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Fuzzy math should not obscure real progress by SLO City

December 14, 2011

John Ashbaugh

OPINION By JOHN B. ASHBAUGH, San Luis Obispo City Councilman

Here’s a riddle for you: When is a “0” not a zero?

Answer: When it’s being deployed by a political activist with an axe to grind.

I refer, of course, to “SLO Salary Cuts: $0” by Kevin P. Rice, elsewhere on CCN.  In it, Kevin disputes the reality of the compensation reductions that will result from a new two-year agreement with our City Manager, City Attorney, and 71 other employees who are unrepresented by a union. Kevin’s conclusion is based entirely on “fuzzy math,” replete with errors of judgment, flawed reasoning, and outright distortions.

I could refute each of Kevin’s points in sequence, but instead I want to “take the high road.” I invite you to read for yourself the Council staff report for our December 6 meeting, where you can find for yourself two fundamental facts:

•    This agreement results in substantial savings for the City – $807,000 per year, exceeding by almost $50,000 the target set by the Council when we adopted our 2011-13 Financial Plan.

•    The City of San Luis Obispo has made significant progress with this contract in implementing a smooth “glide path” to fiscal sustainability. We hope to obtain similar agreements from our five employee unions, and this first agreement with our managers gives us reason for cautious optimism.

The staff report contains all you need to know to realize that Kevin’s argument is completely bogus. But you may need to “read between the lines” to realize fully the critical leadership role played by our City Manager, and by all our Department heads, in recommending this new agreement to our Council.

The fact is that ALL employees covered by this agreement will “feel the pinch” of a 7.2 percent reduction in their compensation (and yes, in the case of our City Manager, that reduction is fully 12 percent). They deserve our thanks and our praise: This reduction in our managers’ compensation exceeds that of any other city in this county, and most other cities in California.

There are, of course, those who argue that “It’s not enough.” There are those, like Mr. Rice, who would have you believe that these cuts are fictional, or exaggerated; it’s all too easy to obfuscate this issue by delineating fine rhetorical distinctions between “salaries” and “total compensation.” Let me assure you: These cuts are absolutely real, and (to repeat) they go well beyond the target that our Council had set when we adopted the Financial Plan in June.

I’m optimistic about our fiscal and economic future in San Luis Obispo, but I’m also a realist when it comes to employee compensation: We require professional services in managing a $100 million municipal corporation with over 300 employees, and we must pay competitive salaries to obtain those services. Our Council unanimously chose to hire BOTH our City Manager AND our City Attorney in my first year in office. I continue to believe that our City is very fortunate to have the services of these two individuals.

In these times of rampant conspiracy theorists and paranoid fear-mongers, it is too easy to convince your readers that “corruption” is rampant in City Hall, that Council members like myself are “on the take,” or at best that we are willfully ignorant of fiscal realities facing our community.

Here’s my “take” on this: There really are no dark conspiracies at City Hall; we listen to everyone who has a complaint or a suggestion, and we make a serious attempt to respond. We do our level best to comply with California’s “open meeting” law (the Ralph M. Brown Act). We couldn’t take bribes even if we tried; we have a very vigilant City Attorney and City Clerk, and people like Karen Velie who actually read our Financial Disclosure forms required by the California Fair Political Practices Act.

Finally, all five of us diligently read voluminous staff reports on our city’s fiscal condition, and we listen carefully to citizen and staff input. We disagree on many issues, and often interpret data differently, but we do so not out of ignorance. We differ on matters of perspective, ideology, and experience.

We also have an excellent staff, in my opinion. I do my best to provide them with the respect they deserve, and I value their services. For their part, our employees also value their jobs, and they give 100 percent, and often more, because they also care deeply about the community they serve.

If you want accurate information about any issues confronting our City, please do not hesitate to contact me. My cell phone is 550-7713; my email is jashbaug@slocity.org. Sure, I’m just another political activist with my own axe to grind, but I’m also an elected official with a record that I’m ready to talk about any time, in any forum, with any constituent. Call me.


