Analysis: Complex Situation Leads to MOUs

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Firefighter Union President Bobby Weist pickets outside of City Hall in 2013.
Firefighter Union President Bobby Weist pickets outside of City Hall in 2013.

There are multiple considerations driving the apparent council support for MOUs that will provide four bargaining units with a 3 percent COLA (Cost-of-Living Adjustment), should the Davis City Council support a consent agenda item approval of the agreements.

One viewpoint notes that all four of the bargaining units, particularly PASEA (Program, Administrative and Support Employees Association) and DPOA (Davis Police Officers’ Association), played ball with the city in the last decade – taking less in terms of a pay increase in 2005, and accepting concessions in 2009 and 2012.

Notably absent from the agreements are the firefighters and DCEA (Davis City Employees Association), both of whom went to impasse in the last round of negotiations – and DCEA went to impasse against the city twice, once succeeding in overturning the last, best, and final offer.

Sources have told the Vanguard that neither group has met with the city about a new agreement and until the two groups come to the bargaining table, they will continue to operate under the imposed terms and conditions.

However, this is not necessarily the only or even the predominant view. In an email the Vanguard received, City Manager Dirk Brazil took a different approach noting that, since 2009, take home pay for the average city employee has dropped by 7 percent. At the same time, these employees have been asked to pay an increased share of their benefit costs (i.e. pay the employee share which the city had previously paid), among other cost increases.

According to the city manager’s view, “The 3% over two years agreed to between management and the employee groups that is before the City Council Tuesday night for consideration is an incremental move to improve overall compensation for our employees after a very difficult few years.”

But this approach comes at a cost – a very large cost for a city in a precarious fiscal condition. The Vanguard on Monday showed city projections for how even a modest $1.1 million increase to employee compensation will impact the budget down the line.

Just a $1.1 million increase will push the city into the red, according to current projections, until 2019-20. Obviously the city has fund-balance it can lean on, and could make other cuts as well.

The announcement comes just before the city council will make decisions on how to raise approximately $10 million a year for roads and other infrastructure that is currently using $4 million in general fund and road impact money.

Moreover, city projections show the city turning into the deep red in 2021 after the expiration of the current sales tax.

Reaction on the Vanguard yesterday was uniformly negative. As one poster put it yesterday evening, “Does anyone think this is a good idea?  I read through the comments quickly, but I didn’t notice anyone support[ing] it.  If people that usually disagree are in agreement on this, the CC should take notice.”

But there is another side to this story. The city has been facing a difficult time recruiting police officers that fit in with the city’s culture to come and join the city police force. Part of that consideration is the analysis that the Vanguard has repeatedly run since 2008 that Davis police are near the bottom in total compensation in the region and among similar cities.

On the other hand, the Davis firefighters, going back to 2004, received a whopping 36 percent pay increase. The Davis Police Officers, believing that they were doing the right thing, took a much more modest 18 percent increase during the same MOU cycle.

The result is that, while the police officers are near the bottom in compensation, the firefighters are near the top, even after the imposition of the most recent contract on them.

In 2013 and 2014, as the Davis firefighters fought every single reform, from boundary drop to the decrease in staffing to the shared management agreement to the collective bargaining agreement, it was the Davis Police Officers’ Association who showed up at the city council meeting to back the city and blunt the firefighters’ protest.

The Vanguard has long been concerned with the sizable gap in pay between police and fire – particularly in a town that has relatively few fires and where part of the solution to the late night downtown issues seems to call for more patrol officers.

Unfortunately, the numbers do not seem to add up at this time for increasing compensation for employee groups. The city is making a big mistake by increasing compensation on four bargaining units in hopes of making the police more competitive. The city simply does not have the budget reserves or flexibility to do this at this time.

And they do this at great risk. The city is counting on the voters to pass a still-unidentified revenue measure in order to maintain basic services like roads and bike paths. The city is further counting on the voters to approve innovation park measures that they hope will provide more diverse streams of revenue at a time when the city is struggling to figure out basic traffic flow on Richards Boulevard.

As the Vanguard’s analysis from the early fall shows, the city needs to hold employee compensation in line in order for these projects to pencil out. Increases to employee compensation means increased costs of city services, which means decreased net revenue on these parks.

Finally, by angering key constituencies that often do not see eye to eye on city issues, the city risks losing revenue measures that would pay for these increases.

