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Atherton: Bids to outsource services suggest 'substantial' cost savings for town

Original post made on Jul 6, 2011

As 12 town employees watch the clock tick forward toward the July 15 elimination of their jobs, union representatives, town negotiators, and a state mediator plan to meet on July 5 to discuss proposed employee concessions and private companies' bids to take over Atherton's building and public works services — bids the town's manager has called "really good and very aggressive."

Read the full story here Web Link posted Wednesday, July 6, 2011, 12:00 AM

Comments (21)

Posted by Bobbo, a resident of Menlo Park: Menlo Oaks
on Jul 6, 2011 at 12:20 am

You know, I can receive substantial cost savings by shopping at Walmart or Target as well. However, if I want my product to be of good quality and long lasting, I may not exactly wish to shop for the lowest cost item just to save a little more cash. There's something to be said for a town's services being handled "in-house", something that lends itself to being more of a family and having the ease and ability to take action by dealing with one entity rather than several calls being made and winding up with the possibility of poor work being done on the job and little accountability or assurance that the job will be completed correctly the next time.

Sure, you can blame unions for the cost. But at some point, especially with only 7% of the workforce being union-based (as opposed to the 26% in 1980) and especially since the average government employee, union or otherwise, makes less than the average private sector employee in the same position, we have to also include other factors in the increased price tag, such as mismanagement by the Council or others, the rise in the cost of goods or even growth of the city itself and the extra goods and services entailed in that growth. With all of those factors, one can't expect to be paying the same amount in 2011 as one did in 1990. Sometimes you get what you pay for.........I'd rather it be custom furnishings rather than Walmart.


Posted by More pablum, a resident of Atherton: other
on Jul 6, 2011 at 12:30 am

Bobbo is talking about Walmart and custom furnishings. Only 8% of the workforce in Atherton unionized? Hardly. All the cops belong to a union except for the chief and lieutenant. The 12 employees being laid off are also all unionized.

Again don't lose sight of the issue:

Does every cop in Atherton have to make over $100,000 per year? Why? Are they taking life and death risks, or lucky to work in a town that has very low if not non-existant violent crime?

Does every cop in Atherton need a 90% pension at age 50? Why?

Does every cop in Atherton need full medical benefits for themselves and their family, for life, after one day on the job? Why?

Does every cop in Atherton need their CALPERS contribution made by the town?

Yes, there's WalMart, custom Italian furnishings, and certainly a wide range in-between where quality service may be obtained for a fair price.

Don't be fooled by the cops and their buddies posting misleading information on these forums. They're making way too much money and are trying to blame everyone but themselves and their greed for the situation.


Posted by Institutional Memory, a resident of Atherton: other
on Jul 6, 2011 at 6:20 am

First, I accept the premise informed taxpayers believe public employees are overpaid. Private sector defined benefit pensions are rare, if not extinct. Nevertheless, public sector employees continue to have them. I also acknowledge public sector employees used to make less than their private sector counterparts in exchange for a secure job with that defined benefit. Over time, things have changed so that the public sector is competitive with the private sector.

Atherton's leaders are trying to correct the perceived inequity. Yet, Atherton does not operate in a microcosm. Atherton doesn't operate independently. It is part of the broader market for police officers. Though some residents individually might exert a great deal of influence, the Town government does not. Whatever policy the Town Council might adopt could place the Town at a disadvantage relative to their larger municipal peers.

In a perfect world, the market alone would dictate police salaries. The more cops looking for work, the less compensation they could demand as they compete for the available jobs. Today, there are plenty of well trained and qualified cops seeking work. San Jose PD, one of the region's best law enforcement agencies, laid off over 60 Officers last week. Oakland PD had their blood-letting last year. Labor laws and union contracts, however, interfere with pure market mechanisms.

A key differentiator between the private and public sectors is unions. Most government employees bargain collectively. Changing this situation will require more than the Atherton's Council's wishful thinking. Wisconsin leads the way, but the wave has yet to reach California. Given California's traditionally liberal politics, elimination of collective bargaining faces very high hurdles.

Clearly, the Atherton Council is frustrated. They are locked into what they perceive are above market compensation levels. Public pressure leads them to seek solutions to realign total compensation to below private sector levels, including contribution based retirement plans. But, unless Atherton colludes with every other Bay Area municipality, they risk acting alone and to their disadvantage.

The Atherton Town Council has alternatives. At one extreme, they could do what is widely suggested on these forums -- outsource the Police Department. At the other extreme, they could do nothing. Somewhere in between, they can reduce the number of cops on the street (layoffs) or request concessions.

It's helpful to understand the Town's contractual position with the Atherton POA.

