EditorialWith school district and city budget shortfalls in the millions of dollars all around, we found it interesting that Palo Alto, which is experiencing its own shortfall of $6.2 million and climbing, just hired a new assistant city manager at a starting salary of $195,000. Pamela Antil is moving to the Peninsula from Novi, Mich., where she no doubt earned less, and will report to City Manager James Keene, who was hired two years ago at a starting salary of $240,000 a year, plus a $600 monthly transportation allowance and a housing package. Those seem like big dollars, even for Palo Alto, which helps explain why 153 qualified individuals applied for Antil's job. Still, Antil's starting salary on a staff that includes several other assistants to City Manager Keene and in a city that is facing a $6-million budget deficit seems excessive at a time when many in the private sector, who still have jobs, have taken substantial pay cuts.
With city salaries frozen, it's time for pension reform
By comparison, Pleasanton City Manager Nelson Fialho earns $197,000, but hasn't had an increase since 2007 because of a hiring and management salary freeze he imposed when tax revenues here started heading south. The new City Attorney Jonathan Lowell earns $1,000 a year less. He was hired to succeed retiring City Attorney Michael Roush who earned $177,000. City managers in Dublin and Livermore earn more than Fialho but nowhere near the $325,000 annual salary that San Ramon pays to its city manager, Herb Moniz.
On this side of the Bay, elected officials and city managers are working with their cities' financial staffs to curb spending and block pay increases. Pleasanton, besides ordering a hiring and management pay freeze, has also stopped all expenditures that can wait until the economy improves. Building inspectors and others now carpool to job sites when they can. Livermore has laid off 11 municipal workers and Dublin has also put job and salary freezes in place.
Shaken not only by their own city budget deficits but also by rising pension costs, city managers in Alameda and Contra Costa counties are working on solutions. Through their organizations -- the Alameda County City Managers Association, which Fialho now heads, and the Contra Costa County Public Managers Association -- they've formed a joint working group on pension reform. The working group is rooted in three man concerns:
* The general state of the economy has sparked a public outcry over public pensions that may lead to overreaching and inappropriate pension reform by statewide initiative;
* The majority of current public pension programs under the California Public Employee Retirement System (CalPERS) and most other public retirement systems are not financially sustainable;
* It is important for cities in the same geographic region to work toward a uniform set of goals for pension reform so as to avoid an inherent competitive disadvantage in hiring qualified staff.
Although pension programs have worked well in the past, changes made by the state legislature have made them financially unsustainable. The city managers, therefore, are recommending a new tier pension offering that could be implemented through upcoming bargaining processes for union employees. Pleasanton already has curbed healthcare benefits for employees hired after Jan. 1, which includes cutting healthcare benefits entirely once the retired employee reaches age 65 and is eligible to receive Medicare benefits. In these times, it is very possible that employees also will be asked to contribute to their medical insurance premiums, which the private sector long ago required.
In a white paper prepared by the two county city manager associations, the managers state that the goal of any new plan for pension reform should be to provide current and future employees with an appropriate pension upon retirement, but also one that is fiscal sustainable for employers and taxpayers. We agree. It's also important, the city managers insist, that there be a regional pension standard based on sound actuarial work. Because of the global recession, local revenues are significantly depressed. Property taxes and sales taxes are not expected to recover to their previous levels for some time -- perhaps years. With cities wrestling with declining revenue and mounting budget deficits, this is the time to also wrestle with pension plans. We support Fialho and others (including our elected officials, who are willing to control these costs.