Pensions Across the Country Threatened by Deficits

This past Sunday, the Washington Post ran an article about a silent crisis facing the pensions of public employees.

The Post writes:

“The funds that pay pension and health benefits to police officers, teachers and millions of other public employees across the country are facing a shortfall that could soon run into trillions of dollars.”

More ominously, accounting techniques have disguised the extent of this crisis.

“But the accounting techniques used by state and local governments to balance their pension books disguise the extent of the crisis facing these retirees and the taxpayers who may ultimately be called on to pay the freight, according to a growing number of leading financial analysts.”

At the local level this is particularly alarming:

“Local governments use these same techniques for their pension funds and face deficits that further contribute to what some investors and analysts say may be shaping up to be a massive breach of faith with a generation of public employees.”

Here is the most alarming danger. And it seems to directly apply to the situation at the local level.

“Very small shifts in actuarial assumptions can generate huge changes over time,” said Susan Urahn of the Pew Center on the States, which has studied the issue. “It is not very transparent, and even where it is transparent not many people understand it.”

Sound familiar? One of the ways, Davis has made the budget projections look better is by shifting some of the assumptions.

This is from last night’s Davis Enterprise article:

The city funded benefits under a pay-as-you-go method until last fiscal year, when it added an extra $500,000 to the payment. To fully fund the program, which would save millions in the long run, the city would have to pay in about $4 million per year, Navazio said.

‘Given the level of benefits and the cost of benefits, we need to be setting aside 6 percent of our employee salaries, and that percentage is pretty high compared to other cities,’ Navazio said. ‘That’s also a reflection of the city’s benefits, which are pretty high, and how that’s packaged.’

‘We have got to find the means to fund that,’ Councilman Stephen Souza said.

‘We are fully intending to deal with it, we’re just not dealing with it fully in this fiscal year,’ Navazio said.

Labor negotiations will reopen during the 2009-10 fiscal year, Navazio said, and money has been set aside to address the cost-of-living increases expected.

Council members agreed there is a bright side to the city’s budget picture. For one, Davis has maintained a healthy, 15 percent reserve, totaling about $5.6 million.

The reserve could be used to address further state cutbacks that may be part of Gov. Arnold Schwarzenegger’s revised budget, expected out today. The reserve also could soften any blows if property and sales tax assumptions built into the budget are incorrect.

All of which suggests that the very budgets that the city was celebrating on Tuesday night might be very tenuous. The Washington Post article cites the longevity of people as one plank of the problem. Simply put as people live longer, pensions have to pay them for longer. In order for people to continue to receive the benefits that were promised to them, state and local government must make fiscally responsible decisions. If pensions are non-transparent, the costs hidden, or if their levels are unsustainable, they will serve to undermine the pension system as a whole. Placing the burden on the taxpayers and hiding the costs, hoping to forestall difficult decisions to future leaders, in actuality threatens the entire system. That means everyone gets hurt by unsustainable policies.

—Doug Paul Davis reporting

Author

  • David Greenwald

    Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Categories:

Budget/Fiscal

64 comments

  1. Energy use, water use, paving over agricultural land, military “adventures” overseas..like the impending fiscal crisis described today… ALL UNSUSTAINABLE. When we were the “last-standing ” industrial power on the plant at the end of WWII, there appeared to be no limits…60 yrs. later, the fact that we have finally ” hit the wall” can no longer be ignored…

  2. Energy use, water use, paving over agricultural land, military “adventures” overseas..like the impending fiscal crisis described today… ALL UNSUSTAINABLE. When we were the “last-standing ” industrial power on the plant at the end of WWII, there appeared to be no limits…60 yrs. later, the fact that we have finally ” hit the wall” can no longer be ignored…

  3. Energy use, water use, paving over agricultural land, military “adventures” overseas..like the impending fiscal crisis described today… ALL UNSUSTAINABLE. When we were the “last-standing ” industrial power on the plant at the end of WWII, there appeared to be no limits…60 yrs. later, the fact that we have finally ” hit the wall” can no longer be ignored…

  4. Energy use, water use, paving over agricultural land, military “adventures” overseas..like the impending fiscal crisis described today… ALL UNSUSTAINABLE. When we were the “last-standing ” industrial power on the plant at the end of WWII, there appeared to be no limits…60 yrs. later, the fact that we have finally ” hit the wall” can no longer be ignored…

  5. “‘We are fully intending to deal with it, we’re just not dealing with it fully in this fiscal year,’ Navazio said.”

