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Living in San Carlos June 24, 2010

San Carlos City Management Agrees to Significant Cut in Pay and Benefits.

by Chuck Gillooley

5.3% Reduction in Pay and Benefits

The City of San Carlos announced today that it has reached an agreement with Management Unit employees for pay and benefit reductions that start on July 1, 2010.  This is the third time that Management Unit employees have agreed to salary and benefit reductions since the current Salary & Benefit Resolution was adopted in July 2008.    These reductions will be considered by the City Council in this coming Monday’s meeting.

According to the press release, the total savings from canceling the cost of living increase this past March combined with the most recent cuts that will take place on July 1 will amount to $360,000.  A sizable portion of these savings will come from a 1.5% cut in base salary across the board.   Kudos to the City employees for taking this difficult step during such tough financial times.  There is no easy or painless solution to solving the City’s structural deficit, and there are many difficult decisions still to be made to close the gap.   But every contribution is significant, and this gesture on behalf of the employees of the City of San Carlos is big, both literally and symbolically.

For complete details on the proposed pay and benefit cuts, click here for the complete press release.
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San Carlos City Management Agrees to Significant Cut in Pay and Benefits., 5.0 out of 5 based on 4 ratings
Comments 21
  • Chuck,
    It should be noted that the management group also gave up a 2.75% Cost of Living Increase for the coming fiscal year in March. So the management givebacks for fiscal year 2010-2011 are actually 8%.
    Thank you,
    Andy Klein
    City Councilmember

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    • Andy,

      Thanks for the clarification. The press release is a little fuzzy with both figures.

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      • Chuck,
        The bigger item for me personally is going to a 3rd tier retirement. The MOU shows the management unit going to a retirement benefit of 2% @ 55. This means that after working for 30 years, they can retire at 55 with 2% (of the average of their highest three years of salary) for every year worked. Essentially that means they retire with 60% of the average of their highest three years salary. This is a big change. The 2% defined benefit is the lowest in the CalPers system, and we have moved from the single highest year to the average of the three highest. It should be noted that Menlo Park is going to court over whether or not the citizens can vote to force the unions to take 2% @ 60. Granted we haven’t gone to 60, but we have moved to 2% which is more important. San Carlos continues to lead the way on pension reform, and will always be at the forefront in the future.
        Andy Klein
        City Councilmember

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        • Let’s see. You get a job for 30 years (I’ve been laid off 3 times in the last 10 years). After working straight for 30 years, with no interruption in income or benefits or retirement contributions so lots of time to save money and spend time with your family instead of job searching, you get to retire. You get 60% of your salary – either highest year or average of high years – for… what exactly? For working for 30 years? Hell, I’d take a job with 30 years of job security and NO pension. Is San Carlos hiring?

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          • Anonymous,

            Maybe you ought to look inwardly – why have you been laid off three times in ten years? It could be awful luck on your part (in which case I offer you my heartfelt condolences) – or it could be you weren’t carrying your weight or just weren’t that special. I know this for sure – good people/employees are hard to find. If you find a good one, do all that you can to keep her/him on board.

            Malcontents seem to be the first to find fault with others. (I sound like a bit of a malcontent with that, don’t I?) Let’s quit blaming the employees for the soup we’re in – we’ve voted for those that have enacted our laws and programs.

            Anonymous, any chance that your name is Matt Grocott?

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        • Tiers aren’t going to do any good unless you fire everyone and hire them back. You’re not hiring.

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        • A 3rd tier retirement system. Right! And then 10 years from now you will ask for a 4th tier, then a 5th tier, then when does it stop? Employee’s pay into these pensions too you know. Work for the city of San Carlos and never make a decent living and pension. Great fix for your employee’s. I am sure they will work hard for your city.

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          • Look, it’s reality in the private sector that refusal or failure to adapt to changing economic conditions will doom any organization to eventual failure. Why should it be – how can it be – any different for the public sector? How do you figure the city budget is sustainable in the face of both boom and bust cycles if its hands are tied and it can’t consider reduction in employee overhead expenses? I’m generalizing here but it’s also well-known that a significant number of public pension funds are woefully under-funded – were I a public employee and told my pension benefits won’t be reduced I would take little comfort in the leap of faith that over the long term the pension will be able to fund 100% of its obligations. As far as what qualifies as a decent living that is unfortunately open to argument unless and until city jobs are such that they can be valued according to free market supply and demand; my question is how many would willingly give up union status and leave it to the free market to prove what their jobs are worth.