The city is taking a great risk in believing they can increase compensation on some groups without increasing compensation for all groups.

In short, the Vanguard believes that this is a very bad idea that is likely to undo some of the key concessions and undermine the city’s fiscal standing that remains extremely perilous.

The city manager is focused on the wrong issue. The problem that the city has been attempting to fix since perhaps 2009 (and really, we have consistently argued that the heavy lifting did not begin until 2012) is that the city increased compensation beyond its capacity to sustain it from 1998 until 2012.

So if the city employees have had to take cuts in the last five years it is to compensate for the huge pay increases many enjoyed the previous decade and a half.

City revenue right now cannot justify that increase and we cannot support the idea that some groups can be rewarded for playing ball.

We certainly need to restructure the fire-police compensation picture, but this does not appear to be the way to do it.

—David M. Greenwald reporting

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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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76 thoughts on “Analysis: Complex Situation Leads to MOUs”

  1. Misanthrop

    I think its a good idea and the notion that your commenters are representative of the community is certainly a stretch. One thing I don’t think anybody said is that the cops don’t deserve a small raise.

    Davis has so many ways to raise the money it needs through taxes or growth. Its not a question of can we but will we?

    1. Davis Progressive

      couldn’t disagree more.  davis lags on revenue, so unless we want to tax the heck out of hte citizens to pay for overpriced employees, i don’t see that this is a good approach.

  2. Barack Palin

    The city is further counting on the voters to approve innovation park measures that they hope will provide more diverse streams of revenue

    Ha, as we are learning that Nishi is most likely going to be a bust as far as revenue goes.

      1. Barack Palin

        Then David shouldn’t have used a plural as in “innovation park measures” when we now only have one (MRIC) possibility.

        But, what’s the difference between an innovation park and a research park?

        The business uses could include research and office space for small- to medium-sized business, including start-ups and UC Davis spin-offs. 

        http://nishigateway.org/news-and-updates/frequently-asked-questions/

        Business park, research park, innovation park, they all sound the same to me.

  3. Don Shor

    We need a graph showing total employee costs over the last decade or so, and a separate one showing employee costs as a percentage of the total budget.

    1. Sam

      In 2014 the City had about $66,000,000 in total revenues (that is everything including grants and charges for services) and paid about $35,000,000 in payroll, $8,600,000 for pensions, $6,000,000 for OPEB for a total cost of payroll of $49,600,000 excluding benefits. So at best labor is 74% of revenue.

      *As I posted yesterday the pension number is going to be $18,000,000 making labor 89% of all revenue, not including what the city pays for employee medical and dental benefits.

       

       

  4. Tia Will

    Reaction on the Vanguard yesterday was uniformly negative. As one poster put it yesterday evening, “Does anyone think this is a good idea?  I read through the comments quickly, but I didn’t notice anyone support it. “

    I also did not see any support for it on a quick read through of the comments. I also did not speak because I am uncertain and truly grateful that it is not my decision to make. What I would point out is what I see as an error in thinking about this problem which David has pointed out clearly in this article.

    Not all worker groups are overpaid. By any reasonable comparison ( given that there is no comparable private work force) our police are not overpaid. So while it is easy to sit back and complain about overpaid public employees using the non comparable private sector, it is far less easy to come to a resolution that meets both the needs of the police ( and potentially other workers) and the community.

    David concludes “We certainly need to restructure the fire-police compensation picture, but this does not appear to be the way to do it.”

    I am not so sure. What do you see as the reasonable alternatives given the previous differential treatment which we cannot now undo ? Unless I am presented with a reasonable alternative, I could not stand in opposition to this move.

  5. Barack Palin

    David, you still haven’t addressed how the city came up with the 3% COLA’s when statistics don’t seem to back it up at least as far as no COLA raises being given to Soc. Sec.

  6. Jim Frame

    since 2009, take home pay for the average city employee has dropped by 7 percent. At the same time, these employees have been asked to pay an increased share of their benefit costs

    How much of that 7% drop in take-home represents salary cut, and how much represents increased benefit cost?  I suspect mostly the latter, i.e. welcome to the real world.  (By way of comparison, since 2009 the cost of my health insurance has risen 56%.)

