City turns to retirees to deal with worker 'exodus'

Palo Alto's rate of rehiring pensioners highest in Santa Clara County

Faced with an exodus of experienced city workers, Palo Alto is turning to familiar faces for help -- its own retirees.

The city has been rehiring its retired employees at a higher rate than any other city in Santa Clara County, according to a recent report from the county. The county's Civil Grand Jury found that 5.7 percent of the city's employees are people who retired and were then rehired (for other cities in the county, the average was 1.6 percent).

The jury investigated the practice of rehiring retired workers because of concern over "double dipping" -- workers who retire and then return to work while collecting their pension. Such cases, the Grand Jury found, are in fact quite rare. In most cases, rehiring retirees "appears to be a prudent way to secure highly skilled talent for short-term tasks at a relatively low cost to economically strapped municipalities and does not in itself appear to be a barrier to hiring new workers," the Grand Jury wrote.

In Palo Alto, the rehiring of retirees is particularly popular for several reasons. With revenues falling, the city has been shaving away at workers' benefits and instituting new requirements for employee contributions to pensions. These factors led dozens of employees to retire over the past two years, leaving "a rapid and unprecedented municipal 'brain drain'," according to a report from Human Resources Assistant Michele Dallara. It also didn't help that the city already had a large number of employees near retirement age even before the Great Recession.

Sandra Blanch, the city's human resources director, said Monday night that the retirements have come in three waves, coinciding with the city's recent reforms to workers' pension and medical care and new rules requiring greater contributions from employees toward their retirements. These initiatives, undertaken over the past three years, were undertaken to curb the spiking costs of pensions and health care.

The city's plummeting tax revenues also threw a wrench into the city's "succession planning" by forcing the council to trim positions instead of creating training plans. The city, according to Dallara's report, faced a "significant exodus of workers with expertise and institutional knowledge" and ended up rehiring retirees for such positions as deputy fire chief, police investigators, and managers in Public Works, Planning and Human Resources.

The City Council briefly discussed the report Monday night and directed staff to make some brief revisions before sending it to the Grand Jury. City Manager James Keene described the situation as a "short-term" one. Blanch said the city has 45 recruitments in progress and its percentage of retirees has already been reduced to about 4 percent of the city's workforce, she said.

"Clearly, both the economic fiscal crisis and our own actions to try to deal with the long-term situation, for the most part in advance of other jurisdictions here, did accelerate some of the departures and put us in a bit of a predicament here," Keene said.

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Posted by Concerned insider
a resident of Another Palo Alto neighborhood
on Sep 13, 2011 at 11:11 am

People of Palo Alto are getting royally ripped off. This could be avoided. These employees and their managers did not do such a wonderful job, that they're needed right now. It's poor planning and poor management, from the get-go.

This is by design, and it boils down to mismanagement and greed, with double-dippers taking advantage of an opportunity for self-benefit, not to contribute to the community. Just look at the infrastructure.

We can't blame them. It's a system we allow. In other communities, planning and management is just better. Everywhere, but Bell?

In order to have a brain-drain, there must be a brain to drain. Palo Alto 'aint what it used to be, on many levels. Our community lives on a reputation from long past. We, its residents, are too trusting.

Time to wake up & smell the coffee. I don't know what it will take. More *anonymous* city hot lines to report abuse?

Insiders are aware of these problems. Auditors merely confirm it. Try running a business like we allow PA to be run, and see how long it lasts before the whole house of cards falls.

Like this comment
Posted by Perplexed
a resident of Barron Park
on Sep 13, 2011 at 11:21 am

Most companies are not reliant on one employee. If an employee leaves for a company they generally explain what they are doing to existing employees - so I am not sure why there is a brain drain. I would assume in Palo Alto as well as any company that there is cross training.

Like this comment
Posted by brain drain
a resident of Meadow Park
on Sep 13, 2011 at 11:31 am

can't imagine why workers are leaving

could it be they read the crap slung against them on these blogs, realize they aren't valued for their contributions, going to be continually under-appreciated and take off for greener pastures?

let me join the dumb ranting - fire them all and replace them with walmart employees - if they're good enuf for walmart they're good enuf for PA

ten bucks an hour for everyone!

i'm sure PA will be pleased with the level of service, knowledge, experience and performance

Like this comment
Posted by More-Bad-Management
a resident of Another Palo Alto neighborhood
on Sep 13, 2011 at 11:50 am

This situation reeks of bad management, and/or the impact of unions. In many non-union companies, people cross-train, so that if someone were to unexpectedly resign, or die, that that position would have some sort of backstopping. Clearly, the issue of cross-training, and internal process is poorly managed at the City of Palo Alto.

Maybe it's time to begin looking around for another City Manager.

