News

Pensions: Palo Alto's ticking time bomb

Employee pensions are helping fuel fiscal crisis throughout the state -- and in Palo Alto

In 2007, the year Warren Buffett famously described public pensions as a time bomb with a long fuse, Palo Alto officials decided to add a little gunpowder to the city's benefits package.

The economy was booming, real-estate prices were surging and the council decided that the time was ripe to improve the pension benefit for employees represented by the Service Employees International Union (SEIU), about half the city's workforce. The rapidly rising cost of health care was of greater concern to city officials, who sought to switch the SEIU workers to a less generous health care plan. In exchange, the city offered to bump up the union's pension formula from "2 percent at 55" (that is, 2 percent of the employee's highest salary multiplied by the number of years worked before retirement at 55) to "2.7 percent at 55."

But Buffett's aphorism notwithstanding, the fuse on Palo Alto's time bomb wasn't particularly long. In 2008, as the stock market began to plummet and real-estate investments started to tank, city leaders realized that the city's generous pension packages -- a lasting legacy of the pre-recession era -- could not be sustained. The following year, they launched the period of unraveling that continues to this day and that is set to take center stage in the coming months, as the city tries to formulate a broader strategy for containing out-of-control benefit expenditures.

Some progress has already been made. In 2009, after loud protests, heated negotiations and a one-day strike by SEIU workers, Palo Alto became the first city in the region to implement a second pension tier for new employees, one with a less lucrative formula. Last year, the city's firefighters accepted a second pension tier as part of a new union contract, and in May, after nine months of negotiations, police officers followed suit.

But even with these changes, the fuse continues to burn at an accelerating clip. In 2002 and 2003, the city's pension expenditures were $3.8 million and $2.4 million, respectively. Since 2008, annual expenditures have consistently hovered around $20 million. The budget for 2013, which the City Council adopted last month, projects $23.1 million in pension costs. And with investments by California Public Employees' Retirement System (CalPERS) running far below projections this year, City Manager James Keene expects expenses to continue to grow in the coming years, he said in a recent interview.

The issue of pensions is a common topic on the dais at City Hall -- especially during the spring when the council considers its annual budget. Increasingly, employee compensation is taking up a greater share of the budget, leaving the council and staff with less to fund city programs and services. This year, financial pressures prompted officials to propose outsourcing the city's popular animal-services operation in order to save roughly $500,000 a year. The city ultimately elected to keep the service in-house, but staff is now scrambling to find annual savings of $470,000.

Staff compensation now makes up about 63 percent of the General Fund. The benefits share has grown particularly fast in recent years. In 2002, the proportion of dollars spent on employee benefits to salaries was 23 percent. That ratio went up to 54 percent in 2010 and to 63 percent by fiscal year 2012.

Health care expenses jumped from about $10 million in 2002 to a projected $24 million in fiscal year 2013, which began July 1. They are expected to approach $30 million in two years. Pensions, meanwhile, jumped from $3.8 million in 2002 to $23.9 million in 2012. In 10 years, employee benefit costs will exceed salaries, the city projects.

Vice Mayor Greg Scharff alluded to these trends at a May 7 meeting, when the council was discussing the city's long-term financial forecast. Medical and pension costs, Scharff said, "are running at an unsustainable rate and crowding out everything else." As a result, he said, the citizens of Palo Alto aren't getting a fair shake.

"What we're asking people to do is to accept a lower quality of life so that we can fund pensions and benefits that are growing at an outrageous pace," Scharff said. "I don't accept that that should be the plan."

But, as city officials often acknowledge, identifying the problem is far easier than solving it. The city's annual expenditures hinge on a wide range of decisions, many of which get made in Sacramento. Palo Alto employees are among the roughly 1.6 million workers -- active and retired -- who participate in CalPERS, the largest pension fund in the nation.

"What we need to do is we need to basically bring down pension and medical costs, but we're really hampered in our ability to do that given state law and legacy issues and inability to change pre-existing costs for people who are retired and all sorts of issues out there like that," Scharff said.

Councilman Pat Burt echoed this sentiment and said that even under recent revisions to pension formulas, "Employees do very well."

"Retiree pension and retiree medical -- that's what's blowing up the budget," Burt said.

He cited the "3 percent at 55" pension formula recently adopted by public-safety employees and the fact that all employees still get 90 percent of their families' medical coverage paid for by the city. Salaries may remain frozen or get trimmed, Burt said, but Palo Alto's benefits remain extremely lucrative.

"There's potential that they won't be getting a fair shake on salaries, but even new employees get a very fair shake on pension and benefits," Burt said. "On the benefit side, new employees still do very well."

Now, Scharff, Burt, Councilman Greg Schmid and Councilwoman Karen Holman hope to launch a broader discussion on reforming employee benefits. Last week, they released a colleagues' memo that calls for the city to come up with a "benefits strategy" that would guide future reforms. In the memo, they note that the cost of employee benefits and pensions "has risen dramatically for the City of Palo Alto, reducing the funds available for our community's necessary and valued services and infrastructure." They recommend the city work with employees to come up with solutions to the pension problem with the the goal of "building a modern, flexible workplace environment for Palo Alto City employees while also assuring sustainable costs for its citizens."

The council plans to launch this discussion in September.

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Palo Alto employees make no secret of the fact that generous employee benefits were a major driver in their decisions to join the city's workforce.

Before a council meeting June 25, about 40 employees represented by the SEIU gathered in City Hall to address the council, which was scheduled to go into closed session to discuss the status of labor negotiations. Employees spoke about morale problems in the workforce and urged the council not to make any drastic benefit reductions.

Robert Item, an engineer in the Utilities Department, said he had previously worked as a consultant in the private sector.

"The (ctiy's) benefits were something I haven't seen in the private sector," Item said, explaining his decision to make the switch.

Palo Alto isn't unique in this regard. A March report from the Santa Clara Grand Jury noted that private-sector employees typically contribute more than 50 percent of the total cost toward their own pensions -- 50 percent in the case of Social Security and an even greater share in the case of 401K plans. The generous benefits offered by cities are intended to counterbalance the higher salaries in the private sector.

"Cities reported that they felt compelled to enhance benefits to attract and retain the best work force possible," the Grand Jury wrote.

But benefits have been particularly generous in Palo Alto, where the city has until recently footed the entire bill for employee pensions, including the employees' share. The city has also traditionally paid employees' entire medical costs -- a perk that's generally unheard of in the private sector. Only in the last three years did it start asking workers to chip in -- a proposal that has been particularly unpopular among unions.

When it comes to pensions, veterans of the city's Police and Fire departments have done especially well. Former Police Chief Lynne Johnson, who retired in late 2009 after making comments that many interpreted as an endorsement of racial profiling, led all local retirees with a pension of $201,953 in fiscal year 2012, according to documents the Weekly obtained from CalPERS through a Public Records Act request. Former Fire Chief Nick Marinaro, who retired in 2010 under more amicable circumstances, drew a pension of $166,157.

But high pension payments aren't restricted to police officers and firefighters. The list of Palo Alto retirees getting hefty pension payments include Richard James, former director of the Community Services Department ($178,681), and William Miks, former manager of the city's water-quality control plant ($176,067). Frank Benest, the former city manager under whose watch the city bumped up the pension formulas for its labor unions, received $193, 351, second only to Johnson.

To be sure, most Palo Alto retirees make far less than that. Many midlevel managers draw pensions in the $65,000 to $70,000 range. A retired arborist received a $55,718 pension in 2012, while a former manager in the Community Services Department got $70,728.

But six-digit pension payments, while uncommon, aren't exactly rare. The list of 954 Palo Alto retirees who received CalPERS funds in 2012 includes 88 who received pensions greater than $100,000 in 2012. The Santa Clara County Grand Jury also noted in its report on pensions that the average pension for public-safety employees in Palo Alto retiring between the ages of 51 and 54 with 30 years of service is $108,000.

The pension problem is further compounded by the city's massive health care liability for retirees. According to the Grand Jury report, the city's pension liabilities totaled $153.9 million and its health care liabilities are $105 million -- for a total of $259 million. Palo Alto's debt per resident was calculated at $4,021, higher than in any other city in the county (San Jose was a distant second with $3,320).

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The problem of benefit costs isn't limited to Palo Alto or, for that matter, to California. Ever since the Great Recession hit, states across the country have been grappling with the fact that they can no longer honor the promises they made to their workers during better times.

A new study by the Pew Center on States, which surveyed financial data from 2010, found 49 states with liabilities in their pension funds (Wisconsin is the lone exception). The problem was particularly glaring in Illinois, Rhode Island, Connecticut and Kentucky, where pension plans were underfunded by about 50 percent. California pension plans were 78 percent funded in 2010, with a $112 billion funding gap, Pew reported.

Many states have taken steps to address this growing problem. Twenty-three states have both increased employee contributions and reduced benefits, a recent study by the federal Government Accountability Office found.

California's pension pains are exacerbated by how CalPERS' pension plans are structured. The fund operates under a "defined benefits" plan, which guarantees each participating employee a certain pension sum, thereby forcing employers to constantly revise their contributions to CalPERS based on the pension fund's returns on investment, known in industry parlance as "discount rates." The private sector, by contrast, uses the "defined contribution" model under which payments to the fund are constant but the pension amount ultimately depends on investment performance.

Under this system, workers in Palo Alto and elsewhere are guaranteed their pension payments regardless of CalPERS' investment performance. The city's contributions, which support the guaranteed payments, thus ebb and flow with the economic tides (lately, it's been mostly flow).

A recent report by the Santa Clara County Grand Jury urges public agencies to switch from the defined-benefit to the defined-contribution plans, in which "costs are predictable and therefore more manageable by the cities." Three states -- Georgia, Michigan and Utah -- have shifted since 2008 from defined-benefit plans to "hybrid" plans that "shift some investment risk to new employees," according to the Government Accountability Office report.

California Gov. Jerry Brown is trying to take a similar approach. His 12-point plan, which includes such reforms as second pension tiers for new employees and a 50-50 split between employer and employee contributions, also calls for a "hybrid" approach that includes both a defined-benefit and a defined-contribution component.

Rising pension obligations have already helped to push some cities to the brink of insolvency or, in some cases, beyond. When Vallejo declared bankruptcy in 2008, it had a $195 million unfunded pension obligation, the Grand Jury report notes (the bankruptcy, from which the Vallejo finally emerged in 2011, allowed the city to renegotiate its employee contracts and led to a reduction of pension and health care benefits). Stockton embarked on a similar path in late June when it passed a budget with a $26 million hole and became the largest city in the nation's history to file for Chapter 9 protection. The Grand Jury report notes that Stockton had less than 70 cents set aside for every dollar of pension benefits its worker are owed.

Other California cities have pushed through aggressive pension reforms in an effort to avoid similar fates. In June, San Diego and San Jose both passed major pension-reform measures with overwhelming support from voters. The San Jose measure gives city workers a choice between accepting a less lucrative pension plan and increasing their pension contributions to 13 percent (employee contributions currently range from 5 to 11 percent). The San Diego measure goes a step further and creates a 401K-like pension system for new employees, with the exception of police officers.

So far, Palo Alto's pension reforms have been relatively modest. The city's new contract with the police union raises the retirement age for collecting pensions by shifting new employees from a "3 percent at 50" formula to "3 percent at 55."

It also changes the way pensions are calculated. They used to be based on a single year of highest salary; now they're based on the average of three consecutive years with highest salaries. The reform addresses the problem of pension spiking, when an employee cashes in on unused vacation and sick days and pulls extra overtime in his final year to increase his "highest salary" and bump up his pension payments.

The city is also now asking its workers to fund the entire employee share of the CalPERS contribution. In the case of the police union -- the latest labor group to agree to a contract -- this comprises 9 percent of the total pension contribution. Other employee groups will soon be asked likewise to pick up the full share of employees' CalPERS costs, Keene said in a recent interview.

"In our current negotiations with the SEIU, one of our fundamental components is having them pick up that remaining 2.75 percent gap and paying the full employee share," Keene said. "We'll be working with the management-and-professionals group to have them move in that direction, too."

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While state policies and economic trends have fueled Palo Alto's pension crisis, some of the wounds have been self-inflicted. In 2001, the city increased pension benefits for public safety workers by 50 percent, effective retroactively. Then came the 2007 agreement with SEIU, which resulted in a 35 percent lifetime benefit increase for employees. The city's newly passed budget points to these "large retroactive benefit increases" as a major reason for why "pension costs have skyrocketed (and will continue to grow)."

At the time, the city saw the increase in pension benefits as a reasonable exchange for a less generous health care plan. The average monthly health care cost per employee had jumped from $734 in 2004 to $1,009 in 2008 (it is projected to be $1,230 in fiscal year 2013).

"The City is balancing its risk between medical and pension costs by capping its medical premiums while enhancing the pension plan," then-Human Resources Director Russ Carlsen wrote in October 2006. "Since CalPERS manages the pension fund (one of the largest funds in the world) and has a 9.2 percent rate of return over the last 10 years, it is a more predictable expense versus extremely volatile health care expenses, which the City has little control over."

Other cities made similar calculations and opted for "predictable" CalPERS returns. Carlsen noted in his report that nine of the 11 benchmark cities Palo Alto had looked at had similarly "improved or are in the process of improving their retirement formula beyond 2 percent at 55 within the last several years."