    My sympathy in this matter works on a sliding scale — I’d be more inclined to see a modest bump in the salary of lower-rung employees, and much less inclined to grant any increase to highly-paid staff.  But before any blanket increases are given I’d like to see a comprehensive review of staffing allocation, since a seniority system tends to shed the low-cost employees and leave the high-rollers in place.  Is the city top-heavy at this point, i.e. should we have fewer management folks and more line staff?

     

  7. Mark West

    First of all, the City cannot afford to pay more, which should be the first consideration.  If you don’t have the money to spend, you don’t spend it.

    Second, the only argument in favor of pay raises that holds water is the one about not being able to hire enough qualified police officers.  If that is, in fact true, then the compensation package being offered to new police officers needs to be restructured.

    I completely agree that the police and fire compensation should be relatively equal, but since we have no problem hiring new fire department employees if anything changes it should be to reduce the compensation there.

    The CM’s justifications for the other raises are nonsense.

    Total compensation across all departments should remain flat until the City has made significant headway addressing the fiscal crisis through means other than raising taxes. One place to start is to reduce compensation for senior management.

      1. Sam

        Davis is following the same path as San Bernardino.

        http://www.huffingtonpost.com/2012/07/15/san-bernardino-bankruptcy-political-feuds-denial_n_1674936.html

        Denial that there is a problem, overcompensation of safety employees and decaying roads. The only thing that is missing is an economic downturn. Since those happened about every five years one should be coming soon. In the meantime lets give everyone raises, build a sports park and new swimming pools.

    1. Mark West

      So Sam says above in 2014 we had a payroll of $35,000,000 (excluding benefits), and the chart Don posted says we had 433 FTE’s that year.  That gives us an average payroll cost of more than $80,000 per FTE (plus benefits).

       

       

      1. Sam

        Cost of payroll is $49,600,000 plus benefits or $114,550 per FTE. Keep in mind that FTE number includes a large number of employees that earn low salaries working part time for the Parks Department.

  8. Matt Williams
    The challenge/problem that comes with percentage increases is that they build on whatever the baseline situation is.  In the case of Davis the actions by Council and Management during the 2004-2009 period set a baseline for City employees that created a massive differential payment difference between our firefighting public safety employees and their policing public safety employees . . . as well as expanding the already existing pay differential between public safety employees and non-public safety employees.
    To illustrate just how problematic disparities in baseline can be, let’s ask ourselves the simple question, “Does Davis really value firefighters more than it values police officers?” 
    The current baseline pay for line of duty firefighters and line of duty police officers says that we do value firefighters more than police officers, because we pay our firefighters so much more per person than we pay our police officers. 

    Further, even if we accept the fact that in 2009 Davis thought firefighters were more valuable to the community than police officers, do the public safety incidents over the past 36 months support continuation of that 2009 Council decision to reward firefighters with considerably more pay than police officers?

    Next time you walk past Ket Mo Ree, ask yourself, “Which do you value more for yourself and your family, safety from fire or safety from personal harm?

    The truth is that, for the most part we value them both equally, and a percentage raise that applies to all employees not only perpetuates the baseline pay disparities created during the 2004-2009 period … it actually widens the gap between the firefighters and the police officers because a 3% raise for the top 5 line of duty firefighters (based on data from 2013 salaries for Davis | Transparent California) would be a $4,650 average salary raise, while that same 3% raise would only amount to $3,775 on average for the top 5 line of duty police officers.  It is even worse when you look at the top 5 non-public safety employees.  Their average raise would only be $3,220.

    Bottom-line, percentage raises can be very well described by the expression “the rich get richer and the poor get poorer.”
    1. Barack Palin

      So Matt, what would you do about the disparity if you were to get elected?  Would you try to rein in the firefighters or bring the PD up closer to their pay?

      1. Matt Williams

        BP, I would start with a global principle that the pool of total salaries and wages paid by the City would not increase.  An argument has been made that Line of Duty Police Officer wages are currently not competitive in the marketplace, with the result being a significant challenge attracting qualified officers for our open position.  I would like to see evidence that that is the case, and based on that evidence would be inclined to bring police officer salaries and wages to that market level.  Once that level was established for police officers, I would work hard to bring firefighter salaries wages down to the same level . . . which would mean we would be paying all our public safety personnel of of the same salary/wage scale.  I don’t think the firefighters would agree to that parity without a fight, but I believe that hard-nosed negotiations would cause them to eventually see the wisdom of that approach.

