For years, Palo Alto’s Utilities Department employees and managers fretted about the challenges of recruiting and retaining skilled workers at a time of stagnant salaries and reduced benefits.
Now, with the city’s economic recovery speeding along and tax revenues happily spiking, the city is planning to do something to stem the concerns – pay more.
In the recently completed round of contract negotiations with Service Employees International Union, Local 521, the City Council adopted a set of principles that included “setting compensation at levels sufficient to recruit and retain qualified employees when economically feasible.” The city also tried to align salaries of the SEIU workers with the median of comparable jurisdiction.
In the Utilities Department, the effort has particular urgency. The department currently has 20 open positions out of 236 positions in the budget, and the problem may get even more acute in the next few years. More than half of the Utilities workforce will be eligible for retirement by 2015, according to a report from city’s Human Resources department. The hope is that the new contract, which reserves the biggest pay bumps for the most urgently needed employees, will help curtail or perhaps delay this potential exodus. The City Council is expected to approve the contract on Monday.
Under the proposal, while splicers in Utilities would receive 12.1 percent raises over the two-year period and utility locators would receive raises of 14.6 percent, a utilities-system operator would receive a 19.5 percent raise. In the wastewater-treatment plant, most employees would get raises of 8.3 percent, while the maintenance mechanic would see a salary increase of 14.5 percent over the two-year period.
“We know there’s a risk, especially in Utilities,” Chief People Officer Kathryn Shen told the Weekly. “Just looking at age of our utilities operators and managers, we know we have to be prepared for turnover, and we know we’ll have to recruit.”
Shen said the city is also now in the process of doing a new market study for the managers and professional group, which would be based on more recent data than the one used for the last salary alignment.
The staffing situation in Utilities and Public Works has been called a “crisis” by workers. Many staff members have left the city since 2009.
In January, Aaron Miller, an operator at the water quality control plant, told the council that two of his coworkers recently left the department to take jobs that paid them an additional $10 an hour.
“The city isn’t paying competitive wage for the skilled workers,” Miller said. “I believe that a hiring and retention crisis is happening.”
Worker Jesus Cruz introduced himself as “the last electric system operator for the City of Palo Alto.”
“There used to be six of us, and now it’s only me,” Cruz said.
Four operators have left to work for Santa Clara, he said, because of wage differences.
A new report performed by the consulting firm Leidos, which examined the culture within the Utilities Department, confirms that these have not been happy times at the department – and not merely from a financial standpoint. The report, known as the “Utilities Department Organization Assessment,” surveyed the workers and, after listing their many frustrations, concluded that “the organization is ready for change.”
Workers specifically feel limited by bureaucracy and cost-reduction efforts and would like a “more open work environment” and more accountability, Leidos found. The current culture, the report states, directs “employees’ energy toward negative rather than positive factors.
“This indicates that approximately one-third of the efforts and energy is negatively focused, which impacts overall organizational performance,” the report states. “However, the survey also shows that the employees have a desire to improve the way the group works together to build a strong internal community and are open and ready for change. The employees are asking for a more open work environment and to be held accountable.”
The firm recommends that the city make an effort in “addressing the potentially limiting values of bureaucracy, confusion, cost reduction and control.”
“CPAU should also address employee requests for accountability and development through training and recognition, competitive compensation packages, and opportunities to develop effective processes/systems and communication strategies,” the report states.
According to management, the challenge of retaining Utilities employees has already had a visible impact on customers. A new report from City Manager James Keene notes that the 2012 Customer Satisfaction Survey “indicated that while customers experienced fewer outages, they were less satisfied with the time that it has taken to restore service.” This, the report notes, is very likely the result of six open linesperson/cable splicer positions (half of the 12 budgeted positions).
“While no evidence suggests that current authorized staffing levels are in excess of current needs, the ability to meet future needs could be very different if attrition due to retirements and employees leaving for better opportunities is realized as expected,” the staff report states.