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“We require professional services in managing a $100 million municipal corporation with over 300 employees, and we must pay competitive salaries to obtain those services. Our Council unanimously chose to hire BOTH our City Manager AND our City Attorney in my first year in office.”

_____________________


Ok, then for starters how is it that this corporation can manage without its top employee for 2 months every year? Two months! I read it over and over and I can’t believe that Lichtig gets gets 2 months off every single year. Is she a school teacher? Does the City shut down for those 2 months? Since when do government employees get 2 months paid vacation every year? Are you trying to adopt the Greece model of government?


What a perfect example of a bloated bureaucracy when the leader can leave for 2 months a year while the corporation runs itself and what a perfect example off how out of touch the work ethic in government management still is compared to the work ethic in private sector management.


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In reality she probably does not actually take the whole two months. Like most public workers they use a couple weeks and bank the rest so when they retire they can cash out thousands of unused hours of vacation, usually at a higher rate than when they earned the hours.


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Instead of Looking at it from the standpoint of 2 months vacation time, why don’t you look at it from how many hours the City Manager puts in per year. I know that the City Manager and City Attorney on City Council meeting days are at City Hall at 8:30 am and work until past 11:00 pm on some Council meeting nights with no overtime pay. When is the last time you worked a 16 hour day without overtime?


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Bigger question: When is the last time I was compensated $320,000 a year?


First off, your math is questionable. Even if they worked 8:30am to 11pm. that’s only a 14.5 hour day, not a 16 hour day. Furthermore, that assumes they worked the entire time and didn’t even take time off even to eat lunch (very unlikely), so at best even if your start and stop time is true, that’s more like a 12 hour day.


Second, that is only City Council meeting days, not every day. Many people work jobs that require 50-60 hour weeks 5 days a week, and others that require four 10 hour days, or three 12 hour days. Few of those jobs pay $221k.


In return for getting $320,000 in compensation, I think most SLO residents would *gladly* work a few 12 hour days.


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Bigger question: Are you qualified and have the experience to be a CEO for a 100 million corporation and over 300 employees. All I am trying to say is…..is the City Manager’s compensation really out of whack when it is compared to other CEO’s with similar budget and employees? That’s the question not whehter you or SLO residents would like to paid 320K.


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Our city manager is paid significantly more than most.


Yet, the point of my opinion was not about pay; it was about misrepresenting the amount of the concession made. It was about the city manager lauding her own offer on TV prior to the vote of the council. If SLO wasn’t sinking in red ink maybe $320K would be more justifiable.


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And what exactly would those qualifications be? Maybe the whole problem is with people who assume it takes some genius talent to run things, that such genius is in short supply, and that we need to pony up a whole lot of money to get that genius. Maybe we don’t need a manager at all, but could let a “council of department heads” function as a leader. Maybe we don’t need department heads. Let our $900 per month mayor run the show. Maybe lots of other alternatives to hiring somebody for almost as much as we pay the US President just to keep city hall operating. There are lots of good, smart people out there who don’t demand that kind of money.


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That depends on the performance of the CEO. If the organization’s is on a downhill course under the CEO’s watch then, no, the CEO doesn’t deserve to have $320,000 in compensation–or ANY compensation.


Instead, they should be drop-kicked out the door like yesterday’s compost, without any kind of severance package or benefits.


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Yesterday. Thanks for asking.


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On the other hand, the CM can leave for the day at 10:00 AM.


MBCA, you’re not helping your own argument here.


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Much as I agree that there are adjustments of executive salaries and benefits, Mr. Rice has identified multiple ways that the City’s staff has exaggerated the “reductions” in management compensation. The public will accept an explanation, even if it accurately amounting to no more than a limitation on raises. But the attempt to spin high management pay packages into “cuts” undermines the City’s efforts to reduce the cost of the public services the rank and file City employees actually produce. Obviously failing to actually cut management pay leaves fewer dollars to keep rank and file employees providing public services.