        The salaries and wages of the non-public safety employees should be set at the competitive market level of their position and responsibilities.

         

        1. Mark West

          I would agree with this approach, to a degree, but I think the reductions should come before the raises.  Don’t spend what you don’t have and don’t make commitments that cannot be funded.

          I would not expect the firefighters to ‘see the wisdom of that approach’ as you put it, so parity may only be reached over an extended time period. Cuts may be needed in other areas in order to have the funding necessary to bring police wages up to market levels during the time that the firefighters delay. Of course the other option is to just outsource fire service and be done with the problem.  

          1. Matt Williams

            Mark, if the goal is a total compensation target there are two components number of employees being paid and rate those employees are being paid. If the union won’t see wisdom on the rate then there is always the possibility that the number of employees is reduced to a low enough number to hit the target. In effect the union can accept lower salaries and wages across the board or fill ou the layoff slips for some of their members.

        2. Mark West

          Sorry Matt, you are not going to reduce the number of firefighters below some minimum number and the Union knows it. Besides, they have no incentive to enter negotiations if they believe reductions are coming as they can simply continue to work under the (overpaid) terms of the imposed contract. The threat of outsourcing might get them to the table, but not a few layoffs of the lowest seniority employees.

           

          1. Matt Williams

            Mark, how close are they to the “minimum number” now? If the union doesn’t care about layoffs of the lowest seniority employees, then the department is overstaffed. With that said, I would eliminate all overtime across the board rather than laying off the lowest seniority employees.

    2. Frankly

      I get this, but I have a bit of a problem with this line of thinking.  If I have a house fire I will value firefighters more than any other city employee.  If I am a victim of crime, I will value police more than any other.  If I am building a house or trying to complete my TIs on a business property, I will value city planning and development personnel more than any.

      From my perspective what is broken with respect to government employee compensation is that it is a closed system that is also corrupted by the Democrat political machine.

      I was thinking about our CC history.  Today 3 of 5 of our CC members are themselves government employees.  Ironically it appears that those 3 more often line up on their voting record.  I think Davis has a history of a high percentage of government employees on the CC.  I see this as a clear conflict of interest… or at least a conflict of perspective.

      The entire system needs to be reformed.  Compensation model decisions need to be turned over to a citizen committee that is served by a professional HR representative that should be independent.  The City should pursue buying out the CalPERS pensions and moving to a defined contribution retirement plan.  The compensation system needs to be changed to that base pay is more in-line with the general labor market, with the addition of incentive pay.    Unions and employee groups can still be allowed, but the City should scrap collective bargaining and move to professional HR representation.  This can be outsourced.

      Davis needs to be progressive on this given our unique situation of having such a small general fund budget.

      This will make for some unhappy City employees.  Some might quit and leave.  That then provides the opportunity to hire new talent and new energy that will be happy to have a job even with the new compensation model.

       

      1. Mark West

        “Today 3 of 5 of our CC members are themselves government employees.  Ironically it appears that those 3 more often line up on their voting record.  I think Davis has a history of a high percentage of government employees on the CC.  I see this as a clear conflict of interest… or at least a conflict of perspective.”

        This I think is the important point (and not your daily diatribe against a specific political party). Unless we have made a point of getting educated in another point of view, we generally come at problems based on our own experience.  If you are a public sector employee (or were raised in a household of one) you see employment as being a function of government with compensation primarily determined by seniority (or who you know).  Job creation comes about through government expansion, paid for by increased taxes.

        If instead you come from a private sector background, you see employment as a function of profitability with compensation based on a combination of individual, company and sector performance. Job creation for a region is a function of economic expansion, which is often benefited by decreased taxes.

        Davis is a bedroom community for predominately public sector employees, run by public sector senior management overseen by a CC majority with a public sector background. No wonder our default approach is to raise taxes so we can increase compensation to employees. That, from a public sector background, is what you call ‘economic development’ and ‘job creation.’

        Raising taxes does not increase the economic viability of a region, in fact, it does just the opposite.  If we want to improve the economic viability of Davis, we need to move away from the pervasive public sector view and understand that economic development and job creation comes through business development, not taxation. If we want to pay for all of the nice toys we want (parks, pools, safe roads, vibrant downtown) we need to increase revenues through business development and economic expansion, because as we can see from recent history (and these proposed MOU’s) all we will get from increasing taxes is an increased cost of public sector employee compensation.

