Palo Alto's Fire Chief Nick Marinaro became the first major City Hall domino to fall when he retired in late June, after 37 years of service.
City Attorney Gary Baum went next. After six years of dispensing legal advice at City Council meetings, which routinely dragged well past midnight, Baum departed to pursue a career in private practice and to save his wife from being a "Monday night widow," as he told the council last week.
Baum's departure coincided with the retirement of Library Director Diane Jennings, a 24-year veteran of the city's library system. Jennings, who helped kick-start the library system's dramatic renovation, is leaving Palo Alto for Santa Fe, N.M., just as the voter-approved reconstruction of local library branches is beginning to take shape. She now intends to monitor the rebuilt Mitchell Park library through a webcam.
Public Works Director Glenn Roberts made no public announcement about why he's suddenly leaving his post after 18 years in the department or where he's going, but his settlement with the city suggests that Roberts' sudden departure wasn't entirely his choice. The city approved six months of severance pay, totaling $130,600, in exchange for Roberts' retirement and a promise not to apply for another job in Palo Alto. In mid-October, Roberts was placed on administrative leave effective immediately, leaving headless the department charged with overseeing some of Palo Alto's most controversial projects.
The task of handling all the departures (and all the subsequent arrivals) would tax any Human Resources Department. In Palo Alto it could soon become trickier because Human Resources Director Russ Carlsen himself is on the way out. Carlsen, who turned 65 in September, told the Weekly he is preparing to leave at the end of next month to pursue a doctorate.
It's not just the top department heads submitting resignation letters. Workers represented by the Service Employees International Union, Local 521, and mid-level managers have been retiring at a startling rate over the past few years. Between January 2007 and January 2009, 115 city workers left the city -- more than twice the number projected by the city's finance staff. The surge of retirements added $25 million to the city's liability for retirees' health care benefits.
Since then, the flow of workers out of City Hall has continued unabated. In 2009, 87 city workers retired, according to the Human Resources Department. The city expects the number of retirements to reach 60 in 2010.
But it's the ratio of departures within City Hall's highest tier that has been the most significant. Of the nine department heads reporting to City Manager James Keene, four have either already left or plan to do so later this year. Three others -- Planning and Community Environment Director Curtis Williams, Community Services Director Greg Betts and Police Chief Dennis Burns -- only became permanent department heads in the past year-and-a-half, after years in senior management of their respective departments. Burns is also filling in as interim fire chief until Marinaro's permanent replacement is hired. (The other two department heads -- Utilities Director Valerie Fong and Administrative Services Director Lalo Perez -- started their positions in 2006 and 2007, respectively.)
The sudden rash of retirements may seem to an outside observer like a case of a new city manager cleaning house and installing his own administration. Keene joined the city in 2008. But Keene told the Weekly most of the workers who left did so voluntarily, after reaching their retirement age.
Demographics are largely to blame for Palo Alto's sudden leadership turnover, Keene said. It's been nearly half a century since John F. Kennedy urged Americans in his inaugural speech to "ask not what your country can do for you -- ask what you can do for your country." Many workers in the 1960s and 1970s took his advice and joined the public sector. Now, these Baby Boomers are hitting their retirement age and moving on to other things, Keene said.
"It's pretty unbelievable," he said, referring to the number of retiring executives. "But this is just the reality of the Baby Boomer generation coming of age."
Age, however, isn't the only culprit. The Great Recession has taken a bite out of Palo Alto's tax revenues, even as the city's health care costs soared. The city responded to these trends by snipping away at employee salaries and benefits.
A year ago, the city capped off five months of grueling and ultimately fruitless negotiations by imposing its final offer on SEIU workers, who make up more than half of the city's total workforce. The new terms, which the union vehemently opposed, require workers to start making contributions toward their health care costs.
