just to be on a list if there is an opening.

      The basis of my judgment is looking at what it costs a private business to hire an individual with similar skills and comparing it to what it costs the City of Davis.

       

      1. hpierce

        True story, but it varies on the size of the business, and type of classification.  And whether we all want to “race to the bottom”.

        Clerical/admin public employees are considerably higher compensated than their private sector contemporaries.  Was called “comparable worth” in the 80’s, particularly in Davis.  Got institutionalized.  Professional employees, not so much, particularly the individuals with higher skill/experience values.  In those classes, the public employees were at or slightly below their private sector contemporaries until the last major recession.  Not sure about today, the the private side has been leveling the field in the last 3-5 years.  Not sure they are there yet, but if not will soon be.

        1. Sam

          If you compare the total compensation if higher end employees I do think you will see that public employees are compensated slightly less private. However, their private counterparts have to put in more hours, get less vacation and do not get the eleven holidays public employees get.

        2. hpierce

          As far as putting in less hours, you are right in individual cases, but like teachers, some put in more hours “off the clock”, and some don’t.  Same for city employees.  Reform could/should happen there, as some City employees EARN mgt leave, others don’t.  Some teachers put in many at home hours, others don’t.  In my opinion, the highly motivated/productive employees should paid higher than those not so… hard to do in the civil service environment.

          And the extra hours shouldn’t be due to inefficiencies during the work day.  “pay for performance” should be the mantra in both public and private sector.  The private sector may not want to admit, in their world, “pay for performance” can mean favoritism, or “other services rendered” by/to a supervisor… but to deny that doesn’t happen is to be in ‘denial’.  We need to keep that out of the sectors we can control.

        3. Jim Frame

          Professional employees, not so much, particularly the individuals with higher skill/experience values.  In those classes, the public employees were at or slightly below their private sector contemporaries until the last major recession.  Not sure about today, the the private side has been leveling the field in the last 3-5 years.

          You may have more specific information than I have, but I’ve never seen a private employer that provided anywhere near the pension and medical benefits — particularly post-retirement — that public agencies in California do.  That differential is pretty staggering.

          The other factor that’s often overlooked is that when revenues decline on the private side, employers are usually quick to implement layoffs, hour reductions, salary cuts and benefit cuts in order to stem the flow of red ink.  They may play the hold-on game for little while, but usually not long.  Public agencies have traditionally been very reluctant to make those kinds of cuts, and even when they do there’s often a seniority system that allows senior staff to bump down when their job gets eliminated.  Outside of collective bargaining contracts, I’ve never seen such a thing in the private sector.

           

           

        4. hpierce

          “… when revenues decline on the private side, employers are usually quick to implement layoffs, hour reductions, salary cuts and benefit cuts in order to stem the flow of red ink.”  True story…  what has happened in Davis city government, is they have cut the tree crew, because they were DCEA; cut engineering positions as folk retired (needed or not) downgraded positions to provide for promotions/reclassifications of “insiders”, close to the CM [particularly under Pinkerton].  Yet, the rank and file, many (but not all) of whom are the most dedicated, productive workers, have been slightly less than ‘treading water’ under the last four years.

          Most city employees would love to ‘tread water’, but resent the hell out of those whose boats have (or will) float much higher.

          Your point about private professionals who left their employers, as the pension concept disappeared, figuring that they could do better on their own, is also valid.  And they look at medical/retirement benefits of public employees with anger/angst, as to why others (in the public sector) weren’t treated as badly as they were.  I understand that.

      2. hpierce

        Also Sam, the FFs situation is not reflective of other public safety employees (PD), and much less general city employees.  The FF’s have the only true “union” of all the bargaining groups (as City employees are not allowed to cut their own deals unless they are Department Heads or CM).

      3. Tia Will

        Sam

        The basis of my judgment is looking at what it costs a private business to hire an individual with similar skills and comparing it to what it costs the City of Davis.”

        Thanks for the thoughtful reply. I do have another question. Why do you assume that the cost to a private business of an individual with similar skills is a more appropriate amount than that paid to a City of Davis employee ? Is it not possible that the city employee is actually being paid more appropriately ?

  7. Frankly

    bridging a period of drastic cuts and program changes to a period of relative stability and, ideally, long term fiscal prosperity.

