News

Palo Alto's payroll on the rise as workforce, salaries grow

City sees 6.8 percent increase in employee compensation in 2014

A growing workforce and rising salaries have spurred a 6.8 percent jump in Palo Alto's employee costs last year, according to data released by the city Tuesday afternoon.

The data, which is available here, shows that the city has spent $9.5 million more in employee compensation in 2014 than it did in 2013. The main drivers behind the trend are a growing number of workers on the city's payroll and the city's recent contracts with its labor unions, which include salary increases.

The city added 52 new employees in the calendar year, raising the number of workers on the payroll by 3.4 percent.

David Ramberg, assistant director of the Administrative Services Department, said the city created 23 new positions in the years 2013 and 2014 and filled numerous positions that had been vacant for several years.

At the same time, the number of employees making more than $200,000 annually in total compensation has more than doubled between 2013, when the group included eight employees, and 2014, when the number stood at 19.

Meanwhile, the number of employees making more than $100,000 rose sharply for the second straight year. While this category included 372 employees in 2012, the number went up to 408 in 2013 and to 440 in 2014.

On the city's list of top earners, City Manager James Keene led the way in 2014 with $289,344 in total wages. He is followed by City Attorney Molly Stump ($264,166), Fire Inspector John Parks ($247,470, which includes $114,365 in overtime), Utilities Director Valerie Fong ($242,720) and Chief Operating Officer Lalo Perez ($240,937).

The growing number of workers now earning more than $100,000 reflects the City Council's approval last year of new contracts with the city's labor unions and its non-unionized group of managers and professionals.

In March 2014, the council granted the city's largest union, the Service Employees International Union (SEIU), its first salary increase since 2008. Every worker received a pay hike of at least 4.5 percent, spread out over two years. The council followed that up by approving a two-year contract with similar raises for the management group.

In addition to the 4.5 percent raises, the city adjusted salaries of both SEIU workers and managers to better align with similar positions in neighboring cities. On the SEIU side, this resulted in 320 workers getting additional raises, ranging from 2 to 10 percent. For the management group, which last year included 211 employees, this led to 19 positions being reclassified so that they are within 5 percent of the median market.

The new contracts also made significant changes to the health-care benefits of employees. Under last year's agreement, the city's contributions toward health care became a flat rate, rather than a percentage of the overall cost.

Even with the adjustment, the city's overall obligations for salaries, health care and pensions went up by about $9.5 million between 2013 and 2014, rising from $139.7 million to $149.2 million in a year as the overall employee headcount jumped from 1,532 to 1,584.

Comments

22 people like this
Posted by Carol Gilbert
a resident of University South
on Mar 11, 2015 at 10:49 am

It's a city gone mad!


23 people like this
Posted by concerned
a resident of Palo Alto Orchards
on Mar 11, 2015 at 11:17 am

I see more and more services that are contracted out yet the headcount for the city keeps growing. Just this morning my electrical line was being replaced by a contract company, Pacheco. The park is mowed and cleaned by another company and the street sweeping was just changed to contractors.

Why aren't we seeing a reduction in headcount?


17 people like this
Posted by Resident
a resident of Crescent Park
on Mar 11, 2015 at 11:24 am

Some have speculated that the Manager has been emptying the treasury in order to limit the actions of the new city council - for example the 4 million$ spent on the lobby.
In any event it enlarges his loyal bureaucratic following.


23 people like this
Posted by 38 year resident
a resident of Old Palo Alto
on Mar 11, 2015 at 11:26 am

Palo Alto and many cities across the country continue to hire staff and increase their overall pension debt by millions annually (the liberal way of governance). Where is the accountability? What benefit do the citizens of Palo Alto receive from 23 new jobs created and numerous vacant positions filled? We cannot continue on this path or we will face certain bankruptcy.


19 people like this
Posted by Resident
a resident of Midtown
on Mar 11, 2015 at 11:39 am

Budget Sustainability is a fair issue to raise I think. The City has not been strong on answering it. It like the drought situation. Anyone can check how we are doing by looking at the reservoirs but that doesn't fix anything. The need is for someone (likely the City Council) to do some work on the problem. Hopefully before it gets too bad.


23 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 11, 2015 at 11:48 am

Enough. Our salaries are way higher than surrounding communities. It used to be that govt workers had lower salaries in return for pensions. Not any more.

What a racket. All city workers get raises regardless of performance or lack thereof.

I am never voting to approve another spending measure while they keep draining us for projects like Cal Ave that balloon in cost and time, the ever-increasing utilities rates regardless of how much we save, the YEARS procrastinating on fixing the traffic lights, etc. etc.

(Read Diana Diamond today on the fees and surcharges we pay even when we're NOT using any utilities in PA! For this we need to pay a huge salary to a Chief Sustainability Officer?)


24 people like this
Posted by resident
a resident of Midtown
on Mar 11, 2015 at 11:51 am

More people hired, but many of the libraries are on limited hours, El Camino Park going on it's 2nd year of just being a pile of dirt, the playing fields at Cubberley in more weeds than grass, the baylands center is dis-repair, stoplights at Embarcadero causing traffic congestion (and more greenhouse gas).