    That says it all! Navazio is using voodoo economics to make the deficit that is really “alive and well” seem to go away. It would be harmful to Saylor’s and Souza’s campaigns to admit a huge deficit has been building under their watch. So lets pretend no deficit exists! Hocus, pocus! Poof! Voila!! All gone!!!

    If the city is responsible for paying out pensions and health benefits in the future, then it needs to be placed in each and every budget. Otherwise the message that is sent comes out as “well we are not going to put this in the budget, so maybe we will pay in the future, or maybe we won’t”! Is Navazio saying that paying out the pensions and health benefits is something that he “does not intend to deal with” the fiscal year it is due? What kind of a financial officer is he? A very dishonest one, I would say, who is allowing himself to be a shill for the Saylor/Souza camps.

  6. “‘We are fully intending to deal with it, we’re just not dealing with it fully in this fiscal year,’ Navazio said.”

    That says it all! Navazio is using voodoo economics to make the deficit that is really “alive and well” seem to go away. It would be harmful to Saylor’s and Souza’s campaigns to admit a huge deficit has been building under their watch. So lets pretend no deficit exists! Hocus, pocus! Poof! Voila!! All gone!!!

    If the city is responsible for paying out pensions and health benefits in the future, then it needs to be placed in each and every budget. Otherwise the message that is sent comes out as “well we are not going to put this in the budget, so maybe we will pay in the future, or maybe we won’t”! Is Navazio saying that paying out the pensions and health benefits is something that he “does not intend to deal with” the fiscal year it is due? What kind of a financial officer is he? A very dishonest one, I would say, who is allowing himself to be a shill for the Saylor/Souza camps.

  7. “‘We are fully intending to deal with it, we’re just not dealing with it fully in this fiscal year,’ Navazio said.”

    That says it all! Navazio is using voodoo economics to make the deficit that is really “alive and well” seem to go away. It would be harmful to Saylor’s and Souza’s campaigns to admit a huge deficit has been building under their watch. So lets pretend no deficit exists! Hocus, pocus! Poof! Voila!! All gone!!!

    If the city is responsible for paying out pensions and health benefits in the future, then it needs to be placed in each and every budget. Otherwise the message that is sent comes out as “well we are not going to put this in the budget, so maybe we will pay in the future, or maybe we won’t”! Is Navazio saying that paying out the pensions and health benefits is something that he “does not intend to deal with” the fiscal year it is due? What kind of a financial officer is he? A very dishonest one, I would say, who is allowing himself to be a shill for the Saylor/Souza camps.

  8. “‘We are fully intending to deal with it, we’re just not dealing with it fully in this fiscal year,’ Navazio said.”

    That says it all! Navazio is using voodoo economics to make the deficit that is really “alive and well” seem to go away. It would be harmful to Saylor’s and Souza’s campaigns to admit a huge deficit has been building under their watch. So lets pretend no deficit exists! Hocus, pocus! Poof! Voila!! All gone!!!

    If the city is responsible for paying out pensions and health benefits in the future, then it needs to be placed in each and every budget. Otherwise the message that is sent comes out as “well we are not going to put this in the budget, so maybe we will pay in the future, or maybe we won’t”! Is Navazio saying that paying out the pensions and health benefits is something that he “does not intend to deal with” the fiscal year it is due? What kind of a financial officer is he? A very dishonest one, I would say, who is allowing himself to be a shill for the Saylor/Souza camps.

  9. There a big steps and small steps that can be taken. A small step would be to change the salary base used for calculating pensions. I think the pensions are based on ending salary. So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years. This would encourage people to stay in the higher positions longer and the longer people remain employed reduces the overall pension liability. You can not blame the employees for doing what they are doing – they are playing by the rules. However, the rules need to be modified to make the system work.

  10. There a big steps and small steps that can be taken. A small step would be to change the salary base used for calculating pensions. I think the pensions are based on ending salary. So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years. This would encourage people to stay in the higher positions longer and the longer people remain employed reduces the overall pension liability. You can not blame the employees for doing what they are doing – they are playing by the rules. However, the rules need to be modified to make the system work.