The contract is called a "Memorandum of Understanding" (MOU). It is available on the Internet, as it was bundled into a council packet when it was approved in 2009. Scroll down to item #25 in this document: Web Link

The Town Council publicly stated (by way of their recently published FY2011-12 budget) they wish $200,000 in concessions from the Atherton POA achieved through a meet and confer process.

The Town's leverage to bring the Atherton POA to the table is the threat of layoffs or outsourcing. Interestingly, the MOU between the Town and the Atherton POA codifies a process to re-open negotiations. First, the Town Council must declare a fiscal emergency (they haven't). Additionally, there must be less than 2% growth in the property taxes (it's 3+%). The re-opener clause is, therefore, closed. Atherton POA members will need to approve re-opening negotiations.

Typically, when negotiating an MOU with a POA or a Deputy Sheriff Association (DSA), an employer agrees to percentage increases each year the MOU is in effect. For at least the past decade, Atherton has chosen a different methodology.

Atherton pays at the 70th percentile of a "market basket" of local agencies. The measurement is made upon total compensation (wages and benefits). The group of agencies is listed in the MOU.

One point of view is that concessions are already built into Atherton's MOU. If other POAs in that pool have made concessions, those adjustments will be reflected in the annual compensation survey. This decrease will "trickle down" to Atherton.

Another view is Atherton's 70th percentile basis is already "below average". In educational grading standards, 70% equates to a "C-". Taking compensation down to "D" or "F" levels isn't going to help Atherton compete for the caliber Officer they need to provide great service or mitigate liability.

From a long term perspective, paying below market compensation is bad policy.

When an Officer moves from one agency to another, they are called a "lateral hire". Hiring pre-trained, qualified cops reduces expenses and gives the hiring employer a known entity. The prospective employer can look in the personnel file, performance appraisals, commendations, etc. Because laterals cost less to field than someone who has yet to graduate from the police academy, the demand for laterals is certain increase. They are a relatively inexpensive alternative to paying for a rookie. It takes weeks to get them on the street, instead of the year required for someone who needs to go to the academy.

SFPD announced they will focus on lateral hires as a way to reduce their expenses. In doing so, they save the approximate $150,000 (per Oakland's POA) cost of recruiting, back-grounding, training, and fielding a new officer. They also point out a new Officer has a 40% chance of failing to make it to the field, despite the sizeable investment.

Assuming the Oakland POA's estimate is correct, the Town risks having to spend $150,000 (with just 60% possibility their investment will pay off) for each Officer who leaves because of the reduction to D or F level compensation.

It's already started; SFPD hired an Atherton Officer earlier this year into one of their lateral academies! With close to 300 SFPD retirements in the next two years (courtesy of their DROP program), there will be plenty of lateral hiring at SFPD alone. While Atherton cops may not lateral to SFPD, it will be a disruptive factor in the local police labor market.

More importantly, when an agency pays below market rates, they become the de facto training agency for other law enforcement organizations. They install a revolving door, paying for training Officers who leave for other municipalities.

Beyond the estimated $150,000 cost of fielding a new Officer, it costs thousands annually to keep an Officer trained. There are state mandates regarding continuing training. Officers must have a certain number of hours of Continuous Professional Training (CPT) each year. There are also recurring training mandates ranging from first aid to driving schools. Specialty positions require even more state mandated training.

East Palo Alto Police is an example of an agency which paid below market for years. Sure, they found Officers willing to settle for lower wages. Many of them used EPA PD as a training ground and then moved to other agencies. EPA PD has now fixed their revolving door problem, paying market competitive rates.

Atherton has also experienced this problem. They paid below market in the early 2000's and lost several Officers in quick succession to the Sheriff's Office. In response, the Town quickly became competitive with the police labor market by offering today's much maligned industry standard pension plan (3% at 50) and C- compensation. That change stemmed the bleeding.

Returning to below market levels would be a mistake. Institutional memory, however, appears to be short and we're headed toward repeating the failed policy of last decade.

In summary, reducing wages and benefits to "D" or "F" grade level would give the Town a short run gain. It might also satisfy some political pressure placed on the Council. But, ultimately the savings could convert to deep losses from recruitment and training.

Further, below market compensation will introduce the risk of liability, as these new Officers will be inexperienced or be comprised of Officers who had to settle for less than market compensation for other reasons.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jul 6, 2011 at 7:01 am

Institutional memory:

you make the perfect case for out-sourcing. The town doesn't have to be competetive in wage payments when they don't have any officers working directly for the town. Better service at half teh price and no problems with having to be competetive in wage payments. Sounds like a winner to me.


Posted by Grading on the curve, a resident of Atherton: other
on Jul 6, 2011 at 10:06 am

Institutional memory is clearly a police officer. The sleight of hand I enjoy most in his post is that if an Atherton police officer is paid at the 70th percentile of neighboring communities, then the police officer is being paid at a "below average" rate.

"Another view is Atherton's 70th percentile basis is already 'below average'."

