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About this blog: So much is right — and wrong — about what is happening in Palo Alto. In this blog I want to discuss all that with you. I know many residents care about this town, and I want to explore our collective interests to help ...  (More)

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Is Palo Alto too generous in paying its staff?

Uploaded: Apr 14, 2020
Palo Alto spends $6 million a month on employee salaries plus health benefits. Just a little over a week ago, the Palo City Council decided, somewhat abruptly, to continue paying full salary to its 1,100 or so city employees full salary until the end of June. The city’s staff had been working at home so far for a month.

The council was told that Monday evening that because the Cal Ave and University Ave shopping areas are literally closing down due to the coronavirus, the city would lose $15 to $20 million before the end of this fiscal year. That sounds bad, but the city’s general fund is about $220 million.

What follows is uncomfortable for me to write, since I understand the problems of declining incomes and/or being laid off, having gone through that experience myself. But to continue “salaries as usual” to the end of June because, as Councilmember Liz Kniss said, “Kindness starts at home,” is a bit unusual, because most companies are giving two-week severance pay, at best. Some service employees, like waitresses and bartenders, gardeners and household cleaning people, get nothing at all. “Home” is all of us, not just city employees, who are among the best paid public employees in the country, with full health care and hefty lifetime pensions. Now they are getting a 3-1/2 month paid “transition period.”

That’s unheard of in private industry, especially during this health crisis. Hotels are empty, their staffs are gone, Lyft and Uber drivers have no business, restaurants have closed – many residents and workers in this town are in big financial trouble.
Without calculating the cost, our city council keeps its multitude of employees fully paid until the end of June. My guestimate: $21 million (@ $6m/month (plus that $15 to $20M loss of revenues).

Most city staffers (except police and fire) are working from home. About 100 have had their hours reduced, some down to zero. Yet this could be a great time to do some project research and planning. But I haven’t heard or seen of any new reports this past month. And what will these employees be working on until June 30? Do they have assignments? Nobody is building, business is lacking, traffic, thankfully has diminished. The city isn’t hiring. So what is happening?

I have a few ideas:

• Of course we shouldn’t keep employees at full salary, but perhaps a partial salary. I first thought of a 50 percent cut, but that’s unfair to the lower-paid staff members. How about $10,000 to each employee for each of the next three months or so – then see how things are going. That will cost considerably less.

• Maybe we should figure out if all these jobs are necessary? I doubt that 65,000 residents need 1,100 people to run our city daily. I know, the city can come up with all sorts of reasons why everyone is necessary, but it seems the city manager himself has a couple of assistants and deputies, and we are always hiring all these consultants. The city can cut, and this is the time to do it. One idea is to plan on a 20 percent workforce reduction without cutting any services.

• Maybe we should ask if our staff salaries (and those of other cities) are too high. City staffer play oneupmanship games --if one city gets raises, other city staffers in the area want even higher raises. Maybe instead cuts should be considered in these times when our economy is drastically dropping -- how about 15 or 20 percent cuts for managers? At least our council could explore such an idea. Taxpayers are hurting == many of them are out of work.

• Maybe some of these at-home employees can be put to use:
a) The return drop at the library is closed but an employee or two could unlock it and clean off all those books we have read.
b) What about a loan program (with interest) to all city employees who need financial help?
c) What about a similar loan program for small businesses? If we can keep people employed in some fashion that will help our economy.
d) How about having city employees assist agencies that are handing out food to the homeless in the area?

These are all off the top of my head and would need to be thoroughly – and thoughtfully – examined. But the times have certainly changed and this is the time when our cities can also make profound changes.

It doesn’t have to be business as usual.

We need your support now more than ever. Can we count on you?

Comments

 +   35 people like this
Posted by Joseph E. Davis, a resident of Woodside: Emerald Hills,
on Apr 14, 2020 at 12:56 pm

Governments are mostly run for the benefit of the bureaucrats. So the answer to your question is the same as, "Is the Pope Catholic?" and can be expected to change about as often.


 +   23 people like this
Posted by j'hickey, a resident of Woodside,
on Apr 14, 2020 at 1:49 pm

The alter ego states: Governments are mostly run for the benefit of the bureaucrats

And he says that in time of a pandemic, no less.


 +   31 people like this
Posted by Diana Diamond, a Palo Alto Online blogger,
on Apr 14, 2020 at 1:53 pm

Diana Diamond is a registered user.

