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Palo Alto looks for speedier union negotiations

Original post made on Mar 14, 2012

Palo Alto officials made a push this week to speed up the city's process for labor negotiations when a City Council committee endorsed a new policy that calls for new union contracts to be approved before existing ones expire.

Read the full story here Web Link posted Wednesday, March 14, 2012, 4:10 PM

Comments (59)

Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 14, 2012 at 4:35 pm

Mr. Klein states that the city has potentially lost millions of dollars by extending existing contracts. He and other elected officials have demonstrated little or no fiscal restraint however while allocating many more millions in other non-essential services, while infrastructure and public safety needs go by the wayside. Millions have been spent or set aside for several non-essential, niche projects such as playground construction, business district make-overs, bike bridges, golf course upgrades, public art, and countless consultant fees. Additionally, public dollars are still being used to fund homeless programs that cater to few if any Palo Alto residents. The Children's Theater is funded in large part by public dollars, a practice way past its time. These same elected officials that vilify the public employees so-called greed, have no problem accepting lifetime medical benefits after serving their terms. It's for these city leaders and elected officials to back up their rhetoric with some action. Although I agree that certain reforms and adjustments have to be made with our public employees salaries and benefits, to characterize them as the sole culprit of our financial woes is simply irresponsible and unfair. They are being used as a scapegoat after years of poor civic planning and irresponsible spending on frivolous, non-essential projects and programs.


Posted by Tim, a resident of Southgate
on Mar 14, 2012 at 4:41 pm

With binding arbitration now voted out, the process should be faster.


Posted by LAZLO, a resident of Old Palo Alto
on Mar 14, 2012 at 4:48 pm

Jeez, you think they might be trying to stop the mass exodus of employees? Keene and Klein spend so much time figuring ways to ***** over employees that the city can no longer retain qualified employees. Only the city benefits by stalling negotiations and not having to pay contractural agreements made to employees with this new "no contract" swill put forth by Keene and Klein.


Posted by Nayeli, a resident of Midtown
on Mar 14, 2012 at 5:27 pm

I am getting to the point where I believe that public SERVANT employees shouldn't have a union with the power that has been granted to them in California. The State is going bankrupt and the demands of these unions are largely to blame.

If they aren't willing to work for what is on their contracts, then let them find a job elsewhere. I suspect that many others would line up to replace them.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 14, 2012 at 6:27 pm

The police or fire department associations can hardly be called a union. They don't even refer to themselves as a union. A bargaining unit, yes. A union, not even close, at least in the purest form of the definition. They do not have the ability of going on strike, nor do they possess binding arbitration any longer. The police association for example Nayeli could have insisted on working for what was on their last contract, however, they voluntarily chose to defer a negotiated and agreed upon pay increase. A pay increase they will likely lose altogether. They deferred that pay increase along with cutting a number of positions and specialty assignments, all without adopting an adversarial role or threats of ballot measures. Again, it is delusional to entirely blame public employee salaries and benefits for the financial ills of our city and state. Our elected officials have made them scapegoats for decades of there own poor planning, investments, and frivolous spending.


Posted by Fed Up, a resident of Charleston Gardens
on Mar 14, 2012 at 6:34 pm

Public unions have turned the public sector into a cleptocracy that charges the taxpaying public far more than the value it delivers, and steals the difference.

Public unions should be illegal due to the conflict of interest they create for the public. Most city services could be accomplished by the private sector for half the cost. What has the city government done that is so valuable that my kids will have to keep servicing their bloated pensions generations from now?


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 14, 2012 at 6:41 pm

> Again, it is delusional to entirely blame public employee salaries
> and benefits for the financial ills of our city and state.

WRONG!!!

Too often the percentage of salary/benefits for public sector entities is in the 80%-85% of generally available funds. The cost of labor is driven by unions not along lines of the "value of labor", but more along the lines of the "availability of funds".

And then there are work rules and, in the case of public safety unions/bargaining units, an attempt to force the head count of the unit based on external variables--such as the number of people living in the jurisdiction.

Public sector employees' salaries generally are not capped by anything competitive, or even remotely real world--such as having their employer going bankrupt (although we are seeing a little bit of that here in California).

And then there are the deferred salaries--called pensions, which the taxpayers have back-stopped via contractual guarantees. And there is "pension spiking", which is clearly driven by public sector employees.

Sorry .. if there is anyone "delusional" in this picture .. it's not the people looking to scale back the number of public sector employees, or their salaries/benefits.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 14, 2012 at 10:06 pm

On the topic of public safety salaries, specifically the Palo Alto Police officers, I learned that their salaries have been negotiated and approved in part due to a comparison with 16-18 other police agencies in our region of similar size and demographic. The majority of those comparison cities are located in the bay area. Both the police association and the city negotiators agreed ahead of time which cities would be used for comparison. Palo Alto Police have never registered above the mid-range in terms of total compensation, even after approving a labor contract. Prior to their last negotiated contract, PAPD was in the bottom third.

There is definitely room for an appropriate level of pension and salary reform. The police department also realized this and has made numerous voluntary concessions including deferring a contractual pay increase. However, there is also a market standard of what police and firefighters earn which in my opinion they deserve. To dismiss their contribution entirely with calls to quit and we'll hire someone else is simply disrespectful.


Posted by Jo Ann, a resident of Embarcadero Oaks/Leland
on Mar 15, 2012 at 5:18 am

I would like a simple answer to the question of why city making more than $100,000 are getting over-time pay.