  11. There a big steps and small steps that can be taken. A small step would be to change the salary base used for calculating pensions. I think the pensions are based on ending salary. So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years. This would encourage people to stay in the higher positions longer and the longer people remain employed reduces the overall pension liability. You can not blame the employees for doing what they are doing – they are playing by the rules. However, the rules need to be modified to make the system work.

  12. There a big steps and small steps that can be taken. A small step would be to change the salary base used for calculating pensions. I think the pensions are based on ending salary. So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years. This would encourage people to stay in the higher positions longer and the longer people remain employed reduces the overall pension liability. You can not blame the employees for doing what they are doing – they are playing by the rules. However, the rules need to be modified to make the system work.

  13. The whole intent of the great retirement packages for civil servants was to make up for the reduced pay. Now that they make as much or more than the private sector they can fund their retirement on their own like the rest of us do. We’ve seen this happen with the private pensions in the past. If you don’t control your own retirement finances in this day and age you are crazy.

  14. The whole intent of the great retirement packages for civil servants was to make up for the reduced pay. Now that they make as much or more than the private sector they can fund their retirement on their own like the rest of us do. We’ve seen this happen with the private pensions in the past. If you don’t control your own retirement finances in this day and age you are crazy.

  15. The whole intent of the great retirement packages for civil servants was to make up for the reduced pay. Now that they make as much or more than the private sector they can fund their retirement on their own like the rest of us do. We’ve seen this happen with the private pensions in the past. If you don’t control your own retirement finances in this day and age you are crazy.

  16. The whole intent of the great retirement packages for civil servants was to make up for the reduced pay. Now that they make as much or more than the private sector they can fund their retirement on their own like the rest of us do. We’ve seen this happen with the private pensions in the past. If you don’t control your own retirement finances in this day and age you are crazy.

  17. Shortly after I was elected in 2000, I attended a PERS conference geared toward local finance directors and staff. The lesson I came away with was:

    SMALL CHANGES IN RATE OF RETURN TRANSLATE INTO HUGE CHANGES IN PAYMENTS REQUIRED.

    I have actually explained this to DPD (David Greenwald), and I have brought this point up over and over again over the years during council budget discussions. I brought it up when we were negotiating lowering the age of retirement for management and professional workers to 55.

    I explained that we are shouldering a massive amount of risk when we accept 3% at 50 or 2.5 percent at 55, yet this risk is not factored into our total compensation figures.

    Risk has cost, in and of itself. Also, it is hard for me to believe that in this recently globalized economy, with the dollar losing its reserve currency status, that we will be able to count on the 7.75% annual rate of return that PERS assumes.

    Hence, the value actual total compensation that the council majority has recently bargained away is likely to be much greater than the figures show, and our unfunded liability is likely to increase if we are to continue to “balance” the budget.

    Again, I did explain this act point to the council when I was the only vote against lowering the retirement age of management and professional workers.

  18. Shortly after I was elected in 2000, I attended a PERS conference geared toward local finance directors and staff. The lesson I came away with was:

    SMALL CHANGES IN RATE OF RETURN TRANSLATE INTO HUGE CHANGES IN PAYMENTS REQUIRED.

    I have actually explained this to DPD (David Greenwald), and I have brought this point up over and over again over the years during council budget discussions. I brought it up when we were negotiating lowering the age of retirement for management and professional workers to 55.

    I explained that we are shouldering a massive amount of risk when we accept 3% at 50 or 2.5 percent at 55, yet this risk is not factored into our total compensation figures.

    Risk has cost, in and of itself. Also, it is hard for me to believe that in this recently globalized economy, with the dollar losing its reserve currency status, that we will be able to count on the 7.75% annual rate of return that PERS assumes.

    Hence, the value actual total compensation that the council majority has recently bargained away is likely to be much greater than the figures show, and our unfunded liability is likely to increase if we are to continue to “balance” the budget.

    Again, I did explain this act point to the council when I was the only vote against lowering the retirement age of management and professional workers.

  19. Shortly after I was elected in 2000, I attended a PERS conference geared toward local finance directors and staff. The lesson I came away with was:

    SMALL CHANGES IN RATE OF RETURN TRANSLATE INTO HUGE CHANGES IN PAYMENTS REQUIRED.

    I have actually explained this to DPD (David Greenwald), and I have brought this point up over and over again over the years during council budget discussions. I brought it up when we were negotiating lowering the age of retirement for management and professional workers to 55.