Maybe this is the time to create more public awareness about the way our governments work, and to try to make some changes. Our council members are dependent on us, we the people. to get re-elected. They are the vehicle we should use tod rive them to mae appropriate changes.
Diana


 +   31 people like this
Posted by resident, a resident of Barron Park,
on Apr 14, 2020 at 3:35 pm

The "Kindness starts at Home" (Liz Kniss' rationale for the benefit to employees) is definitely not the way to think about it. The extra money comes from somewhere. In this case, it comes from residents (since business tax was killed). I think it is kinder to save that money for people who need it vs. yet another employee giveaway. Don't forget employees also get the $1200 stimulus checks (so they make even MORE than if there weren't the pandemic).

This isn't the employees' fault nor even the City Manager's fault. They are behaving rationally in their own self interest. Just like when a CEO gets huge composition, it is not the CEO's fault. It is the Board of Directors' fault for not acting on behalf of the investors. In this case, it is City Coucil's fault for voting "yes" to every request like this.

"It is difficult to get a man to understand something when his salary depends on not understanding it."

- Upton Sinclair


 +   44 people like this
Posted by Independent, a resident of Esther Clark Park,
on Apr 14, 2020 at 3:56 pm

Kindness for whom, Liz Kniss? Certainly not for your taxpayers, residents, and voters!!!!!!!

Given the City of Palo Alto had $455 million in unfunded pension liabilities PRIOR to covid-19 close downs, it's clear that the City's current consumption is too high --- since it isn't fully funding staff's retirements. Since 80% of the City's expenses are for salaries and benefits, comprising its current consumption, then yes, the answer to your question is yes, the City is paying its staff too much. Yes, yes, yes, yes. It is time to cut back.


 +   21 people like this
Posted by rsmithjr, a resident of Duveneck/St. Francis,
on Apr 14, 2020 at 9:39 pm

rsmithjr is a registered user.

The city hasn't thought through all of the implications of some of their recent actions. Here are some:

1. Giving tenants freedom from eviction is going to slow down money that landlords will collect. How will the landlords be able to pay their taxes?

2. Giving city staff their full salaries (the school board is going the same thing) means that residents who are not collecting their salaries will still have to pay their taxes in order to pay the staff. [I just paid my property tax last week and know what that cost me.]


The city is part of an economic system. They need to think a little more clearly about that.

Perhaps there are a lot of staff that we really don't need right now.

Or perhaps we are paople out there in our society who need money a lot more that many of the city staffers right now.


I don't know what most residents would think about this.


 +   51 people like this
Posted by Old Palo Alto, a resident of Old Palo Alto,
on Apr 15, 2020 at 1:27 am

If kindness starts at home then why not refund April 10 property taxes for everyone who calls Palo Alto home?


 +   32 people like this
Posted by Humanity for All, a resident of Atherton: West of Alameda,
on Apr 15, 2020 at 8:28 am

(portion removed) Trump created a program (Payroll Protection Act) that sends money to employers to keep their employees on payroll during this crisis.

You present an argument t like a CEO who makes 200 times what his workers make and wants to cut their salaries and benefits. you have yours and screw people who have chosen government service as their profession. Did you ask Google or Apple to stop paying their workers? Is it ok if they pay 50% of their rent or mortgage? Can they pay 50% of their car payment.

I suggest that you spend more of you time trying to figure out how everyone can get through this crisis successfully instead of taking money out of people's pockets who need it.


 +   16 people like this
Posted by Resident, a resident of Another Palo Alto neighborhood,
on Apr 15, 2020 at 8:32 am

One thing we do not know is what percentage of people in PA are still receiving the same salary/wage as they have always been. Many people are still working (from home or because they are essential workers), but many are furloughed, or only being paid their basic rate with no overtime or bonuses - which they would normally depend on as integral to their income.

As a result of people no longer earning enough to pay their bills they are going to be either going into serious debt, or if some of their bills are waived or delayed until life returns to near normal, they will still have to backpay their bills. This is economic truth. This is the secondary effect of the virus. This is not going to mean that people will suddenly be in the same financial position as soon as they go back to work. People will be losing vehicles, finding it difficult to pay basic bills such as insurance, healthcare copayments, vehicle leases, utilities, etc. Things such as gym memberships, clubs, classes, entertainment, recreation, will be low on financial priority lists and businesses that depend on people having disposable income for such things are going to suffer.

This is economic reality of what will be happening for at least a year. Some people will still be earning the same salary, but a great deal will not. The question is what percentage of Palo Alto will be able to continue living the same lifestyle in the coming year.