Since then, the pension problem has added to what was already a perfect storm of budget calamities in Palo Alto. The Great Recession took a bite out of the city's sales- and hotel- taxes, major sources of General Fund revenues. Health care costs have been rising dramatically, putting the squeeze on the budget and forcing the city to cut workforce by about 10 percent.

But while tax revenues this year returned to their pre-recession levels, the twin problems of health care and pension costs are only getting worse. At the May 7 meeting, Scharff characterized the pension problem as one the city needs to own up to.

"This isn't a calamity that happened to us. This isn't a natural disaster. This is something that we did to ourselves and that the state did to us, frankly," he said.

Now, the city hopes to reverse the trend. Last year, Scharff, Burt and Holman spearheaded a measure to eliminate the long-standing requirement of sending disputes between the city and its public-safety unions to binding arbitration. Measure D easily passed last November, with more than two-thirds of the city's voters supporting it.

The move gives the city more flexibility in labor negotiations and allows it to impose benefit reductions on unions. And while the city has already succeeded in wresting some concessions from its workers, Keene and council members have consistently maintained that employees will have to make even more sacrifices in the future.

"We really have to make moves to reduce our long-term liability in this regard," Keene said, referring to pensions and other benefits. "What that means is increasing employee contributions to those costs. We made our first moves in that area, but I see in the OPEB (other post-employment benefits) area we'll have to make continual changes in the future."

No one expects these discussions to be easy. Recent reforms have taken a toll on employee morale and have prompted dozens of veteran employees to retire. Keene said the retirements are a testament to the city's "generous pay and benefit packages that allowed people to retire quite young in life." He also said the city has been successful in attracting and recruiting "a new generation of employees who are excited about government."

But not everyone sees the changes as positive. SEIU workers told the council June 25 that they are now doing far more work for less pay relative to their counterparts in similar cities. Lynne Krug, an inspector in the Utilities Department and former chair of SEIU, Local 521, said the city is no longer retaining its top workers because of it.

"We are really doing a lot more work than we ever thought we'd be doing," Krug said. "It's exhausting."

Her colleagues concurred. The loss of experienced workers, several SEIU workers told the council, will necessarily result in a lower quality of services in Palo Alto.

Ratu Serumalani, a maintenance worker in the Community Services Department, said employees are still feeling the pain from the concessions the city forced the union to accept in 2009. City workers are struggling to pay the bills, he said. Many have retired, he said. During this period of concessions, the city lost "a lot of talent," he said.

"There will come a time when you will have no one here actually training," Serumalani said. "There's no succession plan. What you have here is the very last of the very talented."

Related story:

State investments take a bite out of local budgets

Comments

 +   Like this comment
Posted by Palo Altans for pension reform
a resident of Old Palo Alto
on Jul 13, 2012 at 8:28 am

Palo Altans will support pension reform wholeheartedly. We can't dismantle our city, like the recent proposal to get rid of the animal shelter and before that branch libraries (which were shot down by the community), to put band-aids over the real problem, while we keep hiring for newly created administrative positions. We need reform like in San Jose, and we need to come up with fair and appropriate benefits for today's world. We also have to see that staff has an inherent conflict of interest here, as they benefit from the status quo. The council needs to show leadership and it will get backed up by the community, without a doubt.


 +   Like this comment
Posted by Logic
a resident of Green Acres
on Jul 13, 2012 at 8:32 am

And yet, we "charge ahead" with a 10 million dollar "bike path plan". We must get our budget in order before approving any more new spending, or we will face the day where we are selling off our parks to pay our debts.


 +   Like this comment
Posted by Dismantle-It-Now!
a resident of Another Palo Alto neighborhood
on Jul 13, 2012 at 9:36 am

> We can't dismantle our city, like the recent proposal to get rid
> of the animal shelter and before that branch libraries

We most certainly can! It just takes strong Council members, a good financial analysis, and a good plan for delivering services some other way than by the ineffective, unionized, employees that have become too expensive.

The first step involves coming to our senses about having to provide "services" for both residents, and non-residents, alike. Over seventy-five percent of the people using the golf course are non-residents, and the non-resident users of the Art Center have been even higher than that. Same goes for the Cubberley Center, and there percentage of Palo Altans using the Airport is very small. Yet, the City seems to think that it has an obligation to provide services to anyone with a tin cup and the audacity to demand funding from the City.

Dismantling this perverse welfare state for the wealthy seems to be the first order of business.


 +   Like this comment
Posted by Bob
a resident of Community Center
on Jul 13, 2012 at 10:07 am

To Dismantle:

Our parks are heavily used by non-residents. Our libraries can be used by non-residents,
Our tennis courts are open to all - just walk on. Our swimming pools are open to all for a fee.The golf course makes money for the city -it is NOT in the red. And it is out-of-towners who keep downtown Palo Alto afloat with cash And the airport - it has become the commercial lifeblood for the high tech industry. What we don't need are these grandiose schemes right now- a bridge over Bayshore like the Tunnel to NoWhere, a legacy of a previous council. We don't need an off-the-chart bicycle plan - right now. We don't need the many 'executives' with six-figure salaries that Frank Benest and Jim Keene has hired - especially one to straighten out the Information Technology security problem WHICH IS SAP'S PROBLEM AND WHICH SAP SHOULD FIX. SAP has been a problem for years and a $$$$ drain.Take away the arts, take away the recreation, and you take away the building blocks of Palo Alto. THIS is a council that just can't say NO. But it's almost August. Who is going to run for City Council? Recycled councilmen - and women? The insider, big business, developer crowd who can 'raise the money'? It's called 'political musical chairs'.


 +   Like this comment
Posted by dexter hake
a resident of Los Altos Hills
on Jul 13, 2012 at 10:33 am

re health care benefits, when do start talking seriously about a single payer plan, Medicare for All? Relieve the muncipalities of this burden at least.


 +   Like this comment
Posted by Dave
a resident of Crescent Park
on Jul 13, 2012 at 10:44 am

First things first: Does a timebomb even have a fuse? I mean if it were ticking, wouldn't that mean there was some kind of detonation/timer device instead of the old fashioned fuse?


 +   Like this comment
Posted by Silly
a resident of Duveneck/St. Francis
on Jul 13, 2012 at 11:06 am

This article contains NOTHING about the fact that Palo Alto has significantly more city workers making more than $200,000 in straight salary than any of the surrounding communities.

I love the fact that we've got a police dispatcher making $300,000 with over-time. Her rudeness is included.

I'm tired of hearing how hard they work. The lazy traffic light supervisor can't even be bothered to check the timing of the traffic lights that cause such backups. I guess his laziness is included, too.


 +   Like this comment
Posted by AR
a resident of College Terrace
on Jul 13, 2012 at 11:22 am

The package approved for Benest is, simply, shameful. All involved with that should not have such responsibility ever again; we cannot afford their largesse. Looks like something similar may have happened with Lindsey. We could well end up paying Benest and Lindsey for many more years than they worked for us. What a deal (for them). Packages like this are ludicrous and it is no wonder that people are steamed and the entire issue is under scrutiny. The argument that we must pay salaries at that level in order to attract and retain "the best" is seriously undermined by both short tenure and poor performance. Voters Beware.


 +   Like this comment
Posted by h gans
a resident of Fairmeadow
on Jul 13, 2012 at 11:26 am

Simple math.

If a public employee is paid a pension of $100K for thirty years after retiring at 55, their present day salary is double. So an employee is paid $100K per year - factoring in future pension benifits - they are making $200K. The highest paid employs are at $400K.

So why are they are complaining?


 +   Like this comment
Posted by Lou
a resident of Another Palo Alto neighborhood
on Jul 13, 2012 at 11:34 am

Yes, I've had a rude incident with a police dispatcher. And then there are burned out street lights on major arterials and even El Camino which is a state highway and Caltrans' turf. Why can't the city put pressure on Caltrans to repair the surface of El Camino between Town and Country and the Stanford Shopping Center? That stretch is a tooth chipper.Been that way for years. Why is the city involved in major redesign$ of Rinconada and Eleanor Parks? That can wait as well as a bike bridge and this bicycle route gradiosa. Get real, city hall!!
And this 'little rabbit hole apartment' idea for seniors? In 5-10 years would Councilmember Larry Klein move in? Or past councilmember Dena Mossar? Liz Kniss? Or any other of the present and past council members? Who dreams up this nonsense? The PLanning Department and the Arch.Review Bd have already ruined the aesthetics of the city.


 +   Like this comment
Posted by sw
a resident of Palo Verde
on Jul 13, 2012 at 12:08 pm

I say let the Palo Alto employees who would rather work for other cities go. In this economy, I have no doubt there will be competent people happy to apply for the vacated positions.


 +   Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 13, 2012 at 12:27 pm

Peter Carpenter is a registered user.

The ultimate market test is to put out an RFP for each of the city's services and see what the bids are for each. And contract out is paying as you go with no future pension liabilities.

Atherton did this and is saving millions.


 +   Like this comment
Posted by Cindy
a resident of Midtown
on Jul 13, 2012 at 12:33 pm

Employee Retirees are living longer. For the first time, there are now more retirees than active employees. Many cities are now having their employees pay 25- 40 % of their pension and medical costs. Cities can longer fund a employee retiring with 90% of their salary and 100% of their medical.


 +   Like this comment
Posted by John Kidd
a resident of Old Palo Alto
on Jul 13, 2012 at 12:43 pm

Bravo for a great article that fairly presents a significant challenge to us all.


 +   Like this comment
Posted by Dan
a resident of Southgate
on Jul 13, 2012 at 1:03 pm

Pensions should be based upon base salary. OT and cashed-in vacation and sick leave should not be part of the formula.


 +   Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jul 13, 2012 at 1:31 pm

Peter said

"The ultimate market test is to put out an RFP for each of the city's services and see what the bids are for each."

We could do that for all City jobs and all Private Sector jobs - as a result we could outsource everything and move most jobs to India and China.

I certainly agree with you that there needs to be more fiscal responsibility but I amnot sure the best answer is to terminate all employees.


 +   Like this comment
Posted by Concerned Palo Altan
a resident of Another Palo Alto neighborhood
on Jul 13, 2012 at 2:01 pm

Palo Alto should follow the steps of Stockton and San Bernardina and declare bankruptcy to break away of the commitments made by previous city councils who more cared about getting union support than the ci they were representing.


 +   Like this comment
Posted by Voter
a resident of Professorville
on Jul 13, 2012 at 2:41 pm

All new hires to 401Ks.

All current city workers given the choice to switch to 401Ks or have their salaries cut some large percentage to compensate for the huge, out of market taxpayer benefit that their pension has proven to be.

Better yet, all city functions except sworn police should be outsourced to the private sector. We the people should pay those who work for our government market rate and only market rate, not what the unions are able to bribe out of our politicians.

Enough is enough. The voters of conservative San Diego and liberal San Jose all agree 70/30. Palo Alto wants and deserves the meaningful structural reforms regarding what we pay our government employees.


 +   Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 13, 2012 at 2:45 pm

Peter Carpenter is a registered user.

Outsourcing by no means moving the jobs off shore. Most city services MUST be provided on site so any contractor would have to be on shore.

Caring an argument to the extreme is always a clever tactic but is also usually ineffective.


 +   Like this comment
Posted by kma
a resident of Meadow Park
on Jul 13, 2012 at 3:12 pm

Web Link


 +   Like this comment
Posted by kma
a resident of Meadow Park
on Jul 13, 2012 at 3:14 pm

It's a lesson for the future. Present police benefits are not the sole or primary cause of the city's fiscal problems.

see article

Web Link


 +   Like this comment
Posted by David Pepperdine
a resident of Another Palo Alto neighborhood
on Jul 13, 2012 at 3:52 pm

Recommendations:

1. Scrap pensions - move to employee contributed 401(k) plans
2. No more health coverage after retirement -- LaDoris Cordell notwithstanding, it's too expensive
3. Outsource work to private companies who bid for contracts. Include quality metrics.
4. Layoffs
5. Address the attitude of entitlement among some employees. Help them get the picture -- we're their customers, we pay their salaries.

That's pretty much it.


 +   Like this comment
Posted by Kim S.
a resident of Old Palo Alto
on Jul 13, 2012 at 4:12 pm

One additional recommendation:

Scrap the idea that we need to be competitive with the salaries in other cities. This will only force government salaries to continually rise. Cities should come together on what a fair price is for the job at hand and not offer annual pay hikes to everyone. Raises should only be granted based on exceptional performance by individuals.


 +   Like this comment
Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 13, 2012 at 5:59 pm

Jim Keene has given Palo Alto a steady hand after a string of scandals and/or foul-ups involving the former Deputy City Manager, Police Chief, City Attorney, Administrative Services Director, Human Resources Director, and Public Works Director. All of these individuals are now gone, some under a cloud, some a step ahead of the sheriff. Benest was a good man burdened with family tragedy. Trouble was that in his absence, the Deputy City Manager and department heads ran amok. City Council was simply AWOL. The big pension boost engineered through a bamboozled City Council by the former Administrative Services Director was emblematic of that irresponsible time.


 +   Like this comment
Posted by James
a resident of Meadow Park
on Jul 13, 2012 at 6:12 pm

Looking at the graph, the Firefighters paid nothing towards their retirement. What's with that?