Palo Alto also became one of the first cities in the area to institute a two-tiered pension system, with new employees getting "2 percent at 60" pensions (their pension payments will equal 2 percent of the highest salary earned, times the number of years of service, with retirement at age 60). Existing workers remained under the existing "2.7 percent at 55" pension formula. Keene also froze salaries for all non-public safety employees; eliminated the bonus program for managers, professionals and department heads; and changed department heads' employment to "at will" status.
These moves have significantly improved what was once a bleak financial outlook. On Oct. 5, when the council's Finance Committee discussed the city's long-term financial forecast, council members were astounded by the new projections, which incorporate the recent changes to pensions and health care contributions. The city's previous forecast, which did not include these measures, projected years of steep budget deficits in the city's General Fund, ranging from $9 million in fiscal year 2012 to $16 million in 2017. The new forecast, which contains more modest salary increases, projects a $1.4 million deficit in 2014 and a surplus of $400,000 in 2017.
Councilman Greg Scharff, who sits on the Finance Committee, said the new numbers have given him confidence that the city is on the right track.
"The previous numbers were scary," Scharff said. "I wouldn't say we're out of the woods, but when you look at these you see the problems are manageable.
"I feel, frankly, that Palo Alto is on the right financial track and that we've made huge progress and that things are actually looking up."
Mayor Pat Burt told the Weekly that the council agreed with Keene that these compensation adjustments were the "necessary and responsible" things to do to reduce expenses during lean times. They also, however, had an unwelcome side effect: They gave many of the city's most experienced and knowledgeable workers an incentive to leave. Burt and Keene both said the new employment conditions played a role in the recent wave of retirements.
"Certainly, given some of the questions and concerns people have expressed, this has to be a factor in these decisions," Keene said.
The flood of retirees leaves Palo Alto in a sudden recruiting frenzy with various executive search firms combing through candidates in search of the city's next fire chief, city attorney, public works director and library director. It doesn't help that some of these departing managers, including Jennings and Roberts, have left at a time when their respective departments are undertaking massive projects that will significantly impact the city's future.
Jennings is departing just as the city's $76 million reconstruction of its aged library facilities is zooming ahead. Three of the city's five libraries (the Mitchell Park, Main and Downtown branches) are slated for dramatic renovations in the coming years thanks to Measure N, which voters approved in 2008. The College Terrace branch is due to reopen this Saturday (Nov. 6) after more than a year of renovations.
At the Oct. 25 council meeting, watchdog Bob Moss pointed out that the city is now "doing more to modernize, renovate and expand our libraries than we've done for the previous 50 years." He thanked Jennings for her ability to accept community concerns and to integrate these concerns in the city's plans for its new libraries.
"She's done a really fine job and our libraries are the better for it," said Moss, who sits on the Library Advisory Commission. "Unfortunately, she's leaving and we'll be the worse for it."
Roberts' replacement will immediately step into one of the city's most contentious and complex debates -- over whether the city should build an anaerobic digestion plant in Byxbee Park. The landfill that currently occupies the Baylands site is scheduled to close in the next year or two, at which time the land would revert to parkland.
A coalition of environmentalists hopes city officials will build a waste-to-energy plant on the site -- a facility that would convert local food waste, yard trimmings and sewer sludge into electricity. Another equally vociferous coalition thinks this idea stinks and wants to see the space revert to parkland, as promised.
The new public works director will also take charge at a time when the city is reforming its fee system for garbage collection. Garbage rates went up by 6 percent last month, largely to cover the cost of the city's financially draining "zero waste" program. The new cost structure, which will be unveiled next year, will likely call for even higher rates for garbage collection and possibly new fees for recycling, public works officials have said.
Keene acknowledged that the new vacancies, as well as the task of filling these vacancies, should slow things down in City Hall over the first half of 2011. It doesn't help that his assistant, Kelly Morariu, resigned last month to accept a job as Hayward's assistant city manager.
"Clearly, in the short-term, over the next six months it will be a challenge," Keene said. "It has to have some effect on our response and our workload."
At the same time, Keene and the council embrace this transition period as the perfect opportunity to transform City Hall. Keene told the Weekly he hopes to take advantage of the recent departures and arrivals to make the organization leaner and more efficient.