    If I were a union head I could not be more pleased with this obvious advertisement in advance of a demand for pay increases.

    1. Sam

      I liked this from the fire department’s section of the budget report:

      The FY 15-16 Fire Department budget is increasing by a net of $362,792. This is primarily due to: $180,676 in costs for the shared services agreement with the University of California Davis (UCD);

      So the agreement that saves the City a TON of money is the reason for the budget increase? Who came up with this Mr. Weist? How can this even be factually correct?

      You would think with all of these highly compensated employees one of them would have questioned having this in the report.

       

       

      1. Sam

        FYI-Buried in the report is a note that the $180,676 increase from the shared services is offset by a $155,551 payment from UCD to the City. I still don’t see anything in the report about the agreement lowering wages by $450K.

        Negligent or deceptive financial comments during contract negociations?

        1. David Greenwald

          I think it was last June, very quietly the council decided not to move the division chiefs onto the UC Davis payroll and that pretty much ended the savings from the shared management.

        2. Sam

          David-That would show up as an increase in salaries then, not operations. Davis is reimbursing UC $180K in operations expenses and UC is reimbursing Davis $155K in expenses.

  8. SODA

    Yes, I am confused too. 0% employee increase yet MOUs have not been negotiated. ???

    And new org chart now has 2 assistant city managers; what is the net increase on that change and the other additions?  Doesn’t make sense to me.

    And Sam, where did you see the figure for the increase in fire for shared management; that is unexpected isn’t it?

    1. SODA

      David, what was the reasoning for not moving the division chiefs?  Was it the recommendation of the Fire Chief?  Have I missed his regular reports?

      1. Sam

        They mentioned something about hiring 5 new firefighters, so they could have had 2’s leave and hire in at 1.

        You asked for a comparison in wages private to public. Here is an LA Times article on the subject. http://www.latimes.com/local/cityhall/la-me-worker-pay-20150426-story.html#page=1 .

        It only compares pay and does not include benefits which are substantial, but it does give you some idea of how out of line the costs are for cities compared to the private sector.

  9. Frankly

    The basis of my judgment is looking at what it costs a private business to hire an individual with similar skills and comparing it to what it costs the City of Davis.

    First, let’s look at the retirement benefits because they are the most glaring difference:

    Step-1 is to determine life expectancy…

    http://abcnews.go.com/Health/ActiveAging/humans-live-longer-2050-scientists-predict/story?id=9330511

    This is a study that I read about that refutes the government life expectancy numbers a bit.  By 2050 the government says the life expectancy will be an average of 84 for men and women.  The study puts it at 91.5.

    But this does not include the difference in socioeconomic differences.  Factoring class differences today and including the study above, we can safely peg the expected life expectancy in 2050 as an average 95.

    But let’s use 90.

    And then looking at the Davis city employee retirement benefits from the current administrative employees association MOU, they get 2.5% @ 55

    Go here: http://transparentcalifornia.com/salaries/2013/davis/melissa-c-guidara/

    Let’s use MELISSA C. GUIDARA our Human Resources Administrator.  This would be a HR Director at a 300-500 employee company.  (NOTE THAT THE PAY OF ALL DAVIS CITY EMPLOYEE IS PUBLIC RECORD.)

    She makes $151,888.79 in base pay.  Her benefits are $47,971.69… or a total of $199,8690.48.

    Let’s assume she is 50 years old and started working for the city at age 25.  At age 55 assuming she does not get a raise, she would be fully vested in her pension and can retire with 75% of her pay or $9,493 per month.

    Assuming that 90 year life expectancy, and a 2% annual rate of inflation COL, the present value of her pension value at retirement is $2,865,700.85.

    Go here for a good annuity calculator… http://financialmentor.com/calculator/present-value-of-annuity-calculator

    This means that another private-sector HR director would need to save $2,865,700.85 in her 401k to get a similar retirement lifestyle.

    Now we would have to factor Social Security payments that the private sector employee would get.  However, that would not kick in until age 70.  And we would also have to factor the fact that Ms. Guidara would not be paying the 7% social security tax, and neither would her employer be paying their 7%.  So we would have to develop a spreadsheet that has 35 rows and factors all the payments needed.  Factoring the lost Social Security benefit offset by the fact that Ms. Guidara did not have to pay the tax, we would still be easily over $2 million.