        1. Sam

          “Davis is a bedroom community for predominately public sector employees, run by public sector senior management overseen by a CC majority with a public sector background.”

          What worries me is that this group will never come to the realization that they are unable to pay for the decisions they have already made.

        2. Frankly

          There are several frequent posters on this site with copious evidence that would seem to back your worry.

          As someone that has worked in the private sector all of my life, but with many years of that time working directly with government agencies, I have a pretty clear perspective of the differences.

          On the public sector side workers tend to react with a strong sense of entitlement to what they feel is fair.  But only within their public-sector bubble, and without a belief that their compensation should have any connection to the actual budget.

          I know this will piss some people off, but it is really that Ayn Rand description of “producer-mentality” verses “looter-mentality”.

          In the private-sector the perspective is “if we don’t all work together well and produce, we will get pay-cuts and risk losing our jobs.”  Generally in the private-sector, 5 PM happens and there is a need to produce for the customer, then the employees work late.

          The general public-sector mindset is one where there is a job description and hours worked… generally when 5 PM happens the service window is closed… and then expectation that a level of pay needs to happen despite the financial results of the organization.  And that if there is a shortfall, then more should be looted from taxpayers to make up the difference.

          Private sector-employee to management – “I think I have earned a raise.”

          Public sector-employees to management – “We think we deserve a raise.”

          This is a subtle but impactful mindset difference that, lacking experience in the private-sector, someone in the public-sector would have difficulty understanding.

          The public-sector labor market is a false market.  It is really a labor cartel… where the union heads and their politicians in all government organizations work to control and protect labor compensation.

          And so our police department complains that it cannot attract qualified candidates because Davis’s police pay is too low.  But it is only because of what other cartel member organizations pay, not because of any general labor supply and demand setting of price.

          But here I think is the bottom line.  We cannot afford to give any raises.  The city is running a current budget deficit.  And when including the long-term unfunded liabilities of road and infrastructure repair/maintenance, and unfunded pension liabilities, we are deep, deep in the red.

          It might not feel fair to not get a raise, but there is no money to fund any raises.

      2. Matt Williams

        Frankly said . . . “I get this, but I have a bit of a problem with this line of thinking.  If I have a house fire I will value firefighters more than any other city employee.  If I am a victim of crime, I will value police more than any other.  If I am building a house or trying to complete my TIs on a business property, I will value city planning and development personnel more than any.”

        Your argument above falls into the “can’t see the forest for the trees” category.  Step back from the individual case level and look at the picture in the aggregate.  Life experience ebbs and flows at the personal level, but at the community level, the citizens/residents who have a personal experience with a fire will be balanced out by the citizens/residents who have a personal experience with a policing incident and the citizens/residents who have a personal experience with an application processing incident.

        With that said, what you have proposed represents a major sea change in the way Davis has conducted its business of Human Resources.  It will take a lot of intestinal fortitude to accomplish.

        BTW, which 3 CC members are public employees?  I can get to 2, but haven’t come up with the third one.

        1. David Greenwald Post author

          There is no third – Dan works for Solano County, Lucas works for the State Assembly, Rochelle is a private consultant, Brett works for the Farm to Fork, and Robb is mainly retired but does some consulting. If I had to guess, he’s thinking of Brett but that’s a non-profit, not the public sector.

  9. Davis Progressive

    the explanation for going forward is convoluted.  the numbers show the revenue is not there to sustain unless we want to pass another tax.  this isn’t a good timing.  i for one will not support another tax unless the city cleans up it’s act.

  10. Ben_F

    I am not sure where Sam is getting his numbers. Looking at the City budget online the revenues come in at over $115 million from all sources before you look at capital improvements. Adding that in revenues are 144 million. This is for year 13-14. For this same year payroll costs are $51 million. This makes labor only 35% of revenue. Very different story. Am I missing something?

    1. Davis Progressive

      you’re conflating general fund with all fund revenue.  very different.  most of the all fund revenue you cannot use for payroll (though in public works there are exceptions).