Like this comment
Posted by did u no
a resident of Downtown North
on Sep 13, 2011 at 12:48 pm

Long and informative. This practice of rehiring former employees started as an attempt to "fix the budget " on union employees backs. With a new "threat" to take away certain retiree benefits, there was a wave (first of three) of employees either forced to retire early or some who were just ready to retire. The threat was still just that. Then through unsuccessful city budget planning and horrible union negotiations, the second wave came and a large amount of dedicated, knowledgeable worker bee employees left the City – not voluntarily, but to preserve retiree benefits. Several employees had worked 10, 20, 30+ years to retire one day with the same retiree benefits they hired in with yet the takeaway threat was still running ramped forcing MANY worker bee employees to leave early. Ironically enough, city staff kept crying how “the bad economic times” were the cause of budget shortfalls, when in reality poor management at all levels (city council, senior staff down to supervisory). Then the last wave came and management staff with inside knowledge started to retire to keep the same benefit that they now knew was going to happen while others did not. So through all of this, favorite employees were hired back not because of what they could contribute to the city’s organization, but because they still had “friends” in management who would hire them back. It truly is a world of “it’s not WHAT you know but WHO you know” in the City of Palo Alto.
Many employees have always wondered why citizens would allow city council(s) and rogue management staff to continue to operate in the red while moving funds around to appear they were running in the black. One could see how citizens could not follow the mess. Many have also wondered why city senior management staff have always acted like their designated budgets were their personal funds and NOT for their own discretion. It is extremely interesting to read about all the new projects (bike paths, bridges, parks, railway, etc.) the city seems to take on that go no place other than a headline in the news. Majority of that work never comes to fruition, and the budget keeps being reduced. One would think a City Manager would be hustling to keeps existing businesses and entice others to come to the city. This “not in my backyard” attitude by a few key fiscally sound citizens should not dictate council. It happens though for political career reasons. So here you have a very old issue (rehiring retired employees) that still has not fixed the budget, AND now there is a huge management staff that does not know how to manage, budget, plan, and they cannot do the worker bee work to assist in the day to day operations. With managers not managing and not working with employees, just WHAT ARE THEY BEING PAID TO DO?

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Posted by Dan
a resident of Old Palo Alto
on Sep 13, 2011 at 3:50 pm

The practice of re-hiring retirees exists in many organizations, and it isn't always done because of poor management. Sometimes, it's just the most efficient thing to do at the time. What may be different here is that in the real world, when a retiree is re-hired, they don't get to double-dip. While they are working again, they don't receive retirement benefits from the company BECAUSE THEY ARE WORKING FOR THE COMPANY AGAIN. Then when they stop working for the company, their retirement benefits resume. They get a salary and regular benefits like any other employee, but not double. It's their choice. Many of them would be happy to be working and earning $$.

So why can't the city do that? I could use the dreaded "U" word, but I'm too kind.

Like this comment
Posted by Dysfunctional Organization
a resident of another community
on Sep 13, 2011 at 4:21 pm

The City of Palo Alto is a dysfunctional organization. Changes have been at the top echelons on the years, sometimes in the aftermath of scandal, at other times people left just before the sheriff arrived so to speak.

The worst cases, the former assistant city manager, former city attorney, former human resources director, and former finance director under the former city manager are now well and gone. In some but not all cases their replacements have been improvements. Still the overall dysfunction continues unabated, as morale sinks to even further lows.

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Posted by neighbor
a resident of another community
on Sep 13, 2011 at 9:54 pm

The community disfunction, as displayed on this topic, and nearly all comments on this website, is not irrelevant. The PA community -- as shown on these pages -- seems angry, mean, cheap, belligerent and not at at all what it was just 5-10 years ago.

Very sad.

Now....resume your acrimony, fight amongst yourselves.

Like this comment
Posted by Outside Observer
a resident of another community
on Sep 13, 2011 at 10:04 pm

I just hope there is more on the Grand Jury's plate than this inconsequential "re-hiring retirees" issue.

Indeed, this is probably the only thing a Civil Grand Jury can go public with, as the real dirt they have found is all referred to criminal investigation.

At least that would be the case with a competent and rational Civil Grand Jury, but then perhaps I'm just the eternal optimist.

Like this comment
Posted by Ray
a resident of another community
on Sep 14, 2011 at 8:04 am

What is the big deal over hiring back city retirees?
A few facts:
The retiree can't work more than 560 hours in one year.
Most are hired back to do special projects or handle some backlogged
They get salary only- no benefits or adding to their pensions.
They know how the city functions so there is very little training like
a new employee. This saves time and money.

Like this comment
Posted by No surprise
a resident of Barron Park
on Sep 15, 2011 at 10:19 pm


We are talking about managers who "fix the system".

Retirees can work 960 Hours a 35 - 100 an hour.
If a manager retires without training their co-worker
they can have retirement AND around 40,000-70,000 a year for part time work.

There is no logic to this. It's a rip off.

Why would only one person in the whole city know a job?
Why would the city hire managers in professional positions who had never done the work before (cronyism) when hiring at rates of 100,000 - 160,000 a year?

Sorry, but further commenting on this topic has been closed.

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