The new SEIU contract will cover 570 union members, more than half of whom will receive salary raises beyond the 4.6 percent cost-of-living adjustment that every employee will receive. In most cases, the salaries will be raised to align with those in other jurisdictions.
In addition to Utilities workers, the SEIU group includes employees from Library, Planning, Public Works, Public Safety and other departments. The group makes up about half of the city’s total workforce. An average raise in the new agreement is 7.7 percent.
The new contract will cost the city about $7.6 million in additional compensation over the two-year period, which stretches from December 2013 to December 2015.
It seems so hard to square this kind of discussion with the fact that city workers are compensated wildly more than the going rate for equivalent jobs in the private sector, especially when you include pension and healthcare differences.
What’s going on here? Do we not recruit and train, the way the rest of the world does? Is the career path at CPAU so ossified that nobody will come here except as a senior manager?
Is PG+E such a better place to work that people will go there instead of here even at a huge negative compensation difference? Are we blowing money on massive early-pension and healthcare benefits that nobody values?
There is absolutely no information about salaries at the CPU, or other regional government-owned utilities, in this article. So—how is anyone supposed to make any sense out of this article, or the underlying issue of appropriate compensation for people who work for a government-owned monopoly that has a captive audience for customers? An utility that does not have to turn a profit, and can pretty much do anything it wants–since there is no Board of Directors to hold the Utility Management accountable.
The City’s recent) salary data can be used to at least answer some of that question:
There are six Sr. Resource Planners—four with an average take-home of $135K, one with a take-home of about $100K and one separated with a take-home of about $100K.
Sr. Engineers are paid between $131K and $138K. Various managers are making between $125K and $175K. Electrician leads: $90K to $118K. Electricians: $80K to $103K. Cable-splicers are all taking home between $110K and $120K.
The Director of the Utilities makes about $220K.
(Note—only employees who have worked a full year are included in these numbers.)
All of the employees enjoy, more-or-less, jobs-for-life, and all are guaranteed a pension of at least 82% of their last years’ salary, and possibly even more if the City can find ways to “spike” their exit salary.
Looking at these salaries, and doing some simple projections, it’s difficult to believe that most will not see exit salaries of at least $150K a year. The table below provides estimates of pension payouts for these folks:
—
The following matrix of payouts provides a good estimate of what public sector pensions are worth (in this case public safety employees):
Using a COLA of only 2%, public sector retirees will receive the following payouts in the following ranges:
————————–Minimum Pension Payouts————————-
Initial
Pension
Payout
$100K–10-Years: $1.1M | 20-Years: $2.5M | 30-Years: $4.1M
$150K–10-Years: $1.7M | 20-Years: $3.4M | 30-Years: $6.2M
$200K–10-Years: $2.2M | 20-Years: $5.0M | 30-Years: $8.3M
$250K–10-Years: $2.8M | 20-Years: $6.1M | 30-Years: $9.3M
$300K–10-Years: $3.3M | 20-Years: $7.4M | 30-Years: $12.4M
$350K–10-Years: $3.9M | 20-Years: $8.6M | 30-Years: $14.4M
$400K–10-Years: $4.5M | 20-Years: $9.9M | 30-Years: $16.5M
$450K—10Years: $5.0M | 20-Years: $11.2M | 30-Years: $18.6M
$500K–10-Years: $5.5M | 20-Years: $12.3M | 30-Years: $20.6M
(Note—non-public-safety employees will see slightly less
in pension payouts.)
In terms of the CPU, it’s very likely that many of the folks currently employed will be paid from $7M to $8M in their retirement years—which needs to be factored into their present salaries. The City is currently ignoring this deferred compensation–because it will be paid by CalPERS.
—
Without having access to the salary data, and pension plans, of other utilities—how can anyone make any sense out of the City’s claims?
> “indicated that while customers experienced fewer outages,
> they were less satisfied with the time that it has taken to
> restore service.
Is there a link to this report? The PAU has never done a very good job of reporting “downtime” to the public, in general. There are some downtime reports in the Advisory Commission Reports, but I don’t remember seeing this sort of data on the Utility’s web-site, even though it has been suggested (by myself) in the past.