Economics mean that every one of us will be affected. Even if our income still appears to be stable for now, the effects will mean that all lives will be impacted. This is the same for those trying to run a business, a non-profit, or even a City.


 +   29 people like this
Posted by Online Name, a resident of Embarcadero Oaks/Leland,
on Apr 15, 2020 at 11:52 am

Online Name is a registered user.

A recently published report put PA police salaries at a hefty $241,000 while the CC is proposing shutting off streets to prevent speeding. Perhaps those cops could maybe try ticketing a few speeders instead of putting us more in the financial hole for the cost of more barriers??

Perhaps all those employees collecting their salaries and benefits could do the jobs they usually outsource to consultants for yet more money?

I do hope that if the city tries to raise our utility rates -- already producing a $20,000,000 "surplus" each year that there will be massive pushback.


 +   25 people like this
Posted by menlo park resident, a resident of Menlo Park: Felton Gables,
on Apr 15, 2020 at 1:03 pm

How nice that Palo Alto government employees get paid - just like Washington - I don't think they are worrying about how they going to feed their families or pay rent or mortgages. I also bet that they have either a husband or wife that also has an income. Maybe they should try to live on just social security & a one time $1200. to survive


 +   19 people like this
Posted by Pv resident, a resident of Portola Valley: Central Portola Valley,
on Apr 15, 2020 at 4:09 pm

Maybe Liz & her fellow workers could send some love our way


 +   30 people like this
Posted by Jennifer, a resident of another community,
on Apr 15, 2020 at 5:03 pm

Partial salary makes sense, and so does cutting staff.


 +   26 people like this
Posted by Anneke, a resident of Professorville,
on Apr 16, 2020 at 8:08 am

Didn't we used to think that working for the government would mean a significantly lower salary than working for a commercial company, but with more job security and benefits?

That is no longer the case! Government and city salaries are excellent, and the permanent benefits are even much greater.

Some years ago, when I was still working, a colleague of mine tried to appease his mother, who worked for one of the surrounding cities, about her worries that her (forever) city pension of $125,000 per year would not suffice her continued living.

Am I right in feeling there is something unequal here?


 +   20 people like this
Posted by Los Altos Neighbor, a resident of another community,
on Apr 16, 2020 at 9:05 am

I would not mind a rebate on my property taxes to match the reduction on work these taxes are paying for... but I'm not holding my breath.


 +   10 people like this
Posted by Anon, a resident of Another Palo Alto neighborhood,
on Apr 16, 2020 at 12:50 pm

I wish folks would stop quoting the 1100 staff figure, because it is highly misleading. Any teenager who works a couple of hundred hours in a summer program or whatever shows up. Don't believe me? Go look at the public salary list and start working your way back. A lot of pages of people making a few thousand bucks. No real impact on the budget, past, present, or future.

Now, start at the top and work your way down. Now, I know everybody loves firemen, and, on the very few occasions that I have needed them, they were there, they were competent, they were polite, and, they are willing to put their lives on the line. I can't complain, exactly, but, if I look at the salary list, then, boy, it sure does pay to be a fireman. And, we need them now, just like any time, coronavirus or not. IMHO, yes, they are paid "too much" -- but, there really isn't a good way to do it. But, rest assured, one fireman does cost us taxpayers 16 times what one of those folks at the bottom of the 1100 person chart costs.

So, let's look at this another way. Short-term, vs, long-term. Short-term, there must be a lot of people who do building permits and such who don't have much to do right now. Perhaps we can back enough on some of that effort and find a way to save a few bucks without bankrupting a lot of nice people?


 +   12 people like this
Posted by MV Resident, a resident of Cuesta Park,
on Apr 16, 2020 at 1:17 pm

MV Resident is a registered user.

To answer the headline's question: No.


 +   15 people like this
Posted by Who do you think you are?, a resident of another community,
on Apr 16, 2020 at 2:25 pm


Um, your article comes off as entitled and elitist, with a "let them eat cake" mentality.


<<Maybe some of these at-home employees can be put to use:
a) The return drop at the library is closed but an employee or two could unlock it and clean off all those books we have read.
b) What about a loan program (with interest) to all city employees who need financial help?>>


Unbelievable.


 +   15 people like this
Posted by Erin, a resident of Rengstorff Park,
on Apr 16, 2020 at 2:34 pm

I will not read this article. The title says everything I need to know about you as a person.


 +   6 people like this
Posted by musical, a resident of Palo Verde,
on Apr 16, 2020 at 4:08 pm

I'm receiving my same Chevron dividends, so far. Without them I'd be eating my seed corn.