"We'll have to be able to function in the long-term more like a Silicon Valley business would," Keene said.
This trend is already visible in the Community Services Department, where three of the four division managers retired last year. Keene took this opportunity to reorganize the department and eliminate one of the divisions. Open Space, Parks and Golf now belong to the same division, with Rob de Geus -- the only division manager who didn't retire last year -- overseeing all three functions.
Palo Alto has also begun to outsource some of the jobs traditionally performed by city workers, including printing documents and maintaining local parks and facilities. Two weeks ago, the council approved a 30-month, $1.85 million contract with the company ValleyCrest Golf Course Maintenance to maintain the Palo Alto Municipal Golf Course. The contract took effect Nov. 1.
De Geus estimated in a report that the move to ValleyCrest would save the city $500,000 over the course of the contract. It also prompted four city workers to retire, he told the council.
De Geus, who joined the city in 2003, has seen his range of responsibilities morph and expand over the past two years. In addition to managing a newly expanded division, he also served on the city's labor-negotiations team during last year's painful wrangling with the unions over workers' benefits. He is also Palo Alto's point man on Project Safety Net, a community initiative to promote youth mental health after a string of teenage suicides on the Caltrain tracks.
In the next few years, workers like de Geus, 41, could become the norm rather than the exception. Keene said the changes in City Hall's organization could create opportunities for city workers to have broader powers at a younger age than they would have had 10 years ago.
"Over time, some people might be able to have more responsibility and authority in an earlier phase in their careers and at a younger age," Keene said.
The restructuring comes at a heavy cost. A smaller staff means it takes longer for the department to institute new programs or manage existing ones. Earlier this week, members of the Parks and Recreation Commission told the City Council that the city's recreation staff, and de Geus in particular, are "overworked." Commissioner Sunny Dykwel said the city's effort to promote youth well-being is already suffering from insufficient manpower.
Dykwel said the newly reconstructed Lytton Plaza in downtown Palo Alto gives the city a perfect venue for hosting events for youths. Unfortunately, the Recreation Department no longer has the staff to manage or coordinate these events, she said.
"It's been increasingly difficult to sustain some of our youth programs as staff capacity is stretched ever so thin," Dykwel told the council at the Nov. 1 meeting.
She noted that over the past seven years, Palo Alto has eliminated seven position from the Recreation Division alone -- a 40 percent staffing reduction.
Keene acknowledged the wave of retirements means larger workloads for staff and longer turnaround times for some projects.
"We're in a real challenging situation," Keene said. "Everyone is working a whole lot harder, and we have to be realistic about what we can achieve in the short term and what we can't."
He maintained, however, that as the city adapts to the retirements, the long-term benefits will far outweigh the costs.
Burt agreed. The recent wave of retirements will allow Keene to install his own management team to lead the city toward a leaner and more efficient future, Burt said.
"Any time you have a number of senior people change in a similar time period, it becomes a greater challenge to focus on replacements," Burt told the Weekly. "It's also an opportunity, however, for Jim to be able to identify some candidates who are strong and who are well aligned with his vision and with the direction he's taken as an organization."
Keene's recruitment drive coincides with council's search for the city's next city attorney -- one of four positions that reports directly to the council (the other three are city manager, city clerk and city auditor). The council last month appointed the firm Bob Murray & Associates to help it identify possible candidates.
Burt said he expects the council to consider its applicant pool for the position in mid-December. Council members would then interview the top candidates and possibly reach a decision on Baum's successor early next year.
As for the other vacancies, Burt said the council intends to give Keene free reign to recruit the department heads. He said Keene's recent moves, including his appointment of Dennis Burns to succeed former Police Chief Lynne Johnson and his recent hiring of Pamela Antil as an assistant city manager, have given him confidence in Keene's judgment.
"I don't expect Jim to always make perfect decisions, either in his hires or in the other decisions he makes, but from what I've seen, I continue to expect a really good batting average, as well as a few home runs," Burt said.