Nope, 70th percentile means they make more than 70% of the cops in the neighboring communities. The neighboring communities are amongst the wealthiest in California.

"Further, below market compensation will introduce the risk of liability, as these new Officers will be inexperienced or be comprised of Officers who had to settle for less than market compensation for other reasons."

Glad to hear that the current crop of officers are paid well and therefore haven't introduced any liability to Atherton!

Institutional memory also asserts that good officers just want the best compensation and will go to the city paying the highest wages. But, if I were a police officer, I would rather work in Atherton for less money and benefits than East Palo Alto for more. The risk/reward tradeoff just wouldn't be right.

But they know this. That's why they won't want to be outsourced! If they really believed they were currently being paid at "C-" below-average salary levels, and there were no benefits to working in Atherton that I just described (they get the police officer "risk of life" high salary without risking their life), wouldn't they not be fighting outsourcing so vehemently, making the videos, etc. etc.?

Just use your brain. I admit, these guys are well-organized, exert a lot of influence, and have fooled a lot of people, but if you really pick apart their arguments (from the smartest cop in the department, whom I believe is Institutional Memory), they don't hold water.

Hopefully the council will have the courage to do WHAT EVERY OTHER CITY IN CALIFORNIA IS DOING: get the police expenses and benefits from an out-of-control state to an in-control state. The standard playbook items of "service will suffer", "we're going to waste more money on re-traning the new officers we have to hire based on those who leave than the money that will be saved", etc. etc. has been used by unions in each of these situations. Well-managed cities don't fall for it.



Posted by POGO, a resident of Woodside: other
on Jul 6, 2011 at 11:22 am

Yes, I noticed that, too.

Being paid at the 70th percentile means that you are well above the mean pay of 50%. That's not exactly "C-" compensation as Institutional Memory suggests. More like a B+.

Do you really think that Atherton police - who don't usually have to patrol the Tenderloin or participate in SWAT raids - should receive "A" wages? For the work load, venue, benefits and risk, I think the 70th percentile appears appropriate.

That said, I believe the economies of scale and reduced overhead and management that can be realized from outsourcing with the San Mateo County Sheriff's Department makes the most sense.

Of course with this change, Atherton residents will have to arrange to stop their newspaper deliveries when they are on vacation.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jul 6, 2011 at 11:35 am

The union representing the workers who are been laid off has just voted to authorize a strike. That means that the union and management have been unable to find a mutually acceptable alternative to outsourcing.


Posted by Ernesto, a resident of another community
on Jul 6, 2011 at 9:49 pm

Bobbo, your analogy is backwards.

Unionized civil servants who know they will not be terminated even if they are coasting/lazy are Wal-Mart in your analogy.

Private workers who must answer for their productivity; if you slack off in the private sector you get fired; are the higher quality, "custom" solution in your analogy.

Atherton scores a double victory by outsourcing. It gets systematically better workers for less money.


Posted by Bad situation, a resident of Atherton: Lindenwood
on Jul 7, 2011 at 12:56 am

I read in the daily news that Atherton wants more than $500K of concessions from these 12 employees to stay in their jobs as outsourcing will apparently save at least $700K.

And am I correct to assume that Institutional Memory has stated the police department will not agree to $200K in concessions? If I am not mistaken they outnumber the 12 by at least two to one and are being asked to therefore make just one fifth the sacrifice of the 12 non-police employees (2.5X in concessions times 2.0X in number of people sharing that burden) and have refused??

This is troubling to me and will simply result in the police department getting outsourced. Standing pat on "the contract says we don't have to" is not the appropriate response given the crisis that is unfolding. I think the police department may be surprised this time as I do not anticipate the residents supporting them on a hardline stance.


Posted by Michael G. Stogner, a resident of another community
on Jul 7, 2011 at 5:53 am

The police officers have no motive to offer concessions, if they are outsourced to and picked up by the Sheriff's Office they earn more money not less.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jul 7, 2011 at 7:07 am

IF they are picked up by the SO. I can think of at least two that probably won't be.


Posted by Grading on the curve, a resident of Atherton: other
on Jul 7, 2011 at 9:39 am

Michael, I disagree with you. The officers clearly DO NOT want to be outsourced. The reasons for this are as follows:

1. Many of them get promotion paths in this tiny department that would be impossible elsewhere. Many of the sergeants would not make sergeant elsewhere; certainly the chief's position is a good example of this. One sergeant whose parents live in Atherton believes he will become the chief of police if the department stays independent.

2. They want a comparable pay rate to the sheriff's department without having to do the work of a sherif's deputy (potentially deal with life/death situations).

3. They enjoy being in a "no accountability" department that has traditionally been able to just say "97% approval" as an answer to any allegation or conflict. The "no accountability" is the result of traditional support from residents. This doesn't work in larger departments.