    So what would a person need to put away to save $2+ million assuming a reasonable conservative 6% rate of return?  That employee would need to withhold and save $1,991 of her paycheck every month.

    See here for this… http://www.bankrate.com/calculators/savings/saving-goals-calculator.aspx

    Now here is the real unfair point of defined benefits… the private sector employee has to save to higher dollar comp expectations in later years during the early career years when pay is much lower.  How would $1991 per month feel when starting a career?   For the public sector employee it does not matter what the early career years paid, it is only those last 3 years that matter.  So if you think about this, when the lowly paid city employee starts working, he/she basically won the lottery in retirement benefits if he/she just stays until age 55 and gets regular raises.

    Now you know why city employees are so insistent that they need a raise.  Every raise exponentially multiplies their life-long retirement pay as if they were making that pay for their entire career.  Compare that to poor Maria the private sector HR Director that gets a raise.  She can only invest the real dollars that she gets into a retirement account and then has to rely on the compound interest returns to help fund her retirement.  And Maria also has to contend with running out of money, while Melissa does not need to worry about a thing.  Let’s talk fairness here.

    Now let’s look at the base pay difference.

    Go here…   http://swz.salary.com/salarywizard/Human-Resources-Director-Autonomous-Salary-Details-Sacramento-CA.aspx?&hdcbxbonuse=on&isshowpiechart=false&isshowjobchart=false&isshowsalarydetailcharts=true&isshownextsteps=true&isshowcompanyfct=true&isshowaboutyou=true

    The reported median total compensation in the Sacramento region for an autonomous Human Resource Director is $198,290 per year.  This is amazingly close to the $199,860 that Melissa makes.

    However, included in the Salary.com numbers is the value of paid time off… $18,216.

    Looking at Melissa’s paid time off, she gets 28 days per year vacation leave and 14.5 paid days of holiday leave.  Melissa also gets 10 days per year of management leave.  And she gets 12 days per year in sick leave.

    Assuming her $151,889 base salary, she makes $74.95 per hour.  Those 64.5 paid time off days equal 516 hours or another $38,674 in compensation value.

    So not only does Melissa get to retire early with a retirement package worth over $2 million, but she also makes $238,534 per year in comp comparable to poor private-sector Maria that makes $198,290.

    There is nothing fair about what we are paying city employees.  It is way out of whack with reality even if we could afford it… which we can’t.

    1. Topcat

      So not only does Melissa get to retire early with a retirement package worth over $2 million, but she also makes $238,534 per year in comp comparable to poor private-sector Maria that makes $198,290.

      Topcat wishes that he had gone to work at the City of Davis when he was 25 🙂

        1. Frankly

          I think the game is to get in and get yours before the well runs dry.

          I fully expect that 20 years from now there will be news reports of the lucky 30 years of public-sector payola that finally collapsed.  All the rest of us will be paying for it until those folks pass on.  That means our kids and their kids will be paying for it.

    2. Matt Williams

      Frankly’s post above is a “six course dinner” for most people, but I strongly encourage everyone to take the time to read it, and ask questions where it isn’t clear or is confusing.  The dialogue should be very valuable.

      With that said, Frankly’s information allows us to look at the real impact of a 1% salary increase (“raise”) for the example employee.

      — A 1% raise for the example employee would cost the citizens of Davis $1,518.88 per year.  Using the example employee age of 50 and that employee’s retirement at 55, the total 5-year incremental salary outlay by the Davis citizens is $7,594.40.

      — Further, that $1,518.88 per year translates into a $94.93 per month increase in the employee’s monthly defined benefit pension.  For the 35-year pension period from 55 thru 90 (420 months) the total additional pension payments by the Davis citizens is $39,870.60.

      — Add the $7,594.40 together with the $39,870.60, the total outlay by the Davis citizens for the 1% raise is $47,465.00, which makes the functional annual percentage of the raise equal to 6.25%.

      — The incremental take-home pay of the example public employee is $1,518.88 per year.