 +   Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jul 13, 2012 at 6:14 pm

Peter-

You are wrong, many PA jobs could be outsourced to companies in China and India - many could be located offshore (IT, Finance, Park & Rec Customer Service etc) and the rest with contractors working here (managed service contracts). However, you sort of missed the point anyway - I guess I should have expected that.

Most of the City employees are dedicated and loyal people who work hard. The compensation may be high but that is not their fault - it was years of management neglectthat created that problem. So I think it would be unfair to take the easy way out (like Atherton did) and replace the workers with contractors. If the City created the problem then the City should fix the problem in a responsible way.

It is important to remember that many of our jobs could be done cheaper by others - so as we fix problems we should treat the City workers the way we would like to be treated.


 +   Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 13, 2012 at 6:21 pm

Peter Carpenter is a registered user.

Alphonso - you have missed the point. The issue is not if their excessive compensation and benefits are the employees 'fault' but that those excessive compensations and benefits are neither justifiable or affordable.

"It is important to remember that many of our jobs could be done cheaper by others"

Correct and that is why either our wages drop or we lose our jobs because our employer is forced out of business by more efficient competitors.


 +   Like this comment
Posted by Taxpaying citizen
a resident of Barron Park
on Jul 13, 2012 at 6:23 pm

It's high time to begin outsourcing. That city with as much revenue as Palo Alto can't afford basic infrastructure repairs because it's overpaying a giant inefficient bureaucracy is absolute madness.

Our planning dept, for example, is one of the worst in the area: slow, inefficient, and opaque, and yet we continue to hire more planners on their outrageous government pay scale. The fire department is a playground for a self-serving union that had the nerve to try to scare the public into forcing the city to accept inefficient work rules through a feather bedding ballot measure. They should be consolidated with the county or nearby cities.

Enough is enough.

Also the utility users tax which flows directly into the general fund is a giant conflict of interest and should be repealed. With the tax helping to fund lavish pensions, the city Council cowes to its union apecial interests and does not perform its role of oversight of the utility.





 +   Like this comment
Posted by Privatizer
a resident of Fairmeadow
on Jul 13, 2012 at 8:43 pm

New York Times recently had an interesting article about a town in Georgia which had privatized pretty much all its city government operations:

Web Link

There seems no reason why Palo Alto cannot learn some lessons from it.


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Posted by AR
a resident of College Terrace
on Jul 13, 2012 at 8:51 pm

David Pepperdine: please run for City Council.


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Posted by Richard
a resident of Midtown
on Jul 13, 2012 at 8:53 pm

Bob. Can you cite figures that prove the golf course is not subsidized? How has the airport become the lifeblood of the community? Statements without proof are simply opinions to support a position.

We must follow the recommendations of the Infrastructure Blue Ribbon Commission (IBRC) report - Catch Up and Keep Up before we spend money we don't have on wonderful ideas like a $10 Million bike bridge across highway 101. And Liz Kniss gets $47,000 from the County to help the cause. Talk about politics to get elected.

I still can't believe a recent statement from the City Council about spending $25 to $35 Million dollars on new road and bike lane construction. It's almost as if the Council is pandering to certain groups to get reelected. Look where that got Greece, Spain, Italy, and Ireland.


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Posted by Steve C
a resident of Menlo Park
on Jul 13, 2012 at 9:55 pm

These obscene salaries and benefits are slowly the state and local governments. Warr3en Buffett is right a lot more often than he is wrong. Why not just declare bankruptcy and start from scratch? A dispatcher earning $300k a year? Come on, get real. In most cites outside California, the police dispatchers are probably lucky to earn $50k, and even that is a stretch.


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Posted by Steve C
a resident of Menlo Park
on Jul 13, 2012 at 9:58 pm

*slowly suffocating the state and local governments*


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Posted by jardins
a resident of Midtown
on Jul 13, 2012 at 10:56 pm

The City Manager is helping this city come to ruin by creating new and expensive and unnecessary administrative positions: e.g., urban forester, sustainability support manager . . .

Until the Council puts a freeze on all new appointments we're not going to make any progress in improving this city's financial situation.


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Posted by JM
a resident of Evergreen Park
on Jul 14, 2012 at 12:11 am

To Veritas

Yes. Mr. Keene was burdened by tragedy. But he also took off every Friday, did he not, to teach at Stanford, a nice addition to his cv, and traveled frequently to all sorts of meetings around the country which added to his stature in his field no doubt, but which did nothing for the city. He really took us for a ride, and laughing all the way to the bank the rest of his life on our dime.


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Posted by kale
a resident of Barron Park
on Jul 14, 2012 at 5:53 am

city is going to need to declare bankruptcy, no doubt about it


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Posted by Peter Carpenter
a resident of Atherton
on Jul 14, 2012 at 6:55 am

Peter Carpenter is a registered user.

Here is the alternative:



Web Link


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Posted by GougedInMidtown
a resident of Midtown
on Jul 14, 2012 at 8:42 am

Most commenters are absolutely correct. If we were to outsource most of the jobs through an RFP process we will receive a fair priced proposal that is competitive with the market - not what the unions have negotiated in a manner that is far removed from reality. No private company cuts investment in its products and customers in order to retain staff benefits! And yet that is exactly what the unions seem to want cities to do - retain employee salaries and benefits at unrealistic levels while raising taxes on citizens and cutting back on benefits.


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Posted by common sense
a resident of Midtown
on Jul 14, 2012 at 9:50 am

The equivalent teacher's retirement fund CalSTRS had returns of 1.8% this past fiscal year. School districts base their benefits budget on a 7.5% return. The average over the past 10 years has been something like 6.7%. CalPERS won't be much different.

Here's the article in the Sacramento Bee: Web Link

Guess who will make up the difference? - we the taxpayers.


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Posted by neighbor
a resident of Another Palo Alto neighborhood
on Jul 14, 2012 at 10:58 am

For such a strongly self-proclaimed "progressive city," Palo Alto is remarkably slow to take action to deal with the challenging budget situation.
Gee, reminds me of the state of California/Sacramento legislators who seem to avoid reality and believe they can increase our taxes with ease.
Here, I see little of teh necessary meaningful action on the fundamental challenges - and like others have posted, focusing instead on lane reductions on Charleston/Arastradero etc., instead of scrutinizing the need/specs of each city position (esp the highly paid ones -- now, that would be something worthwhile. I don't d**n city positions without analysis, though I suspect there are unsustainable and overly generous employment packages that must be modified -- this is just reality. The rest of us already live in the real world. Please, let's get real and deal with this.


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Posted by lazlo
a resident of Old Palo Alto
on Jul 14, 2012 at 4:35 pm

...golly, if city "leaders" had only funded retirement benefits when they promised employees contracts would be honored when they retired. Nope, instead they wring their hands and blame the employees because the city never adequately funded retiree contract obligations, never accounted for inflation, never accounted for national and local economical cycles. Never mind that the city has over $300,000,000 in unappropiated reserve funds (including retirement money "redirected")Never mind that the city manager makes over $500,000 in salary and benefits including a house and property taxes paid for by city taxpayers, auto allowance, gym fees, and much more. So in an effort to add fuel to the fire, The Weekly has added yet another bandwagon phrase with "ticking time bomb" to be included in their media favorites of "ballooning", "skyrocketing", and "unsustainable". Instead of reporting the news with investigative and factual information, the media chooses the cheap way out with headlines that serve only to sell ads. What a pity.


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Posted by Taxpayer
a resident of Barron Park
on Jul 14, 2012 at 5:01 pm

The city (rather the taxpayers) has contributed plenty to workers retirement. Much more, in fact, than most private employers contribute to their workers through 401K matches.

However, the ridiculous benefit formulas (retiring at age 50 with 90% of salary, for example) mean that even after the city's substantial contributions there is a giant unfunded gap (which was supposed to be covered by astronomical market returns that never materialized).

Special interest (IE those at the government trough) posters such as the one above want the taxpayers to shut up and continue paying for the unfunded differences forever even as the bubble bursts. Insinuating that the private sector's awakening with regard to the outrageous benefits its funding for government workers is a bandwagon is just insulting.

Every time the bureaucracy faces the voters wrath. The days of 300K dispatchers are numbered.


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Posted by Anna
a resident of College Terrace
on Jul 14, 2012 at 5:08 pm

In the private sector, you get fired if you're caught leaning on your shovel.

The sooner we outsource the whole city bureaucracy, the better. If the city bureaucrats as capable as their unions claim they are, they'll do just fine. Meanwhile well be getting better work for about half the cost. We can use the savings to fix the roads, underground the utility grid, etc. I'd rather pay for those things than for lavish pensions for city bureaucrats.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 14, 2012 at 5:10 pm

Peter Carpenter is a registered user.

"if city "leaders" had only funded retirement benefits when they promised employees contracts would be honored when they retired."

Wrong - extravagant defined benefit pensions simply cannot be funded in advance and that is why those pensions must be replaced with defined contribution pensions. Why should public employees be guaranteed a specific pension payout when no one else is?


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Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 15, 2012 at 8:01 am

> Ratu Serumalani, a maintenance worker in the Community Services Department,
> said employees are still feeling the pain from the concessions the city forced
> the union to accept in 2009.

And what about the rest of the US? With unemployment at 11% in some localities, most CPA workers still have their jobs. Whatever "pain" that CPA employees sustained over the past couple of years would seem to be a lot less than most people working in the private sector.

> City workers are struggling to pay the bills, he said.

How in the world would one City employee know about the financial problems of all City employees? Maybe it's time for some personal financial management classes for City workers—paid for by their Union.

> Many have retired, he said. During this period of concessions, the city lost
> "a lot of talent," he said.

This statement, of course, is not buttresses with any data. Only HR can speak to the turnover rates with any authority. During the salad days of the Silicon Valley, turnaround in some companies was as high as 25%. This is a management issue, which is dealt with by having well-documented SOPs (Standard Operating Procedures), training classes, assigned "buddies" for new employees, frequent reviews during the first two years, a well-supervised probationary period, and so on. The basis of an effective management approach is that there are "no indispensable people"--which holds true for municipal employees also.

All-in-all, not very helpful input.


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Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 15, 2012 at 8:48 am

We need to be asking why we don't just terminate the current pension benefit for City employees, and have them enrolled in the US Social Security System--just like everyone else?


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Posted by Alphonso
a resident of Los Altos Hills
on Jul 15, 2012 at 9:04 am

Peter said

"Wrong - extravagant defined benefit pensions simply cannot be funded in advance and that is why those pensions must be replaced with defined contribution pensions. "

Actually that statement is wrong - the pension problem is enormous because cities were permited to amortize the unfunded liabilities over decades. That accounting practice allowed cities to offer more than they could afford. It is very easy to offer benefits when you are allowed to pay sometime in the future.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 15, 2012 at 9:54 am

Peter Carpenter is a registered user.

Alphonso - please tell us how any local entity can fully fund a defined benefit pension given that they have no certainty regarding future investment returns? It simply cannot be done.


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Posted by Resident
a resident of Midtown
on Jul 15, 2012 at 10:55 am

"the city manager makes over $500,000 in salary and benefits including a house and property taxes paid for by city taxpayers, auto allowance, gym fees, and much more."
And he hired 5 new people (several managers=big bucks) for the Development Center. Keep the developers happy.
We dont need long range park plans for Rinconada, Pardee and other parks. Or the staff hired to manage its useless meetings.
We dont need a bike bridge or Liz Kniss help us spend money.
We dont need a road between the Art Center and Main Library.
Frank Benest recommended the current city manager. What else do you need to know?


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Posted by Alphonso
a resident of Los Altos Hills
on Jul 15, 2012 at 11:21 am

"Alphonso - please tell us how any local entity can fully fund a defined benefit pension given that they have no certainty regarding future investment returns? It simply cannot be done."


The same way private industry has done it for years - use an actuary. Of course the liability estimates are based on assumptions so they may not be exact, but very close. Every community measures their unfunded liability from time to time so the information is readily available. The problem is not that thay can not measure the probable liability - the problem is that they take the current liability and spread it over decades - delaying payment so they can spend money on other things. If you had demanded better accounting when you were on the MP Fire Board then the pension cost issue would have come to a head much earlier. You were not alone in ignoring the problem - almost every city did the same thing. It was easy to defer the problem so that is what was done. I should add that we should not blame people like you for doing and inadequate job - we the Voters are the ones at fault -we did not demand more.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 15, 2012 at 11:48 am

Peter Carpenter is a registered user.

" use an actuary." That is exactly what CalPERS does - but the actuary is instructed to use false assumptions and even then their calculations are rejected for political reasons.

"If you had demanded better accounting when you were on the MP Fire Board then the pension cost issue would have come to a head much earlier"

We did exactly that and paid down the bulk of our unfunded liability in 2009.

" Every community measures their unfunded liability from time to time so the information is readily available."

Wrong. The new GASP regulations that require doing so just took effect July 2012 - prior to that very few public agencies measured and accounted for the unfunded pension liabilities.


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Posted by Guest
a resident of Crescent Park
on Jul 15, 2012 at 12:22 pm

I have two words for all communities in PA's situation: Force Majeure.