    I explained that we are shouldering a massive amount of risk when we accept 3% at 50 or 2.5 percent at 55, yet this risk is not factored into our total compensation figures.

    Risk has cost, in and of itself. Also, it is hard for me to believe that in this recently globalized economy, with the dollar losing its reserve currency status, that we will be able to count on the 7.75% annual rate of return that PERS assumes.

    Hence, the value actual total compensation that the council majority has recently bargained away is likely to be much greater than the figures show, and our unfunded liability is likely to increase if we are to continue to “balance” the budget.

    Again, I did explain this act point to the council when I was the only vote against lowering the retirement age of management and professional workers.

  20. Shortly after I was elected in 2000, I attended a PERS conference geared toward local finance directors and staff. The lesson I came away with was:

    SMALL CHANGES IN RATE OF RETURN TRANSLATE INTO HUGE CHANGES IN PAYMENTS REQUIRED.

    I have actually explained this to DPD (David Greenwald), and I have brought this point up over and over again over the years during council budget discussions. I brought it up when we were negotiating lowering the age of retirement for management and professional workers to 55.

    I explained that we are shouldering a massive amount of risk when we accept 3% at 50 or 2.5 percent at 55, yet this risk is not factored into our total compensation figures.

    Risk has cost, in and of itself. Also, it is hard for me to believe that in this recently globalized economy, with the dollar losing its reserve currency status, that we will be able to count on the 7.75% annual rate of return that PERS assumes.

    Hence, the value actual total compensation that the council majority has recently bargained away is likely to be much greater than the figures show, and our unfunded liability is likely to increase if we are to continue to “balance” the budget.

    Again, I did explain this act point to the council when I was the only vote against lowering the retirement age of management and professional workers.

  21. ANON 10:02 “So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years.”

    I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.

    Consider the current system, where a city employee starts his pension at 90% of his last wage. In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k. His starting pension (adjusted up every year with a COLA) will be $180k (i.e., 200 x .90). For the city of Davis, this represents a Net Present Value of just under $4 million. (In other words, the city would have to buy a 5% bond for $4 million in order to pay off this retiree’s pension.*)

    If we used average salary over his last five years, his starting pension would be $102,600 ($570k/5 x .90). For the city of Davis, this represents a Net Present Value of roughly $2.25 million. In other words, a NPV savings of $1.75 million from the present system.

    If we instead used median salary over his last five years, we would completely get rid of the incentive to promote employees to management positions for their final year on the payroll. In the example above, the median salary over the employee’s last five years is $95,000. His pension would start at $85,500 ($95k x .90). For the city of Davis, this represents a Net Present Value of roughly $1.87 million. In other words, a NPV savings of about $2.1 million from the present system.

    * That is not how our system works. Instead, the city makes regular payments to CalPERS, which then invests the money and makes monthly payments to its pensioners. The city’s payments are based on how much PERS needs to fund the city’s pensions. As such, the effect is the same as my NPV calculation suggests.

    One more note… I spoke with an expert on how PERS charges cities in California, when an employee gets a massive hike in his wages in his final year before retirement. The expert told me that PERS doesn’t eat this increase. PERS simply charges the city all at once what it owes, in order to fund that pensioner’s retirement. (Before that conversation, I wondered if maybe the cities were getting off easy by letting their employees game the system.)

  22. ANON 10:02 “So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years.”

    I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.

    Consider the current system, where a city employee starts his pension at 90% of his last wage. In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k. His starting pension (adjusted up every year with a COLA) will be $180k (i.e., 200 x .90). For the city of Davis, this represents a Net Present Value of just under $4 million. (In other words, the city would have to buy a 5% bond for $4 million in order to pay off this retiree’s pension.*)

    If we used average salary over his last five years, his starting pension would be $102,600 ($570k/5 x .90). For the city of Davis, this represents a Net Present Value of roughly $2.25 million. In other words, a NPV savings of $1.75 million from the present system.

    If we instead used median salary over his last five years, we would completely get rid of the incentive to promote employees to management positions for their final year on the payroll. In the example above, the median salary over the employee’s last five years is $95,000. His pension would start at $85,500 ($95k x .90). For the city of Davis, this represents a Net Present Value of roughly $1.87 million. In other words, a NPV savings of about $2.1 million from the present system.