The real question that the Council members should be asking is how the City can justify paying the public’s city management personnel more than five times what the median city family tax payers earn. Shouldn’t public service (including management) have parity with the compensation of the average citizen being served?

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Please Mr. A….let’s call a spade a spade….we’re paying the City Manager and the current Police Chief too much…..we could have found someone as good or not better than them for far less money. This city, along with many others in this state have been blindsided by thinking that top salaries means the best managers. Until and unless we start being fiscally responsible we’re doomed to repeat the same mistakes. Car/housing allowances, etc., should be done away with in these times. Let’s start acting like the city is a profit-relying business and stop spending money like it grows on trees. And good luck in thinking that the citizens are going to approve another tax hike. Spending money on downtown sidewalks is rediculous….start that process over again and give the job to the Public Works Department.


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Sorry Mr. Ashbaugh, I believe Mr. Rice is correct. A pay cut is a pay cut; everything else is deception. Beyond that, I take issue with a city manager’s contract with such incredibly high pay and includes eight weeks of time off. What are you all thinking? You could attract plenty of qualified applicants at 60% of the current city managers pay and compensation package. Why would anyone who makes $220K also be offered a car allowance? Something really strange is going on; it’s time to do something different.


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In answer to your “what are you all thinking” question…


Perhaps the City Council is thinking they could get a lot more of their pet projects accomplished if they were without City Manager oversight for two months out of the year.


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Ashbaugh:

“… it’s all too easy to obfuscate this issue by delineatting fine rhetorical distinctions between “salaries” and “total compensation.”


As Kevin pointed out in his “rant” there is a real difference betwixt the two. Salaries are used to determine the rest of the compensation, including retirement, so if the base salary is not being reduced, then reductions in the other compensation elements are just temporary, or stop-gap measures, and do nothing toward bringing (what most people feel are excessive) city payroll expenses for management back down to reality in the long-term. Claiming, as Mr. Ashbaugh did in his Congalton interview, that the City Manager took a “pay cut” to work for SLO is true only in the sense of Ms. Lichtig’s Beverly Hills bank balance, should have been totally irrelevant to the City’s decision to hire her and the salary negotiations. “Fuzzy Math” is not a habit of “lazy” bloggers, but of City Fathers as well.


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Andrew Carter, who wants to whip rank and file city employee pay, when asked about Lichtig said she’s worth every penny. It’s really just class warfare.


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whatisup and bobfromslo raise some good questions that I don’t need to repeat. Mr. Ashbaugh you have some ‘splainin’ to do. As whatisup said, you go on and on paragraph after paragraph but you couldn’t go over Rice’s editorial point by point? Hmm :(


Was that you on Congelton’s show the other day explaining the mucho $$ being spent to fix up a small part of a SLO sidewalk. I didn’t feel that you did a good job at all justifying that waste of funds on that either.


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John: Isn’t it true that Katie Lichtig has a contract regarding her employment with the city that specifically states that her salary CANNOT be reduced? If that is the case, there would need to be an agreement between her and the city, correct? If that is true, can you show us that agreement, please? Until that document is produced, no one, including you, have any credence in claiming that her salary is being reduced. And if that document can be produced, please highlight where it states that her base salary of $221,000 is being reduced, and by exactly how much. Until that happens, no one is going to believe what you have written, instead you appear to be “covering” for her and the claims that are being made. You stated that you did not want to go down Mr. Rice’s assertions one by one; do us all a favor and “go over” the one assertion that he made concerning the city manager’s purported pay cut. No bluster, no doublespeak, just present the numerical facts showing your evidence that his claims are wrong.