      1. Ben_F

        I don’t think that is what he was  talking about. General fund revenues weren’t 66 million.  For example General fund revenue for that year in capital projects was $466k and labor was 1.477 million.  31.6%

          1. Matt Williams

            Sam, the table at the bottom of page 13 is not for the General Fund. Table 6 at the top of page 16 shows the General Fund expenditures, which totaled $46,470,907.

        1. Sam

          True, General Fund expenses were $46,470,907. I included the higher revenue amount because I do not have access to a report showing the salaries paid associated with only the General Fund, only total pensionable salaries. I would love to see it though. Just like I would love to see a new ten year projection with the suggest raise and the new increase in the CalPERS rates before the Council votes.

  11. Frankly

    The main problem with pay increases in the multiplier effect caused by the increase in long-term pension liability.

    Say the employee is 54 year old has 29 years of service and a base pay of $100,000 and a 2.7% @ 55 pension benefit.   Assuming a life expectancy of 90 years old, at retirement at age 55…

    At the $100,000 salary the total pension liability would be $2,835,000.

    At the $103,000 salary the total pension liability would be $2,950,050.

    The difference is $85,050.  So a 3% raise causes a new $85,050 City liability for that single employee.

    I might be more open to some COLA if the pension benefits can be capped at the current compensation levels.

    It is this compounding of the pension liability that is the big problem.  It is also the main driver for why city employees are so keen on getting a raise.

    Any city employee over 45 years old is going to be thinking about that pension benefit and retirement age.

    1. hpierce

      Frankly… you said, “At the $100,000 salary the total pension liability would be $2,950,050”  Is that the “theoretical liability”, and what are your assumptions?  This is truly meant as a fair question, leading to a determination of the ACTUAL City “liability”.

      You have stated that assumptions include, 30 years service @ 2.7 @ 55 (which isn’t happening for new employees, but for the purposes of discussion, let’s ignore that).  You give the life expectancy as 90 (a bit high (big bit) unless you are looking at a really ‘worst case scenario’ to “make a point”).  Folk retiring @ 55 today actuarially (sp) are not expected to live to 90 (median or average). What are you assuming for increases (COLA’s) in retirement?  Are you assuming only pension, or are you adding in other post-retirement benefits?  If the latter, are you acknowledging that at 65, City retirees are only covered for Supplement to Medicare (if they are eligible, some, believe or not AREN’T)?

      This isn’t a “set-up” Frankly, but I would like to test your assumptions and compare them to facts.  I believe you may be missing some “facts”, but can’t tell until I know your assumptions for your numbers.  I mean for this inquiry to be fact-based.  If you contact me on this, I’ll respond ‘off-line’ as well, then we can share with all.

      Afterthought… do you consider, for employees to date, the amounts paid for employer share (and/or, in the past) of PERS contributions to be “sunk costs” or ‘liabilities’?

      Feel free to contact me @ hortensepierce@yahoo.com

      1. Sam

        hpierce- Using a calculator on the Fidelity website a husband and wife would need $2,785,040 to purchase an annuity paying $100,000 a year for the rest of their lives with an automatic 2% COLA. So his numbers are at least realistic.

        https://gie.fidelity.com/estimator/gie/quoteresults

        The city already has an unfunded pension of $58,000,000 and is looking at a 110% increase in annual contributions. A 3% raise only compounds the bad situation.

        1. hpierce

          Your math/logic/facts are faulty/questionable…

          30 years @ 2.7% is 81%, NOT 100%… $81k, NOT $100k (error? distortion/ lie?)… already you are wrong in your analogy.

          Next, the 2% COLA in retirement under PERS is the MAX, not guaranteed.  Probably will be similar/same as the SS adjustment.  If inflation is 8-10% (as has happened in my memory), PERS retirees get 2%.  Second strike.

          I’ll challenge you as well as Frankly… do you know how PERS pensions work (either you do not, but you tell an untruth to make a point)?  When an employee retires, their funds come from their contributions (or those made on their behalf).  In they die early, and have not selected a “longest life” benefit (which further reduces their pension by 6-7%, depending on the age of their beneficiary @ retirement), any money goes back into the “pool” and I assume is credited to their employer(s).  If the beneiciary also dies before 90, your assumptions are still wrong. Strike Three

          In estimation of the City’s “liability” did you subtract out the payments made by the employees whether made by them or as part of an offset when they took lower salary increases?  The interest earned by PERS on that money? The interest earned by PERS on the employers’s share?  Whether the City’s contributions to this point are “expenditures/sunk costs”, or unfunded liabilities?

