Sunday, December 29, 2013

Steven Greenhut: Does the Bell Toll for Excessive Public Pay?

Steven Greenhut
Mod: This is a follow up to Friday's post (link) regarding City Hall's disturbing lack of candor about what it did with a couple million dollars in taxpayer money. Telling residents that costs associated with employee salaries had been cut when they were actually increased and then bundled into pension and benefit accounts was not a very good thing to do. That this claim was likely made to help con voters into extending Sierra Madre's state leading combined utility tax rates makes it even worse. If we had a real City Council heads would be rolling, but today we do not. The sad fact is the majority of our elected officials work far harder for city employees and their demands than they do the taxpayers whose money funds everything ... The following was written by columnist Steven Greenhut and deals with some of the problems that we are now starting to see here in Sierra Madre. If you want to know the real reason why we pay double-digit utility tax rates, this is it. Trust me, it's not about the Library. What it is about is city employee pensions and benefits.

Does the Bell Toll for Excessive Public Pay? (Reason.com link) - “The art of government is to make two-thirds of the nation pay all it possibly can pay for the benefit of the other third,” mused Voltaire. Even that cynical French Enlightenment writer couldn’t imagine what would transpire one day in California, where a portion of the mere 15.3 percent of the public that works for government has gotten the rest of the public to pay for an eye-popping level of compensation.

The latest data — revealed in a December update to the controller’s “Government Compensation in California” Web site — provides fodder for outrage. There’s a fire battalion chief in a small Bay Area suburb receiving a one-year total compensation package that costs $494,000 and city managers in modest-sized burbs (Temecula, Menifee, Carlsbad, Buena Park, Fountain Valley) receiving pay-and-benefit packages of nearly a half-million bucks and more in 2012.

We see a list of employees in fiscally troubled cities — Stockton, San Bernardino, Vallejo — with total earnings in the $200,000 to $300,000 range. The data shows public “servants” taking $230,000-plus cash-outs of leave, CEO-level salaries for employees in impoverished backwaters, and many employees receiving six-figure benefits in addition to their wages. Average pay levels for California public employees often soar above average earnings in their respective communities.

Coincidentally, the controller’s update was released just as Angela Spaccia, former administrator in the scandal-plagued Los Angeles County city of Bell, was found guilty on 11 corruption charges that included the misappropriation of public funds. She was accused of creating a secret pension fund for herself and then-city manager Robert Rizzo, who at one point “earned” a salary of $800,000 a year plus benefits.

Rizzo — the rotund racehorse-owning poster child for municipal greed — previously pled “no contest” to corruption charges. Five other Bell officials were convicted, also. The scandal, which erupted in 2010, sparked a widespread debate about public pay levels and oversight. Trial evidence included an email string where officials joked about getting “fat together” and “taking all of Bell’s money.”

In fact, Controller John Chiang created this statewide compensation Website, based on data provided by cities and agencies, in direct response to Bell. The database has been widely praised as thorough and easy to navigate. But as scary as the information it provides may be, it may even understate the problem.

Its municipality pay averages “are in orders of magnitude too low,” argued Steve Frates, director of research at Pepperdine University’s Davenport Institute. That’s because it includes part-time and occasional workers in the average. Furthermore, the database doesn’t include other benefits public employees receive. It only calculates the direct costs of pensions and medical-care benefits — not the tens of billions of dollars in unfunded liabilities.

Chiang says that public disclosure of compensation information is the first step toward reform. Critics complain, however, about a lack of follow-up steps from other state officials. “The illegality, the excesses of Bell, are an aberration of the real problem,” said Richard Rider, president of San Diego Tax Fighters. “The most powerful force in local politics are the public-sector unions. They elect people who are most compliant. The result is what you would expect.”

The public has seen only modest reform. Gov. Jerry Brown and legislative leaders were concerned last year that their tax-increasing ballot measure (Proposition 30) was in trouble because the public didn’t trust that they would spend new dollars wisely. So they cobbled together a tepid pension-reform measure that mostly pares back excesses for new employees. That was it from the state.

Some localities, including San Diego and San Jose, passed pension reform measures last year. Bankruptcy forced Stockton to pull its far-above-average compensation levels down to the state average. But nothing fundamental has changed in California.

