Wednesday Sep 29 2010
Mayor talks city salaries, pensions and cash outs
By: Scott Yuill, Rocklin Mayor
Mayor's quarterly column
No issue is more top-of-mind in Rocklin (and elsewhere) today than government-employee compensation — salaries, pensions, and “cash outs.” Taxpayers are angry. And understandably so. I am, and have been for 22 years in Rocklin, a small-business owner and employer. I fund retirement accounts for myself and my employees. When I started my term on the council fewer than four years ago (the first time I’ve ever held public office), I had some knowledge of the inner-workings of government employment and a fundamental understanding of some of the complexities. But experiencing it all first-hand, even as an insurance and financial services professional who understands actuaries, pensions, and other forms of retirement funding, has been an education like no other. Reducing wages and changing benefits — even when a public employer can’t afford or sustain them — isn’t as easy as simply taking a vote. Under California law, wages and other terms and conditions of employment must be negotiated between public employers and their employees. Although this isn’t new (the Meyers-Milias-Brown Act established collective bargaining for local-government employees in 1968), when did government start negotiating financially unsustainable deals? Over the last decade or two, government compensation (the entire package) has outpaced private-sector compensation in many cases. Regionally speaking, Rocklin certainly hasn’t been a leader in this problem. But we aren’t without issues and controversy. And while the problem is bigger than just the city of Rocklin, we, too, need to recalibrate our public-compensation packages. This topic can’t be fairly addressed, however, without recognizing that public employees — those who protect us and keep our communities safe, clean, and enjoyable (among the many other services they provide) — are valuable. They pay taxes, too, and often live in the communities where they serve. Here in Rocklin, our city employees play a significant role in enhancing our quality of life. And they do so professionally and cooperatively, despite unprecedented circumstances; namely the city asking them to make salary, health-benefit, and other concessions — and council members (myself included) voting to approve the negotiated concessions plus layoffs and furloughs — to close drastic budget gaps. They are stakeholders, whose lives and livelihoods are personally impacted. Significantly, the compensation packages for existing and now-retired city employees are ones established years ago via negotiated agreements, and in some cases are a culmination of multi-jurisdictional service and pension contributions. Attempting to unravel these legal agreements, isn’t the answer for Rocklin. Creating new contracts for new employees will most likely need to be the first step. How we do it is the $64-million question. Long-term, we need effective reform to comprehensively address government compensation packages. A system-wide overhaul; at all levels of government. It took years for local governments, state governments, and the federal government to dig into our current hole, and digging ourselves out isn’t going to be quick or easy. It can’t be accomplished overnight, and it can’t be accomplished by the city of Rocklin alone. More immediately, however, Rocklin can and should seek to address some individual pieces of the overall pie. Here are some examples. City manager Rocklin will hire a new city manager. The process necessarily involves an opportunity to establish a new compensation package. I’d like to see Rocklin hire the best talent for the least amount of money. What’s an appropriate salary? Should the salary be commensurate to Rocklin’s size and management complexity? Should size and complexity be the only measuring sticks? One misstep by an inexperienced city manager could cost city taxpayers hundreds of thousands of dollars. Rocklin, in my opinion, should expect its new city manager to be, among other things, a skillful leader with strong economic-development experience to strengthen our local economy. What does a reasonable compensation package for Rocklin’s new city manager look like? In my view, one that doesn’t enable substantial lump-sum cash outs of unused leave time (e.g., sick, vacation) at the end of his or her service. (Note: Under the city’s structure, the city council negotiates compensation directly with the city manager; it doesn’t and can’t (by law) negotiate directly with other city employees. The city manager is responsible for hiring employees and negotiating as required.) Pensions Although pension reform falls under the umbrella of long-term, systemic change, what about more immediate options for Rocklin in this area of employee compensation? The city participates in California’s Public Employees’ Retirement System (CalPERS) — a defined-benefit retirement plan that provides benefits based on an employee’s years of service, age, and compensation. Cities participating in CalPERS are subject to certain costs and rules set exclusively by the state. One thing the city does have a say in, however, within state-set limits, is the chosen benefit formula and options (for example, 2 percent at age 60). In my opinion, employees should contribute more toward their retirement and in some cases retire at an older age. Salaries Over time, salaries for city employees in Rocklin increased partly out of fear that the city wouldn’t be able to attract qualified employees. (This occurred throughout California, not just in Rocklin.) City (and county) leaders need to address this one-upmanship approach to hiring. One way we might do this is to provide compensation that reflects our local cost-of-living factors, instead of trying to compete with out-of-region, outlying jurisdictions. With so much to consider, this is a pivotal time for Rocklin. And we — the residents, business-owners, taxpayers, employees, unions, and city itself — are all stakeholders. I urge your participation. Admittedly, before being elected in 2006, I wasn’t someone who regularly attended city council meetings. I now know how vital it is to shaping our community. Please feel free to e-mail me at Scott.email@example.com or call me at home at (916) 435-4874 anytime.