Long a doctrine of contract law, it allows a party (PA) to be freed of an obligation (generous pensions) when extraordinary circumstances (such as the Lesser Depression we are in) prevent the party from fulfilling the obligation.

To those who say the courts won't allow this: judicial minds change with the times.

Go for it.





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Posted by Lynn Krug
a resident of Midtown
on Jul 15, 2012 at 3:21 pm

Pensions and contributions validated.

Much love to you all. I am happy to live in and work for Palo Alto. I adore my neighbors. I work very hard for my job and my family

And to reinforce the article. I am NOT currently a union leader for the employees.

I spoke in the employee capacity based on a detailed business wage and benefit comparative analysis developed from the WGWW Utility Engineering and Operations Department employees wage and benefits packages.

The report gave comparison to local civic wage and benefits and comparative industries.

The report showed that the employees of the Enterprise fund in Utilities Operations and Engineering were underpaid by 8 - 20% for their full wage and benefit package compared to an average wage and benefit package. These jobs include: Utility Pipe Fitters, Project Engineers, Engineers, Associate Engineers, Utility Field Service Workers, Electrical Linemen, Electrical Engineers, and Water Gas Waste Water Engineering Field Inspectors.

Let's talk about some of what was omitted from this article:

The City of Palo Alto run a Utility Operations and Engineering Department for Water, Gas, Sewer Fiber etc. The city Public Works runs a Water Quality Treatment Plant. These are Enterprise fund operations not General Fund.

Omitted from this article are the facts that Palo Alto Utility Operations and Engineering employees are paid 8-20% less than median for their entire wage and benefit package.

Not less than highest wage and benefits - They are paid 8-20% less than the approximately the AVERAGE. That works out to a 15 - 25% overall loss in wage and benefits. Is the city or this newspaper telling you that?

- All those great 24 hour City of Palo Alto WGWW Utility service guys who drive to your residence to give supreme service ...(unlike PGE) are paid 20% below PGE.

- The on call service electrical linemen and pipe fitters for repairs of electric and water gas waste water emergencies? They are paid wage and benefit package 10 - 20% below PGE.

- The utility estimators make 25% less than East Bay Municipal Utility District.

- Inspection staff for Utility Engineering gets paid 14-18% less than average locally (not the top wage 14 - 18% below the average).

When I say I am "exhausted"... this article omits the actual supporting facts presented with my comments to city council ...as to WHY I would be exhausted?:

Utilities Operations and Engineering are taking in more housing and development projects for remodels and project developments than ever before in our history. That means we are getting permits, more taxes in the future, and tens of thousands of dollars for utilities per property. And more work than we are staffed for.

In my comments to city council:

I am a City of palo Alto Water Gas Wastewater Engineering Field Inspector on the Stanford Children's Hospital job for City of Palo Alto Utilities Engineering - my working that position is saving the city and/or Stanford $1,000,000. over 5 years. Normally a sole full time Chief inspector at minimally 200,000+ a year would have been assigned to that project but I have been entrusted with my experience to handle the project. Also - I have 6 other development projects that I inspect concurrently. My duties have extended far into other job descriptions for engineering coordination, which I do willingly - I enjoy my job and working for the city. Each of my co workers has to be able to substitute in for me with equal qualifications and work load.

That is an outrageous work load and a huge savings for the city. ... Where is my claim of $1,000,000 financial savings mentioned in this article? And that is just one employee.

What about others? On the Water CIP for HDPE pipe the engineering inspection staff saved the city at the very least $100,000. by their initial plan review. That comes from having experienced and responsible staffing.

Mentioned on June 25 in my communication to City Council:

For WGWW Engineering Field Inspection staffing -Per Management: IT TAKES A MINIMUM OF 5 YEARS TO CROSS TRAIN " to learn the profession of three main utilities while working for the City of Palo Alto - No other city utility has as many diverse responsibilities for multiple utilities. Palo Alto has electric, water, gas, sewer, storm, fiber, etc. My co-workers Field inspection and I all come with a minimum of 10 years prior engineering and construction experience. To be a Utility Inspector you must know the implementation, engineering, and documentation for water gas and sewer, and be able to answer and deliver to citizens, contractors, owners, management, and coordinating departments.

We have already lost experienced inspection and all other types of staffing due to cuts and driving people out who wish to retain their healthcare.

Who will be left to adequately perform the work, mentor, and train?

The attacks on employees in the media have driven out many of our best and brightest.

ARBITRATION

This article refers to arbitration...

And on binding arbitration - citizens won nothing. Arbitration was portrayed by the city management as "undemocratic" ? In reality arbitration would force the city to reveal it's side of accounting and for the employee group to do the same.

The FACTS would have to be analyzed. Facts aren't necessarily political drivers.

Without ballooning controversy how can you politically drive an issue, or create an audience for your paper? Or an enraged constituency for your city?

Much like the facts that were omitted in reporting my commentary to city council.


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Posted by Alphonso
a resident of Los Altos Hills
on Jul 15, 2012 at 4:54 pm

"We did exactly that and paid down the bulk of our unfunded liability in 2009."

What you (MP Fire) were paying off was the unfunded liability that you had before you switched over to CALPERS.You still amortize the changes to the amounts of unfunded CALPERS liabilities over a 20 year period - have you ever read the Menlo Park Fire CAFR?

"prior to that very few public agencies measured and accounted for the unfunded pension liabilities."
That is simply not true-most of the cities up and down the Peninsula have increased their pension contributions as a way to catch up with the unfunded liabilities, but they are doing it very slowly (like 30 years). The can quantify the problem but are hesitent to do much about it.

" but the actuary is instructed to use false assumptions and even then their calculations are rejected for political reasons."

I would love to hear you explanation of that comment.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 15, 2012 at 5:16 pm

Peter Carpenter is a registered user.

From The MPFPD COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2011:

"In addition, $4.4 million was designated for Public Employees Retirement (PERS). Although the Fire
District had prudently accumulated reserves during the economic expansion at the turn of the century, it
continues to be confronted with the same dilemma that local governments throughout California are
facing with increasing expenditures continue to outpace the recovery of decreased revenues. Pension
costs have risen statewide due to changes in benefit levels and investment losses in the Public Employees
Retirement (CalPERS) system during the economic downturn. On an annual basis the employer
contribution rate to CalPERS has increased and will continue to rise. The Board's budget philosophy
sets aside any excess funds created by budgeting at 35% to offset potential future PER's Safety Rates in
excess of that rate. Once the actual employer rates increases above 35% and 15% for Miscellaneous
employees, the PERS Stabilization Fund Balance will be used to mitigate the effects to the General Fund.

On March 16, 2011, CalPERS, Web Link
announced that its Board of Administration voted to keep its assumed rate of return at 7.75%. The vote
was not unanimous however, with three of the ten voting members voting to lower the rate to 7.50%.
One positive thing to emerge from the recent CalPERS administration meeting was the endorsement of
State Controller John Chiang's legislative bills which prohibit Board members and certain officers from
accepting employment with business partners after leaving the public pension fund. The Board also
agreed to establish standing risk and governance committees.
Despite these efforts, the rate of return on the CalPERS portfolio remains highly uncertain. The
District's retirement benefit costs could increase significantly if market conditions become unfavorable.
Retirement benefit costs represent a significant portion of total District expenditures, and the uncertainty
and volatility affecting these costs and the difficulty estimating and budgeting to cover them, present an
ongoing challenge for the District and warrant further analysis and cause for concern.
******

Next question??


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Posted by Lynn Krug
a resident of Midtown
on Jul 15, 2012 at 5:39 pm

Why wasn't the chart or even mention of the enterprise fund employees wages at 8 - 20% below median for the entire wage and benefit packages included in this article?

Why wasn't that also put into a chart for this report to show exactly how much the Utility employees are contributing and sacrificing for the city?

This is not journalism. This is pandering.


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Posted by John
a resident of Midtown
on Jul 15, 2012 at 5:49 pm

Lynn Krug,

I worked in the private sector, in Palo Alto. It was typically expected that I would work long hours, including weekends, because I had a salarly. I paid for my SS and 401(k) and co-payed on my medical. After 30 years, I retired, at about $82k per year, top salarly, in 1998. I now get about $1k per month on my pension. My SS is about $1.5k I still have to pay a sizeable co-pay for my medical.

What ARE you whining about?


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Posted by Outraged
a resident of Green Acres
on Jul 15, 2012 at 6:56 pm

The fact that Ms. Krug and the other public sector beneficiaries of these absurd benefits packages are still trying to spin the numbers to make themselves look like the overworked/underpaid class in this mess is not they type of spin that is going to fool many Palo Altans.

We're not Bell. People here are too informed and saavy to fall for the usual union spin. The fact that most private sector taxpayers, especially around here, are too busy fighting through the recession and too disperse in their interests to come together and fight the singular, focused special interests that are the public sector unions has let the problem reach this point. It will not go any further now that the magnitude of the institutional greed is squarely in the public's eye.

The SEIU should be begging to be switched to 401Ks right now to stop the bleeding (and drop the whole attitude of entitlement that city bureaucrats deserve retirements far better than those enjoyed by those who pay your salaries), because when we the voters do put a stop to it the solution will not be kind to unaccountable bureaucrats with benefits packages approaching 200K. The public sector's exemption from the laws of market efficiency is about to end.

Palo Alto is a charter city. We the citizens can put a measure on the ballot with some number of signatures. I will volunteer some of my precious hours to make this happen (I have to work close to 70 per week in my private sector job because that is what the market demands, and I have to keep the trough full for over 1000 city bureaucrats) if our council sells itself to the unions and doesn't fix the problem in this upcoming cycle.


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Posted by Lynn Krug
a resident of Midtown
on Jul 15, 2012 at 7:02 pm

My comments are respective to the lack of factual information.
Perhaps you did not read my original commentary. I am happy at my job and I am not whining. I work hard and respect the need to go the extra mile for the city and you.
My own contributions and those of my co-workers have been significant in these hard times.

What I am saying is the facts of employee contributions were omitted in this article.

The plight of retired individuals in California and else where on a fixed income does not escape me.

Seriously,
$82,000 a year would be a significant raise for me, - and that was your salary in 1998.
Thanks,
Lynn


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Posted by Outside Observer
a resident of another community
on Jul 15, 2012 at 7:20 pm

@Lynn Krug,

You seem to know a lot about Calpers. Others have told me that Pete Wilson raided Calpers funds for billions back when he was governor, and also that for years Calpers employers paid nothing into Calpers.

Is this true?


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Posted by Lynn Krug
a resident of Midtown
on Jul 15, 2012 at 7:23 pm

There is a You Tube Video Jan 12, 2010
Lynn Krug
Objective Organizational Performance Review for Palo Alto - YouTube
I don't believe in freebies - I believe in work and accountability...
so ask yourself that was 2010, ...What has kept the city from doing this?

Web Link


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Posted by Lynn Krug
a resident of Midtown
on Jul 15, 2012 at 7:51 pm

Palo Alto chose Cal Pers and does not and has not participated in contributions to Social Security for it's employees. So, John I won't Social Security like your company contributed to.

Calpers is the largest pension fund in the country and has always been a resource that the state has sought to raid , but regulations have been put in place now. CalPers establishes a more stable investment and investment support for businesses by their history of their own investments (notable sans a few housing debacles).


401 K's are a great way for more random and potentially unregulated investment and exploitation by corporations and private industry as exemplified by our recent national history.

CalPers establishes a more stable investment and investment support for businesses by their history of their own investments (notable sans a few housing debacles).

Yes there was a time when the city did not pay any thing into Pers and I believe there is a potential for "smoothing" going on now to help stabilize costs for the future,.. but I do not have that information resource here.

Calpers is one of the largest pension funds in the country -( a juicy steak for the corporate sector),

...AND potentially a poverty and financial nightmare for the elderly retired of California if Calpers were dismantled.



Web Link


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Posted by StartOver
a resident of Community Center
on Jul 15, 2012 at 8:07 pm

Of course we have unhappy city employees - they signed up to a giant giveaway plan; and the trough is looking empty. So the morale is low.

We have a choice - fund our city services (which these employees are supposed to deliver) or fund outrageous retirements. The percentage of employee costs should be fixed at 1999 rates (% budget) then subtract out legacy commitments. What is left goes to current employees. Setting a cap on employee expense means today's employees lose to yesterday's employees.

If they don't like it let them quit. Heck, let them ALL go and start over - it is a far easier task than negotiating from the current status quo.

And then you don't have a morale problem.

Is it legally possible to restart a city ?


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Posted by Peter Carpenter
a resident of Atherton
on Jul 15, 2012 at 8:14 pm

Peter Carpenter is a registered user.

"Is it legally possible to restart a city ?"

One way to do that is to put each city service out for bid and then outsources anything that, fully costed, can be done less expensively. Atherton did that with everything except its police services and is saving millions - and with no future liability for pensions for the contracted work.


The other alternative is bankruptcy which Vallejo, Stockton, Mammoth and San Bernardino are doing. Public employees need to look at what happened to the pensions of auto workers and airline employees when their companies went through bankruptcy.


