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San Luis Obispo City Council battling over binding arbitration

February 16, 2011

By KAREN VELIE

After a contentious debate, San Luis Obispo City Council voted 3-2 Tuesday night to call for a special council meeting next week to discuss repealing or revising binding arbitration and pensions for public safety employees.

Next Tuesday, the council is slated to vote on whether or not to allow the public another chance to vote on binding arbitration, a mandate that resulted in police officers receiving a 30 percent raise in 2008.

“My strong belief is that taxpayers think we need to get hold of our budget and 80 percent of our operating expenses go toward salary and benefits,” said councilman Andrew Carter.  “The citizens are becoming more aware that city employees have an above average income than that of the public or the private sector, and their benefits are off the charts.”

Binding arbitration, voted in by the public in 2000, entitles public safety workers’ unions to bring in a third party arbitrator if labor talks are at an impasse. The city and the unions are then required to abide by the arbitrator’s decision.

“If this gets put on the ballot, it is a choice for the taxpayers – if you want your council to have control, we can’t have binding arbitration,” Carter said.

Last night, Carter asked that the agenda for a proposed March 1 council meeting include a discussion of binding arbitration and employee pensions and the possibility of placing both issues up for a city-wide election as early as June

Both city manager Katie Lichtig and city attorney Christine Dietrick concurred that the issue should be heard at a special meeting on February 22 at 7 p.m. in order to provide staff the time needed to prepare the ballot measure along with a title and summary for the proposed June election.

Council members Andrew Carter, Dan Carpenter and Kathy Smith voted in favor of having a special meeting to allow the public to discuss placing binding arbitration up for a vote of the people.

Mayor Jan Howell Marx and councilman John Ashbaugh said they were opposed to revisiting the issue because prior discussions have been very contentious and that the people had voted 57 to 42 in favor of binding arbitration in 2000.

Council members are asking the public to have their voices heard through either email or during public comment at the council meeting scheduled for February 22 at 7 p.m.


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I recommend the following site that I found today that John Ashbaugh wrote back in 2008 and at the end is a letter of recommendation by the City Attorney. For sure he and Jan Marx (an attorney in her own right) will not vote to put this on a ballot for the people…


http://www.johnashbaugh.net/Assets/Documents/Bind_Arb.pdf


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I think it’s funny that you are all bowing down to Kevin Rice yet he is receiving ALL the benefits you are complaining about.


Kevin, why don’t you forgo your penson and donate all your overtime to these poor people???


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slojo,


(1) Suddenly, you are now asserting that public safety employees should receive zero pension? An odd flip-flop, or more likely, just flip (and irrational).


(2) Why have you ignored my previous query? I will restate: I’D REALLY LIKE TO HEAR a true-blue labor Democrat tell us how the evil Republicans are blocking our right to vote on Gov. Brown’s tax “extensions” which were resoundingly voted down by 67% in 2009… then turn around and tell us how the city council should deny us a vote on binding arbitration. Please explain that to me.


(3) I find it more and more difficult to believe you are not a local public safety union employee, despite your claim to the contrary, given the veracity and specificity of your comments.


Best.


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Kevin,


I am not a public safety employee. Believe it.


I did not “suddenly say” public safety employees should receive zero pension. I was simply stating that since you are receiving the pension you are fighting against, maybe you should give it up.


I am not a “true blue labor democrat”….you will be shocked to know that I am registered Republican. I just happen to agree with the safety employees on this issue.


My opinion is, again, if the citizens want binding arbitration repealled, get the signatures required to put it on the ballot. The council did not originally place binding arbitration on the ballot 10 years ago (or whenever it was), it came from the PEOPLE. If you have all the support you think you do, you should have nothing to worry about.


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Then we solely disagree on whether the council should lead the city, or a single citizen should be burdened with collecting thousands of signatures. Second, if there is not support from the public to pass a ballot measure, then you should have nothing to worry about either.


Best wishes.


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I doubt it would be a “single citizen” leading the charge.


But yep, we do disagree. See ya Tuesday.


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Somebody tell me why it’s ok that Katie Lichtig make 30K more than the previous City Manager. Does that extra 30K come out of the “emergency funds”? WTF?


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It’s not okay. We’re with you. Remember that Marx/Ashbaugh voted yes on her contract.


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slojo, et al., who believe a ballot measure should only be brought by the people (not the council):


I don’t expect to convert anyone, but here are the proponent arguments:


(1) Binding arbitration was brought eleven years ago, in a very different climate. To sustain the benefits that Gov. Davis signed (in SB 400), the DOW would have to be at 25,000 today.