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  • The click on the link dowsn’t work for me. I get a black overlay on the the web page.

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  • Well done. Now I’ll consider the next proposed tax increase.

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    • I’m very pleased to see the management team finally step up to the plate, but it’s a small first step.

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    • Yes , well done, but what are you thinking?? The next tax increase? The solution to this city’s problems is not to reduce city salaries/benefits just to throw more spending on the backs of the rest of us.

      If I were a city employee, I would be very offended by your comment.

      The money saved by reducing city salaries should go toward propping up the essential services that have been threatened and need to keep. However it seems like status quo that if we are saving money, we now have more to spend on other things…isn’t that the thinking that got us in this mess??

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      • You’re right, it’s not “the” solution but I, and I think many others, think it to be at least a piece of a solution.

        Any city employee offended by the comment can speak with any of us in the private sector who have sacrificed income in order to keep our jobs.

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        • I agree. Many have said on this blog that they would reconsider a revenue measure if there were meaningful cuts in employee compensation costs.

          The state and the county are both looking at the same kinds of reform. CalFire, where three of the councilmen want us to get our fire service, just took a similar but much larger cut.

          I have said from the beginning that the solution should be a combination, not either of the “two paths.” Employee compensation has to be reformed if we’re going to have a sustainable budget, and it has to be reformed for current employees. They can dump the PD, but that price will go up and we’ll be right back in this situation again. If we did pension reform and cut back the management to staff ratio, raised fees, and cut some services, how much would we save? We’ll never know because they’re not willing to present that option. They’re in too much of a hurry to get rid of our public safety employees.

          The Mayor told the Chamber of Commerce that’s what we need, but I haven’t heard anything about it since then. Matt proposed cuts that would have saved millions, Andy thanked him, and that was the end of that. Back to outsourcing.

          It’s really sad that management waited until the outsourcing vote was literally on the agenda before announcing their voluntary cut. If they had done it sooner, there might have been some discussion about other ways to save $2,000,000.

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  • Rather than temporary cost savings for the 2010-11 year, I would much rather have seen a permanent LONGTERM changes/fixes to the CURRENT employees pension plan. The temporary cost savings do not address the longterm unsustainable benefit/pension systems of all the CURRENT employees. If we are going to talk about paridigm shifts in the way of doing city budgeting, then there needs to be SIGNIFICANT changes to the CURRENT employees pension systems (this is one of the main factors in SC not being able to afford it’s own police and fire organizations as the safety employees pension plans are the largest and allow retirement at 50 yrs old). One significant change would be to close out the current pension system (with whatever benefits each employees has already earned) and go to a defined contribution system for all — just like the private sector did over the last ~15years across the board. As is, the multiple tiers only affect NEW city employees (which BTW, there will not be many of in a level or shrinking organization) and if multiple other cities, counties end up doing the same thing of lower benefit tiers for new employees in the next few years, then it ends up creating organization stagnation by making employees just stay where they are at (whether they still enjoy the job or not) just to keep the better pension benefits. Another significant change/option would have been to increase the full retirement age to 2%@60 or 65 yrs old. Why does the management group need to be able to retire at 55 yrs old? There is no reason they cannot work till 65 like the rest of us. Social security if it is still around increased retirement age to 67 yrs old and even countries in Europe have figured out that allowing workers to retire at 55 yrs old is not sustainable and are starting to increase retirement age to 60+ yrs old. It is obviously clear that those making the decisions are older CURRENT employees that have a strong vested interest in keeping those great pension benefits for the current employees (at the cost of new employees and city services/taxpayers)

    Every day you hear or see articles about the public sector pension systems being unsustainable, but I don’t see any real progress towards changing them for current employees at the CA municipal, county or state level anytime soon. The problem is (especially during a recession when money is already tight and the pension fund stocks values go down) that these large pension systems end up needing to be funded by general fund money which then causes layoffs, or service cuts,… Oakland CC just last night voted to layoff 80 police officers due to their city budget issues and because the police would not agree to contribute to or make any real changes to their pension plans. San Jose and San Francisco budget issues are also in the news almost daily.