In the private sector, employees are routinely classified as "managerial" specifically so employers can AVOID paying over-time.

It seems outrageous and a perversion of the labor laws for top managers making MORE than $200K to get over-time.


Posted by Peter Carpenter, a resident of Atherton
on Mar 15, 2012 at 7:07 am

Peter Carpenter is a registered user.

The citizens should demand that the PA Council adopt by ordinance the same policy as was adopted years ago by the Menlo Park Fire Protection District:

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 Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 15, 2012 at 9:39 am

> The citizens should demand that the PA Council adopt by ordinance
> the same policy as was adopted years ago by the Menlo Park Fire
> Protection District:

Maybe .. but it would be better for Palo Alto if the Council would start to hire professional negotiators, rather than depend on the Staff--which has a fundamental problem of "conflict of interest". The Palo Alto City Charter prohibits the Council from being directly involved in the operations of the City government, so none of the Council can actually be involved in the negotiations. So--it is not clear exactly who is actually representing the taxpayers/residents/business owners during these salary negotiations.

The PA Charter could be changed, to allow more direct intervention. At the moment, it's not really clear how the Council is involved in any long-ranged financial planning for the City. The finance people provide various documents, but most Council members seem more innumerate, than fiscally aware, so the value of these documents to the decision process is questionable. Most Council Members seem to just "rubber stamp" whatever is put before them. Looking back over the years, the number of 9-0 decisions seems to reflect a lack of serious deliberation. To make matters worse, the Brown Act makes it impossible for elected officials to talk among themselves (like Boards of Directors do in the private sector) in order to come to a group decision that involves in-depth discussion.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 15, 2012 at 10:56 am

Jo Ann, not sure what information that you're relying on for the overtime question, but management level personnel, at least in the fire and police department, are not eligible for overtime. Never have been. These are the kind of distortions that create so much anxiety and anger over these issues. People need to become accurately informed before throwing out these claims.


Posted by Kim S., a resident of Old Palo Alto
on Mar 15, 2012 at 11:01 am

There are plenty of non-managerial police officers making over 100K and getting overtime on top of that. This needs to end.


Posted by Concerned Retiree, a resident of Midtown
on Mar 15, 2012 at 11:20 am

To me, it seems a simple answer. We cannot afford to pay an increase of 12 percent in benefits and sharply rising salaries and overtime which go beyond the COLA. End of argument.

This is not about how great our employees are (or aren't.) It's about living within our means, just like the PA citizens themselves have to.


Posted by David Pepperdine, a resident of Another Palo Alto neighborhood
on Mar 15, 2012 at 1:53 pm

We need to end pension spiking wherein employees don't use sick leave for years, then get vacation and sick leave added to their final year's pay, and get to use that as their final year salary for pension computations.

Many public employees work in one jurisdiction for a decade or two, then move to another district for a decade and collect pensions (often spiked) from both. This is not the intent of the pension system. But the employees are simply gaming the system because the rules.allow them to do so.

Many public employees have violated their unwritten contract with their employers by engaging in such practices.

Us citizens need to demand change, or else put these services out to bid by private companies - which typically offer 401-K plans rather than spike-able pensions and lifetime healthcare.


Posted by Tracy, a resident of Another Palo Alto neighborhood
on Mar 15, 2012 at 3:14 pm

Palo Alto's CalPERS Actuarial Report highlights/lowlights

Palo Alto's pension plans are severely under funded and taxpayers are being asked to increase payments to cover the shortfall. Here are the funding levels and unfunded liability for each (page 5 in the link at bottom of page):

Safety Plan: funding ratio is 64.8%. The unfunded liability is 103 million.
Misc. employees: funding ratio is 62.2%. The unfunded liability is 197 million
Total taxpayer unfunded liability for both plans (excluding East Palo Alto) is: 300 million

These are market value of asset numbers. The actuarial value of asset numbers are used for the purpose of setting contribution rates.


Schedule of Amortization Bases (page 13): CalPERS typically smoothes gains and losses over a 15 year period (it was three years until 2005) and they amortize the increased costs for plan changes over 20 years. At least that was the case until 2007-2010 when they expanded "corridors" and allowed for additional changes to help defer the true cost of pension plans over thirty years. They also phased in the increased costs in what amounts to a negative amortization payment plan. If you look at this page 13 you will see that even though the contribution rates/costs are increasing so is the unfunded liability.

Contribution rate history (page 15).
Safety: 2008-09 = 24.5%. 2012-13 = 31.1%. Increase of 6.6% of payroll
Misc: 2008-09 = 17%. 2012-13 = 23%. Increase of 6% of payroll

Rates will increase in 2012-13 to reflect CalPERS lowering of the discount rate. They will increase again in 2013-14 to reflect CalPERS negative earnings this fiscal year (2011-12) assuming something doesn't change. CalPERS is currently negative about 2%, and haven't earned anything to cover current expenses or the projected 7.75% rate of return.

Average annual compensation by age (page 26). Add 9% to determine the salary the pension is based on. It has to do with the city paying the employee share of the pension contribution and then allowing the employee to count that money as compensation for the purposes of the pension payout

Disability retirements: almost as many retire on disability than do naturally in the safety classification (page 28). Comparing the safety disability retirement rate to the Miscellaneous employee disability retirement rate is a SHOCKING comparison.

CalPERS Investment Return Sensitivity Analysis based on five different return assumptions (page D-1). When CalPERS earns 7.75% the taxpayer cost goes up.