For instance, outages should be reported, at least, by date, time-of-outage, time-of-restoral, number of hours/minutes that the outage lasted, and the general location of the outage. Additionally, some cause of the outage and the number of customers involved should be included in such a report.
Lastly, there should be a quarterly, and yearly, recap of the Utility Outage report. If that data were generally available on the Utility’s web-site, then we could make some sense out of a City Manager’s claims that people are unhappy about the time for restoral-of-service.
It’s been a while since the last outage in my neighborhood, so I don’t have any personal data to contribute here. We all had to sit through the city-wide power outage when the private airplane from the Palo Alto Airport took off in a terrible fog and crashed into the only high-voltage electric feed for the City of Palo Alto, taking the power out city-wide for about eight hours. It would be interesting to see if the City is including that outage in their internal data about outages?
Resident – You need to get your information right — professional public sector employees are paid less than private sector equivalents even when pension and healthcare are factored in.
PGE pays way more than equivalent positiions in CPA Utility Department that is one of the main reasons there is a growing recruitment and retention problem.
> You need to get your information right — professional public sector
> employees are paid less than private sector equivalents even
> when pension and healthcare are factored in
Time to show your cards, friend. Without a worksheet showing total life-time compensation of public sector and private sector workers to prove your point–you are just blowing smoke.
Wayne – Do you have such a worksheet to prove your point? Otherwise you are just blowing smoke.
Congressional Budget office report (see “professional” category):
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&cad=rja&uact=8&ved=0CDcQFjAB&url=http%3A%2F%2Fwww.cbo.gov%2Fsites%2Fdefault%2Ffiles%2Fcbofiles%2Fattachments%2F01-30-FedPay.pdf&ei=wQQiU6yPFs39oASU5ILQBQ&usg=AFQjCNF7Uy55Dpt0WuAzZpIqgxmxHyh63g&sig2=nPuUK0dWHv9QytKQ_HR3fg&bvm=bv.62922401,d.cGU
Federal vs. private-sector pay: No comparison is definitive, auditors say:
http://www.washingtonpost.com/politics/federal-vs-private-sector-pay-no-comparison-is-definitive-auditors-say/2012/07/23/gJQAJAWM5W_story.html
Rather than keeping up w/salaries in an increasingly expensive place, it seems to make economic sense to shift some infrastructure services to county agencies or share with other nearby cities. Do all the little towns and cities have their own or is Palo Alto just special?
Which of the Palo Alto infrastructure agencies could be closed with the responsibility shifted to the county?
What is the per citizen cost for all this in a city of 60k?
Time to dump CPAU and go to private sector. The CPAU employees shouldn’t care because (by their own claim), they will get paid more.
We won’t be stuck with ballooning pension costs and the free market will rein (rather than holding us hostage to whatever rates the City Council sees fit to charge us to go around for Prop. 13).
There are three cities in CA that own their own gas systems. How are you going to get the county to do electric and gas when they don’t even work on it at all? Good luck with that. as for going with the private sector, make an appt. to have the work done, and then wait.
New in Town + David Pepperdine = The “profit” that Palo Alto’s utilities generate are returned to the City instead of PGE shareholders. Please do a little basic research.
@Get Educated:
That “profit” is nothing but a tax: a loophole in Prop. 13 that is enabling a city council that is addicted to spending.
Sorry. Would much rather have corporate utilities vs. the CPAU scams: corrupt director, staff moonlighting on city time, and inflated water bills. And don’t even get me started on the $21M paid to Enron.
No question: dump CPAU, the inflated pensions and health care crap.
Why do you care? Per your claim, you’d make more money in the private sector.
So quit already!
Here’s a link to the widely circulated Santa Clara County Grand Jury report from a few years ago, which helped stimulated a lot of the reform momentum:
http://www.scscourt.org/court_divisions/civil/cgj/2010/CitiesMustReinInUnsustainableEmployeeCosts.pdf
Among other things, the Grand Jury cites a study which found government employee wages and salaries costs to be 42.6% higher than equivalent private sector wages and salaries, and benefits costs to be 72% higher. I believe this doesn’t include pension expenses.