          Maybe you should get better informed, and check your numbers… several are demonstrably wrong.  Your analysis, unless backed up by your assumptions, are patently false.

          As it stands, unless you or Frankly demonstrate otherwise, I question your credibility as to your liability #’s.

          Is there a problem that needs to be addressed?  Yes.  But not the one you and Frankly seem to stipulate.

        2. Sam

          I posted a link that you can use to calculate the cost to purchase something that resembles a pension and ran one example. There are a ton of variables when calculating an employees actual pension. For example, CalPERS offers COLA provisions from 2%-5% and on May 1st gave increases from 1.62%-4%. The Fidelity website only offers the option of 0% or 2% flat.

          I do know how pensions work and will email you the answers to the questions that you posed to Frankly.

      2. Frankly

        hpierce – No I did not include any COLA.   I just did simple math so we can understand it in 2015 dollars.  (Assuming COLA = rate of inflation)

        I also am not including OPEB… just the pension.

        For life expectancy, I was using the 2050 estimate adjusted by income-class.

        But let’s say 85 and so 30 years of retirement.

        2.7% x 30 = 81%.  81% of $103,000 = $83,430.  $83,430 * 30 = $2,502,900

        The unfunded long-term liability for pensions would be the long-term known funding obligation minus what is already funded.

        1. hpierce

          Thank you, Frankly, I find that quite helpful…  will have to play with analysis of how that is reduced by 7-8% each year (employee contributions, whether paid by employees or on their behalf), employer contributions to date [which I see as “sunk” costs, to date, not liabilities], have to make assumptions as to what PERS interest/earnings, etc. (which assumptions I’ll share).

          Will also need to further inform myself as to employee/employer shares under the new formulas, to see how much of the total “annuity” is funded by the employees, how much by the PERS system (dividends/investment/’actuary’ results), and how much by the ‘public’ in terms of ‘unfunded liability’.  I’m looking to get the numbers right, to inform policy issues.

          Am trying to be fully “transparent” on this.  I believe Frankly and Sam (and others) have over-estimated the City’s liabilities, significantly, but the overall issues are real, but should be addressed with “real numbers”, not ‘worst case’/theoretical, so the community can decide what we want to do.

          If the VG community wants to engage on facts/numbers, great… just please avoid the need to use adjectives such as “right wing”/”left wing”, conservative/liberal, Democrat/Republican, etc.  The issues are too important to ‘play games’.

        2. Frankly

          just please avoid the need to use adjectives such as “right wing”/”left wing”, conservative/liberal, Democrat/Republican, etc.  The issues are too important to ‘play games’.

          I will work on that.  It is national political season though, so I am going to have to work extra hard.

        3. Frankly

          My main point was that a 3% COLA increase causes a big hit on the pension liability in the scenario I painted.

          Think about what a defined contribution retirement benefit would return for a similar employee getting a 3% raise.

          Making $100,000 at age 54, they would get a total of another $3,000 in gross compensation retiring at age 55.

          $3,000 compared to $88,050 hardly seems fair does it?

          Or more specifically, $88,050 in additional retirement benefit does not seem right does it?

          Lastly, we cannot afford it.

          But apparently none of this matters.

  12. Anon

    One thing that is missing from the discussion of firefighters vs police is that firefighters not only fight structure fires in Davis, but participate in strike teams where there are forest fires in other parts of the state.  Forest fires, as anyone with a half a brain knows, are extremely dangerous.  Just trying to keep all factors in the equation, not weighing in particularly on who should make how much.

  13. TrueBlueDevil

    Since when is the city budget balanced, especially given the $100 million road backlog?

    I thought the first rule of finance was when you have a financial hole, quit digging. I guess in a Democratic-run city, the equation is time for more taxes. Tax, tax, tax.

        1. David Greenwald Post author

          But part of the reason that two are not Democrats is precisely because they are not and do not want to be part of the local machine. They got elected in part to create a more fiscally sustainable government.

        2. TrueBlueDevil

          So do I have this correct: they aren’t part of the Democratic machine, but they voted with the machine?