Link to all Palo Alto Actuarial reports:

PA Safety plan: Web Link

PA Miscellaneous employee plan: Web Link

Plans for all counties and cities: Web Link


Posted by bill g, a resident of Barron Park
on Mar 15, 2012 at 5:47 pm

Thank you, Marrol, for giving a reasonable evaluation of how past Councils have distributed our money. The first priority should have been to fund essential needs, streets, public safety, and maintenance of capital assets.

The Infrastructure Blue Ribbon Commission (IBRC) has outlined what is needed to correct the prior backwards allocation of our tax dollars. Now let's see if the present Council has the strength of character to adopt the IBRC recommendations.

Nayeli The "State is going bankrupt..." has been accurately described by Mr. Marrol i.e. Our elected officials have made them (public employees) scapegoats for decades of their own poor planning, investments, and frivolous spending.


Posted by a friend, a resident of Another Palo Alto neighborhood
on Mar 15, 2012 at 10:01 pm


Tracy, I have heard the disability retirements of safety workers are a problem, and in most cases a tolerated gaming of the system. So I took your challenge and this is what I found:

For the general workers which includes office, street repair, and maintenance positions their were 945 service retirements and 9 disability retirements.

For safety employees there were 187 service retirements and 145 disability retirements.

Something's not right there and I suspect we have some employees gaming the tax free disability retirement system.

The actuarial reports are very interesting. The safety plan link didn't work. The link is: Web Link


Posted by Ernesto USMC, a resident of Ventura
on Mar 16, 2012 at 9:39 am

"For safety employees there were 187 service retirements and 145 disability retirements."

It makes me very angry to read this, as both a taxpayer and someone who served in a role that probably entailed a magnitudes greater risk of disability than that of a Palo Alto firefighter (and slightly less so but still hugely higher than a PA cop).

Disability cases should be audited randomly and continuously and anyone found to have "gamed" the system (a nice way of saying stole from the public) should forfeit their pension and be charged. If there is no penalty for stealing, then people will steal. The statistics demonstrate that this is clearly the case.


Posted by Jo Ann, a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 2:02 pm

Marol,

Re my question about why such highly paid employees get over-time, please refer to any article about labor costs.

One police dispatcher made $97,000 in over-time -- a figure that's pretty memorable. And recent articles cited o/t pay in excess of $100K for the various police and fire execs.


Posted by CPR, a resident of Another Palo Alto neighborhood
on Mar 16, 2012 at 2:45 pm

Does anybody know anybody making 150K per year that gets paid overtime, after 40 hours? That's the deal our safety unions are getting. My guess is the average cost of police and fire is 225K, before overtime.


Posted by Jo Ann , a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 3:04 pm

Maybe it's time for all of us to ask our fine City Council that question.

city.council@cityofpaloalto.org.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 5:57 pm

Jo Ann, management personnel in the police and fire departments are not eligible for overtime. Line level and supervisory personnel are eligible. With the police department being down in numbers approaching the 20% mark, I am not surprised in the least that overtime expenditures may have increased. We can debate the issue of minimum staffing, however both departments do adhere to a minimum number of on duty personnel. It is my understanding those are the minimum number of officers and firefighters it takes to provide the service we have come to expect in Palo Alto, as well as providing them with the manpower to operate safely and effectively. I was surprised to find out that the police department's minimum staffing during the late night shift is only six officers (one supervisor and five patrol officers). Apparently they operate near that number a majority of the time.

As for the salaries that people are so outraged over, let's not forget that these public safety contracts were signed publicly with everyone's knowledge. I don't recall too many people complaining about public safety salaries during the boom years, nor were people lining up to apply for these jobs. I don't think that most people think about police and fire jobs as a way to get rich, nor do I believe that most people that do apply are in it for the money. Palo Alto Police salaries remain in the lower half in terms of pay and benefits when compared to the other benchmark bay area cities that are used for comparison during contract negotiations. There is a market rate for public safety salaries, and even though there is definitely room for reforms, quite frankly, I truly believe they earn and deserve their compensation.


Posted by Jo Ann , a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 6:55 pm

When a police dispatcher earns $300K a year, I beg to differ. I guess her rudeness is extra.

In fact, I refer you to the recent report on salaries just published here. Web Link

If you scan that list, you will see MANY people earning in excess of $110,00 getting huge over-time compensation.

I've got one fireman making $124K in salary, $137K in overtime, the city manager made $160K in salary and got $862 in ot. There are 4 Utilities people making between $112K-$123K who got overtime ranging from $400 to $9,500.

Notice I'm not including "other" compensation they get.

How much do you think engineers, marketing managers, secretaries, Peet's managers, accountants get in Palo Alto these days? I suspect you'll find private-sector jobs pay WAY less and their people get no over-time and no pensions.

In fact, some have their hours cut back so they don't even get health care

Go to any chain store and talk to the "managers" and you'll find they barely make more than clerks but THEY get no over-time because they're classified as managerial. Public servants get to retire in their 50s with big pensions; the rest of us get downsized in our 50s with no pensions and little if any unemployment.

Remember the old joke: What did you get for your 50th birthday? Answer: Laid off.

I'm all for labor rights but there has to be some equity.


Posted by Jo Ann, a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 8:04 pm

Regarding the quality and quantity of police and fire service, from personal experience there is a lot of over-staffing.