    * That is not how our system works. Instead, the city makes regular payments to CalPERS, which then invests the money and makes monthly payments to its pensioners. The city’s payments are based on how much PERS needs to fund the city’s pensions. As such, the effect is the same as my NPV calculation suggests.

    One more note… I spoke with an expert on how PERS charges cities in California, when an employee gets a massive hike in his wages in his final year before retirement. The expert told me that PERS doesn’t eat this increase. PERS simply charges the city all at once what it owes, in order to fund that pensioner’s retirement. (Before that conversation, I wondered if maybe the cities were getting off easy by letting their employees game the system.)

  23. ANON 10:02 “So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years.”

    I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.

    Consider the current system, where a city employee starts his pension at 90% of his last wage. In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k. His starting pension (adjusted up every year with a COLA) will be $180k (i.e., 200 x .90). For the city of Davis, this represents a Net Present Value of just under $4 million. (In other words, the city would have to buy a 5% bond for $4 million in order to pay off this retiree’s pension.*)

    If we used average salary over his last five years, his starting pension would be $102,600 ($570k/5 x .90). For the city of Davis, this represents a Net Present Value of roughly $2.25 million. In other words, a NPV savings of $1.75 million from the present system.

    If we instead used median salary over his last five years, we would completely get rid of the incentive to promote employees to management positions for their final year on the payroll. In the example above, the median salary over the employee’s last five years is $95,000. His pension would start at $85,500 ($95k x .90). For the city of Davis, this represents a Net Present Value of roughly $1.87 million. In other words, a NPV savings of about $2.1 million from the present system.

    * That is not how our system works. Instead, the city makes regular payments to CalPERS, which then invests the money and makes monthly payments to its pensioners. The city’s payments are based on how much PERS needs to fund the city’s pensions. As such, the effect is the same as my NPV calculation suggests.

    One more note… I spoke with an expert on how PERS charges cities in California, when an employee gets a massive hike in his wages in his final year before retirement. The expert told me that PERS doesn’t eat this increase. PERS simply charges the city all at once what it owes, in order to fund that pensioner’s retirement. (Before that conversation, I wondered if maybe the cities were getting off easy by letting their employees game the system.)

  24. ANON 10:02 “So the incentive is to move into a Chief role (or any other high position) just before retirement and then step away. Across the state this creates a revolving door situation in the top jobs. The pension base salary could be set at something like the average of the last ten years.”

    I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.

    Consider the current system, where a city employee starts his pension at 90% of his last wage. In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k. His starting pension (adjusted up every year with a COLA) will be $180k (i.e., 200 x .90). For the city of Davis, this represents a Net Present Value of just under $4 million. (In other words, the city would have to buy a 5% bond for $4 million in order to pay off this retiree’s pension.*)

    If we used average salary over his last five years, his starting pension would be $102,600 ($570k/5 x .90). For the city of Davis, this represents a Net Present Value of roughly $2.25 million. In other words, a NPV savings of $1.75 million from the present system.

    If we instead used median salary over his last five years, we would completely get rid of the incentive to promote employees to management positions for their final year on the payroll. In the example above, the median salary over the employee’s last five years is $95,000. His pension would start at $85,500 ($95k x .90). For the city of Davis, this represents a Net Present Value of roughly $1.87 million. In other words, a NPV savings of about $2.1 million from the present system.

    * That is not how our system works. Instead, the city makes regular payments to CalPERS, which then invests the money and makes monthly payments to its pensioners. The city’s payments are based on how much PERS needs to fund the city’s pensions. As such, the effect is the same as my NPV calculation suggests.

    One more note… I spoke with an expert on how PERS charges cities in California, when an employee gets a massive hike in his wages in his final year before retirement. The expert told me that PERS doesn’t eat this increase. PERS simply charges the city all at once what it owes, in order to fund that pensioner’s retirement. (Before that conversation, I wondered if maybe the cities were getting off easy by letting their employees game the system.)

  25. “I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.”

    If the average is over ten years rather than five, the city saves more – and valuable employees are encouraged not to wander off with all their invaluable expertise. Ten years sounds pretty good to me!

    By the way Rich, I am certainly dazzled by all the facts and numbers you give, but have no idea how accurate they may be. Vergis tends to do the same thing – try and dazzle with facts and figures to sound like she knows what she is talking about (when she clearly doesn’t). Can you simplify your discussion a bit for us more simple-minded folk?

