In a year when Menlo Park residents were asked how they would cut programs and/or raise fees and taxes to balance the city’s budget, it has become evident that completely different costs — those associated with employee retirement and health benefits — present large long- and short-term budget woes.
The number of full-time-equivalent employees has dropped about 13 percent — from about 260 to 230 — over the past five years, but personnel costs have increased about 27 percent from about $16.9 million to $21.5 million.
A large portion of the budget is attributed to employee retirement and health benefits.
Of the $32.5 million the city plans to spend in the fiscal year that started July 1, some $2.8 million — about 9 percent — will go to cover pension costs for city employees.
Plus, the city owes employees post-retirement health benefits that total about $860,000 a year.
City Manager David Boesch said the costs associated with employee retirement and health benefits have “exacerbated” the city’s budget, but the city is limited in what it can do to reduce the growing costs.
“Over time we hope to … moderate the costs,” Mr. Boesch said. “We can’t do that unilaterally and expect to attract and retain quality employees.”
He noted that many Bay Area cities are trying to address rising pension costs, and Menlo Park aims to be an “average payer.”
Employee retirement and health benefits weren’t included in a recent community-outreach program that asked residents — through a survey and workshops — how to cut services and/or raise taxes and fees to balance the budget.
The public-input process prompted the council to approve eliminating five vacant positions, raise fees for city-operated programs such as child care and gymnastics, and explore the likelihood of getting a tax measure passed on the November ballot.
The savings that stemmed from the community-outreach process, plus other measure approved by the council, total an estimated $1.54 million, leaving the city $1.8 million short of covering its costs.
The city is projected to pull the difference from its $21 million of unallocated reserves.
Police negotiations
Employee benefits are a component of current negotiations with the Menlo Park Police Officers Association and Police Managers Association — two of the city’s four labor bargaining units.But after 10 bargaining sessions, negotiations with the Police Officers Association, which represents the city’s 37 line officers, have reached an impasse, and a state mediator has been called to assist negotiations.
The mediator asked both sides to refrain from publicly discussing the content of the negotiations.
Both parties met June 28, and have scheduled a second meeting for July 17.
“The problem isn’t solved yet, but there is willingness to get back together and talk,” Mr. Boesch said.
Mayor Nicholas Jellins labeled the negotiations “a complex issue” and noted that the impasse cannot be solely attributed to pay and benefits.
But compensation is a fragile issue, as the city’s 48 police officers make-up less than one-fourth of the city’s workforce, but are the root of about half — $1.42 million — of the city’s pension costs, according to Glen Kramer, the city’s personnel director.
Menlo Park officers receive the state’s top pension rate, but the city’s line-level officers receive salaries 4 percent below the county average, Mr. Kramer said.
The average line-level police officer in San Mateo County earns $7,412 a month, and the equivalent position in Menlo Park is paid $7,065.