 +   9 people like this
Posted by Resident here, a resident of Another Palo Alto neighborhood,
on Apr 16, 2020 at 4:45 pm

How about having some support an office of economic development for RESIDENTS and MICRO BUSINESSES -- help people who have ideas and want to do something in the economy as it is today to do it.

If we're paying for them anyway, and they have benefits, can I get some help with my yard? I cannot afford it, and the weeds will need to be removed before it gets really dry. I know others who would benefit from similar help. Please don't laugh, it would be an amazing public relations coup, employees chipping in where they can to help residents (especially since they probably have zero contact with middle-class house-poor residents as it is).


 +   8 people like this
Posted by Resident here, a resident of Another Palo Alto neighborhood,
on Apr 16, 2020 at 4:48 pm

@Anneke,
Federal government salaries are not great, the civic service has been a punching bag for both sides of the aisle for a very long time.

Read Michael Lewis's book The Fifth Risk. It was an NPR pick last year or the year before. It will also give you some insight into today.


 +   13 people like this
Posted by Joseph E. Davis, a resident of Woodside: Emerald Hills,
on Apr 16, 2020 at 5:26 pm

Salaries are just part of the compensation. We also have to consider benefits and, especially, defined benefit pensions that in many cases are worth several million dollars (if a private company was to provide an annuity with the same payoff.)


 +   20 people like this
Posted by Scottie Zimmerman, a resident of Midtown,
on Apr 16, 2020 at 10:05 pm

Scottie Zimmerman is a registered user.

My first exposure to Ms. Diamond was years ago when she was briefly Editor of the Weekly. In that position, she published an editorial defending her decision not to allow Palo Alto Animal Services (PAAS) to present a pit bull photo & blurb as "Pet of the Week." She trashed all pit bulls as dangerous, violent, and unpredictable. Soon after that, the Weekly stopped publishing anything from PAAS and instead made Peninsula Humane Society in Burlingame the beneficiaries of its pet-related public service.

Ms. Diamond displayed her ignorance then about pit bulls and PAAS policies that ensured dangerous animals were not put up for adoption. Once again, she's taking an adversarial position when she doesn't know enough about Palo Alto's government activities and responsibilities. I for one support the Council's decision to maintain salaries for city employees. Even if some of them are working from home.


 +   9 people like this
Posted by Joe, a resident of Another Palo Alto neighborhood,
on Apr 16, 2020 at 10:42 pm

The 2108 city salary data has about 1440 entries. About 400 entries are for part time employees.


 +   6 people like this
Posted by Joe, a resident of Another Palo Alto neighborhood,
on Apr 16, 2020 at 11:07 pm

The 2018 city salary data has about 1440 entries. About 400 entries are for part time employees


 +   15 people like this
Posted by Pied Piper, a resident of Community Center,
on Apr 17, 2020 at 12:16 pm

Palo Alto is run for the benefit of employees.
The City Council is scared s**tless of the unions.
Because unions can completely trash them come re-election time.

Until that changes, don't expect things to get better.

Six things need to happen to fix this:
1. The City Charter needs to be explicit that the city should be run for the direct benefit of residents.
2. Eliminate the Utility Department contributions to the general fund. Those are an end-run around Prop 13.
3. Outsource most city functions so we don't pay above market for those services. And thus no more pensions for those. Plus we can measure what we're paying for given work. Pensions/lifetime benefits just make the cost open-ended.
4. City Hall should morph to primarily supervising the outsourced service providers.
5. All voter tax measures should be contracts:
We pay X. We get Y. If we don't get Y, we don't pay X.
6. Adopt zero-based budgeting.


 +   15 people like this
Posted by Luca, a resident of St. Francis Acres,
on Apr 17, 2020 at 1:54 pm

Luca is a registered user.

Brilliant idea! Let's cut their salaries, just to add to the general economic disaster! Let's make sure that the well off with salaries can save even more money, while sending others, including civil servants, towards economic ruin!

Jokes aside, I am utterly dismayed at this suggestion (and no I am not an employee). What we should do in this time of crisis is continue supporting all the employees and all the services that we have been using. In other countries this support comes from the government, here we have to do it more ourselves, but we need to continue to pay our sport clubs, schools, restaurants, gardeners, etc, even though we are for the moment not really using them. In this way we can ensure that when the situation is a bit better, the economy can restart gracefully.