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Posted by Alphonso
a resident of Los Altos Hills
on Jul 15, 2012 at 9:22 pm

From The MPFPD COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2011:

"As required by State law, effective July 1, 2005, the District's Miscellaneous and Safety Plans
were terminated, and the employees in those plans were required by CALPERS to join new State-
wide pools. One of the conditions of entry to these pools was that the District true-up any
unfunded liabilities in the former Plans, either by paying cash or by increasing its future
contribution rates through a Side Fund offered by CALPERS. The District satisfied its Safety
Plan's liability by agreeing to contribute amounts to the Side Fund through an addition to its
normal contribution rates. During fiscal year 2010-2011, the remaining balance of $2,001,969 was paid off. "

also

"Changes in liability due to plan amendments, changes in
actuarial assumptions, or changes in actuarial methods are amortized as a level percentage of payroll on a closed basis over twenty years. "


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Posted by Again People?
a resident of Meadow Park
on Jul 15, 2012 at 9:54 pm

Seriously? Do we have to go there again? 1. It is not the lowest paid employees raping the city budget via seiu negotiations, present and definitely not past. 2. Previous years management staff ALWAYS secretly supported seiu negotiations because it was said to us "we get what you get.." and that they did, hence THAT group of management have the extreme retirement packages, and then only to be rehired back as 'management specialists'. Wait, I digress. 3. The lowest paid employees have borne the brunt of the entire 'bad economic times' package and cannot afford to work anymore. Many are retiring early to maintain affordable benefits - those who do not get the lucrative management deals. 4. 2.7% @ 55 is no longer available. It was grandfathered out a couple of contracts ago so calm down folks - 3% @ 60 it is for now, ok!?? 5. EVERY management employee should be forced to take a $5K/year furlough. They make far too much for managing PAPER and contracting out a majority of their work. Besides, 2.7% @ 55 was at a time when the entire country (private industry) was getting lucrative sign-on bonuses, 10 - 20% annual pay increases, stock options, etc., while public employees crept along with 2 - 6% increases. Bargaining for the long hall to get 2.7% @ 55 was fair and equitable way to keep up with the economy and inflation. Reminder, 2.7% @ 55 is no longer available and is grandfathered out with not too many working who will get it. Don't hate public worker bees for providing civic service.

This issue is a class issue. Look at Palo Alto, in my opinion I see it this way. There are two classes: Those who have and those who have not. Those who have come from overseas with nothing on their backs yet thrive in this economy, while have not's are those who own homes and have lived here all their lives yet as senior citizens are pocket poor living on fixed incomes. I see the attack on public employee's as AGE DISCRIMINATION because those who are working at age 50 and over are being forced to retire due to city/seiu negotiations. Pay increases are not happening. SEIU has bargained many items. Benefits are the last thing to give up and people 50+ are leaving to keep them, hence bringing in a younger workforce with 3% @ 60 – for now.


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Posted by Edit
a resident of Adobe-Meadows
on Jul 15, 2012 at 9:59 pm

2% at 60 for SEIU.


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Posted by Seriously??
a resident of Southgate
on Jul 15, 2012 at 10:04 pm

"We're not Bell. People here are too informed and saavy to fall for the usual union spin. The fact that most private sector taxpayers, especially around here, are too busy fighting through the recession and too disperse in their interests to come together and fight the singular, focused special interests that are the public sector unions has let the problem reach this point. It will not go any further now that the magnitude of the institutional greed is squarely in the public's eye." Posted by Outraged, a resident of the Green Acres neighborhood, 2 hours ago

Your outrage is most likely caused by YOUR lack of watching the hen house and leaving it up to City Council. As a former union worker and employee, I can say that the community rarely took issue with city budgets during the public budget meetings. Oh yes there were the few die hards with issues, yet for the most part, citizens like you were not involved. If you had been, you would understand that my pay increases were always justified. I would say so for the management staff WHICH citizens like you could have controlled if attendance and questions were performed. Public service is no longer a noble honorable thing to provide for the public. It is sad how the wolves are ready to destroy the chicken house.


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Posted by Again People?
a resident of Meadow Park
on Jul 15, 2012 at 10:08 pm

I sit corrected. Thanks. But hey, how about suggesting 3% at 60 since the work force is younger now. Heck, I paid my dues. Is it not their turn to contribute for a better future?

Between the suggested $5K managment furlough and 3% @ 60 retirement formula, how's that for negotiating a win-win for now????

The farm does not have to be sold.


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Posted by I Understand
a resident of Southgate
on Jul 15, 2012 at 10:19 pm

"Ratu Serumalani, a maintenance worker in the Community Services Department, said employees are still feeling the pain from the concessions the city forced the union to accept in 2009. City workers are struggling to pay the bills, he said. Many have retired, he said. During this period of concessions, the city lost "a lot of talent," he said."

This was discussed amongst employees at all levels. I mean those who were friends and worked side by side regardless of their heirarchy. It was a future that would affect every single one of us. If the city decided to drastically start cutting benefits, there would be an influx of people who were years-of-service ready to retire to maintain benefits, and those who were not quite age-ready and left at 50 to maintain affordable benefits. So by these groups of people retiring, they city has created a perpetual problem without knowing how to fix it. The city now has to pay even MORE into reitrement fund and they have to rehire and retrain for those positions left open. What a quagmire. Bankruptcy is the sleazy way out for City of Palo Alto. They need to be held accountable. There is room for management to give up fringe benefits and salary without having to rape the pockets of worker bees who make $25K to $75K a year. Come one now. Man up and do what is your civic duty AND what is right. Mr. Serumalani and his coworkers are victims of a failed world economy and this is the trickle-down effect.


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Posted by Sad But True
a resident of Charleston Meadows
on Jul 15, 2012 at 10:44 pm

Posted by Resident, a resident of the Midtown neighborhood, 11 hours ago

"the city manager makes over $500,000 in salary and benefits including a house and property taxes paid for by city taxpayers, auto allowance, gym fees, and much more."
City employees have always been outraged over these costly perks. We could not change anything. Citizens could have.


"And he hired 5 new people (several managers=big bucks) for the Development Center. Keep the developers happy."
He hires friends to keep them happy. Makes closed door deals with developers. Sounds fishy???


"We dont need long range park plans for Rinconada, Pardee and other parks. Or the staff hired to manage its useless meetings."
Ditto on that. Wasting more money to appear accountable.


"We dont need a bike bridge or Liz Kniss help us spend money." Exactly.


"We dont need a road between the Art Center and Main Library."
MONEY PIT. Infrastructure cannot support a new road.


"Frank Benest recommended the current city manager. What else do you need to know?"
He was the beginning of the end to destroy a happy, content workforce at all levels.


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Posted by So Ironic
a resident of another community
on Jul 15, 2012 at 10:55 pm

"Posted by jardins, a resident of the Midtown neighborhood, on Jul 13, 2012 at 10:56 pm. The City Manager is helping this city come to ruin by creating new and expensive and unnecessary administrative positions: e.g., urban forester, sustainability support manager . . .
Until the Council puts a freeze on all new appointments we're not going to make any progress in improving this city's financial situation."

Sustainability Support Manager? This position should NOT be management, yet, how much you wanna bet it will be? And how much you wanna bet it's an existing insider who the job was created for? Wouldn't be the first time it happened. How much you wanna bet it will be a private secretary for the Sustainability Manager? This stuff makes me ill.


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Posted by Hmmmm
a resident of College Terrace
on Jul 15, 2012 at 11:12 pm

"Posted by Veritas, a resident of Another Palo Alto neighborhood, on Jul 13, 2012 at 5:59 pm"

Your comments are factual. That was a period when city employees were outraged and actually wondered how high level management could behave the way they did AND get away with it. Noe of them were being held accountable. Not unlike today.

It is actually offensive to re-read Russ Carlsen's words. He was one of the biggest C****S who got out in time because of INSIDER INFORMATION. Rat B!!!!!


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Posted by Leland
a resident of Old Palo Alto
on Jul 15, 2012 at 11:12 pm

Fire.Them.All.


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Posted by Edit
a resident of Adobe-Meadows
on Jul 16, 2012 at 12:13 am

The reality is based within and throughout:

Web Link

The opportunism of "Fire Them All" demonstrates the failure to understand the necessity for accountability and responsibility of the citizens to participate in a participatory manner in their own government.
:
..."The Weekly has added yet another bandwagon phrase with "ticking time bomb" to be included in their media favorites of "ballooning", "skyrocketing", and "unsustainable". Instead of reporting the news with investigative and factual information, the media chooses the cheap way out with headlines that serve only to sell ads. What a pity."


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Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 16, 2012 at 8:21 am

Hmmmm is right on target. Former Palo Alto Human Resources Director Russ Carlsen was duplicitous and vicious, as were former City Attorney Gary Baum and former Assistant City Manager Emily Harrison. These people and other senior leaders in the top ranks of the City of Palo Alto bureaucracy simply ran amok in the Benest era. City Council was a mere rubber stamp for whatever they were bamboozled into approving, including the sweet 35% increase in the Calpers pension deal orchestrated so smoothly by former Administrative Services Director Carl Yeats just before he himself retired. Benest was a good man at heart, but the whole top layer of City Government acted like Palo Alto was Hazard County of Boss Hogg fame. The City Coucnil in that era refused to lead.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jul 16, 2012 at 9:13 am

> I spoke in the employee capacity based on a detailed business
> wage and benefit comparative analysis developed from the WGWW
> Utility Engineering and Operations Department employees wage
> and benefits packages.

> The city Public Works runs a Water Quality Treatment Plant.

This could, and should, be automated, to reduce cost to the consumer.

> Omitted from this article are the facts that Palo Alto
> Utility Operations and Engineering employees are paid 8-20%
> less than median for their entire wage and benefit package.

It would help to have provided Weekly readers a link to this wage survey. Without being able to review/vet the work, it becomes of little use to a public discussion of wages/benefits. What needs to be pointed out at this time is that unless the post-retirement benefits (expressed in dollars) are estimated, and added into the salary/benefits being examined/compared with other entities, the comparison is not particularly meaningful.

To make matters worse, it is clear that municipalities have created an employment system which operates in parallel with the private sector, that is paid for with taxes, not from the value of the work performed by the employees. This parallel employment system tends to ignore the intrinsic value of labor—seeing jobs more as an "right", or an "entitlement", than something that pays for themselves, over time.

The key point here is that the City of Palo Alto has made pension guarantees to its employees that will see most of them bringing in millions in post-retirement payouts.

Public safety employees receive the most generous pension payouts in California, at the present time—

---
Using a COLA of only 2%, public safety retirees receive the following payouts:

Total Pension Payouts
Pension
$100K--10-Years: $1.1M | 20-Years: $2.5M | 30-Years: $4.1M
$150K--10-Years: $1.7M | 20-Years: $3.4M | 30-Years: $6.2M
$200K--10-Years: $2.2M | 20-Years: $5.0M | 30-Years: $8.3M

Police and Fire Department employees are routinely drawing over $100K in the larger cities, with their pensions at 90% of their high salary. In another decade, or so, the public sector will totally bankrupt the private sector with their pension demands.
---

Although public safety people currently received the highest pension payouts (3% at 30 years), the non-public safety people have managed to win 82% (at 30 years). If they happen to work longer than 30 years, the pension multiplier is not capped at 30 years—so people can enter retirement with more than 100% of their salary at the time of retirement.

The pension payouts need to be added to the salary/benefits, creating a dollar value for Total-Lifetime-Compensation (TLF). Only when these TLF values are compared can we begin to have an fair comparison of salaries/benefits between employers.


> All those great 24 hour City of Palo Alto WGWW Utility service guys
> who drive to your residence to give supreme service ...(unlike PGE)
> are paid 20% below PGE.

Comments like this one are clearly self-serving, and should be ignored (with prejudice). Unless there were honest, impartial, comparisons made by an outside auditor—there is simply no way to compare the service levels/quality between these two service providers.

> The attacks on employees in the media have driven out many
> of our best and brightest.

Really? And just what attacks in the media would those be? Are you thinking about the "sunshine" that the Utility was put under a few years ago when up to 20 (out of 300 employees) were disciplined for various offenses—such as moonlighting with municipally-owned equipment in Menlo Park, as well as other locations?

Or are you perhaps thinking about the lineman who threatened to kill co-workers, was fired, and then got his job back through legal means--with pay for time off the job?

Just how thin-skinned are the "best and the brightest". If a few words printed in a newspaper has "run them off", then they were probably not all that well suited for this kind of work.

(It's hard to believe anyone would make such a silly statement like this one in such a public place.)

> I am NOT currently a union leader for the employees.

You could not tell from the spin in this posting.

All-in-all, most of the problems we are seeing with salary/benefit complaints in the Utility are based on the fact that Palo Alto is too small to run a utility. The problems and solutions to these problems will continue to grow over time. Selling the Utility to PG&E would produce from $1B to $2B in cash, which could be invested so that the yearly interest payments would fund future infrastructure needs. The costs for utilities would not go up very much, and might, over time, actually come down under PG&E's control.