(2) BA was brought by an organized and monied special interest, not a grass roots citizen movement. To expect or require a citizen to collect 6,000 signatures on their own with their own money is counter to what leadership is for. The council are elected to serve citizens and lead.

(3) BA was voted in by 57 percent, which is nothing mind-blowing.

(4) The one-time invocation of BA was very unexpectedly costly; mainly due to the largely unknown mandate that forces the arbitrator to completely take one side. No reasonable middle ground can be chosen.

(5) Even though it has only been utilized once, it is not reality to say it costs nothing when it is not used. There is always something called the “risk of litigation” and BA is an specter that hangs over every negotiation. Even when it is not invoked, there are certainly concessions made to avoid the potential risk of litigation that would occur if BA were invoked again.


AND… I’D REALLY LIKE TO HEAR a true-blue labor Democrat tell us how the evil Republicans are blocking our right to vote on Gov. Brown’s tax “extensions” which were resoundingly voted down by 67% in 2009… then turn around and tell us how the city council should deny us a vote on binding arbitration. Please explain that to me.


FINALLY: We are very lucky to have a truly professional cadre of public safety servants in the city. I do not think for a moment that public sentiment would allow the council to decimate our services. But I do think the council (and the People) should have complete control over contracts. It is utterly atrocious that the council contracted Lichtig at her present salary level, and I think we deserve better than that. The council certainly needs improvement, and I feel a correction will come either by vote or by pure balance sheet.


Best.


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Thank you, Kevin…


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SLO is a world away from Camden, NJ. What the two cities do share are the staggering costs associated with bloated defined-benefit pension plans which are financial time bombs. It’s already blown-up Camden. SLO and thousands of others places are next unless they do something:


http://www.usatoday.com/news/nation/2011-02-14-camden-cops_N.htm


How about we start by reducing the public safety employee headcount in SLO by a full 50%? We can replace some of them with privately contracted security and fire individuals, others with volunteers. The rest we just do without…


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“Question: How many posting here are public employees and how many think the questions about public pensions is off base?”


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Really Crusader? Reduce staffing by 50% and use volunteers??? Do you have ANY idea what that does to the level of service?


Do you know the difference between a volunteer and a professional?


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I didn’t say use ALL volunteers. I am going to take a wild guess and say that both the PD and the FD are OVERSTAFFED right now. Yeah, I know, sing me a song about how we need more of both. I also know that privately contracted armed security is a great deal cheaper than sworn cops. Make use in them in some cases in place of cops. Further it would see that the use of part time and volunteer firefighters could be used to great benefit.


I cannot drive around town without seeing 4-5 patrol cars or F1 parked over on Marsh next to Jamba Juice. Sacrosanct or not, we need to look hard at cutting public safety.


PS: I know that neither cops nor firefighters are “professionals.” If they were their jobs would require advanced degrees and licensing — licensing they didn’t pick up on the job. They would also be EXEMPT employees if they were truly professionals. Perhaps if they expect to be paid as “professionals” we can also demand they work OT without extra compensation as exempt employees?


You can’t have your cake and eat it too — “professional” or not.


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Crusader…….that’s rediculous. You need to educate yourself a bit more on what it takes to be a professional firefighter (not a volunteer).


Start here: http://en.wikipedia.org/wiki/Professional


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A “professional” firefighter? No such thing. But even if there was such a thing (as their union claims of course) perhaps we don’t need “professional” firefighters. Or perhaps we only need 20% of our firefighters to be “professional.”


When a “professional firefighter” requires the same level of education as actual professional — be they CPAs, registered civil engineers, lawyers, doctors, etc. I will view them as “professionals” but not until.


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Crusader, are you an Ostrich?


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Crusader……I’m done with you. You are completely ignorant.


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You can run, but things ARE going to change!


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Crusader, I am a licensed Civil Engineer. I am with you on this one. It is a slap in the face for people to call themselves “Professional” Firefighters when it took me 4 years at Cal Poly studying civil engineering with a concentration in Structural Engineering, passing the Engineer in training exam (8 hour test), then 2 years of work experience, and then the Professional Engineers Exam (2 days – 16 hours, covering civil engineering, seismic design, and surveying) just to earn the title Professional Engineer.


You know whats even worse, I cant afford to live in San Luis Obispo because I dont get paid enough but I know several fireman who can. Whats wrong with this picture? Most people dont even know what I do. “Whats a civil engineer do?” Most people ask. Well wake up and look around you everything you see from the moment you get up to bedtime, a civil designed. Homes, streets, sanitation, clean water, bridges, etc.


Sorry for the rant, its so frustrating to watch a glorified frat house of “Professionals” get paid more than you and have had to work half as hard to get where they are.