 +   3 people like this
Posted by Anon, a resident of Another Palo Alto neighborhood,
on Apr 18, 2020 at 4:42 pm

Posted by Pied Piper, a resident of Community Center, on Apr 17, 2020 at 12:16 pm

>> Because unions can completely trash them come re-election time.

Politicians at the city level often feel "civic duty", "civic pride", etc.
People have their agendas, but, I seriously doubt if *any* city council member, including the ones I really don't like, are "scared" of not being elected. Seriously?! "City Council"?

>> 1. The City Charter needs to be explicit that the city should be run for the direct benefit of residents.

I agree with this one. Seems to me that Developers have long been more important than *residents*.

>> 2. Eliminate the Utility Department contributions to the general fund. Those are an end-run around Prop 13.

What is your utility bill? Why not turn your heat down and let everyone else pay the extra taxes? IOW, why do you care?

>> 3. Outsource most city functions so we don't pay above market for those services.

Let's get serious now. I posted a link to the public salaries page. Most of the top salaries are police and fire, and, they are really large, I would agree. You want to save money by outsourcing the police and fire departments? The city did outsource part-time lifeguards already. I wonder how much that saved? Let's keep our eyes on the big money. Tell me how we would outsource police and fire and how much it would save. In any case, we aren't going to lay off police and fire right now, are we?


 +   6 people like this
Posted by Otto Maddox, a resident of Monta Loma,
on Apr 20, 2020 at 7:31 pm

Oh please.. council members are all funded by the Unions. The next time you get one of those mailers for a someone running for City Council read the fine print. They tell you who paid for the printing and mailing. It's usually one of the labor unions.

Then we expect these council members to negotiate on our behalf with the same unions who paid for their campaigns.

We're too stupid sometimes.


 +   1 person likes this
Posted by Resident here, a resident of Another Palo Alto neighborhood,
on Apr 20, 2020 at 7:59 pm

@Luca,
I can't afford any of the things you mentioned, and the 2017 tax changes increased my taxes to the tune of 2/3 of what we actually live on. If it is so easy for you, can you please make up the difference for house-poor Palo Altans who are just scraping by?

Again, if we're paying for the employees anyway, can I please get some help with my yard and weeds?


 +   2 people like this
Posted by Brian, a resident of Menlo Park: The Willows,
on Apr 21, 2020 at 12:32 pm

Brian is a registered user.

Resident Here,

The fact is that if you own a house in Palo Alto, and bought it more then a few years ago they you are sitting on an valuable asset. If you are not working and just getting by (you said taxes are taking 2/3 of what you live on) you should consider either selling the house and moving somewhere more affordable or look into a reverse mortgage.

As to other comments:

You don't pay property tax to Palo Alto, you pay it to the county. Palo Alto gets it's share but do so a lot of other agencies (Schools, Fire District, etc.)

Not paying city employees is short sighted and will exacerbate the current economic crisis while creating other problems for the city. If you stop paying them how many will leave and find jobs with other cities or companies. Palo Alto will have lost some great employees, employees that are hard to replace and the replacements would need to be trained, all for a short term savings. It would probably end up costing the city more in the long run.

I think it is a great idea to have the city employees working from home or in ways that allows them to self isolate. Restocking books, doing needed mainenance on buildings and equipment, upgrading old software or learing new skills that would make them a better employee are all things that can be done without spreading the virus.


 +   1 person likes this
Posted by Anon, a resident of Another Palo Alto neighborhood,
on Apr 21, 2020 at 1:02 pm

PACC started discussions on the budget issue last night. I, for one, would appreciate seeing some real detail laid out in newspaper fashion. The way budgets are typically presented requires us citizens to know too much about the details of each program. Let's see the city budget considered first of all using true cost per employee including amortized lifetime benefits (all benefits, including health, pensions, and any others perks), and then, see the employees grouped by department and program.

Then, we need to consider which departments/programs have income. If Stanford pays Palo Alto for Fire protection, that income has to be factored in. For utilities, if the electricians and gas technicians are paid for out of utility bills, that income has to be included.

Then, we can see how income, outflow, net expenditures, average complete salaries/benefits, maybe compare to other departments in the Bay Area (it is pointless to compare salaries to Midland/Odessa Texas for example), then we can get a sense for how we are doing.

As a taxpayer, the usual budget roll-up doesn't do this department/program outflow-income. Usually income is grouped in one place, outlays together in another. Yet, in the case of utilities and fire protection, it is critical to understand the net cost. Likewise, maybe we have a ton of library employees (and volunteers), but, how much are libraries really costing us?


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