The whole thing is pretty depressing reading actually, if you’re a working taxpayer in Santa Clara County.
> Do you have such a worksheet to prove your point?
Yes, I do. Several, in fact. But I’m not claiming that every Government Sector employee is paid less than people performing the same jobs in the private sector, like you are. So, the burden of proof falls on your shoulders.
So far, in this thread, I’ve provided a lot of data. What have you provided?
Time to show your cards.
> The “profit” that Palo Alto’s utilities generate are returned
> to the City instead of PGE shareholders.
This is not true, on several levels. PG&E, as a government-regulated entity, has many obligations which are mandated by the California Government as to how it spends its revenues. It can only charge what the CA.PUC allows it to charge. Municipal Utilities are exempted from this oversight, and can charge anything they want.
While the pass-thru to the Palo Alto General Fund has been fairly significant over the past hundred years, there is little to show for this money–as it was not targeted for use for needs like infrastructure. It has been used to hire a goodly number of people, and pay fairly steep salaries, however.
PG&E and City of Santa Clara both pay 10-15% higher salaries than Palo Alto Utilities for comparable engineering positions (except for Palo Alto Senior Engineers who just received a 10% increase). You can verify this by looking at Santa Clara’s HR website, and the ESC website for represented PG&E employees.
If this were not true, then why are experienced Palo Alto Utilities employees leaving to work for these organizations?
The City of Palo Alto does not treat its employees very well. They are underpaid compared to employees in cities with smaller budgets, and they are treated like plebeian lowlifes.
They need more pay and more dignity!
>> PG&E and City of Santa Clara both pay 10-15% higher salaries than Palo Alto
>> Utilities for comparable engineering positions (except for Palo Alto Senior
>> Engineers who just received a 10% increase). You can verify this by looking
>> at Santa Clara’s HR website, and the ESC website for represented PG&E
>> employees.
>> If this were not true, then why are experienced Palo Alto Utilities
>> employees leaving to work for these organizations?
Glad they are leaving. We can’t afford them and their grossly inflated
compensation with pensions and 100% lifetime health benefits any more.
You can throw all the spreadsheets out there that you want but it won’t change the facts. HR performs exit interviews to determine why experienced and young new employees are leaving. The overwhelming reason is better pay and benefits elsewhere. One sad loss was a very very good lineman who was trained by Palo Alto and was a valued asset. He took a job with the City of Lodi. So David Pepperdine climb off your pedestal and face reality. A recent new hire moved from Florida to work for Palo Alto as a trouble man, which is like a lineman. He lasted a little more than six months before he took a job at PG&E making much better money. We’ll I’ve wasted enough of my time trying to enlighten the privileged who treat there experienced and skilled public servants more like just servants.
“they are treated like plebeian lowlifes.”
Yes, especially by Palo Alto residents, as evidenced by the comments here.
Many other municipal utilities are located in areas that have lower costs of living-much lower-than the Bay Area. The pension system is state-wide and the workers that Palo Alto trains can keep accrued benefits while earning more and enjoying lower housing costs elsewhere. When I retired from Palo Alto, City residents were enjoying rates that were averaging 15% less than residents of surrounding cities. Count your blessings, folks.
Looking at the latest salary/benefit data released by the City, only four Utility employees have resigned with less than a year’s service. Two of the four was involved in outside work.
It would appear that about 29 people of the 235, or so, employed by the Utility separated during the 2012-2013 accounting year. A number seem to have had more than ten years of service, suggesting that they retired. Some of those who separated seem to have returned to the Utility’s payroll, often within a few months of their separation.
It’s difficult to deal with comments that have no analytic basis of fact.
As to the Santa Clara Municipal Utility offering higher salaries, the pension package needs to be considered before that salary differential can be considered as important.