So the city hires a chief "sustainability" person, a chief marketing hack, etc, etc.

Does City Manager Keene deserve being paid 50% more than the Governor of California?


23 people like this
Posted by Voter
a resident of Barron Park
on Mar 11, 2015 at 12:30 pm

We all need to vote for statewide pension reform in 2016 if Chuck Reed succeeds in getting it on the ballot. This will allow cities to freeze already-earned pension obligations, but change the formula going forward to something like a 401K or equivalent to the private sector.

I'm tired of underwriting 6 figure annual pension payments for city bureaucrats with no distinction between the low and high performers. The chief PR officer in the city is costing us a quarter million dollars per year and making our lives better how?

Filseth and DuBois are both private sector guys. They will clearly be able to see the obvious (that the taxpayers are severely overpaying), but the question is whether they will be able to have any effect. Guys like Berman and Wolbach are in the public sector unions' pockets (even if they publicly eschewed campaign donations) since they fancy themselves career politicans and you don't go far in this state without taking care of your union friends.

Scharff never met a development he didn't like, but he has shown himself willing to stand up to union special interests. I hope he takes a leadership role in addressing the bloat that is our city government.


13 people like this
Posted by good
a resident of Duveneck/St. Francis
on Mar 11, 2015 at 12:32 pm

I'm glad to see that we're paying our employees something close to market wages. It's what we need to do if we really want talented professionals working for us. Even at those prices, though, James Keene is a complete steal. He's basically the city CEO and he could go make at least 4 times that in the private sector if he wanted to. Considering that as of 2012 median household income in PA was $118,936 these numbers seem very much in line (cheap, actually) for what we should be expecting to pay people with masters and doctorate degrees with 10+ years of experience.


15 people like this
Posted by concerned
a resident of Barron Park
on Mar 11, 2015 at 12:43 pm

fiscal irresponsibility run rampant just like the feds


16 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 11, 2015 at 12:50 pm

Good, if median household income is $119,000, that means that in a two-income family each person is earning $59,500. Is Keen really worth 6 times that? Plus he gets a house, bonus, "extra pay" and benefits?

How many private sector works get pensions any more? No one I know in the private sector. I joke that a pension is a small hotel in Europe (a pun on pensione).


Like this comment
Posted by good timing
a resident of Barron Park
on Mar 11, 2015 at 1:18 pm

Since the Toll authority is laying off people, they are happy to join the city anytime by bus and by train. Good news to everyone!


9 people like this
Posted by 38 year resident
a resident of Old Palo Alto
on Mar 11, 2015 at 3:04 pm

@Good....[portion removed] He is a liberal spender who allows for no accountability with city staffers. Get the tax money and hire people to expand the city payroll. That's how liberal politicians roll. How does that benefit the residents of Palo Alto?


19 people like this
Posted by anonymous
a resident of Duveneck/St. Francis
on Mar 11, 2015 at 3:09 pm

Palo Alto is a "fancy" city with 1M/year given to the city youth theatre and etc., which can seem over the top, but I am concerned about the high headcount of city employees in a small city like this, with the associated high perks and costs. The more that get entrenched, the more the overall picture is worrisome in terms of long-term financial commitments.
I agree with the poster who noted outsourcing; why then the increased headcount of city employees if we are moving to outsourcing of basic tasks as well as consultants.
Some of us (professionals), at least, are not seeing big raises and certainly no pensions in the private workplace here.


18 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 11, 2015 at 3:56 pm

Good, a few more points:

If it took a company ceo as long to introduce a new product or fix a known problem with an existing product as it takes Palo Alto fix the timing on one single traffic light, he or she would have been gone long ago.

If a company ceo allowed the type of lax supervision, faulty construction, exponential cost increases over the original budget to get a piddly govt grant as has happened with Cal Ave, he or she would have been fired long ago.

If a company ceo couldn't find ONE single substandard employee whose performance doesn't warrant a raise or who deserves to be dismissed, he or she would have been fired long ago. Rightly or wrongly, the stock market rewards layoffs and wage cuts.

If a company ceo can't find a single internal employee to handle pnline "community outreach" more effectively than awarding out-of-town lucrative $200,000+ contracts, that ceo obviously doesn't A) know his community, B) doesn't respect taxpayers' hard-earned dollars and c)doesn't realize that PA is in the heart of Silicon Valley and tech innovation.


7 people like this
Posted by Abitarian
a resident of Downtown North
on Mar 11, 2015 at 4:28 pm

If we want to recruit and retain high-quality city employees, my feeling is that we should be prepared to compensate them according to local and industry norms. Fair is fair.

That said, it baffles me that City Manager Jim Keene should get a *merit* raise a few short months after his administration was chastised by the Santa Clara County Grand Jury for unacceptable behavior.

It sends the message that staff are hired and rewarded regardless of whether or not their contributions are essential and excellent.