So they should have motivation to offer concessions. They are hoping that their usual stonewalling and reliance on supporters who say no matter what they do or how much they are paid, we absolutely need them, will be enough.


Posted by Michael G. Stogner, a resident of another community
on Jul 7, 2011 at 1:28 pm

Menlo, said
"IF they are picked up by the SO. I can think of at least two that probably won't be."

I know what and who you are talking about...and a normal Sheriff's Department wouldn't pick them up, but this is San Mateo County we hired Bob Brennan.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jul 7, 2011 at 2:49 pm

Brennan must have had wood on somebody.


Posted by Facts on Brennan, a resident of another community
on Jul 7, 2011 at 3:08 pm

Brennan assaulted an Atherton resident, Barbara Proulx, shortly before he retired as chief over a disagreement about mountain lions West of Alameda. This is a FACT (note I said assaulted, not battered) and should not be deleted by the Almanac. Brennan was required to undergo anger management training as a result of this incident. HOWEVER, it was not documented in his personnel file (in as much as no complaints against police officers in Atherton ever have been), so did not interfere with him getting a job as a sheriff's deputy. Whether it interfered with him continuing to be chef of Atherton, I let the readers be the judge.


Posted by Bobbo, a resident of Menlo Park: Menlo Oaks
on Jul 8, 2011 at 3:13 pm

Wow. So much hatred toward the cops in Atherton. I would think twice about putting my life on the line for some of the insensitive [portion removed; name-calling violates terms of use] posting here who equate having to be shot at on a regular basis to being a REAL police officer. Pablum and Pogo don't seem to understand that anything can happen at any time. And there's something to be said for the training and vetting that goes along with a union position...but union or otherwise, it sounds like total disrespect from some of the same people who want their riches protected and streets kept clean of loiterers. Do you understand that a simple pullover for speeding can result in a gunshot to an officer? Do you know what goes into the training? It sounds to me that Atherton doesn't really need any officers since they don't "potentially deal with life/death situations." Really? Wow. Such ignorance. Glad I'm in Menlo....much as I have my complaints every now and then, our officers come quickly when called and have dealt with most of our problems with courtesy. Just go ahead and make Atherton part of the Sheriff's department; it'll be cheap. Can't wait for Pogo to try dealing with a massive bureaucracy when he has an issue.


Posted by Bobbo, a resident of Menlo Park: Menlo Oaks
on Jul 8, 2011 at 3:22 pm

...and no, Pablum, I wasn't saying "Only 8% (actually, I said 7%)of the workforce in Atherton unionized? I was talking about this nation. And people like you seem to think that somehow 7% of our working population is responsible for the expenses our towns and businesses have been burdened with that has brought them down. Go ahead and cheapen all the services...you'll get what you pay for. I've got an idea, why not hire the Walmart security guards for protection and Mexicans for the city's public works. Just don't complain when you're robbed and no one ever catches the criminals and don't complain that we have such high unemployment when you use illegals to do the work that a capable American can.


Posted by sosdd, a resident of Atherton: other
on Jul 8, 2011 at 3:25 pm

Bobbo, you are correct about the woeful ignorance of most of these posters about police duties in Atherton. However you are wrong in that POGO lives in Woodside but is an expert in all things about Atherton. When he replies he will tell you how wonderful the Sheriff is in Woodside and how much money will be saved. However he usually will explain we will have to pick up our own papers and water our lawns since the Sherriff will not do that.
Sorry POGO I stole your tedious script.


Posted by peter carpenter, a resident of Atherton: Lindenwood
on Jul 8, 2011 at 4:31 pm

peter carpenter is a registered user.

Nothing tedious or ignorant about POGO's postings. He speaks both from relevant personal experience and hard won knowledge.

Repetition is sometimes necessary when people don't pay attention.


Posted by POGO, a resident of Woodside: other
on Jul 8, 2011 at 5:20 pm

POGO is a registered user.

Well, at least you know the rationale. Congratulations for paying attention in class.

The only thing I would add is that we (Woodsiders) would never think to ask a well trained, armed and expensive law enforcement officer to do anything as silly as water our lawn, pick up our newspaper or help me unlock my door. I'd like to believe that they have better things to do.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jul 8, 2011 at 7:08 pm

Menlo Voter is a registered user.

Well Bobbo, I speak from experience. 10 years in a large municipal police force in the bay area. Atherton officers and their department have always been viewed as a joke amongst the law enforcement community. I'll guarantee you, between self initiated felony arrests, writing and serving search warrants and initiating parole and probation searches, I wasn't picking up newspapers or making sure peoples' lawns got watered. There are private security forces and gardeners to take care of those things. If APD was a truly proessional police force and not a glorified security force they would refuse to do those things. Those are not the job of a PROFESSIONAL police officer.


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