As to CPU employee’s exit interviews, why not post them on-line so that we can all see what those leaving are saying about the Utility Management. Since the Utility seems to cast a complete cloak of opaqueness over its operations–it might be interesting to see what employees are saying, even if they are “disgruntled”.
Santa Clara’s pension package is the same as for Palo Alto employees hired in 2009 or earlier – CalPers 2.7% @ 55.
The comments (including mine)regarding other Utility agencies’ salaries have a total basis in fact – Munis post salaries on their HR websites, PG&E’s are on the ESC website, and their salaries ARE higher. Also, Palo Alto HR performed a salary/benefit benchmarking study that compared Senior Utility Engineer positions at other Munis and PG&E, and found the average compensation at the other agencies to be 10-15% higher. That’s probably why the Palo Alto Utilities Senior Engineers recently got a (well deserved) 10% raise.
Mr. Martin’s chart above correctly states that the benefits illustrated belong to public safety employees and not others. This was passed by the voters.
Statements that are qualified by phrases such as “It would appear. . . “ and “Some. . . “ and “Seem to have. . .” are not statements of “analytic fact.”
Many valley employers love lower staff turnover. They can hire yonger employees who work that position for less. Seniority starts over for those. Pension? What pension. Employee 401K’s and IRA’s have replaced those, and those have no cost of living adjustments.
2.7% @ 55? Looks like my private sector pension is 0.7% @ 66, commonly called Social Security.
The response by “ former employee” is right on. Many whiney residents have way too much time on their hands and feel it necessary to add their two cents. All of the employee’s in Palo Alto are deserving of their salaries. If you want the best quality and professional personnel then you either pay the competitive wage or you lose the best. Then our City must try and hire someone else and train them again and the revolving door continues. Supply and demand. Rather then bash our employee’s and cry about the pensions and benefits they have why don’t you just MIND YOUR OWN BUSINESS and allow the city to do their job and hire and pay what they know they need to do. Maybe the City should come into your home and tell you how to run your budget or tell you who to hire for work, unless of course you are one of the TPARS who have nothing better to do then sit on your behind and whine. Our employee’s, from administrative staff, utilities, public works, fire,police, parks and any other department deserve their salaries,pensions and benefits. LEAVE THEM ALONE!!
Yes, if your taxes are not paying their salaries, leave them alone.
SteveU, the electric utility industry (both municipals and private sector)is not like “many valley employers”. Many municipal utilities offer 2.7% @ 55 pensions. PG&E (private sector) has a 2% @ 60 pension, but they also have a 401K program with a 60% company match (union employees) and 75% match (management employees). Why? Because there is an industry-wide shortage of qualified utility workers and engineers, and employers are competing for a relatively small pool of qualified workers. Because these utility jobs have a large impact on safety and reliability, employers place a premium on experienced workers.
The Utility marketplace for workers is different than the typical valley “high tech” companies which treat workers as an expendable commodity.
> This was passed by the voters.
When did this vote take place?
> “It would appear. . . “ are not statements of “analytic fact.”
Government records released to the public are notoriously less than 100% accurate. Anyone who uses such records without making some sort of acknowledgment that the data is believed to be correct, but might not be, could easily be embarrassed when the actual data becomes available.
Palo Alto is too small to own a Utility. It makes no sense to continue running this very small outfit. It makes far more sense to sell it to PG&E, and bank the money. The City could easily make $40M to $60M a year on interest from such a sale, if banked correctly.
> Rather then bash our employee’s and cry about the
> pensions and benefits they have why don’t you just
> MIND YOUR OWN BUSINESS
In the past fifty years, US governments at all levels have run up a debt for the future of between $100T and $200T dollars. Why? Because ordinary citizens stood by, and let them do it.
There was a time that we were proud that this was a country “for the people, by the people, of the people.” This poster obviously dosen’t believe this framework for our collective governments. That’s a shame.