    For instance: “In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k.” Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?

    I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000. And frankly, many of them have not shown themselves to be particularly talented or knowledgeable in their field, evidenced when they are asked to provide staff reports.

    I’ll go one step farther. I have overheard staff members, in vastly different fields of endeavor, saying something to the effect – “if the city wants to let me retire at 50 and collect a pension while I work elsewhere, hey it’s fine with me”; “if this project goes through, hey that keeps me employed”. I don’t blame city staff for feeding like pigs at the public trough if the city hands it to them. It is the City Council that needs to be responsible enough to rein the unions in – which has not happened. The buck stops at the City Council’s door.

    Sue Greenwald has been harping on this issue forever, and only relatively recently are people hopping on the bandwagon. Too little, too late!

  26. “I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.”

    If the average is over ten years rather than five, the city saves more – and valuable employees are encouraged not to wander off with all their invaluable expertise. Ten years sounds pretty good to me!

    By the way Rich, I am certainly dazzled by all the facts and numbers you give, but have no idea how accurate they may be. Vergis tends to do the same thing – try and dazzle with facts and figures to sound like she knows what she is talking about (when she clearly doesn’t). Can you simplify your discussion a bit for us more simple-minded folk?

    For instance: “In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k.” Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?

    I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000. And frankly, many of them have not shown themselves to be particularly talented or knowledgeable in their field, evidenced when they are asked to provide staff reports.

    I’ll go one step farther. I have overheard staff members, in vastly different fields of endeavor, saying something to the effect – “if the city wants to let me retire at 50 and collect a pension while I work elsewhere, hey it’s fine with me”; “if this project goes through, hey that keeps me employed”. I don’t blame city staff for feeding like pigs at the public trough if the city hands it to them. It is the City Council that needs to be responsible enough to rein the unions in – which has not happened. The buck stops at the City Council’s door.

    Sue Greenwald has been harping on this issue forever, and only relatively recently are people hopping on the bandwagon. Too little, too late!

  27. “I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.”

    If the average is over ten years rather than five, the city saves more – and valuable employees are encouraged not to wander off with all their invaluable expertise. Ten years sounds pretty good to me!

    By the way Rich, I am certainly dazzled by all the facts and numbers you give, but have no idea how accurate they may be. Vergis tends to do the same thing – try and dazzle with facts and figures to sound like she knows what she is talking about (when she clearly doesn’t). Can you simplify your discussion a bit for us more simple-minded folk?

    For instance: “In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k.” Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?

    I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000. And frankly, many of them have not shown themselves to be particularly talented or knowledgeable in their field, evidenced when they are asked to provide staff reports.

    I’ll go one step farther. I have overheard staff members, in vastly different fields of endeavor, saying something to the effect – “if the city wants to let me retire at 50 and collect a pension while I work elsewhere, hey it’s fine with me”; “if this project goes through, hey that keeps me employed”. I don’t blame city staff for feeding like pigs at the public trough if the city hands it to them. It is the City Council that needs to be responsible enough to rein the unions in – which has not happened. The buck stops at the City Council’s door.

    Sue Greenwald has been harping on this issue forever, and only relatively recently are people hopping on the bandwagon. Too little, too late!

  28. “I think Anonymous 10:02 makes some very good points. I would slightly amend his suggestion about “the average of the last ten years.” I suggest the median of the last five years.”

    If the average is over ten years rather than five, the city saves more – and valuable employees are encouraged not to wander off with all their invaluable expertise. Ten years sounds pretty good to me!

    By the way Rich, I am certainly dazzled by all the facts and numbers you give, but have no idea how accurate they may be. Vergis tends to do the same thing – try and dazzle with facts and figures to sound like she knows what she is talking about (when she clearly doesn’t). Can you simplify your discussion a bit for us more simple-minded folk?

    For instance: “In his last five years, he made $570,000: $85k, $90k, $95k, $100k and $200k.” Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?

    I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000. And frankly, many of them have not shown themselves to be particularly talented or knowledgeable in their field, evidenced when they are asked to provide staff reports.

    I’ll go one step farther. I have overheard staff members, in vastly different fields of endeavor, saying something to the effect – “if the city wants to let me retire at 50 and collect a pension while I work elsewhere, hey it’s fine with me”; “if this project goes through, hey that keeps me employed”. I don’t blame city staff for feeding like pigs at the public trough if the city hands it to them. It is the City Council that needs to be responsible enough to rein the unions in – which has not happened. The buck stops at the City Council’s door.