      — If an equivalent private sector employee, being paid the same salary wants a 35-year monthly pension of $94.93 per month, he/she will have to go out and purchase a 35-year annuity, which assuming a 4% rate of return would cost the employee a lump sum of $21,416.33. Spreading that over 5 years the annual take home would be $1,518.88 minus $4,283.27 in order to have the same benefit as the public sector employee. The 1% raise would result in a decrease in take-home pay.

      1. Frankly

        Frankly’s post above is a “six course dinner” for most people

        The complexity of this topic is probably at least part of the reason that the problem exists.

        What is important for everyone to understand is that city staff do not require a raise because they are already much better compensated than are their private-sector peers… especially considering the tremendous value of their pubic-sector defined benefit pensions, and if they are paid a raise the value of that raise becomes exponential because it passes to their defined pension benefits.

        The other point is simply fairness.  It is not fair that a government employee gets so much more than others doing equivalent work… especially when it is the others paying the taxes that pay the government employee.

        Considering the value of those public-sector defined benefit pensions and paid time off, we should be seeing base compensation of public sector employees being 70-90% of what private-sector employees make in base comp. So, we need to hold the line on giving raises until we reach that level of equalization.

        1. hpierce

          “… when revenues decline on the private side, employers are usually quick to implement layoffs, hour reductions, salary cuts and benefit cuts in order to stem the flow of red ink.”  True story…  what has happened in Davis city government, is they have cut the tree crew, because they were DCEA; cut engineering positions as folk retired (needed or not) downgraded positions to provide for promotions/reclassifications of “insiders”, close to the CM [particularly under Pinkerton].  Yet, the rank and file, many (but not all) of whom are the most dedicated, productive workers, have been slightly less than ‘treading water’ under the last four years. Most city employees would love to ‘tread water’, but resent the hell out of those whose boats have (or will) float much higher. Your point about private professionals who left their employers, as the pension concept disappeared, figuring that they could do better on their own, is also valid.  And they look at medical/retirement benefits of public employees with anger/angst, as to why others (in the public sector) weren’t treated as badly as they were.  I understand that.

        2. Frankly

          They cut the tree trimmers because as a function it was much more expensive than could be handled by contractors.  Those were not strategic positions… and unfortunately… yes, probably because they were not surrounded by the legal protection of a union, those workers fared more poorly.

          But failing to fill positions of retired folk is nowhere in the ballpark of private sector layoffs.  I have had it happen once in my carreer.  My wife once.  For my wife, it was Famers Savings Bank in Davis… came back from our first two week vacation and she came in to work, and walked out 10 minutes later with a pink slip.  For me, I kept getting my hours cut and would be laid off for stretches of time.  Never filed for unemployment on principle.  Probably a stupid thing since I had paid into it.  But both of us thank the lord that it happened because we both ended up landing better jobs that helped move careers forward.  It really sucked at the time… hurt and caused major financial anxiety… but in retrospect neither one of us really liked the jobs we got laid off from.  It taught me something… it taught me that people tend to stay in job comfort land even though it isn’t a good fit.

          The problem with defined benefit pensions is the job-lock tendency.  If it wasn’t for that… if employes had a 401k style defined contribution plan instead… it would not be such a hit to make reductions when the budget demands.

        3. hpierce

          Frankly… wasn’t Farmers’ Savings the bank owned by Pete Anders (sp?) when he somewhat mysteriously died?   Possible suicide due to malfeasance?

        4. hpierce

          “Probably a stupid thing since I had paid into it.” and yet, thought you were thinking of submitting a piece about employee shares in a company they worked for?

        5. Jim Frame

           Never filed for unemployment on principle.  Probably a stupid thing since I had paid into it.

           

          I’m surprised to hear you say this, since you’re an employer — UI contributions are paid entirely by the employer.  One might argue that wage levels are commensurately lower to account for the UI cost, but that’s getting pretty abstract, especially since the contribution rate is determined by the employer’s layoff history (i.e., the firm’s demand on the UI payout reserve).

        6. Jim Frame

          wasn’t Farmers’ Savings the bank owned by Pete Anders (sp?) when he somewhat mysteriously died?   Possible suicide due to malfeasance?

           

          He was murdered (I had to look up the details, as memory failed) by a tenant who owed him money. The guy hired a hit man, but the hit man chickened out, so the tenant took on the job himself.