15 people like this
Posted by 38 year resident
a resident of Old Palo Alto
on Mar 11, 2015 at 5:47 pm

@Abitarian...we overpay for city employees when you factor in benefits on top of high salaries. The local and industry norms for government employees are a union perpetrated scam. The way to solve this would be to set a fixed salary for a job and post it. Someone will take the job at the rate of pay being offered and if not, they can go somewhere else. If other cities did the same there would be an end to this foolishness. City pay rates now are at the same level or exceed private sector pay. There are plenty of qualified people that will take these jobs at the salary being offered. And the next step would be to set up employee contributed pension plans similar to the private sector. Enough is enough.


8 people like this
Posted by common sense
a resident of Midtown
on Mar 11, 2015 at 6:54 pm

The City Manager position does not have the level of responsibility of a private sector CEO. A private sector CEO is ultimately responsible for growing revenues and growing the value of their company.

The City Manager has no responsibility for growing revenues. The "revenue" that the city receives are mandated by law: sales tax, etc.


10 people like this
Posted by Deep Throat
a resident of another community
on Mar 11, 2015 at 7:45 pm

The City Manager supported by a majority of the City Council has the responsibility for growing revenues and return on investment for property owners and developers, and for their architects, builders and lenders. Instead of being paid by those who benefit from his actions, the City Manager is paid with government funds.


8 people like this
Posted by resident
a resident of Another Palo Alto neighborhood
on Mar 11, 2015 at 10:06 pm

Yet we still have only two code enforcement people. We do not have
the necessary ordinances or enforcement to insure a decent
environment in our residential areas. This is the dirtiest City I have
ever seen- and that is not an exaggeration- with some areas looking like a slum.


18 people like this
Posted by jane
a resident of Evergreen Park
on Mar 12, 2015 at 12:30 am

Agree completely with online name above, "If a company ceo allowed the type of lax supervision, faulty construction, exponential cost increases over the original budget to get a piddly govt grant as has happened with Cal Ave, he or she would have been fired long ago."

Add to that the less than transparent way James Keene operates, highlighted by his secretive dealings with Arriaga a few years ago that earned the reprimand of the Santa Clara County Grand Jury for unacceptable behavior a couple of years ago.

But what really concerns me are the future pension liabilities James Keene is racking up with all his additional high level hires who will be grandfathered in. This is just plain irresponsible. The previous council colluded in supporting Mr. Keene's ever expanding empire. I only hope that the current council will act in a more responsible manner and pull the plug on allowing this to continue.



57 people like this
Posted by Ed
a resident of Downtown North
on Mar 12, 2015 at 8:40 pm

The cities top earners all make more than any governor in this countryWeb Link . None of their 'services' warrant the ridiculous pay and overly generous benefits that, by no coincidence, the city government sets. This is crazy.


9 people like this
Posted by jg
a resident of Midtown
on Mar 12, 2015 at 9:32 pm

"he could go make at least 4 times that in the private sector if he wanted to'

Let him. The sooner the better.


6 people like this
Posted by George young
a resident of Walter Hays School
on Mar 10, 2016 at 8:40 am

The city employee salaries should be published in two categories: management and non management
, known as SEIU employees. The salaries that run in the high 6 figure amount are not those of SEIU EMPLOYEES. The union is not the problem. The Palo Alto City salaries for SEIU employees are the lowest in comparison to our surrounding cities, Sunnyvale, San Jose, Mountain View, etc.

The Post is misrepresenting the information by not publishing the difference between the two categories. Our middle class is disappearing perhaps because those that make decisions are the ones in the upper class category and continue to give themselves more and non management get less. Keene is expecting a 3.5% increase at the expense of the SEIU employees with cuts in healthcare. Management should be embarrassed as they collect their increases and bonuses. As usual Jim Keene continues to hire management staff and the management/non-management ratio continues to rise.


13 people like this
Posted by Baloney
a resident of Another Palo Alto neighborhood
on Mar 10, 2016 at 3:33 pm

James Keene, working short weeks, taking frequent and long vacations, and having two assistants, makes more money than any other city manager on the Peninsula. He does NOT work a 40-hr week, has more help and more paid vacation than managers of larger cities. He is not a steal, he is a burden. A very incompetent, inactive, lazy burden.

Ask any city worker and he will tell you other cities pay better than Palo Alto. That's why we can't keep good city workers-- they leave to make more money elsewhere.

This city, small as it is, is badly run and poorly managed,


Like this comment
Posted by Business Consultant
a resident of Portola Valley
on Mar 10, 2016 at 5:57 pm

Any management textbook will tell you it is not cost effective to have your employees in the executive pay bracket do useful work.

Yet an irreducuble minimum of work remains to be done no matter how many formerly productive individuals are promoted out of the working ranks. Therefore the organization must hire ever more employees at the lower pay grades, both to do the work and to provide employees for its growing executive class to supervise. Costs inevitably rise as a result.

It's known as Coddlington's Law.


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

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