    Sue Greenwald has been harping on this issue forever, and only relatively recently are people hopping on the bandwagon. Too little, too late!

  29. “Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?”

    It’s probably unrealistic. I used it to emphasize my point. However a 50-70% raise is not unheard of, when an employee is moved from a line position to a supervisorial position — in the DFD, this would be moving from Firefighter I to Battalion Chief — for his last year of employment.

  30. “Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?”

    It’s probably unrealistic. I used it to emphasize my point. However a 50-70% raise is not unheard of, when an employee is moved from a line position to a supervisorial position — in the DFD, this would be moving from Firefighter I to Battalion Chief — for his last year of employment.

  31. “Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?”

    It’s probably unrealistic. I used it to emphasize my point. However a 50-70% raise is not unheard of, when an employee is moved from a line position to a supervisorial position — in the DFD, this would be moving from Firefighter I to Battalion Chief — for his last year of employment.

  32. “Why would someone’s salary double in the last single year? Is this a realistic example? If so, why?”

    It’s probably unrealistic. I used it to emphasize my point. However a 50-70% raise is not unheard of, when an employee is moved from a line position to a supervisorial position — in the DFD, this would be moving from Firefighter I to Battalion Chief — for his last year of employment.

  33. “I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000.”

    Yes, I wrote a column about this around 3 years ago. At that time, there were something like 26 managers and supervisors for the City of Davis making more than $100,000 a year. That didn’t include any firefighters or police officers (though it did include the chiefs of those departments). Not only was the head of Parks & Rec making the salary you suggest, but so you a few of her subordinates.

    What needs to be understood, though, is that it is not just salaries that are problematic. It is the hefty cost of all of the benefits that go with these jobs.

    Part of the problem is that the City of Davis must compete with other cities for its workforce. And what happens is one city, usually Elk Grove in our area, will overpay its people with very high benefits. Then every other city feels compelled to join in the frenzy by overpaying its people, too.

    That is not a problem when revenues are growing and the benefits being given away will only be a problem years down the line. But it is a terrible problem now that revenues are stagnant and those bills are coming due.

  34. “I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000.”

    Yes, I wrote a column about this around 3 years ago. At that time, there were something like 26 managers and supervisors for the City of Davis making more than $100,000 a year. That didn’t include any firefighters or police officers (though it did include the chiefs of those departments). Not only was the head of Parks & Rec making the salary you suggest, but so you a few of her subordinates.

    What needs to be understood, though, is that it is not just salaries that are problematic. It is the hefty cost of all of the benefits that go with these jobs.

    Part of the problem is that the City of Davis must compete with other cities for its workforce. And what happens is one city, usually Elk Grove in our area, will overpay its people with very high benefits. Then every other city feels compelled to join in the frenzy by overpaying its people, too.

    That is not a problem when revenues are growing and the benefits being given away will only be a problem years down the line. But it is a terrible problem now that revenues are stagnant and those bills are coming due.

  35. “I have another question for you, Rich. I do agree, as I think a lot of citizens do, that the compensation package for firemen may be too generous for the city to sustain. But you never mention other city employees who are making ungodly salaries – such as the Parks & Rec department. And those folks are not in jobs that have any inherent risk. My understanding is that upper management at Parks & Rec are making in the neighborhood of $130,000 to $160,000.”

    Yes, I wrote a column about this around 3 years ago. At that time, there were something like 26 managers and supervisors for the City of Davis making more than $100,000 a year. That didn’t include any firefighters or police officers (though it did include the chiefs of those departments). Not only was the head of Parks & Rec making the salary you suggest, but so you a few of her subordinates.

    What needs to be understood, though, is that it is not just salaries that are problematic. It is the hefty cost of all of the benefits that go with these jobs.

    Part of the problem is that the City of Davis must compete with other cities for its workforce. And what happens is one city, usually Elk Grove in our area, will overpay its people with very high benefits. Then every other city feels compelled to join in the frenzy by overpaying its people, too.

    That is not a problem when revenues are growing and the benefits being given away will only be a problem years down the line. But it is a terrible problem now that revenues are stagnant and those bills are coming due.