For example, a teenager drove her car into our unoccupied car that was parked in front of our house in broad daylight. She was going about 40 miles an hour in a 25-mph zone. Our car was totaled. Her car had a bashed in front. She didn't seem injured and she was only worried that her parents "would kill" her and not let her drive.

How many respondents would you guess that would take for a one-driver accident that was NOT blocking through traffic?

3 cop cars, some with 2 cops
1 motorcycle cop, maybe 2 (I forget)
1 Fire engine with multiple staff
1 Ambulance with multiple staff


6 vehicles and about at least 12 people!!


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 16, 2012 at 8:39 pm

I agree Jo Ann, minimum staffing levels and pension reforms are worthy of discussion. But with all due respect, none of the other professions that you cited come even close to the level of qualification and challenges that our police officers and firefighters face, often time serving an ungrateful and unfairly critical public. Let's just agree to disagree.


Posted by PJ, a resident of Old Palo Alto
on Mar 17, 2012 at 8:10 am

You should all voice your opinions directly to council in open communications. Put them on the spot in front of a live audience.
Your complaints and gripes do nothing to better your arguments except provide for entertainment as text on a website.
Go and voice yourself to council and the commissions...after all, you voted for them to be there.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 17, 2012 at 10:03 am

Great reminder PJ. I have attended several meetings and will continue to participate in the process and discussion. I have to believe that there is also an element that exists of public employees being vilified for many of the financial problems that the city faces. There is absolutely room for salary/benefit compromise and reform, however, our current financial state of the city has as much to do with poor planing, mismanagement, and frivolous spending on niche projects as anything else. The public employees are being used as a scapegoat for our city leaders and elected officials after years of failing to address our public safety and infrastructure needs. They continue to spend millions on non-essential services and projects, while at the same time blaming the public employees for our annual budget deficits. With proper planning and some reasonable financial priorities, we can attend to our vital civic needs and still pay our city employees a competitive salary.

We continue to hear from our city leaders that we face unprecedented financial challenges and annual budget deficits. The most prominent solution we hear from them is to attack public employee benefits and salaries. The same public employees who for the most part cannot afford to live in the community they serve. Do they truly believe they can solve these financial problems entirely through pension reform? Are you joking? I would like to hear more from them about making sacrifices in many other non-essential projects and services. They continue to blame the public employees, for contracts they negotiated and approved, but have no problem spending multi-millions on new playground construction, bike bridges, golf course remodels, commercial district upgrades, and the list goes on. Also, if our public safety departments are cutting positions and services, as well as their salaries which are already below the median level in the Bay Area, why do we continue to fund niche programs like the Children's Theater? Why does the city fund a six figure allowance to support homeless programs that serve few if any people with ties to our community?

I would like to see the city set some financial priorities and address our vital needs. That starts with essential infrastructure and public safety. Without these elements in place, all of the extra programs are services are meaningless.


Posted by Malik, a resident of Duveneck/St. Francis
on Mar 17, 2012 at 10:11 am

"With proper planning and some reasonable financial priorities, we can attend to our vital civic needs and still pay our city employees a competitive salary."

We can greatly cut salaries and benefits in government from their current levels and still offer a competitive salary. Firefighter pay, for example, should be lowered until there are 4-5 qualified applicants for every opening instead of 500.

Furthermore, the private sector should be the ultimate barometer. Palo Alto spends almost 100K per year per street sweeper driver. If Menlo Park and Mountain View do the same, but the private sector can provide the service for 40K, then 40K is the benchmark, not 100K. Comparisons with equally overpaid, unsustainable cities serve the unions' interests and not the public's.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 17, 2012 at 11:02 am

Agreed Malik, but remember that public employee salaries, especially as it applies to police and firefighters, are driven to a certain degree by a comparison to other Bay Area cities. I'm not sure about the fire department, but the police department and city labor negotiators use a formula where they compare salaries and benefits with approximately 16 other cities in the greater Bay Area of similar size and demographic. Both the city and police agree on which cities will be used. When the police negotiated their last contract they were in the lower third in terms of total compensation. Even with the new contract, they were only elevated to a median range. Since then, they have dropped to the lower third of that comparable list.

Outsourcing certain city services like the street sweepers that you mentioned, or other maintenance tasks, could very well save the city substantial dollars considering they would no longer have to pay for benefits and other public employee compensation. However, applying this to our public safety departments, considering the nature and essence of their work, I believe it would be in all of our best interest to maintain control of those services. I also think it is absolutely vital to have people in those critical roles who have a greater sense of ownership and responsiveness to the citizens they serve. Often time we take for granted what an outstanding service our public safety departments provide. The police department has worked with the city in a supportive manner and voluntarily made cuts, gave up contractually approved pay raises, and eliminated several positions and specialty assignments. Currently they operate with approximately 20% less officers than they did even ten years ago, and that doesn't include the 14 positions that remain unfilled. They are expected to do more with less, to a highly engaged, often time demanding and critical community. It's simply not fair, and people need to hear perspective from both sides.

Again, there is certainly room for certain reforms and adjustments, and I believe we can accomplish this and still keep our public employees, especially the police and fire department, compensated at a competitive rate. These are vital tasks that need our civic commitment. Ultimately our financial stability will only occur if we set reasonable priorities, and are willing to sacrifice the many non-essential, niche projects and services that city continues to pour millions of dollars into, at the expense at times of our basic infrastructure and public safety needs.


Posted by Lets have some Context, a resident of Community Center
on Mar 17, 2012 at 11:23 am

The city is not out of money.