    If SC does not make significant LONGTERM changes now, we likely will be right back with budget problems in a couple more years when our contracts for safety services increase their contract cost to SC above inflation rate (and will have lost our local control over this) and the other SC city employees unions demand significantly larger than cost of living raises in nearterm future years to make up for the 2009-2011 givebacks (that has been the history of the unions in the years after givebacks and why the givebacks are only temporary solutions).

    I would love to hear what others think about all of this.

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    • Yeah!!! Finally, someone who is looking at the big picture. Where have you been for the past three months?

      If the desk-jockies worked until they are old enough for MediCare, we would not only save on the costs of their retirement, we would save all those years of paying for their medical insurance. Once they’re eligible for MediCare, all they need is a medigap plan, which is much cheaper.

      I keep hearing from staff that changing retirement plans for current employees is illegal, but other jurisdictions have done it. If they want to keep their jobs, they sign up for the new plan, period. If necessary, you fire everyone except public safety employees and hire back the ones who are willing to work under the new benefit plan. I can’t think of anyone we can’t live without. Although I think there are some good city employees, I think they have to be willing to work for reasonable compensation. The dot-com gravy train went off the tracks a long time ago now. It’s time to come back to reality.

      Dumping our public safety departments is a short-sighted, short-term solution to a systemic problem. Unfortunately, we haven’t heard anything about how to solve the budget problem except for Mr. Weiss’s “two paths” until now. Now that the management group has opened the door just a crack, lets look at all the options, not jump into dumping public safety. Maybe because Mr. Weiss is planning to retire this year at age 55.

      I’d like to see what it would cost/save if we went to 2.5% at 65-67, but that information is not forthcoming. Another bit of information that is not forthcoming is how much we will have to pay PERS as soon as we outsource the police to the County. That will cost many millions of dollars over the next 2 years; where are we going to get that?

      Little league offered to take over field maintenance but gave up because they got the run-around from staff. What was that about? Why have unions been told that they won’t have to take the pay cuts they’ve offered? It all looks like there’s an agenda that doesn’t include other possible solutions, forcing us to lose our public safety agencies because that’s what the powers that be want.

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  • Somehow the message has been lost to the unions that if they do not make consessions
    there won’t be any jobs to fight for becuase the city will be broke. I belonged to the SEIU for
    many years and they did a great job advocating for good benefits and decent wages, but
    if it comes down to being unemployed or taking a pay cut, no matter how drastic, I would hope
    that the rank and file would realize the better choice and express that to their union reps.
    Great that management has taken a pay cut, good first step.
    The bottom line is that you cannot run a city like a business, but that doesn’t mean you can
    run it into the ground.

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    • The negotiations with the unions would probably go more smoothly if the councilmen weren’t so rude and nasty to the unions from the dais. This is the crudest council I’ve ever seen. No class at all from the majority, just arrogance. Have you noticed how good Matt looks compared to Andy?

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  • Thank goodness I’m only an employee of SC and not a resident. By far the wackiest place I ever worked in my life. Residents…. Question authority, especially when your Council member is a 27 year old with no real world experiences whose platform is a green city with free youth and senior centers.

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    • Blue Collar,

      Warning: he considers any mention of his age a personal attack, along with any mention of the fact that he is inexperienced, immature, naive, etc.

      I think his interest in “green” ran off with Omar’s to someplace far, far, away.

      If you decide to move to San Carlos, you’re welcome over here on the wrong side of the tracks with other blue collar folks. The ruling class stays pretty much on the other side.

      I’m thinking going bankrupt sin’t such a bad idea. We could be annexed by Belmont, where they have a great police department of their own, a great fire department, a fire protection district, a great parks and rec department (for less than our stripped-down model), more property tax income, etc. The knock on Belmont has always been that their council was too volatile, but we have them beat in that department now, and their council doesn’t cow-tow to the city manager.

      Thanks for the post.

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