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How many true “professionals” sue their employers to pay them extra for the time it take them to dress in the morning?


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Jan Marx and John Ashbaugh need to realize that they represent all citizens of SLO — not just SLO public safety employees. They had better come to this realization sooner rather than later.


There are tough economic times. If they feel they can cater to public safety employees to the detriment of all SLO citizens then they are dead wrong. The public safety employees unions might have put them in office, but it will be righteous citizens who will ensure their stay is short…


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Crusader…….they are not catering to public safety. Binding arbitration was voted in by the citizens. If the citizens want to change that, let them. Just becuase some citizens may think the council should put it on the ballot doesn’t make it the right thing to do. What is wrong with you people?


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What is this… “Just becuase some citizens may think the council should put it on the ballot doesn’t make it the right thing to do. What is wrong with you people?”. If the citizens/taxpayers of San Luis Obispo (your employer) want to reevaluate a decision made 11 years ago, who are you to say that’s wrong. Let the citizens get educated and informed (not by public safety unions) and then let the citzens decide. Hopefully, the City and Public Safety Unions will jointly hold forums and debates (there is a difference) for the citizens to become hear each side viewspoints and get educated on Binding Arbitration.


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If the citizens of SLO (NOT my employer!!!!) want to reevaluate a decision made 11 years ago, that is fine. I am not saying it’s wrong. I am saying it’s wrong for the Council to put it on the ballot. Let the citizens put it on the ballot.


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Pardon me, but your perception of who the Council is, who they represent, who elects them to office, who they are accountable is first and foremost the very taxpapyers of the City of San Luis Obispo and no one else.


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Then why ever put anything on a ballot? Just let the 5 council members make all the decisions.


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You guys know that even if binding arbitration is removed, it will not change the PD or the FD’s salaries……


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Then why all the opposition???


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Because it will affect their future negotiations because they feel that that 20% City Reserve should be fair game for future salaries, bene’s and pensions. That don’t understand the business concept of having money set aside for emergencies to meet the City’s obligations. They are required to have that reserve. As soon as this economy recovers (big assumption) they will want all they can get to “catch up for all these years with no increases”. Go Wisconsin!!!


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Question: How many posting here are public employess and have an personal agenda in regards to pension reform?

It would be interesting to see a list of those who think their salaries, pensions and OT are not out of line with the private sector. And how they defend against allegations of gouging…


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I am not a public safety employee and am not in a union.

How come about 7 years ago, the private sector was not arguing that the public safety employees be more in line with them as far as wages? Public sector was rolling in it a while back but it’s funny how you only hear from them when they are not making as much. They still ake more than public by the way.


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I just don’t understand your thinking, so please help me. The logic you use about no one complained when private sector and public employees were in line. Then the economy goes to S*** and the private sector takes a hit (example: I lost all my vacation/sick leave, pay my insurance (which was reduced to a very poor policy), no 401 employer contributions, reduced to four holidays annually and a 10% pay cut. But, I am not complaining because I was one of the lucky ones to keep my job (several friends not so lucky). When hard times come, private sector does not have unions, contracts, or long term commitments to protect them. We deal with the reality of the marketplace and are realistic to know that this is the way it has to be because of the economy. As I look at the contracts the City has online for their employees, I really think they have no reason to complain and they too should be dealing with the economy situation – no guarantees, just a job.


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SLORider…..you know why. Because binding arbitration makes it fair. It keeps the city from screwing the employees and the employees from screwing the city.

You act like it is used all the time when it’s not. It simply makes both parties negotiate in good faith. You know it.


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When Binding Arbitration was put on the ballot and approved Eleven Years Ago, the SLOPD pensions were based on 2.7% and retirement at 55. Salaries were thought to be low at the time, but there was less transparency then than now- nobody really knew or talked about how much the average officer was being paid. The belief in SLO was that the members of the PD were underpaid, and that the city council was not working with them on a fair wage. The economy was just ramping up, the city was flush with money, and as mentioned several times earlier, there was a great misunderstanding about what Binding Arbitration was or would do.


When the issue went to binding arbitration in 2008, the city had already experienced several years of paying 3% at 50 to retiring SLOPD officers, and taxpayers were better able to understand the how and why this recent Public Safety pension windfall could not be sustained. The city’s offer was more than fair, given the crumbling economy and what other municipalities, locally and throughout the state, were paying their officers. The police officer’s union proposal was way out of line. The city and citizens had every reason to believe that the result of arbitration would be something reasonable and fair to both parties. However, the increase proposed for the PD by the city, led in negotiations by Ken Hampian, was well below the percentage increase that (then city manager) Hampian had recently suggested and received for himself, to bump up his pay just before retiring. Hampian’s pay increase was clearly taken into consideration when determining which package would be approved, and the result was what we have today- SLO police officers comprising a large percentage of the highest paid city employees, being paid more than all but the highest paid of county residents, and being paid more than police officers in most other cities throughout the county, state and nation.


