Palo Alto Weekly

News - July 20, 2012

City workers to foot larger share of pension costs

City of Palo Alto set to approve agreement with largest labor union Monday afternoon

by Gennady Sheyner

Employees in Palo Alto's largest labor union will have to start paying a greater share of the city's pension and health care costs under a new contract that the City Council is scheduled to adopt Monday night.

The proposed contract, which the city made public Wednesday afternoon, would apply to the 580 full-time employees represented by the Service Employees International Union, Local 521 — about half the city's workforce. These employees were the first to accept benefit cuts in 2009, when the council first started making structural changes to employee contracts.

The changes are meant to address the steeply rising costs of pension and health care benefits — obligations that have helped lead Vallejo, Stockton and, most recently, San Bernadino into bankruptcy. In Palo Alto, the council plans to hold a broad public discussion in September to consider ways to reduce these costs.

According to a new report from the Human Services Department, the city's medical costs have more than doubled and pension costs have tripled in the last decade, exceeding the city's revenue growth.

"The City cannot continue to absorb all increases in future years and has been negotiating with all bargaining units since 2009 to make permanent, on-going structural change to put in place cost sharing programs instituting employee contributions to medical and pension plans," the report from Kathryn Shen, the city's Human Resources Director, states. "This contract makes progress toward meeting the City's goals in both areas."

The new contract, which the SEIU voted to ratify on July 17, increases the employees' share of health care costs from the current level of about 6 percent to 10 percent of total premium costs. The city's recent contracts with police and firefighter unions resulted in similar concessions from public-safety employees. At the same time, the city will drastically reduce the monthly allowance it gives to employees who don't participate in the city's medical plan. The allowance would drop from $820 to $284.

The SEIU workers will also now be required to pick up the full employee portion of the city's contribution to the California Public Employees' Retirement System (CalPERS), which administers pension plans for the city. The city had traditionally picked up the full employee share, though that changed in 2009, when the workers began paying 5.75 percent of the pension contribution. With the new contract, employees will have to pay the full share of CalPERS' "employee contribution" — which ranges between 7 percent and 8 percent of salary.

At the same time, the pension formula for employees in the second pension tier (those who have been hired after the 2009 contract and who receive less lucrative pension benefits) would be based on the three highest-paid years as opposed to the current system, which bases payments on the single highest year. The city's firefighters and police unions accepted similar conditions in their new agreements.

In exchange for the union's agreement to raise its contributions toward pensions, the city has agreed to give all SEIU employees a cost-of-living increase of 1.68 percent. Workers, however, will no longer receive three floating holidays (they are currently the only labor group to have such holidays). They will also see the probation period for new employees increase from six months to a year.

The recent negotiations bore little resemblance to those in 2009, when the SEIU protested the city's proposed benefit reductions and staged a one-day strike. The council ultimately imposed these reductions unilaterally.

Shen described the most recent round of negotiations between the union and the city as "very professional, even collegial," with both sides doing their homework and contributing data to back up their stances.

"I think both the SEIU and the city were very sober about the current economic situation, and both sides know that we need to be good stewards of finances, especially as other cities are going belly up," Shen told the Weekly.

The new contract also addresses the problem of employee turnover and the challenge retaining employees in light of the recent benefit adjustments. Before the council's June 25 meeting, several SEIU employees talked about the heavy turnover in various departments, especially the Utilities Department, and argued that the loss of experience is threatening to reduce the quality of service.

In the new agreement, the city offers to adjust some base salaries for employees in highly specialized fields. City officials also identified several areas in which the city invests substantial resources in training employees. In exchange for the training, the employees must agree to stay in the city for at least three years after they receive their certification (which Shen said has a value of close to $100,000). Those who choose to leave the organization after getting their certification must pay back $30,000 or a pro-rated portion of the training costs.

The new contract is expected to provide net savings of $545,569 in the current fiscal year, according to the new report. It would be effective from July 1 of this year to Dec. 31, 2013.

The City Council meeting will begin at 4:30 p.m. Monday afternoon, July 23.

READ MORE ONLINE

Reporter Gennady Sheyner's analysis of the financial impact of city workers' pensions, with charts showing the trend over the past 10 years, is posted on Palo Alto Online. Search for "Palo Alto's ticking time bomb."

Comments

Posted by Liberty, a resident of University South
on Jul 18, 2012 at 7:19 pm

The article makes it sound like the City is not paying anything towards pensions. It should mention that the city still pays the CalPERS employer contribution, which changes year to year but i think is around 20% of salary.

I wish i got that.


Posted by me too, a resident of Green Acres
on Jul 18, 2012 at 7:24 pm

me too. Wish I got that.

But I chose to work in the private sector for more money so I could get laid off and have my job outsourced.

We need jobs. Not sit around and get mad at those that have them


Posted by Peter Carpenter, a resident of Atherton
on Jul 18, 2012 at 7:29 pm

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


Posted by Former City employee, a resident of another community
on Jul 18, 2012 at 9:48 pm

Liberty,

If you think you can get by on these take home wages minus the new contributions to Heath and retirement feel free to apply. This is a link to the City's job openings page. I doubt you are qualified nor could get by on the low pay.

Web Link

That's why I left the City.


Posted by Joe, a resident of Another Palo Alto neighborhood
on Jul 19, 2012 at 9:25 am

The link above, to the contract pending approval, has the SIEU salary schedule at the end of the document:

Web Link

Best to review those salary numbers than the few at the open jobs page.