The city does face challenges as costs for every rise as to what they spend money on.

Right now they are reducing salaries a bit, reducing the portion they pay for health care, significantly reducing retirements, significantly reducing the portion they pay for retirements, and eliminating other benefits.

But just to point out this is all about a blance and making choices.

They are discussing adding more dollars to infrastructure spending. They already spending more than 15 Million a year and they want to add more. Okay.

They are looking at a 9 Million Dollar Bike Bridge.

They are looking at 7 Million Dollars for Soccer Fields.

They are exploring buying a post office they have no stated use for.

They will be increasing the operating budget for the libraries which they have no budget for, only contruction was included in the bod measure.

They are one of the most highly rated cities in the country by the financial services and bond people.

They have more money set asside for retiree medical than any city their size.

They have reserve funds larger than god.

They have multiple reserve funds as they split evertyhing into their own funds and then its own reserve fund.

So its all about choices and making reasonable adjustments which they are doing.

Lets stop with the crisis discussion and panic and take a deep breath. They are actually doing a good job. Be glad you live here and not in Stockton or Vellejo.


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 17, 2012 at 11:56 am

Well stated Context, and it is indeed about balance. However, I don't always believe that our city leaders and elected officials are as willing to state matters as clearly as you have. For the past several years they have decried these unprecedented financial challenges and annual budget deficits. Using that platform, I believe they have used this form of crisis management and hysteria to vilify our public employees, especially so with the police and firefighters. Rather than setting some reasonable financial priorities and approaching the issue of employee benefits and salaries in a constructive manner, they chose to cast them as the sole cause of these so-called financial woes. Why? Because they are not willing to admit many years of frivolous spending on non-essential programs and projects. Because they failed to plan for and fund our basic and essential infrastructure needs. Because they refuse to say no to the numerous niche, special interest groups like the Children's Theater, homeless outreach programs, public art proponents, and many others.

We need our city leaders and elected officials to back up their rhetoric with some true action, and don't think for a minute that you're off the hook by simply blaming your public employees.


Posted by Jo Ann, a resident of Embarcadero Oaks/Leland
on Mar 17, 2012 at 2:10 pm

Marol, I take issue with your claim that our public servants can't afford to live here on their current salaries/over-time or retirements when they make more than the average worker and average retiree.

Do you have any idea about the number of private sector workers who can't live here either, the number of commuters from the East Bay, including those who ride the Google busses for hours to go to work here?

Do you have any idea about the number of people, especially laid-off 50-year-olds, forced out of here by high taxes and high utility bills while employers hire only the young?

Have you noticed the explosion of baby stores and the decline of everything else? Have you noticed all the empty stores?

Have you been on 101 looking at the Reverse Commute traffic?


Posted by Marrol, a resident of Embarcadero Oaks/Leland
on Mar 17, 2012 at 2:25 pm

I agree with much of what you state Jo Ann, and with that said, I maintain that it has less to do with public employee salaries and benefits than it does with poor planning, lack of financial priorities, and civic mismanagement on the part of our elected officials and city leaders. The economy has indeed hit many people hard. Those in the public domain chose that path in some part due to the stability. People seeking jobs as police officers and fire fighters know that they're always going to have job. It's not likely that those jobs will ever be eliminated or outsourced. Again, I don't recall many professionals and ambitious college graduates ever lining up for city or county jobs. For the public safety workers, no one has ever viewed that career path as a get rich and be set for life proposition. I believe they were drawn for more personal, noble reasons, and I respect the job they do despite a frequently demanding, overly critical community. I agree there has to be some level of reasonable public benefit and salary adjustments. No question about it. But to accuse those workers as the sole reason for our financial woes is simply short-sighted and irresponsible. Again, we'll have to agree to disagree.


Posted by Malik, a resident of Duveneck/St. Francis
on Mar 17, 2012 at 6:06 pm

The fact that the city has a lot of money does not mean it is ok to waste taxpayer funds, whether it be on silly one-off pet projects like 9M bike bridges or systemic bloat like six figure street sweepers. If we are so loaded, we should repeal the utility users tax (which flows right to the general fund and ends up mostly paying salaries and benefits) or otherwise return the funds to the people responsible for creating the wealth in the first place.

Public employees are not being scapegoated. The practice of paying them far above private sector market rate is rightfully drawing the public's ire.

Police are probably compensated something close to market. Fire, however, (they of the hundreds of applicants per job and the dirtiest, most political union) should have a serious, 30-40% haircut to the point that there are 5-10 qualified applicants per opening. The same goes for most of the bureaucrats in city hall: the six figure planning, maintenance, administration and hr types. All city pensions except police
should be 401k style defined contribution like the rest of the world.

I don't blame anyone for wanting to be overpaid or enjoying the fact that they are. That doesn't mean that as the employer who is paying the salaries and benefits, I should tolerate waste by continuing to do so.


Posted by More city expenditures, a resident of Community Center
on Mar 17, 2012 at 10:25 pm

Context mentioned a number of optional and very expensive projects the city is undertaking. In addition the city is renovating a number of parks, Hoover Park and Rinconada for example. I believe there are others.

PS I don't like it when one person dominates a Forum thread. They have an agenda -- enough is enough.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 7:39 am

Peter Carpenter is a registered user.

When looking at the 'context' don't forget that the City has hundreds of millions of dollars of unfunded pension liabilities. Those unfunded liabilities are not the fault of the pension recipients but the fault of the Council for a) granting over the market pension benefits, b) based on over market salaries and c) then failing to adequately fund the resulting obligations.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 9:53 am

Peter Carpenter is a registered user.