The current pay scale for SLOPD, SLO Fire, and other SLO employees, especially our city manager, are way out of line with reality and the rest of the world. If they were reasonable, then this would not be the hot issue that it is today, and they would not take up such a disproportionate share of the city’s annual budget. However, the salary, benefits, work hours and pensions are far out of line with private sector jobs in the area, or jobs available in the public sector elsewhere. Local taxpayers who are lucky enough to be employed in the private sector, along with those who are underemployed or unemployed, want to see this brought in line with the reality that the rest of us face.


It’s time to put the power over city paid salaries back with the taxpayer-elected city council. If voters do not believe that the city council is treating the PD (or any city employees) fairly, then the voters can vote in a new city council. If the members of the PD, or any city employees, feel that they can get a better deal somewhere else, then can give up their jobs here and go work there.


Ms. Marx and Mr. Ashbaugh: Putting Binding Arbitration back on the ballot, with the hindsight that comes with Eleven Years of experience, makes sense today. We tried it. It doesn’t work.


Mr. Carpenter, Mr. Carter, Ms. Smith: Thank you for recognizing the need and having the backbone to bring this to a public discussion.


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“…the city had already experienced several years of paying 3% at 50 to retiring SLOPD officers,…” is misleading at best. Regardless, it’s factually incorrect.


Fact is, the City doesn’t pay retirees salaries. The City contracts with CalPERS to administer the retirement benefits for the City. The City does pay into CalPERS (for some employees) as part of a negotiated agreement and those payments are invested by CalPERS. The retirees are paid from a trust fund. 75% of pension payments from that fund come from returns on the investments. PERS members (the employees) also pay into the fund to pay for benefits and administrative expenses.


For the SLO City employees represented by the POA – the cops, dispatchers, records clerks and other line-level staff – the City pays nothing into PERS! The employees pay either 8 or 9% (depending on the job) of their own salary toward their own retirement benefits.


The City and the POA negotiated the ‘3% at 50’ safety formula and it went into effect in February, 2003.


Just facts – no opinion.


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You left out one huge detail.


When the fund falls short as it currently is, the tax payers make up the difference. And that 8 or 9% comes from the tax payer to began with. 3% at 50 is way too costly and unsustainable. A person who starts as a cop or firefighter at age 21 and retires at 50 gets a minimum 87% Pension For Life.


Grandpa died an average of 5 years after retirement at 65. Someone born 50 years ago in 1961 is expected to live to an average age of 78.4. Every year we live longer and longer. It’s a good thing, but very expensive when someone else is paying for it!


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BINGO.


Pension liabilities is what ultimately killed GM. All Obama did was dissolve the stockholders’ ownership and give most of the company to the workers. We can’t do that with the city. We need to act now.


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Hog…you’re quoting outdated “historical” payout figures…..they haven’t been paying out 75% of benefits based upon investments lately, check your “Facts”.Here’s the results of an interesting study:


” The issue of how to properly report long-term public pension debt moved into the spotlight in April. Stanford graduate students used a 4.1 percent risk-free government bond rate to calculate the debt of the three state pension funds.


The Stanford students said CalPERS, CalSTRS and UC Retirement have a combined shortfall of $500 billion, nearly 10 times greater than the $55 billion unfunded liability reported by the three retirement systems.”


Now there’s an interesting fact, under-reporting unfunded liability…..Still don’t see a problem?


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Well no, I’m quoting CalPERS today. The Stanford study uses a ‘if this, then that’ methodology. It assumes investment in only low-interest bonds to produce higher liabilities. According to PERS, they’ve earned an average annual investment return of 7.9 percent for the last 20 years, and have earned two straight years of double digit returns. That’s from PERS – I can’t take credit for it. :) It seems there would be significantly different conclusions reached based on the 4.1% return used in the Stanford study and the 7.9% earned by PERS.


There’s a study worth looking at by Lav and McNichol of the Center on Budget and Policy Priorities dated January 20, 2011. It suggests that different solutions are appropriate for the short-term, current fiscal challenges and for the longer-term issues like ‘bond indebtedness, pension obligations and retiree health insurance’.


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Right on Hog!. Have you read the study.?…..I have….here’s a few direct quotes..