Now that the Legislative Analyst’s Office is predicting years of budget surpluses (provided the economy recovers and legislators control their spending), any hope of compensation reform from the Capitol is dim. Reform efforts have thrived only when it seemed as if the state was running out of cash.

On the hopeful front, San Jose Mayor Chuck Reed, a Democrat, is championing a 2014 statewide initiative that would allow cities to cut future benefits for current employees. Union activists are portraying that as an attempt to “eliminate” pensions, which clearly isn’t the case. But that measure could spark the next public-employee compensation battle. Reed recently argued that union-driven overpayment for police leads to higher crime because cities don’t have money left to hire additional officers.

Supporters of Reed’s effort are bolstered by a new Field Poll that reveals plummeting public support for labor unions, as a plurality (45 percent) of Californians say they do more harm than good. And despite the “no reform” approach in Sacramento, more troubling numbers trickle out — even from unlikely sources.

Treasurer Bill Lockyer, a union ally, told a small group in Thousand Oaks this month that the California State Teachers' Retirement System (CalSTRS) is in “crisis mode” and that “there will be a ratcheting down of retirement promises and commitments.” He did, however, defend the condition of the larger California Public Employees' Retirement System (CalPERS).

Sound or not, the list of those who receive pensions of $100,000 or more from CalPERS now tops 12,000 and is growing by about 40 percent each year. There’s plenty of accessible information, from the controller and elsewhere, suggesting that the public-employee compensation system is unsustainable and unfair. Union Watch reports that in struggling Desert Hot Springs the average city worker actually receives an all-included package of $144,000 a year and the average police and fire employee receives $164,000.

Increasingly, the public may be seeing that the problem isn’t a handful of officials who illegally gamed the system, but a system that — as Voltaire understood — allows a powerful minority to legally game the majority.

http://sierramadretattler.blogspot.com

23 comments:

  1. The Controller's report is only the tip of the iceberg....what is absent is the compensation being paid out to a myriad of other government officials such as school administrators. For example, local community college superintendents are earning between 300,000-500,000 per year along outlandish perks - perks like 9 weeks paid vacation/sick leave per year, housing allowances, car stipends, expense stipends, travel expenses and some are even given loans to purchase real estate. It really is time that we, the public, vote on a proposal to set compensation of these officials.

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  2. This is what happens when people don't pay attention to what local government is doing. A 10% UUT is highway robbery. That much of it is being used for things that in no way benefit us is criminal.

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  3. To a council person, not all the money comes from tax payers. Much of it, for them, comes from unions to support elections. The unions expect, demand, votes favoring employee pay and benefits. Unions get very rich and powerful from this.




    Next point. While city managers get healthy retirements, they are a small number of total emplyees. And, they never get what a corporate CEO would get. The large number of highly paid retirees are police and fire employees. There is a web site that I think PERS (Cal Public Emplyees Retirement System) puts up that lists, by city, who gets retirement checks greater than $100k per year. About 90% are police and fire retirees. I haven't looked at the site in a few years, so I don't remember how I found it. I just remember, my name is not on the list. 😣

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    1. Sierra Madre's pension and benefit spend increased from $900,000 to $2,000,000 from 2010 to 2012.

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    2. are the pension payouts itemized to list who was paid what?

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    3. Yep. Go to Friday's post and look for the links to the State Controller's website. It is all detailed there.

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  4. I believe the reason that the City is in a lawsuit with the couple on E Montecito is because they compared the City Manager and her administration to the City of Bell. I first read about their story on the Tattler. I did not understand why the City would go to such lengths to attack them. Now I do. It is all about the corruption that they pointed out. It's the pensions, more importantly, the City Manager's pension. Best way to shut someone up is to attack them. Our City attacks by lawsuits. It is the perfect way to distract the attention from the corruption. Our city manager is the classic carpet bagger. We will never know how bad we are being fleeced until an audit.
    Our City Manager will do whatever it takes not to have an audit...I wonder why that is?
    It is time to take our village back. The City Manager needs to go.
    Everything that comes out of her mouth has to be questioned. The lies and misinformation is the proof.