Here is what San Luis Obispo County is doing - a good model for Palo Alto to follow:

"During negotiations over the past several years, the county and its employees have been working on what Douglas-Schatz calls a "three-point plan" — second-tier pensions; cost-sharing; and prevailing wage.

Under a two-tier pension plan, new employees receive less generous benefits than those that will be received by former and many current employees.
For example, when computing retirement benefits, second-tier employees must take the average of their three final years rather than simply their most highly paid year. There are other changes in the disbursement formula, including a realigned cost of living adjustment (COLAs).

She added that employees now pay a bigger share of the pension cost increases.
Under prevailing wage negotiations, the county and most of its unions also are making other changes. Previously, there were automatic annual wage increases, she said, with an "obligation to comply regardless of economic conditions." Under the new method, the county's fiscal situation must be part of the negotiations.

There is also work afoot to determine the list of "comparator organizations" — that is, comparing a particular category of county work with similar work being done either in other counties or in the private sector.

By Bob Cuddy | bcuddy@thetribunenews.com"


Posted by TO Peter Carpenter, a resident of Community Center
on Mar 18, 2012 at 2:35 pm

Your point about what SLO is doing. What do you think Palo Alto has done, same thing. Two Tier pension with reduced benefits. All employees paying more towards pensions and will be paying even more next year. All employees paying towards medical and medical in retirement. Other benefits have been cut all together.

You hold out SLO like they are somehow a model for PA. PA is doing all the same stuff which it started in 2009. What is your point?

On your unfunded liability, that argument is completely flawed the way you present it. Of course there is unfunded liability as you contribute over time towards the benefit employees may receive someday when they reitre. The real issue is what the City pays each year towards the retirement fund and whether they can make that payment or not. How much they owe over 30 years or more is a false crisis argument.

Its like you saying you bought a million dollar hours and have a loan for 900K. Do you go around screaming like you are in fire saying you have a 900K unfunded liability. Of course not, you pay your monthly payments over 30 years to pay off the 900K.

Sugesting it in any way that the city owes that money all at once it ridiculous and either shows one's ignorance of the issue or their desire to stir a crisis.

Please have some credicblity and do what the city is doing. Reducing the benefits and salaries so it can meet it's monthly and yearly obligations.

BY the way does anyone every talk about thier 25% or 40 million in reserves and the fact that they have stellar A ratings. Of course not doesn't fit the crisi argument.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 3:16 pm

Peter Carpenter is a registered user.

" Palo Alto has done, same thing. Two Tier pension with reduced benefits."

Fact please ---

When exactly did Palo Alto start hiring new firefighters and police officers on a second tier retirement system?

When exactly did Palo Alto start paying market rates for all of its job classifications?

When exactly did Palo Alto negotiate such changes with its unions like San Luis Obispo has done with its 2000 employees who belong to 8 different unions.

"On your unfunded liability, that argument is completely flawed" No, Palo Alto currently is way behind in it 'mortgage' payments simply because the CURRENT value of its CURRENT pension obligations is far greater than what is in those retirement accounts and CalPERS will look to Palo Alto to pay the difference. And in the meantime CalPERS charges Palo Alto interest on its shortfall. Palo Alto's current reserves don't come close to covering this obligation.


Posted by Jeff, a resident of Downtown North
on Mar 18, 2012 at 3:20 pm

Public pensions gamble with our money. We are on the hook when calpers doesn't meet it's unrealistic investment returns. Those like the poster above who echo the public unions screams that all is well have no skin in the game. If they're wrong after all, the public must cover the difference.

The system is unfair, corrupt, and unsustainable. My vote will fall with the majority who will not tolerate a massive private sector funded bailout when the system eventually crumbles.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 3:23 pm

Peter Carpenter is a registered user.

In addition to Palo Alto's unfunded pension liabilitie it also has a huge unfunded medical retirement liability:

"News - Friday, February 3, 2012

Palo Alto sees spike in retiree medical obligations
Rising health care costs, changing demographics add millions to the city's unfunded liability
by Gennady Sheyner


A surge of retirements, shifting demographics and rising health care costs are greatly inflating Palo Alto's obligations to its retirees and prompting a debate among city officials about how much money the city should set aside to meet its gaping liability.

A recent actuarial study by the firm Bartel and Associates estimates that the city should spend $13.6 million this year on medical expenses for retirees, a number that is 39 percent higher than the estimate in a prior audit. In 2009, the firm Milliman and Associates estimated that the city would have to spend $9.8 million annually to meet its obligation.

The alarming divergence between the two studies has prompted the City Council to wonder how much the city should spend this year to narrow its unfunded medical liability for retirees. The Bartel study pegs the gap at about $134.7 million. Milliman estimated it to be about $105 million.


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 18, 2012 at 3:47 pm

> BY the way does anyone every talk about thier 25% or 40 million in
> reserves

You need to be more specific in your claim--by identifying each reserve fund you feel has (presumably hidden) money in it. Please keep in mind that each of these funds is for a specific purpose, such as one kind of emergency, or another. If such an event happens, that that money, or money from some other source, would need to be spent to deal with the problem that the reserve fund was intended to buffer against.

> and the fact that they have stellar A ratings.

