SLO city salary cuts: $0.00

December 13, 2011

OPINION By KEVIN RICE

A recent public relations blitz from the city of San Luis Obispo lauded $807,000 in compensation reductions voluntarily taken by top management. Our local spoon-fed media then dutifully regurgitated the numbers put forth by the city citing City Manager Katie Lichtig’s flagship salary of $221,500 as the standard of measurement. Reports stated the city will realize an annual savings of $39,500, due to reductions taken by Ms. Lichtig alone.

“This is absolutely leadership, and it’s absolutely a step in the right direction,” beamed city Manager Katie Lichtig during a KSBY interview two weeks ago.

But if you think Lichtig is taking a $39,500 cut in salary, you’re dead wrong; and you failed to discern the purposeful weasel wording used by the city to mislead. The city is keenly aware that subtle word choices such as “savings” and “compensation reduction” are easily misconstrued as a cut in salary.

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.

Transparency

Under the new contracts the city will save money which is a small step in the right direction. I don’t oppose it, yet I feel it didn’t go far enough. Council members Kathy Smith and Dan Carpenter also didn’t think the reductions are adequate. If we only count the truly new change to pensions, the real reduction is likely around $300,000, not $800,000. What I find outright offensive are the carefully chosen words used by the city to promote this move. The public fell into believing a $39,500 savings came from a 20 percent cut to our city manager’s pay.

One public commenter wrote, “It’s about time.”

Citizens have even been upset with council members Smith and Carpenter, believing they voted to protect Ms. Lichtig’s compensation. Quite the opposite is true. Further still, the city should have cited Lichtig’s overall compensation of $311,252 instead of citing her lower $220,500 salary which wasn’t even reduced. The city should have made clear the only new reduction is the $18,000 Lichtig will now pick up.

Transparency requires making semantical word parsing evident. If you wish to label Lichtig’s new $18,000 pension expense a “pay cut”, that’s fine with me. It will be deducted from her salary and her pay checks will be less. But it is also true that her salary remains unchanged and this sole new deduction was never pointed out by the city next to the $39,500 claim. Is this the level of integrity the public expects?

Where do labor unions stand?

Missing from the discussion were the city labor unions and represented employees. We’ve frequently heard bargaining groups denigrate high management salaries in the past. It would stand to reason, then, that labor representatives might have joined with council members Smith and Carpenter in asking for more from management.

But there’s an interesting paradox at play here. Labor representatives know the city will be turning to them next. It is in their interest that managers do not take any pay reductions. And it is arguably in their interest for management employees to be paid as highly as possible, lest labor groups lose a valuable point of leverage. Not that I believe labor wants overpaid management, but a rising tide does raise all ships (while those without a boat drown).

Conclusion

Almost overlooked in this story is the question of propriety in regards to City Manager Lichtig appearing on KSBY prior to the council vote to laud her own contract. Isn’t this politicking in her own interest while on duty? Am I the only one who found that somewhat egregious?

I also don’t buy Lichtig’s claim of “absolute leadership” since she didn’t set the bar herself. Instead she turned to management employees to make an offer which she then went along with. Leadership would have been offering an aggressive reduction for herself, then challenging other management employees to follow suit.

While I can agree that these cost reductions are beneficial, I also agree with council members Smith and Carpenter that it isn’t enough. Worst, however, is the intentional misleading of the public, the failure to clarify new cuts versus old, and the failure of local media to ask questions.