          Sounds like they are splitting hairs. If it swims like a platypus and moves like a platypus, it ain’t a pit bull.

          1. David Greenwald Post author

            One thing that I have found remarkable in the discussions we have had is how little conservatives understand or appreciate sharp philosophical differences within the left.

        3. Frankly

          One thing that I have found remarkable in the discussions we have had is how little liberals understand or appreciate sharp philosophical differences within the right.

          And how little liberals understand about business and economy.

          1. Don Shor

            Another interesting fact, little noted, is that the world is not just made up of liberals and conservatives.

  14. Jim Frame

    FYI, the resolution was just passed on consent with Robb Davis registering a no vote.

    I had a long conversation with Brett Lee this morning about this item, and he explained his decision to vote in favor.  His position is too nuanced for me to bother trying to describe it here in detail, but suffice to say it involves the nature of politics being the art of the possible.  I’m satisfied with his position, despite my frustration with the process.

    1. Don Shor

      So let’s see what the impact of this decision is.
      It means no housing project is likely to pencil out for city revenues, because the cost of city services will continue to increase.
      It makes it less likely that a sports park tax will pass, because the ongoing city costs of maintenance will be higher.
      It means that the city’s budget is already mortgaged a decade out, so no other priorities can be implemented.
      It probably reduces the likelihood that voters will approve added taxes for things like universal preschool.
      It calls into question renewal of parcel taxes.
      The problem is, the council majority has made a decision that is fiscally unsustainable, and the multiplier effect of this decision hasn’t even been fully quantified.

      1. TrueBlueDevil

        Yep. So they are either liars, incompetent, or dreamers. Incompetent dreamers? (Brett Lee referring to the art of the possible.)

        Kick the can down the street, just like every other politician… and pay off your support base.

        FWIW, expect more funny games like this with the Enterprise going to 3 days a week.

    2. Mark West

      I want to make sure I understand your comment correctly, Jim.  They voted on the resolution as part of the consent calendar without discussing it in front of the public? Is that correct? Not one of the five pulled the item for discussion?

    3. Michelle Millet

      I wish Brett had been willing to share his explanation during the council meeting so that the public could hear it. I’m uncomfortable when politicians choose to explain their reasoning in private rather then public. I’ve noticed they tend to change their reasoning depending on which individuals they are are speaking to.

  15. Frankly

    There is this difference between public-sector and private-sector where public-sector labor carries power with the threat of being unhappy… and with the private sector the power is in management’s hands to help keep labor happy enough.

    This is a subtle but profound difference.

    An analogy is a family where the kids group together to compel the parents to give them a bigger allowance even when the parents don’t have a budget to support it.  This versus the family where the parents are compelled to have a good relationship with their kids so they can honestly share information about the budget and get everyone in the family committed to living within the family means.

    The former seems dysfunctional to me.

  16. Tia Will

    Frankly

    Private sector-employee to management – “I think I have earned a raise.”

    Public sector-employees to management – “We think we deserve a raise.”

    Having worked in both the public and the private sectors at various times, I see this as too simplistic a view of the attitudes being expressed. It does not take into account that at some points in time, both may be operative and completely valid. Many jobs require working effectively both as an individual and as a member of group or team.

    Using the model I know best, medicine. I can be judged on the basis of how I perform as an individual in my office practice. Do I get my patient’s immunized, do I do appropriate cancer screening, do I prescribe, consult, manage illnesses appropriately. If I do all of this effectively, I may deserve a raise as an individual. But in reality this is not just an individual effort. It is the work of my medical assistant, my nurse’s and my partners who see “my” patients when I am not in the office that contribute to “my” performance. Added to this, is that not all performance is individual. Much is dependent upon the overall performance of “functional units”. This group performance certainly is taken into account when health plans are ranked.

    By dichotomized thinking such as you demonstrate with this, your Randian thinking, and your family example you do not seem to acknowledge that most people can appreciate both individual and group value creation and do not work in a perfectly black and white world.

  17. SODA

    I am appalled that the CC would not at least pull the item for discussion last night. At least in the spirit of transparency if nothing else.  I hope Robb will weigh in and I encourage Brett to give his explanation.

    I realize DV readers/commenters are a slice of the our town but the overwhelming comments on this article have been for a questioning if not negative vote and to not even pull for discussion strikes me as dismissive.

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