The so-called "rating" of the City is actually a reflection of the rating agencies' belief in the property owners ability to pay down any future loans/bonds via increased taxes and fees. By bringing this "rating" into the discussion, presumably you are suggesting that the property owners are always a source of more money for government sector workers's increased salaries/benefits. Using bonds/loans for salaries, or pension payouts/health care payments, is a terrible idea.



Posted by TO Peter Carpenter, a resident of Community Center
on Mar 18, 2012 at 3:47 pm

You just made my point twice over.

Again we do not owe the Medical unfunded liability tomorrow. That's the amount they owe over 30 years just like your morgage.

You have proven your own bias and crisis creation.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 4:17 pm

Peter Carpenter is a registered user.

"Again we do not owe the Medical unfunded liability tomorrow."

What you seem to suggest is that Palo Alto has a ballon mortgage where everything is due later. Sorry, that is not the way that GASB accounting works:

"The net pension liability (the portion of the obligation to employees for defined pension benefits in excess of the plan net position available for those benefits) meets the definition of a liability as defined by Concepts Statement No. 4, Elements of Financial Statements."

"The discount rate should be a single rate that produces a present value of total projected benefit payments equivalent to that obtained by discounting projected benefit payments using (1) the long-term expected rate of return on plan investments to the extent that current and expected future plan net position available for pension benefits are projected according to the Exposure Draft proposal to be sufficient to make benefit payments and to continue investing using the investment strategy selected for the long term and (2) a high-quality municipal bond index rate for those payments that are projected to be made beyond that point."

Looked at any high quality municipal bond rates lately?


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 18, 2012 at 5:24 pm

> "The net pension liability (the portion of the obligation to
> employees for defined pension benefits in excess of the plan
> net position available for those benefits) meets the definition
> of a liability as defined by Concepts Statement No. 4, Elements
> of Financial Statements."

This is a fairly new development:

Web Link

Most government agencies do not use a common format for their budgets, so it might be hard to find the underfunding in most budget documents.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 5:38 pm

Peter Carpenter is a registered user.

Here is the GASB rationale:

From an accrual accounting perspective, the cost of OPEB, like the cost of pension benefits, generally should be associated with the periods in which the exchange occurs, rather than with the periods (often many years later) when benefits are paid or provided. However, in current practice, most OPEB plans are financed on a pay-as-you-go basis, and financial statements generally do not report the financial effects of OPEB until the promised benefits are paid. As a result, current financial reporting generally fails to:

Recognize the cost of benefits in periods when the related services are received by the employer

Provide information about the actuarial accrued liabilities for promised benefits associated with past services and whether and to what extent those benefits have been funded

Provide information useful in assessing potential demands on the employer's future cash flows.


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 18, 2012 at 7:11 pm

> Those unfunded liabilities are not the fault of the pension
> recipients but the fault of the Council

Yes and no. While the premise that the Council is responsible for financial oversight of the municipal corporation is what we all believe—reality is that none of the people who get elected to these sorts of office have the necessary financial acumen to understand the finances of a rather small business, much less the complexities of a city government that has billions of dollars in assets, and long-term financial obligations to bond holders, and its employees.

The employees are the ones who have pressed the City into the contracts that it has agreed to. And the employees have banded together for common representation vis-à-vis labor unions. Perhaps the employees should be a little more "caveat emptor" about their relations with the City, and employed financial experts to review the budget on a yearly basis, to insure that all of the City's future obligations are being met. Given how much they pay in union dues, maybe they should be getting something back for their money?


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 7:30 pm

Peter Carpenter is a registered user.

In my opinion the buck stops with the elected officials.

You can delegate authority but you cannot delegate responsibility.

We elected our local leaders to represent us and they are responsible for the actions of those whom they oversee.

But it gets a bit messier when many of these elected officials accepted both union endorsements and union financial support in order to get elected.


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 18, 2012 at 8:08 pm

> In my opinion the buck stops with the elected officials.

Your opinion, and five dollars, will get you a cup of coffee in this town.

There is absolutely no legal basis for holding these people (the Council) accountable for virtually anything they do while in the official capacity of elected officials. Decisions to underfund, or to not even want to know what an "underfund" is, is nothing that seems to be of interest to most people in this town, or most towns, these days.
The US is looking at $3B-$5B in pension/port-retirement healthcare funding. All of these underfunding situations were the result of incompetent, or willful, decisions on the part of elected officials. And it's doubtful that anyone knows there names, or that any of these thousands of individuals will ever be held accountable for anything.
> You can delegate authority but you cannot delegate responsibility.
Maybe in some limited situations, like the US Military, or a well-managed small company, this is true. But for large companies, and most assured government, there is simply no accountability outside some gross breach of the law.

In Palo Alto, we have a strong City Manager, weak City Council form of government. The Charter is not all that clear about responsibilities of each party, and it is virtually silent about accountability—other than banning the City Council from being directly involved in City government operations. So, the City Manager should be the responsible and accountable party in these sorts of situations. While the City Manager serves "at will", there are few published levels of performance that a City Manager can be judged by. For the most part, the City negotiates a healthy "golden parachute", and if, and when, the Council decides it's time to change City Managers—the reasons for his/her termination are almost never made known to the public.

All-in-all, what we have is a mess in most City governments in the US. And we definitely have a mess here in Palo Alto, where the Mayor is now pushing ping-pong, rather than public meetings about the budget, and the internal operations of the City.


Posted by Peter Carpenter, a resident of Atherton
on Mar 18, 2012 at 8:20 pm

Peter Carpenter is a registered user.