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The document you seek is available here:

http://slocity.org/cityclerk/correspondence/2011%20December%206/REDironc2.pdf


Indeed, Ms. Lichtig did make an agreement to an amended contract, which begins on page 7. The strikeout/underline changes are very minimal. See for yourself. Unchanged:


– SECTION 2C: “base salary of $221,500”


– SECTION 3: A total of 240 hours of leave time (that’s six weeks). Also, Lichtig gets another 80 hours of administrative leave, so that’s eight weeks of time off per year. Sweet!


Other Highlights:


– Pages 2-3 (“SECTION 1 through 11”) enumerate all of the reductions. Make particular note of “SECTION 10” — these reductions are temporary (two years). Was it your general impression from news reports that these were temporary reductions?


– Pages 5-6 is a resolution that management will no longer receive “PERS on PERS”. In lay terms, “PERS on PERS” means that the 8% previously paid by the city was considered pensionable income on top of her salary. So, when the city pays Lichtig’s 8% employee contribution (the approx. $18K I wrote about), it actually increased her pension by $18K. To cover that additional $18K, the city has to pay another 20% employer contribution for the 8% (hence the “PERS on PERS” label). This is generally how the 8% increases to the 12% mentioned by Council member Ashbaugh. Summarizing: By having Lichtig pay the 8%, it actually relieves the city from paying 12% and DOES LOWER Lichtig’s pension. I don’t dispute this is good. I take issue with the articles that implied a $39,500 reduction to Lichtig’s pay. They are misleading.


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Mr. Ashbaugh,


I don’t understand. You claim you can refute Mr. Rice’s “fuzzy math”, but you don’t in your opinion piece. You wrote 15 paragraphs claiming Mr. Rice used “fuzzy math”, but when it comes time to explain why you think he used “fuzzy math” you write this: “I could refute each of Kevin’s points in sequence, but instead I want to “take the high road.” I invite you to read for yourself the Council staff report for our December 6 meeting, where you can find for yourself two fundamental facts”


To help you out Mr. Ashbaugh here is some of what Mr. Rice wrote in his opinion piece. Perhaps you could at least explain where Mr. Rice is using “fuzzy math” for these comments Mr. Ashbaugh.


“The salary cut actually taken by our city manager? $0. That’s right. Zilch.


So let’s examine how an $807,000 savings is possible without salary cuts:


First, management employees will begin paying their own eight percent member contribution toward their pensions. Presently the city pays both the eight percent member contribution in addition to a 20 percent employer contribution. For Lichtig, the eight percent give-up amounts to around $18,000 annually. This is a very real savings to the city and a very real cost to Ms. Lichtig, but it is most definitely not a cut in her $221,500 salary which remains in black and white in her latest contract.


Second, a $5,400 savings is attributed to our city manager giving up her $450 monthly car allowance. Except, she already gave it up for 2011. The new two year contract simply extends this give-up for 2012 and 2013.


Finally, management employees lost the ability to cash in unused administrative leave hours at the end of the year. Except, once again, this is a benefit previously given up already. I find it misleading that extensions of prior cuts were posed as new cuts. In 2013 will there be a re-run implying yet another $20,000 cut?


Katie Lichtig earns 80 hours of administrative leave yearly. At a pay rate of over $100 per hour, cashing in her unused leave hours could amount to thousands of dollars. But management didn’t lose administrative leave accrual. Employees can still take days off work which costs us an equal amount in lost time on the job. It is a mere accounting trick to call this a reduction.”


Yes, Mr. Ashbaugh, if you could at least refute these claims by Mr. Rice it would surely be appreciated.


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Used to be that “the numbers don’t lie”


Nowadays we need to “interpret” the numbers, as if they had meaning. Numbers don’t have intrinsic meaning, beyond what we project onto them, and mathematical formulas were invented to make complex realities comprehensible.


But here we have to constantly be aware of how the meaning of numbers changes, by trying to figure out what the labels actually mean, whether it’s in an analysis by Kevin Rice, Goldman Sachs, the IRS, or a city staff report.


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