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Posted by Simply Disgusting
a resident of Barron Park
on Jul 16, 2012 at 10:14 am

"Posted by GougedInMidtown, a resident of the Midtown neighborhood, on Jul 14, 2012 at 8:42 am Most commenters are absolutely correct. If we were to outsource most of the jobs through an RFP process we will receive a fair priced proposal that is competitive with the market - not what the unions have negotiated in a manner that is far removed from reality. No private company cuts investment in its products and customers in order to retain staff benefits! And yet that is exactly what the unions seem to want cities to do - retain employee salaries and benefits at unrealistic levels while raising taxes on citizens and cutting back on benefits."
It is a double edged sword for employees because they know SEIU is NOT taking care of them and they have LOUSY union leaders that are inexperienced and selling out coworkers for their own self interest. The only thing the union (SEIU) is doing is keeping the new/young work force there so they can continue to pay union dues. (3% at 60 sounded like a good give back to the City.) So you can see why seiu employees have low morale. Employees are getting attacked by the union and the city. Both organizations are squeezing money. Employees have spent many hours doing emergency work during storms, earthquakes, and citizens are not grateful by the apparent talk to outsource OR even file bk.
Answer me this…..IF City of Mismanagement, I mean City of Palo Alto does file bk, what will that do to home prices? What will that do and say to big business in Palo Alto? Will the city credit rating affect individuals? WATCH OUT WHAT YOU WISH FOR. Palo Alto needs tax base to survive regardless if they fix this with or without bankruptcy. P.S. your utility taxes are being raised because of mismanaged budgets internallty and a utility management staff that does not understand what the heck they need to do to maintain the current (unseen) infrastructure nor to create effective maintenance programs. Just wait until seiu is done negotiating and alllll those UNIONIZED UTILITY MANAGERS will get a better deal. THEY are sitting back counting their pay increases which is disgusting, yet they will get it just like they always have and do. Screw the lower paid employees, screw the citizens. I have mine and I want more. Simply disgusting.


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Posted by Erica
a resident of Professorville
on Jul 16, 2012 at 10:24 am

"Your outrage is most likely caused by YOUR lack of watching the hen house and leaving it up to City Council."

This comment shows smug entitlement that sadly has become synonymous with our unionized city workforce. The unions bribed our politicians and stole from us, and are now blaming voters for not catching them?

That's like a rapist blaming his victim for taking the subway alone at night. I agree: lay off nearly everyone and outsource to people who will do the job for market rate. Replacing the smug entitled union-types with accountable private sector workers is an added bonus.


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Posted by Graphs
a resident of Green Acres
on Jul 16, 2012 at 10:37 am

So I just actually looked at the graphs/pictures for this article. Look at them. It is obvious that city managers, police, fire, directors are the ones making the most who get the best retirements. Numbers dont lie. Palo Alto managment and FLS are the greedy ones. Give me MORE. Take from the lowest paid, i don't care, i have to pay all my bills to keep what i have. And the graph that showed all the highest paid/retired people, I didn't see one seiu worker listed.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 10:45 am

Peter Carpenter is a registered user.

This is an easy argument to settle.

Prepare an RFP for each service provided by the city and then call for bids.

If the current employees providing that service want to make a binding bid then let them do so.

Then pick the lowest bidder that has the ability to provide the specified service.


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Posted by Now Now Erica
a resident of Crescent Park
on Jul 16, 2012 at 10:46 am

Posted by Erica, a resident of the Professorville neighborhood, 12 minutes ago

"Your outrage is most likely caused by YOUR lack of watching the hen house and leaving it up to City Council." This comment shows smug entitlement that sadly has become synonymous with our unionized city workforce. The unions bribed our politicians and stole from us, and are now blaming voters for not catching them?"

Now now Erica. You only support the statement because of your offense. Did you realize the MANAGEMENT IS UNIONIZED? Citizens have not been responsible to hold this or past councils accoutable. if a government system is set up with checks and balances and nobody is there to watch the hen house, you get what you get which in this case is a city government running rampid with overpaid management staff that create chaos to appear they are working.


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Posted by Been There Tried That
a resident of another community
on Jul 16, 2012 at 10:50 am

Posted by Peter Carpenter, a resident of Atherton, 1 minutes ago
Peter Carpenter is a member (registered user) of Palo Alto Online

This is an easy argument to settle.
Prepare an RFP for each service provided by the city and then call for bids.
If the current employees providing that service want to make a binding bid then let them do so.
Then pick the lowest bidder that has the ability to provide the specified service.

Been there. Tried it in early 2000's. Sounded good to our group of people to provide fast, affordable repairs and services. Then city manager and then council did not like it. probably because it made sense and would work. they didn't want to change for the future, sooooo hear we are now.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 10:58 am

Peter Carpenter is a registered user.

If you want the citizens more involved in compensation and benefit decisions then have the city council adopt the same policy as the MPFPD Board did:

RESOLUTION OF THE BOARD OF DIRECTORS OF THE MENLO PARK FIRE PROTECTION DISTRICT ADOPTING A POLICY REGARDING DISTRIBUTION
OF PROPOSED COLLECTIVE BARGAINING AGREEMENTS


WHEREAS, in accordance with the policy of promoting prompt public access to government records, the California Public Records Act broadly defines public records (Gov. Code Section 6252, subdivision (3)) and the exceptions to disclosing public records under the California Public Records Act are narrow; and

WHEREAS, the Ralph M. Brown Act, Government Code Sections 54950 through 54963, enacted into law in 1953, requires open meetings of local agencies "to curb misuse of the democratic process by secret legislation of public bodies"; and

WHEREAS, the Ralph M. Brown Act "…reflects a legislative determination that 'public agencies in this State exist to aid in the conduct of the people's business,' and an intent 'that their actions be taken openly and that their deliberations be conducted openly' (Gov. Code Section 54950); and

WHEREAS, the Ralph M. Brown Act and the California Public Records Act require the District to conduct its business in a transparent manner; and

WHEREAS, the Board, as duly elected representatives of the citizens within the District, in conformance with the Ralph M. Brown Act and the California Public Records Act, is committed to providing the District's citizens with information considered by the Board in making its decisions; and

WHEREAS, the Board believes due to the importance of proposed collective bargaining agreements with the District employee labor representatives, that these proposed agreements should be made available to the citizens of the District in sufficient time prior to the Board's adoption of the proposed agreements so as to allow for adequate review and comment by the public prior to final Board action.

NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the Menlo Park Fire Protection District does hereby move that any proposed collectively bargained labor agreement between the District and designated District employee representatives shall be made publicly available at least fifteen (15) calendar days before the meeting at which the agreement will be acted on by the Board.


PASSED AND ADOPTED as a resolution of the Board of Directors of the Menlo Park Fire Protection District at the Regular Meeting held on the 16th day of December 2008


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 12:56 pm

Peter Carpenter is a registered user.

And it just keeps getting worse:


Jul 16, 3:34 PM EDT

The California Public Employees' Retirement System reported its returns for the fiscal year that ended June 30. The 1 percent return is well below its projected annual return of 7.5 percent.

Web Link?
SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-07-16-15-34-41

And guess who gets to pick up the 6.5% shortfall?


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Posted by John
a resident of Midtown
on Jul 16, 2012 at 1:11 pm

>And guess who gets to pick up the 6.5% shortfall?

Why not the recipients of the (presumed) benefits? Tax the current CalPers recipients to refund the amount that creates the deficits. Also, increase the take from current partipants, from their paychecks...whatever it takes to make up the deficit. Zero sum.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 1:18 pm

Peter Carpenter is a registered user.

"Zero sum."

The only way to do that is to convert all existing and new employees to a defined contribution pension where there is no unfunded liability.

And note the composition of the CalPers Board:

The CalPERS Board consists of 13 members who are elected, appointed, or hold office ex officio. The Board composition is mandated by law and cannot be changed unless approved by a majority of the registered voters in the State.

Six elected members:

Two elected by and from all CalPERS members
One elected by and from all active State members
One elected by and from all active CalPERS school members
One elected by and from all active CalPERS public agency members (employed by contracting public agencies)
One elected by and from the retired members of CalPERS
Three appointed members:

Two appointed by the Governor - an elected official of a local government and an official of a life insurer

One public representative appointed jointly by the Speaker of the Assembly and the Senate Rules Committee

Four ex officio members:

The State Treasurer
The State Controller
The Director of the California Department of Human Resources
A designee of the State Personnel Board

6 public employee representatives and only ONE public representative.


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Posted by Jake
a resident of another community
on Jul 16, 2012 at 3:27 pm

It seems slightly unfair and wrong that there are people like Frank Benest, Russ Carlson, Gary Baum, past City Council members who spent very little time providing service to the City of Palo Alto who are getting better retirement medical benefits than City employees who have worked longer than 30+ years for the City. Those same current City employees in many cases took no raises or smaller raises in labor agreements 10, 15 or 20 years ago and instead took the increased retiree medical benefits the City was offering. Now the City has reduced that benefit and is working towards taking away more of it. In my opinion it is unfair on the Cities part to make a labor agreement where the employee does not get money in salary and instead
offers better retiree benefits down the road only to eliminate or reduce that benefit before the employee can take that benefit.
The City should have been contributing to and funding a retiree medical benefit account to pay for the agreement they made with employees. Employees took the City and City Council on their word and agreements made. And employees that have worked as little as 5 years with the City or two term City Council members should have never been getting the same retiree benefits let alone better benefits than employees who have worked more than 25-30+ years for the City.
I would like to see a list of names and years employed with the City of Palo Alto of former employees and City Council members who are recieving better benefits than long time city workers. The long term City workers should not be paying the price for people like Frank Benest, Russ Carlsen and others who took advantage of the Cities benefits intended for 25-35+ years of service employees. Those promised benefits should also have been funded instead of NOW attempting to have employees shoulder that burden. Of course the City Council members want and get the same benefits as 30 plus year city employees.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 3:30 pm

Peter Carpenter is a registered user.

"the City Council members want and get the same benefits as 30 plus year city employees."

That should be stopped immediately - by a citizens initiative if necessary.


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Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 16, 2012 at 3:50 pm

Past time for political accountability. On November 13, 2006, six City Council members voted "yes" to approve a staff proposal to increase the City of Palo Alto Calpers retirement formula from 2.0% to 2.7% per year of service, in one fell swoop effectively increasing the City's financial liability for retirement costs by 35%. These six members were Barton, Beecham, Cordell, Drekmeier, Drekmeier, Morton, and Klein. Mossar, Kishimoto, and Kelinberg courageously voted "no" on this budget buster.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 3:54 pm

Peter Carpenter is a registered user.

Why do the citizens of Palo Alto allow such irresponsible actions by your city council?

IF, big IF, enough citizens really cared this could be stopped.


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Posted by Resident
a resident of Community Center
on Jul 16, 2012 at 3:59 pm

Jake says: "The City should have been contributing to and funding a retiree medical benefit account to pay for"

I completely disagree. Such a union entitlement mentality. The city has been overpaying employees in the form of salary, pension, medical etc for years because the unions bought off the politicians (like Price and Shepherd). The most over paid and under-worked were the fire union employees. Fortunately the tide is turning. For starters I'd like to see:

- all PA employees converted asap to 401k plans
- all PA employees retirement payout start date pushed to 67

There are a host of other changes I'd like to see including eliminating all the abuse with OT, sick leave, and disability.


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Posted by Thom
a resident of Ventura
on Jul 16, 2012 at 4:40 pm

Jake from another community is a Firefighter. So you know which side he is on.


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Posted by Surprised
a resident of Fairmeadow
on Jul 16, 2012 at 5:45 pm

"Posted by Jake, a resident of another community, 1 hour ago"

Jake you are a godsend for getting it. Thank you for understanding this complex issue. I also believe if people read the provided charts in this article it would be obvious as to what was going on to lead us to today.

Currently, I would like to see a list of all management staff that have retired over the past five years and compare that list to a new list of all names of 960 or 1080 hour employees. That information would show how many top level management staff retire with lucrative packages and come back for salary only (at triple their previous hourly salary) to help drive the machine forward so all the other cronies could get theirs too.


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Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 16, 2012 at 6:04 pm

Web Link

"Surprised", the above web link may help.

Note that the Carl Yeats, the former City of Palo Alto Administrative Services Director, was responsible for bamboozling a majority of the City Council on November 13, 2006 into increasing the Calpers retirement formula for Palo Alto staff from 2.0% per year of service to 2.7% (of last years salary times years of Calpers membership. Yeats and his boss retired soon thereafter and now rakes in a sweet $128,297.64 per year. Boss Hogg of Hazard County would have been proud of how slick a job this was to pull off!

The Councilmembers who were bamboozled by Yeats were Barton, Beecham, Cordell, Drekmeier, Morton, and Klein.


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Posted by Outside Observer
a resident of another community
on Jul 16, 2012 at 8:18 pm

The problem with outsourcing is who makes the decisions.

One need look no further than the debacle and cost overruns at Mitchell Park to realize that Palo Alto management lacks the ability to hire or manage any contractor.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 16, 2012 at 8:36 pm

Peter Carpenter is a registered user.

"One need look no further than the debacle and cost overruns at Mitchell Park to realize that Palo Alto management lacks the ability to hire or manage any contractor."

Then get new management!!


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Posted by Pension Envy
a resident of St. Claire Gardens
on Jul 16, 2012 at 10:19 pm

"Posted by kma, a resident of the Meadow Park neighborhood, on Jul 13, 2012 at 3:12 pm"

Web Link

rats the web link may not have followed in copy/paste but go to the original and read facts. I like #4. Thanks kma for posting the link.


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Posted by Surprised
a resident of Fairmeadow
on Jul 16, 2012 at 10:35 pm

"Posted by Veritas, a resident of Another Palo Alto neighborhood, 4 hours ago. Web Link. "Surprised", the above web link may help."