        7. hpierce

          Jim… re: Anders… that’s for the correction… what I seemed to remember was the initial rumors that it was suicide, with the subsequent relevations that it was indeed a murder for hire… thanks…

  10. Frankly

    Correction…

    So not only does Melissa get to retire early with a retirement package worth over $2 million more than Maria’s Social Security, but she also makes $238,534 per year in comp comparable to poor private-sector Maria that makes $198,290.

    1. Topcat

      You’ll get no argument from me that the HR director or FF’s are over-compensated.

      It’s not my area of expertise, but it is my impression that the police and fire departments staffs are quite well compensated.  Could there possibly be some budget savings in those areas?  Perhaps eliminating overtime except in extreme life threatening situations could be a place to start?

      1. hpierce

        Believe you are on the right track.  Particularly for FF’s who take apparatus to grocery stores to shop for meals.  I assume they pay for their own groceries, but no other groups of employees shop for (using City vehicles), on city time, eat their meals (on city time), and sleep (which might be interrupted, in an emergency), as paid employees.  The FF’s are truly unique, in many ways, from all other City employees…

      2. Topcat

        I assume they pay for their own groceries, but no other groups of employees shop for (using City vehicles), on city time, eat their meals (on city time), and sleep (which might be interrupted, in an emergency), as paid employees.

        I doubt that anything can be done to stop the shopping, eating and sleeping on paid time, but I would think that forbidding overtime except in extreme life threatening situations should be within the realm of possibility.

        1. Jim Frame

          I would think that forbidding overtime except in extreme life threatening situations should be within the realm of possibility.

           

          Given the shift requirements and staffing level, I’m not sure that overtime can be avoided.  I haven’t gotten the impression that OT is being sought by FF staff, but rather imposed by circumstances.  Do you have information to the contrary?

  11. hpierce

    ” It is not fair that a government employee gets so much more than others doing equivalent work… especially when it is the others paying the taxes that pay the government employee.”  Absolutely right, Frankly… public employees don’t pay ANYTHING like taxes, or premiums for the salaries or benefits that the private sector companies charge for the services they receive.  Such leeches.

      1. hpierce

        Absolutely right, Frankly.  There should be no taxes.  There should only fees for services (and like prop 218, should not provide for profit), and that should also apply to the private sector.  If folk want to pay for roads, national security, helping the poor/disabled, anything else that government currently provides, it should be voluntary… if your neighbor wants those things, they should let others make those contributions on their behalf.  That would be fair.

        Actually, starting to understand your point… frankly, there should be no “government”.

        1. Frankly

          Now, now, now… let’s not get all hyperbolic (word?… if not, should be.)

          Of course I favor government.  But you cannot sit there and tell me that we are not over govermented (another should be word)?

        2. hpierce

          “Quite a scam of government isn’t it?  Take from private sector earnings to pay public sector wages so they can be taxed again.”  Your words, not mine.  I did react, tho’.  I also believe in limited government.  But I believe that government should attract the talented, pay them in accordance with their talents, and by the pay for talent/performance mantra, weed out the marginal/below marginal. 

          Many of your concepts would lean toward the cheapest/marginal employees. The public sector needs “pay for performance”, but not at McDonald’s rates…

        3. Frankly

          Many of your concepts would lean toward the cheapest/marginal employees. The public sector needs “pay for performance”, but not at McDonald’s rates…

          Not at all.  It is all about market rates for appropriate talent to do the job.  And it is also constantly pushing to do the best that can be done at the lowest possible cost.

          It is stressful and complicated to manage that way… constantly asking if things can be done faster-better-cheaper.  But in the private sector, generally there is no choice.  You have to or the company will fail.

  12. Biddlin

    I paid taxes on every cent I earned in public employ. I paid a share for  dental and health insurance, I paid for a mandatory and exclusive deferred compensation package that would not allow me to remove my money when the market tanked, costing me more that $100,000 in retirement savings, I paid for a long-term disability policy that MetLife never intends on paying and will keep any claimants in court until they die. So where the F are the tax free, free benefit jobs?

    ;>)/

    1. Frankly

      The money use to pay your public sector job so you could pay all those taxes came from taxing the earnings of private-sector business.

      That is the scam… a reverse ponzi scheme.  Tax and spend and tax and spend and tax and spend and tax one last time when you die.

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