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    1. Sierra Madre is all caught up with their audits, thanks to MaryAnn who insisted they be done the first year she was in office. Prior to that, they were about 4 years behind. They have been done on time every year since then. They are done by an independent firm and the firm is changed from time to time to make sure everything is on the up and up. Please do not accuse the Staff or Elaine of fraud. Karen is as honest as the day is long, sometimes too honest in Elaine's eyes. As I said before, Elaine is inept, she makes up answers if she doesn't know the answers, but not corrupt. You can see the audits on line. The next audit report is due to come out in January.

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    2. I don't understand why people cannot understand this. Is there something that was added to the water? The city claimed employee compensation costs are down. A new site run by the State Controller shows that this is not true, and in the case of pensions and benefits that amount more than doubled to over two million dollars. Why is this so hard to understand?

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    3. 12:28 A different take
      I think it depends on how Elaine's pension was approved. How many added contributions and how often were they given to her, and by whom. A mystery.
      It not about an audit of the City's general fund. It is an audit of where the money's going. A check and balance.
      When Elaine states that short term employee costs are down, and in the same breath not mentioning the increase in pension liabilities is misdirection, mismanagement, and a lie.
      I agree with you Elaine is inept, but she runs the show and only let's us know what she wants us to know. Elaine controls the back door dealing with no transparency... that is corrupt for a government official.

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    4. This is all about pensions and benefits. And I do not think that Elaine could have gamed us as badly as she has without the cooperation of the Mayor and Mayor Pro Tem*. This is as bad as it gets.

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  5. why do we have a small city where it's leaders constantly lie to us?

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  6. Any city council person who is classified as "part Time" get just 50% less than what they have been giving away in the past.

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  7. There has to be a happy medium here. Look at what Congress and the upper government employees get in both pay and health compensation, then look at what corporate gets and how they move companies out of the US to save in paying employees salaries. This whole system has become lopsided and needs to be corrected. It is proven that people aren't good at saving for retirement and need a forced retirement plan. Problem is like Social Security, we the people have paid into it for years and the government spent that money elsewhere, now when it comes time to pay up it's the tax payers fault for needing the pension money, money that we paid into it all our lives, money they mismanaged. There are many problems but lets not attack pensions and social security, lets attack the problem. The problem is poor job / work performance. Government employees should be working for the tax payers not the elected officials who have proven to be corrupt in many cases. Not like corporate, government can't move to another country to not pay it's workers a fair salary and pension. It's time to take care of mismanagement of our tax money. Not paying good employees a fair wage is wrong, not firing an employee who is not performing is wrong. Let's look at the real problem here.

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  8. Question, was our city manager hired by Bart Doyle and his group? Question, how many of the problems that the city is experiencing are caused by this group. The city manager may just be doing what she is told to do, that lady may be under more pressure than we know. Sure would be nice to know the truth here.

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    1. Doyle is directly responsible for the 2003 water bonds that have cost this city millions. The interest only payments call is his responsibility. Yet this has never once been discussed by our city government. Instead we are told a lot of BS about pipes and covenants. And who is going to have to pay for this? You are. Every time you pay your water bill.

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    2. Elaine was way later than Doyle's visible participation. I heard there was a miserable collection of candidates for the job, and she was the best of bad choices.

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    3. Doyle's involvement at city hall continues to this day. From Buchanan, to Joffe, to Mosca, to Moran, to Walsh, Bart has been the idiot whisperer all along. This water rate hike is designed to take care of his 2003 water bond blunder. He has had all the help he has needed from this long line of helpful idiots. The price to you? $9 million dollars. That is a lot of yellow water.

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  9. Some interesting information here today, too bad it is Sunday. Most folks out and about, missed some important information from a knowledgeable group here.
    Good column today, Crawford.

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    1. I agree 6:02 - it's a great column. Don't know what to say, except that the proof is there for anyone to see, should they want to.

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  10. It has just occurred to me - the city will have to engage in a PR push to bring homeless people to Sierra Madre when the shelter is built. We don;t have any homeless people, though we have a couple of eccentrics who live in various non-traditional and non-ownership ways. If the shelter is built for 10 people, does that mean someone like our city manager will have to go out and solicit occupants for it? I thought staff time was valuable, and was supposed to be used for the good of the residents.

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    1. Will this place become their official address? Will they be able to register to vote?

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