Thank you Veritas. Four of the top 10 had scandalous careers. Seems like one was semi-busted for embezzlement but won the popularity contest and was allowed to retire, one had harrassment case and given promotion, one was an outright smooth-talkin crook who made the top two list, city resources were used to protect ones private property while others' was ruined. And the beat goes on.......and the beat goes on.


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Posted by Outside Observer
a resident of another community
on Jul 16, 2012 at 11:04 pm

>>"Then get new management!!"

Ok.... and who would hire them?

It's a vicious circle, and I really don't know what the solution is as every proposed solution always gets back to who hires who to fix the problems.

It takes talent to recognise talent, and that has been what is so clearly lacking and has lead to the types of senior management that Veritas has exemplified.



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Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 17, 2012 at 7:55 am

Outside Observer hit the nail on the head. The culture of City of Palo Alto senior management has for many years favored toadying, scapegoating, duplicity, and rank mediocrity. Otherwise people like Carl Yeats, Russ Carlsen, Gary Baum, Emily Harrison and the others would not have had the opportuity to play the games they played for so long within City Hall.


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Posted by Pa-lease
a resident of Another Palo Alto neighborhood
on Jul 17, 2012 at 10:32 am

Outsider, it takes someone with fortitude to RECOGNIZE the problem before they can fix it. The internal high level management staff know the problem yet they do not address it because that means they cannot steal salaries for themselves anymore. Russ, Carl, Gary, Lynne, Emily, FRank, and many past council members got out just before the proverbial mietha hit the fan.

(oh dear gawd, not another new Palo Alto website.)

Web Link

City of Palo Alto
Management and Professional Compensation 2009
Effective 7/1/2009

I was going to do some position/salary comparisons only to find that Palo Alto Human Resources Department has NOT updated the information since 2009.

Instead check this out:

Web Link

Fong needs to have her arse fired. She is ineffective at managing and has joined the 'good old boys' network. She has no inclination to direct.


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Posted by Palo Alto Taxpayer
a resident of Old Palo Alto
on Jul 17, 2012 at 10:35 am

The union bureaucracy the city uses is clearly bloated and overpaid. We have way too many rank and file six figure bureaucrats in admin, maintenance, and other functions that that can be filled at half the cost by the private sector.

Public safety, specifically fire, is an even bigger mess. The fire department should be outsourced to the county, Cal Fire, or a private provider. Close to 200K per year in total comp is way too high for a job with as little actual danger as firefighting in Palo Alto. Less than 2% of calls are even fire related and the job is statistically a safer than working in construction or manufacturing, farming, or other private sector jobs. Allowing for six figure retirements in their 50s on the taxpayer dime is madness.

Finally, as the union types enjoy pointing out, Management is also bloated and ineffective. We will indeed need new management. Specifically, people capable of running an efficient RFP process, awarding the bids, and holding the vendors accountable.

Time to reboot. No more bloated union contracts unless the unions are able to win the RFP process. No more bloated management incapable of holding people accountable. It would start to look a lot like a well-run business, which is exactly what Palo Alto needs to aspire to in government.


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Posted by stephen levy
a resident of University South
on Jul 17, 2012 at 11:10 am

stephen levy is a registered user.

There are five main causes of the fiscal challenges facing local and state governments across the country caused by rising benefit costs:

1) Agreements were made about benefit levels and the cost sharing responsiblities of employees that now look unsustainable and out of step with changes in private company benefits

2) Health care costs have continued to rise far above the rate of growth in the economy.

3) Investment returns on state and local pension contributions have declined below levels assumed by pension fund managers.

4) The number of aging and retiring workers is growing as the large baby boom generation is aging.

5) There were years in the early 2000s in which cities and the state did not make pension contributions.

I think it is interesting that the same situation is true for the promised benefits for Social Security and Medicare. As the baby boomers age and more and more people become eligilbe for Social Security and Medicare, the promised benefits are not matched by existing revenue streams.

Social Security and Medicare beneficiaries (current and future) did not cause the rise in the older population, did not cause the rise in health care costs, and did not cause the slow economy that reduced revenue growth. Just as public unions did not cause these parts of the retirement benefits challenge.

Probably we are ALL participants in not enacting solutions sooner--either for local and state governments or for Social Security and Medicare.

While there are differences in the detaisl most state and local governments and most people who talk about reforming Medicare and Social Secuirty agree that agreements for new people coming into these programs should change to reduce future costs.

But what about existing participants either who are now eligible or will become so soon and who have made plans around receiving current benefits.

Posters are quick to change plans for current public union employees regardless of earlier promises and contracts. Do you also favor changing Medicare and Social Security arrangements for people who are now or will be shortly eligible? If so, how would you do that and why is it fair?

One poster above did notice the similarity between public employee benefits and Social Security and Medicare promises. While I don't agree with his solution it is directly responsive to the common challenge of promised benefits not sustainable under current financing procedures.

Are there other posters not so consumed with hatred for city employees, managers and the council who can suggest arrangements that they would apply to themselves as current or future Medicare and Social Security beneficiaries and public employees.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 17, 2012 at 11:18 am

Peter Carpenter is a registered user.

Stephen asks " Do you also favor changing Medicare and Social Security arrangements for people who are now or will be shortly eligible? If so, how would you do that and why is it fair?"

Thanks for getting us back on topic.

YES I favor changes in Social Security that include increasing the income limit on withholding and changing to later retirement dates.

Yes I favor changes in Medicare which increase pre-enrollment contribution rates and some adjustment of co-pay for individuals who are still receiving higher levels of current income.


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Posted by Slevy@ccsce.com
a resident of University South
on Jul 17, 2012 at 12:09 pm

Thanks Peter for staying on point and putting some of your skin in the game for solutions.

Thesecare thoughtful proposals as is considering defined contribution plans for new public employees as part of meeting those fiscal challenges.

Steve


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Posted by Garrett
a resident of another community
on Jul 17, 2012 at 1:38 pm

The whole thing needs to be reformed, each city did something different then the next, the employee didn't have to pay into or very little. I think the problem was to many people wanted a free ride or pay very very little. Guess what, we owe so much money that to ride will cost so much that the future workers will pay but won't get to ride.

Everyone should pay the percentage they need to pay, no loading up, no free money. You pay for part of your medical, co pays, or those little add on like wife and your kids.

Here how it should have run, Employee put in such amount, city in a amount say 1/2 of the employee.


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Posted by Andres
a resident of Downtown North
on Jul 17, 2012 at 2:22 pm

The fundamental core problem here is that the city employees receive much more total compensation (salary + benefits + pension) than the value of the services they produce, with worth being defined as what it would cost to procure the same services on the open market.

This inefficiency is basically a giveaway from the taxpayers to the employees and management.

One can argue that they deserve the rich pension benefits, but to compensate for that salaries would need to be lowered 30-50% to bring total compensation in line with market.

It makes the most sense to simply outsource and let the taxpayers realize the most efficient solution for their money. This removes the power of special interests (unions) and the temptation of city leaders to indulge the special interests in exchange for political support.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jul 17, 2012 at 4:45 pm

> Posters are quick to change plans for current public union
> employees regardless of earlier promises and contracts.

Promises and contracts are broken all of the time. Promises made by governments are some of the most frequently broken. Certainly the failure to pay "sign-up bonuses" for soldiers during the American Civil War, and WWI, should come immediately to mind. The idea that elected officials should be able to make "binding promises" that bind future governments, and taxpayers, makes no sense at all.

The idea that contracts for multi-million dollar pensions need to be honored needs to be faced, and dealt with. The whole idea that these contracts should bankrupt a nation can not be allowed to happen.

From the link below—A task force co-chaired by former Federal Reserve Chairman Paul Volcker sounded alarms over the fiscal futures of state governments today with a comprehensive report showing, in the words of fellow co-chair Richard Ravitch, "that it's going to be a hell of a lot more costly to deal with this problem five years from now."

Task force: State governments in fiscal danger:
Web Link

"The conclusion of the Task Force is unambiguous," a summary of the report states. "The existing trajectory of state spending, taxation, and administrative practices cannot be sustained. The basic problem is not cyclical. It is structural. The time to act is now."
----

Social Security is going to have to adapt to this problem, too. Keeping in mind, however, that Social Security is not a pension system, and can be changed via acts of Congress—a political solution that fits the whole nation, unlike the thousands of pension systems that can not easily be changed in Washington with a single bill.


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Posted by Perspective
a resident of Greater Miranda
on Jul 17, 2012 at 5:34 pm

Yes I favor both SS and Medicare reform to SAVE the programs for the next generation coming up.

1) No reason to give full benefits at 65. Anyone 55-60, works till 66 for benefits, with an incentive ( like now) for every year of delay until 70.

2) 50-54 works till 67, with incentives to 71.

3) 45-49 works till 68, with incentives to 72

4) 40-49 works till 69, with incentives to 73

5) under 39 works till 70, with incentives to 74.

Change the SS contribution system..let us buy into PRIVATE investments that we KEEP and use as we choose, that we can then will to our children or charities or whoever we wish. Those who don't want to do this, fine..rely on smaller govt payouts. Those who do know that 40 years in a private investment for retirement gives a much higher return on the money than our govt. And it is OURS. Don't trust folks to do it? Have an automatic SS withdrawal like now, but give an opt-out into a private investment account for some percentage of the money.

Medicare: Let us buy insurance we want to buy, and KEEP IT our whole lives, that covers what we WANT to cover depending on what we are willing to insure against. It is insane that we, the taxpayers, spend 50% of the Medicare dollars on the last 6 months of life. Why? There is no stop to the medical intervention that happens when people are clearly failing and dying..monthly hospitalizations for heart failure or pneumonia are common. How to control it? Not the government telling me I am "too old" or "too sick" to get treatment..ME deciding what level of insurance I am willing to buy. Give me voucher, if you insist on government paying..let me buy the insurance I want with it. I may choose to not pay for insurance when I am 80 that covers heart transplants, dialysis, total hip replacements and major cancer surgeries. My choice.

If that is too scary for government-dependent folks, there is no solution other than to limit services based on age and/or illness.There needs to be a limit on at what level of function a total hip or heart surgery is useful. The problem is that if we have govt deciding this "limit", there will be people who do NOT get these surgeries who are actually quite capable of living 10 more useful years. That worries me. There needs to be a limit on how long one can be paid for in nursing homes. We now have a system where the nursing homes have no incentive to get the patients strong enough to return home..and keep them the "100 days" that they are "entitled to" by Medicare A, especially if they are covered for the other 20% by MediCal or private sub-insurance. Everybody is happy with it..the patient for staying, the nursing home for the money. No incentive to work and get OUT to home. Time for a PPO system like was instituted for hospitals in the 90s.


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Posted by Perspective
a resident of Greater Miranda
on Jul 17, 2012 at 5:39 pm

BTW, same philosophical idea for government workers. Stop "defined benefits" and start the kinds of benefits we get in the private world..depends on the market and investments. Institute longer number of years to get retirement...perhaps even with an incentive to stay..ie 30 years retirement, but more payout for every year after up to 40 or 45 years.

Obviously, keep the promises to people near retirement now, but we have to change the younger folks promises and new hire promises.


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Posted by lazlo
a resident of Old Palo Alto
on Jul 17, 2012 at 5:40 pm

The same old posters continue to make their long winded verbose statements often commenting 10-20 times on the same thread. Stating the same thing over and over and over... doesnt't add any validity to your argument. If you have any valid or intelligent argument, is it really necessary to post your opinion continuously or is it just to add to the annoyance factor? Make an intelligent, well thought out opinion the first time and then move on.


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Posted by Outsource now.
a resident of Barron Park
on Jul 17, 2012 at 5:43 pm

Outsource now. The simplest example illustrative of the waste throughout the system: The city street sweeper costing 100k is in no way twice as effective as the private sector contractor who would do the job for 50 with no pension to weigh down our children either.

Maybe we can undo some of the damage already done and maybe we can't, but the first order of business needs to be to stop the bleeding. The unions feel entitled to above market compensation, so they need to be cut out of the picture.


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Posted by Vic
a resident of Jordan Middle School
on Jul 18, 2012 at 8:54 am

Congratulations on a detailed, well-written and highly pertinent article on pension reform.


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Posted by Nancy Anders
a resident of Greenmeadow
on Jul 18, 2012 at 10:41 am

Sweeper at 100K -- get your facts correct. Go to the city website and pull up the salaries --- yes, that is correct - you can go online and check out all the salaries. The 100K sweeper was reported years ago and that was a pay out of a retiree. If my memory is correct, it included vacation pay, overtime and possibly sick pay. There was a point in time when employees got paid any unused sick leave. That practice ended years (if not decades)ago. Folks that were employed prior to a specific date (mid 1980s) were allowed to keep that benefit. I doubt there are many of those employees left in the system.


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Posted by Michael
a resident of Downtown North
on Jul 18, 2012 at 11:00 am

Nancy,

I took your advice and pulled the 2011 salary report (linked below) from the city website. The poster citing the 100K sweeper was absolutely correct and you are incorrect in telling him to "get his facts correct." The data is below.

Now that the facts make it clear that a non-retiring streetsweeper is costing the city over 100K, do you care to comment on whether you think this is a good use of taxpayer money or a wasteful one?