Posted by Improvement, a resident of Another Palo Alto neighborhood
on Jul 19, 2012 at 11:14 am

Good work by the City's new HR Director, Kathryn Shen! She is light years more professional than former HR Director Russell Carlsen. City Manager James Keene has made a good hire!


Posted by John, a resident of Old Palo Alto
on Jul 19, 2012 at 12:23 pm

The article discusses costs of the pension and health plans. But it doesn't address the fundamental issue of how the benefits are determined; a function of the performance of the pension fund or a function of predetermined fixed amounts. Does your reporter know if that discussion is on the table?


Posted by David Pepperdine, a resident of Another Palo Alto neighborhood
on Jul 19, 2012 at 1:40 pm

Staff will always say they're paid too little. Ever heard of anyone complaining they get paid too much?

Salary is a matter of supply of available candidates and demand for their services. If you don't like the wages, get another job or get re-trained. If the employer can't afford your salary, they have to find another candidate.

When you add up all the benefits, IMHO city employees are over-compensated. Vastly. Why should they be paid (salary+benefits) greater than the private sector? Palo Alto has the highest debt per person of any city in the Bay Area. The pension liabilities are staggering.


Posted by JA3+, a resident of Crescent Park
on Jul 19, 2012 at 3:03 pm

"When you add up all the benefits, IMHO city employees are over-compensated. Vastly"

+1

This point has been well-documented elsewhere; there's no doubt here.


Posted by Larry, a resident of another community
on Jul 19, 2012 at 7:45 pm

I am a city worker and I am over payed.


Posted by What Could I Say...., a resident of Another Palo Alto neighborhood
on Jul 19, 2012 at 9:56 pm

I Told You SO!


Posted by lazlo, a resident of Old Palo Alto
on Jul 19, 2012 at 10:00 pm

...now if we could only get the ballooning and skyrocketing salary and benefits of Palo Alto city management under control. HR Director Ms. Shen rakes in $300,000 in salary and benefits. These yearly six digit salary and benefit packages are unsustainable and are a ticking time bomb. Palo Alto City Manager Keene rakes in more than $500,000 with taxpayers buying his family a nice house in Palo Alto, paying his property taxes, gym expenses, auto allowance, paid health and dental benefits for his family, over two months of paid vacation time every year, and much much more. With over 100 managers earning benefit packages up to and exceeding $100,000 plus salary, the real ticking time bomb of unsustainable ballooning and skyrocketing costs are city management related. Why do city management personel need to be paid salary/benefit packages equal to or more than the President of the United States?


Posted by Separation Needed, a resident of another community
on Jul 19, 2012 at 10:09 pm

This is a class issue. Salary group making less than $75K a year should not be part of this argument. Employees making $75K+ a year need to be looked at. Someone making $45K salary and $12K is paying for these new cuts worst than those who are making $9+ salary and $12k in benefits and to boot - management benefits that others no longer have including tuition reimbursement, conference/vacation reimbursement option, etc.

Let us all pay our fair share at all levels. Thank you. From a city worker, single parent with dependents and paying for education.


Posted by Separation Needed, a resident of another community
on Jul 19, 2012 at 10:11 pm

EDIT "than those who are making $9+ salary and......."

$95+ salary and ......


Posted by neighbor, a resident of Greenmeadow
on Jul 20, 2012 at 10:52 am

@former city employee -- the pay for the children's theater position, requiring only a bachelor's degree is more than CSU professors make (with Ph.D.s and often post-doctoral training) with 10-20 years experience and tenure. Looking at the salary schedule, underpaid is not how I would describe it (at any level).


Posted by jardins, a resident of Midtown
on Jul 20, 2012 at 12:27 pm

In total agreement with your points, Lazlo.

I think the whole process of hiring for city management needs to be examined--by an impartial outsider to Palo Alto. I've read the Palo Alto Municipal Code and it seems to grant the city manager full control over the management positions he sees necessary to create. If that is so, it is ridiculous--and undemocratic, given that it is taxpayers' money that's funding such appointments.

I'd surely welcome hearing from others who read that Code--is my interpretation of it correct?


Posted by DEMON, a resident of East Palo Alto
on Jul 20, 2012 at 4:16 pm

I'm a city worker......I love my work


Posted by Former city employee, a resident of another community
on Jul 20, 2012 at 5:46 pm

Neighbor,

Here's a link to the CSU wage agreement:
Web Link

I think you'll see that CSU professors will make quite a bit more than the Children's Theater position. That's if they only work the academic year. If they work a 12 month year they will make a lot more.

The CSU librarians make more than the CT job as the director of education:
Web Link


Posted by Resident and Employee, a resident of Midtown
on Jul 28, 2012 at 1:35 pm


To "Separation Needed" the posts of the SEIU employees wages do not then deduct the current loss of holidays, healthcare and pension contributions by the employee,

Why do the lowest paid employees group continue to take the hit when the weekly reports salaries for the exhorbitant management group pay and retirement?

The jobs currently posted by human resources reflect Management Positions and Police. The listings do not distinguish union group in the cover post. The library position is SEIU.

SEIU: ...the SEIU employees now service: multiple library, art center, theatre, zoo, recreation centers; parks that are not funded by the users. Those "extras" are the cost of running a "quality of life" city.

MANAGEMENT JOB OPPORTUNITIES: Why have we been paying exorbitant salaries for unqualified workers?

Look at the requirements for the Management Specialist.
Are we about to hire another "friend" or associate?

Why are we hiring additional management computer personnel at huge salaries when we already have the positions to cover those duties?

As long as the WEEKLY is a puppet for the city management we will continue to get press releases as news and inadequate evaluation of city performance, the budget, union groups, and pay levels.


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