• “ States and localities devote an average of 3.8 percent of their operating budgets to pension funding. In most states, a modest increase in funding and/or sensible changes to pension eligibility and benefits should be sufficient to remedy underfunding. (The $700 billion figure implies an increase on average from 3.8 percent of budgets to 5 percent of budgets, if no other changes are made to reduce pension costs. However, in some states that have grossly underfunded their pensions in past years and/or granted retroactive benefits without funding them — such as Illinois, New Jersey, and Pennsylvania (and to a somewhat lesser extent Colorado, Kentucky, Kansas, and California) — additional measures are very likely to be necessary.

• The severity and consequences of these operating deficits should not be minimized. Throughout the country, residents are losing services on which they depend — sometimes on which their very life depends, as in the refusal of Arizona’s Medicaid program to fund organ transplants. But these deficits are cyclical and temporary; they will diminish as the economy improves. They should not be confused with the longer-term structural budget problems that a number of states have.

• Some states — such as Illinois, New Jersey, and Pennsylvania (and to a somewhat lesser extent Colorado, Kentucky, Kansas, and California) — have skipped or reduced deposits to trust funds and/or expanded future pension benefits without providing the commensurate funding. Over time, to reach adequate funding, these states may have to institute changes more difficult than the potential solutions discussed below. These states, however, are not representative of states in general

• States that have significantly underfunded their pensions, such as California, Illinois, and New Jersey, would require higher contributions (7.3 percent, 8.7 percent, and 7.9 percent of their respective budgets), even using the standard 8 percent discount rate. These states will have to consider more significant changes to their pension plans to bring their required contributions down to a more reasonable level.

• Public-sector employees generally receive lower wages than their private-sector counterparts, and employee benefits such as pensions make up only part of the difference. If pensions (and/or retiree health benefits, discussed below) are made less generous, current wages may have to increase so that the public sector can continue to attract high-quality employees. Given the difficulty that some jurisdictions have in funding deferred compensation, this may be a reasonable trade-off.


Here’s the deal Hog, the study seeks to draw conclusions based upone averages, but goes out of it’s way to identify states like California as being way off the mark, and needing much more drastic reform to bring things into line. This “non-profit” study group, by the way, is a left wing think tank…..so this is akin to the NRA acknowledging that guns are dangerous……..not much support there buddy.!!


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I think your information is not totally correct, The City for some of its employees pays for both the City’s portion and the employee portion of the retirement into PERS. While the POA maybe paying their 8-9% the City is paying matching funds. What the City (State, etc) need to do is pay their portion and have the employees pay their share into PERS. It is similiar to Social Security, whereby the Employee pays their portion and the Employer pays their portion.


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This was an excellent informative article. I really think that for people to understand the true facts, you should go to the City’s Website (www.slocity.org/humanresources/benefits) , Human Resources Department, and read EMPLOYEE BENEFITS and EMPLOYEE CONTRACTS. The City has been very generous to its employees. This will be an eye opener for the general public.


As an example of what the employees are getting: The City has a JOB OPENING for a Finance Director (vacant for over a year) and here are the bene’s being advertised in the recruitment: The salary range for the Director of Finance/ Information Technology tops at $154,544 annually, Health Insurance ($1,255 monthly is an additional $15,000 annually), Long Term Disability and Life Insurance paid by the City (up to a $100,000 paid policy – the Fire Chief’s widow got this), Retirement: PERS 2.7% @ 55 at the “single highest year” formula, Supplemental Retirement Plan 401(the City contributes 2% of employee’s salary to a supplemental retirement plan (2% of $154,544 is an additional $3100 annually), Deferred Compensation Plan, Car Allowance ($236 per month is an additional $2850 annually), Vacation: 15 days/year increasing to20 days after 20 years, Administrative Leave: 80 hours per year, Holidays: 13 days per year, Trip Reduction Incentive Program (up to 16 hours per year off for using alternative transportation althought this person gets $236 car allowance), 9, 80 Flex Schedule which is working your sceduled 40 hour work weeks in a 9 days/ 80 day work period (provides an additional 26 days off a year), Tuition Reimbursement: Up to $1,500/year for job-related courses and time allownance. All this for 5 years experience and a Bachelor’s Degree although they would prefer a Master’s.


With the exception of the 401, car allowance, and tuition which are management benefits, all these benefits are provided to all City employees.


Does anyone think the City has not negotiated in good faith with all their employees? Go to the City’s website and read the Police, Fire, General unit contracts for yourself. Be informed!


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Birdie,

That is correct, for a Director of a department. Seems that is the way the city takes care of it’s department heads. But how about the rest of the “Worker Bees”? Check out the benefits for the line personnel.


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