Source:
Web Link

Job Title: St Sweeper Op
Department: Public Works

Regular Salary: 63,593.44
Overtime: 1,295.70
Cash Out: 1,981.52
Other: 0
Total Wage: 66,870.66

Employer Contribution to Medical, Dental, Vision: 19,528.78
Employer Contribution to Pension: 11,701.19
Employer Contribution to Employee portion of Pension: 1,493.67
Employer Contribution to Life, LTD, and Meidcare: 1,231.12

THIS SUMS TO A TOTAL OF: $100,825.42


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Posted by Garrett
a resident of another community
on Jul 18, 2012 at 11:15 am

Reform is needed, rules must be made, to many cities gave out so much with out paying. No Free Rides. Employee pays a percentage of his pay, this is a must, benefits rules are needed. The city can put money into the employee pension plan but only a percentage of what he makes. No huge amounts for one person. Years of Service should matter, you should not get 100 percent if you have only worked 20 years, I would think if you have worked 40 years, yes.


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Posted by Nancy Anders
a resident of Greenmeadow
on Jul 18, 2012 at 11:42 am

What I objected to was that when you say 100K sweeper, it implies that the employee is getting paid 100K a year. There is a huge difference between $63,500 and $100,000. Try living on $63,500 in the Bay Area, I know I couldn't. Don't get me wrong – I think many of the benefits gov't employees are getting are over the top and we are finally seeing at least Palo Alto employees paying their share. Whether it is a fair share is another discussion.

Why does everyone tend to beat up on the SEIU folks? The irony is that when they go into negotiations, they "battle" with management and historically what SEIU gets, management ends up with! Go back to the year that 2.7% @ 55 was instituted – do you know that management came into negotiations and told SEIU that they would not get any concessions unless they agreed to 2.7% @ 55. The retirement formula was not what the SEIU employees rated as a priority or even close to it. That information came from two negotiators that year. Now to make it more interesting – if there are still records of how many managers retired within the year that 2.7 @ 55 was instituted you will be amazed! The point of all that is -- when are some retirees going to be asked to kick in for some of their medical? Prior to a year or so ago, City employees could retire with 100% medical.


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Posted by More Corrections
a resident of another community
on Jul 18, 2012 at 12:24 pm

Micheal:

Your numbers are correct but not complete. Palo Alto Online only printed what the City paid. They didn't print what the employee pays. From the $63,593 salery you can deduct what the employee pays for benifits.

Subtract:
Contibution to heath care
Contribution to Pers retirement (should be over $3,300)
Required Union dues

Could you live on less than $60k a year?
He probably cashed out some vacation to pay bills.


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Posted by Michael
a resident of Downtown North
on Jul 18, 2012 at 1:03 pm


The street sweeper costs the city over 100K per year. Palo Alto taxpayers are paying 100K per year to employ a single street sweeper. Those are the facts and the facts are simple. We will also be on the hook for backstopping his pension when he retires at 60.

What the employee does with the money the city pays him (union dues, minimal employee copays, etc.) is not relevant with regard to sound fiscal policy. Do private sector employees not have expenses and deductions as well? The fact is he costs the city over 100K per year, and the market rate cost for a similar position is far below that: A private sector firm would almost certainly perform the task for less than half of that.

To the point that it would be difficult to live on $63,500, a great many in the private sector do it, and do it without the 35K in additional compensation the city is paying through gold plated pension and medical benefits. In fact $63,500 is above the median income for Santa Clara County.

A public servant delivering identical value to a private sector taxpayer is not entitled to be paid more. Why is a public sector employee entitled to immunity from the laws of market value, when those taxpayers floating his privileged position are afforded no such status?




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Posted by Michael
a resident of Downtown North
on Jul 18, 2012 at 1:10 pm

Nancy, when you say,

"What I objected to was that when you say 100K sweeper, it implies that the employee is getting paid 100K a year."

you are again incorrect. If you read my post what I stated was

"...facts make it clear that a non-retiring streetsweeper is costing the city over 100K"

Note that as a taxpayer I have identified the correct, relevant metric -- how much we are paying for services.

Would you care to answer my original question: do you think paying over $100,000 to secure the services of one street sweeper for one year is a sound use of taxpayer money?


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Posted by Perspective
a resident of Greater Miranda
on Jul 18, 2012 at 1:13 pm

More corrections and Nancy: Truly, you crack me up. Do you have any idea what nurses, therapists, counselors, teachers etc make even with graduate degrees and years of experience? They start out, if they are lucky, after years of college and internships, at a job where they have to work weekends and holidays, and for nurses, nights, and are lucky to make $70,000 with not near the benefits. With years of hard work, graduate school, moving up int the world, maybe they can reach 80-90,000. Not bad pay, of course, but do you honestly think you are going to gin up any sympathy for someone who, though he does honest labor etc, has no education, no stress, no responsibility for others health or welfare..making "only" $60,000 per year coming out of high school? Really, you are joking, right? Not knocking whoever this is, and I am happy s/he has such a plumb job, but truly, this is a very bad choice if you are trying to gin up sympathy from most BS and MS level professionals who work in the Bay Area,who then pay the taxes to pay this employee. Really.


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Posted by Kate
a resident of Barron Park
on Jul 18, 2012 at 1:20 pm

Michael thanks for the link. Page 8 gives us another gem: 130k total cost for "admin assistant."

Definitely time to put a stop to "public-sector gone wild."


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Posted by Garrett
a resident of another community
on Jul 18, 2012 at 9:45 pm

Why not put a stop to private sector gone wild.


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Posted by Veritas
a resident of Another Palo Alto neighborhood
on Jul 19, 2012 at 7:52 am

The City of Palo Alto organization needs fundamental cultural change. The watchwords should be accountability, transparency, and integrity.

Many past scandals and foul-ups in City Hall were caused by the lack of any of these virtues. City Council needs to make sure that the cronyism and the Bell, California management style of the past administration never again blights our city.


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Posted by Nancy Anders
a resident of Greenmeadow
on Jul 19, 2012 at 11:36 am

I have an advanced degree in a field that I KNEW would not make me rich. That was my choice. Teachers, nurses, etc. know the going rate when they choose their professions; so to make it sound like they are cheated out of anything is insulting. I don't know what skill set is needed to be a street sweeper – the same to drive any large piece of heavy equipment? Who cares – it is obviously a job that is in demand and therefore it pays a decent wage. Is it fair to the teachers, nurses, etc of the world? Since residents in my area have a fit if there are any leaves on the street, then I guess the street sweeper is under paid! FYI – Admin Asst. is a management position. Here's a news flash – there are some folks that fall under Mgmt/Confidential that don't even manage anyone or anything!


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Posted by Voter
a resident of Crescent Park
on Jul 19, 2012 at 12:30 pm

"Since residents in my area have a fit if there are any leaves on the street, then I guess the street sweeper is under paid."

I will go out on a limb and disagree that city union street sweepers are under paid at 100K total compensation. I prefer my tax dollars be spent more wisely.


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Posted by Wondering
a resident of Professorville
on Jul 19, 2012 at 7:16 pm

Is it easier to have the state, cities, and counties attack the civic employees rather than rally together for decent healthcare costs?
Why is that?

How is it Sunnyvale, Santa Clara and Mt View do not continually use their "local paper" to disparage employees?
Why is that?


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Posted by It's not just here......
a resident of South of Midtown
on Jul 21, 2012 at 11:13 am

High costs of pensions is not just in Palo Alto, and newspapers are excellent resources for a community to know the extent of a problem. So it's not disparaging anyone just to state the facts, no matter the venue.

Further, teachers can haul in a three figure salary, if they are in the "right" school districts.

Look at the UC state system that is putting a limit on the numbers of students they accept, while INCREASING the already bloated salaries of university administrators, the perks alone would support a family in an average California city.

Look at the nice "Goodbye" package given to a former PG&E CEO, upwards of $30 million, when many people do not even have the basics.
I agree with, Veritas, who wrote:
Posted by Veritas, a resident of Another Palo Alto neighborhood, on Jul 19, 2012 at 7:52 am "The City of Palo Alto organization needs fundamental cultural change. The watchwords should be accountability, transparency, and integrity.

Many past scandals and foul-ups in City Hall were caused by the lack of any of these virtues. City Council needs to make sure that the cronyism and the Bell, California management style of the past administration never again blights our city."******************

But I ask: how can Palo Alto ever have that scenario when it calls for both good sense and good ethics? How does one learn good ethics?
Can people that created the problem, solve it on their own? I think not.

Most councils, instead of being visionary, have a "monkey see, monkey do" way of doing business. They will look at OTHER cities and see what they're doing, instead of being leaders and thinkers.

Think about it:
Leaf blower bans?
Plastic bag bans?
Sit/lie bans?

You name it - it's like they research other communities and just copy it. City employees (people I thought were to serve a community) benefitted from the unions intervention, and now, the public serves them, forever, while infrastructure suffers.

I don't know which city was the FIRST to agree to that, but many of them followed. Thus, we are where we are today. We need common sense, ethics and leadership to solve it.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 21, 2012 at 3:06 pm

Peter Carpenter is a registered user.

Here is what is happening in the real world - imagine the response if this was the negotiating position of local governments:

"By JOHN W. MILLER

PITTSBURGH—Top U.S. steelmakers, facing falling demand and profits, are pushing for steep concessions from the United Steelworkers of America in two new labor pacts for nearly 26,000 workers, union officials said.

According to internal USW documents reviewed by The Wall Street Journal, ArcelorMittal, the world's largest steelmaker and among the largest in the U.S., has told the union it wants to cut wages and benefits for all workers by more than $28 an hour, or 36%, from an average $77.40 in 2011 and eliminate retiree health care for anyone hired after Sept. 1. The steelmaker also wants the "unilateral right" to cut wages during periods of reduced operations and to schedule 32-hour work weeks.

For top domestic steelmaker U.S. Steel Corp., which employs some 13,000 USW workers at 11 locations in the U.S., the biggest issues are rising health-care and pension costs for both active employees and retirees, according to the internal union documents. "


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Posted by Peter Carpenter
a resident of Atherton
on Jul 21, 2012 at 3:23 pm

Peter Carpenter is a registered user.

Stockton issued $125 million in pension obligation bonds to refinance part of the city's unfunded actuarial liability paid to the California Public Employees' Retirement System.

Now Stockton has asked the bankruptcy judge to erase debt owed from the city's ailing general fund on a $125 million bond Stockton issued in 2007 to refinance part of the city's payment toward employee retirement benefits.

So CalPERS got $125 million and the employees will continue to get their pensions and the bond holders will get screwed.

If this happens then local governments in California will no longer have access to the bond market - PERIOD.


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Posted by no hope
a resident of another community
on Jul 21, 2012 at 4:43 pm

US Steel CEO John P. Surma:
- Total Compensation for 2011: $4.38 million
- 6-Year Average Compensation: $7.61 million
Web Link


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Posted by Aaron P.
a resident of Ventura
on Jul 21, 2012 at 5:32 pm

If the unions want to play hardball on changes to pensions of current workers, the city must stop the accumulation of generational debt somehow. I recommend:

1. Outsource wherever possible.
2. As each new labor contract comes up for negotiation, impose significant (20-50%) pay decreases that reflect the real cost of the pension benefit to taxpayers.

Most city employees will not leave because they still cannot do better in the private sector. A career of working 40 hour weeks with union-backed job security is largely incompatible with they type of productivity that the private sector requires from its workers who make what the city employees are accustomed to getting from the taxpayers.


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Posted by Anon
a resident of Another Palo Alto neighborhood
on Jul 23, 2012 at 10:06 pm

Posted by Aaron P., a resident of the Ventura neighborhood, on Jul 21, 2012 at 5:32 pm:

"If the unions want to play hardball on changes to pensions of current workers, the city must stop the accumulation of generational debt somehow. I recommend:

"1. Outsource wherever possible.

"2. As each new labor contract comes up for negotiation, impose significant (20-50%) pay decreases that reflect the real cost of the pension benefit to taxpayers."

I have a different idea. How about "Medicare for Everyone", or, alternatively, adopt the German medical system. Cut health costs for everyone by 40%, public and private.

Healthcare costs are eating up both public and private employers and driving work overseas, costing more and more jobs. Let's fix healthcare so the U.S. can compete with the rest of the industrialized world.


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Posted by Wisdom Cometh
a resident of Professorville
on Aug 23, 2012 at 11:44 pm

All of this inflation started with the implementation of Paul Dornell, the ex-assistant director to Public Works. There is a huge scandal that is alive and well inside Public Works as we speak. This very scandal is why they have changed their name to Public Services, offer a 24 hour "snitch-hotline", have placed an HR rep. now at the Municipal Corp Yard, and terminated an out of control Lead of Public Works, Llyod Martinez, who had 26 years of abused experience under his belt. Jon Hospitalier, and Steve Banks are all the remaining tools that still flourished under the "Dornell Dynasty". They need to be fired, before all of this is leaked to the press. All of these people mentioned were grossly overpaid, lazy, and had no business being in a leadership role.


 +   Like this comment
Posted by Deep Throat
a resident of another community
on Aug 24, 2012 at 4:04 pm

The last time I checked Paul Dornell was back at work double dipping while being paid his pension.


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