Wayne, I am curious as to where your salary and pension percentage numbers come from. As a current employee with the City of Palo Alto who plans on retiring after 25 years of service, I will not receive anywhere near the 82% of which you speak. In regards to your comment about all cable splicers making $110,000-$120,000 per year, your wrong. The only way for workers in that position to earn that type of money is by working a ton of overtime. Although there are cable splicers who do earn what you stated, they are certainly not in the majority. You should be thanking them all for keeping your lights on, your computer running and your Tesla charged. By the way, when it comes to collecting a pension, not one penny of that overtime money is factored in to the final compensation component.
Proposition 162 was passed in 1992.
SB400 was passed in 1999.
The link is for the electric utility owned by Penn Yan, NY. Population is about 5500. The link shows residential electric rate of $1.55/mo plus a little under 6 cents a kwh. Penn Yan owns the water and wastewater utilities as well. Palo Alto is not too small to own its utilities.
In order to earn $50m a year in interest the purchase of over $1.8 BILLION of US government securities (the only investment California cites are allowed to make) is required. I am retiring from this silly discussion.
http://www.villageofpennyan.com/penn-yan-services.html#electric
Many folk are not represented by a UNION and do not have any pension.
Some like myself were covered by a change in the Pension vesting law that stopped industry from zeroing earned pensions if you left before 20 years (typical vest date). The law made 7 years ‘vested’ with the amount still being computed for actual time in service. Prior to this law change, I had walked away from 2 other pension accruals (they were tiny, but the company does not have to ever pay those). Back then, 2 or 3 years in a job was common with layoffs and job changes. Someone with 7 years was an ‘old timer’. Companies would frequently shed (lay off) folk with 15+ years. Bye Bye pension. At least that is no longer allowed.
My last few jobs had no pension plan. IRA’s were my only choice.
Maybe you can see why I am not totally enthusiastic about funding YOUR nice pension from my tiny pension.
Then you should STEP UP and organize a union, vote for supportive politicians, or SHUT UP and go home.
Labor unions started because employers treated their employees worse than junkyard dogs and abused them. I see and hear of employer abuse nearly every week–my daughter, a nurse, has been abused by employers at PAMF and Stanford, never being allowed to leave even for a very sick child or family emergency or even a death. This is supposed to be the enlightened 21st century! Yet I see and hear of thousands, maybe more, high-tech workers forced to work mandatory overtime without pay, with the excuse that they have graduate degrees!
My daughter has a graduate degree in nursing, my son a graduate degree in mechanical engineering: does an advanced degree mean that somehow you do not suffer from overwork and fatigue?
No wonder unions are making a comeback–they are needed.
Fight amongst yourselves all you want, The sad fact is that the City Manager and out-of-work friends he hired as senior management staff have created a work place that is no longer tolerable to employees. The exodus of employees (both management and non-management)has skyrocketed to the point where the public is no longer being served by qualified trained employees but instead by transient part time contract employees. One poster continues to use worksheets, pie charts, etc. he has amassed of public employee salary and compensation benefits that have no validity but seems to amuse and befuddle those who choose to question or challenge his absurd claims. The fact of the matter is, if your workplace sucks and employee morale has sunk to the lowest possible level, no raise or salary and benefit package offered by the city7W7 will keep employees from joining the current exodus.
“I see and hear of employer abuse nearly every week–my daughter, a nurse, has been abused by employers at PAMF and Stanford, never being allowed to leave even for a very sick child or family emergency or even a death.”
I find the above comments to be bogus. PAMF and Stanford would not and cannot prevent someone from leaving for an emergency. Did your daughter suffer a death, a family emergency and a sick child and was not allowed to leave work? I think not. And if it is true, then why has she not filed a complaint?
Let’s stick to reality.
I think the city should tell employees if they are not happy with our compensation, then to move on. No need to sweeten the pit for them
Most of these overpaid union bureaucrats have zero chance of bettering their lot in the produce or lose private sector. If they did, they’d be gone by now. They will hold on to their low accountability, far pension, every other Friday off jobs as long as they can.
The good city workers who can do better in the private sector can and should leave, because it is NOT OK to overpay 95 bad workers on order to bring 5 up to what they are worth. This is the sad effect of union labor: we have to pay everyone the same: good and bad.