Every elected official in California takes this oath:

I, , do solemnly swear (or affirm) that I
will support and defend the Constitution of the United States and the
Constitution of the State of California against all enemies, foreign and
domestic; that I will bear true faith and allegiance to the Constitution of the
United States and the Constitution of California; that I take this obligation
freely, without any mental reservation or purpose of evasion; and that I will
well and faithfully discharge the duties upon which I am about to enter.


That phrase "and that I will well and faithfully discharge the duties upon which I am about to enter." IS the legal basis for holding those of us who hold or have held elected office accountable.

And here is the City's Municipal Ordinance regarding those duties:
"Sec. 1. Powers.

All powers herein granted to and vested in the city of Palo Alto shall, except as herein otherwise provided, be exercised by a council to be designated the council of the city of Palo Alto; and said council shall, except as herein otherwise provided, have the power to fix and establish the method and manner in which such powers shall be exercised."

The buck stop there - period.


Posted by Use a Phone, a resident of Downtown North
on Mar 18, 2012 at 8:49 pm

Why don't you two use a telephone


Posted by Peter Carpenter, a resident of Atherton
on Mar 19, 2012 at 5:46 am

Peter Carpenter is a registered user.

"use a telephone"

We would not want to deny you the opportunity of citizen participation in this community dialogue on an important issue. Particularly since the lack of citizen participation is what has created much of the current financial problem.


Posted by Let-The-Blame-Fall-Where-It-Is-Deserved, a resident of Another Palo Alto neighborhood
on Mar 19, 2012 at 8:57 am

> That phrase "and that I will well and faithfully discharge the
> duties upon which I am about to enter." IS the legal basis for
> holding those of us who hold or have held elected office
> accountable.

Can you provide evidence that any elected official in California has ever been charged with any failure-to-perform, or recalled for failure to comply with these words (or words to that effect) since California became a state?

If not .. then your words are as hollow as the words in the Palo Alto Charter that you cite.

There has been one Council Recall here in palo Alto, in the late 1960s. The Recall was based on the fact that there were 15 elected council members at the time, which was proving unwieldy, and some of the Council members were not even attending Council meetings.

Since that one occurrence, there has been no other talk of Council Recalls, or of even recalling an individual Council member. There was a sort of "recall" that occurred some years ago when three of the Council members were "targeted" for replacement with three new Council members. That bit of "politics" created a furor, sadly.

The reality of the situation is that most City governments are broken. A few forgotten words in the Charter, interpreted one way or another, is not going to fix what is wrong in this town--or the Town of Atherton, either.


Posted by Peter Carpenter, a resident of Atherton
on Mar 19, 2012 at 11:13 am

Peter Carpenter is a registered user.

"The reality of the situation is that most City governments are broken."

And guess whose responsibility that is - the people who elected the city leaders. Until a lot of citizens get outraged and involved this situation will not change.


Posted by CPR, a resident of Another Palo Alto neighborhood
on Mar 19, 2012 at 8:29 pm

The PD received 24% raises during the great recession. I don't think most people understand the total impact of that number. For starters a 24% increase in pay needs to be multiplied by the CalPERS contribution rate of about 32% of payroll. Every 1% in increased salary actually increases cost as a percentage of payroll, in Palo Alto, by a factor of 1.5. That's because every one percent increase in salary increases the pension contribution, the accrued leave cost, disability insurance, and workers comp insurance which all move based on compensation.

So the 24% salary increase during the great recession is really much more than that. If a 100k employee received a 24% raise over three years it actually increases cost by a factor of 1.5, or from 100k to 150K in just three years. And of course that rapidly rising cost far exceeds the flat to declining city budget over the same time frame. The employee groups don't seem to understand these little details.


Posted by Taxpayer, a resident of Charleston Meadows
on Mar 23, 2012 at 8:55 pm

If a dispatcher makes 90K in OT, don't blame them. Blame the City for not hiring another FTE. It's either or folks.. They have no problem hiring more managers and do not want to hire more worker bees. That would make the class war too even. No way around it. Pay one position with OT and shut up, OR hire another employee to take up the extra work. It's not rocket science. We do see though how management people hog all the money and do not know how to do their jobs or manage anything but their lunch break.


Posted by CPR, a resident of Another Palo Alto neighborhood
on Mar 24, 2012 at 2:33 am

"If a dispatcher makes 90K in OT, don't blame them. Blame the City for not hiring another FTE."

Maybe we should look into the exemptions public safety, including dispatchers, receive in the overtime calculation. Is it true that overtime for safety employees is based on working non-scheduled shifts which doesn't actually mean they work overtime. For instance an FD emplyee working 48 hours can call in sick for both days and work one 24 hour shift, at time and one half, and be paid for 84 hours straight time?

If dispatchers are getting paid 90k in overtime maybe it has to do with the same liberal application of what constitutues overtime. Or maybe it is just time to regionalize dispatchers, the FD, and police services?


Posted by Deep Throat, a resident of another community
on Mar 24, 2012 at 10:20 am

It's not just the dispatchers who are getting paid for dispatching. Some police officers and police agents are also getting extra pay as dispatchers. I don't know whether that extra pay is calculated as regular time or overtime, and whether that extra pay is calculated on the basis of their police hourly rate or a dispatcher's hourly rate. Are the number of authorized dispatchers, or the number of dispatcher jobs filled, designed to guarantee some police extra pay? Or is the dispatcher's pay rate too low to attract sufficient qualified applicants to work as dispatchers?


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