News

Opinion: Councilmen make case for layoffs

 

The authors are both on the Atherton City Council. Jim Dobbie currently serves as mayor. This ran as a guest opinion in the June 15 issue of the Almanac.

By Jim Dobbie and Jerry Carlson

On June 8 the Almanac published an article by two former Atherton mayors and an editorial regarding the proposed layoffs of some town employees.

The town has been discussing the matter of our current cost structure for delivering services to our residents for many months and has determined it is not financially stable. The matter of outsourcing park maintenance was first proposed more than one and a half years ago.

The council tasked Interim City Manager John Danielson to come up with a financial plan beginning with our fiscal year 2011-2012 budget in line with our revenues. Continuing the trend of dipping into our general fund reserves cannot be sustained and the prospect of an $850,000 gap between revenues and operating costs is unacceptable. We believe if the above authors (the former mayors) had taken the time to do their homework with John Danielson, their perspective of the situation we are facing would have been more accurate.

Employee compensation costs amount to approximately 80 per cent of the town's budget. The projection in cost increases from current pension and health care plan costs for retired (lifetime benefits) are projected to grow and become an even larger portion of the budget in the future.

The public should be aware that the investment assumption being made by CalPERS, the public employee pension fund, is betting on a 7.75 percent average return on their investments, which we believe is far higher than will be realized. What this will mean when CalPERS makes a realistic adjustment is that the amount assessed to local governments will increase significantly and will have to be paid out of town reserves unless something changes.

Here are some examples of our employee total annual compensation, including retiree medical costs:

Office specialist, $117,199; public works maintenance worker, $114,320; building inspector/plan checker, $152,977; and park events manager, $136,437. This compensation is far more than the private sector would pay.

Let's address the claim about the loss of institutional knowledge. We think that claim is overblown. The contract employees that we have today in the Building Department and the Public Works Department have received numerous compliments from residents impressed with their professionalism and knowledge.

In the past our residents have generously voted for a parcel tax, mainly to support the police and fund capital improvements. To ask our residents to support another parcel tax to keep what many residents believe are overcompensated employees would be irresponsible and unlikely to pass.

We have a structural financial problem that has to be addressed. Our short-term deficit for this year is over $800,000 but that is not taking into account other potential liabilities. We could have up to a $600,000 payment to two trash companies. We have pending lawsuits, which, depending on the courts, could add much more.

Recent government accounting changes mandating that local governments recognize their long-term liabilities for retiree medical costs has added emphasis to the urgency to address our compensation issue. In the past, only the cash being paid out in the current year for retiree costs was included in the budget and the growing future liability had been ignored. But it is a real obligation that the local agency cannot ignore.

Recent articles about Vallejo and other cities demonstrate that many local governments are technically bankrupt or close to it. By taking actions now, we can change the course and manage our town in a responsible fiscal manner, which is our fiduciary responsibility as council members.

We also need to be honest about the town's budget beyond employee compensation. If we designate virtually all of the town's money to pay employee salaries and retirement, where does the money come from for street repairs, fuel, maintenance tasks, and so on?

We have no information technology, human resources or risk management departments. The City Hall buildings, including the police department, have damaged roofs that leak in the winter and our electrical wiring and phone systems need complete renovation.

Of course layoffs are a terribly sad and heart-wrenching situation but sometimes they are part of doing business. The town has looked at our finances from every angle, weighed the risks and rewards, and found few alternatives.

We cannot allow ourselves to fall into the same trap as other agencies. Stockton intends to lay off 100 employees and Costa Mesa has reduced employees by 50 percent. Bankruptcy is a real possibility for Antioch and San Diego. We must be better stewards of our town than to allow long-term financial instability.

We must address cash flow. We have been depleting our reserves at an alarming rate. Our situation is difficult but not impossible if we take a solid financial stance and plan for long-term financial stability.

The "bottom line" of the plan that John Danielson has laid out for us is to achieve a much more efficient and cost-effective town government, where residents believe they are receiving fair value for the quantity and level of town services that they pay for.

Comments

Like this comment
Posted by Tom Croft
a resident of Atherton: other
on Jun 14, 2011 at 2:08 pm

I doubt the council plan to fire & outsource, but keep the police set unphased, would pass as democratic test. The plan seems to please the most wealthy Athertonians, few in percentage numbers who have clout and council representation. Let us all vote ! Many like us who have lived here for decades are not wealthy & see little need for our large, authoritarian, costly police force.


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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jun 14, 2011 at 2:36 pm

Dobbie and Carlson are absolutely correct - the Town must have a balanced budget without using reserves and it must eliminate its unfunded pension liabilities. This cannot be done with the current staff size or the current staff pension programs. The planned layoffs are simply the first in a number of necessary and painful steps.


Like this comment
Posted by Steve
a resident of Menlo Park: Downtown
on Jun 14, 2011 at 3:47 pm

San Mateo County is about to lay off employees also.


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Posted by Right on
a resident of Atherton: other
on Jun 14, 2011 at 3:47 pm

Second step is to close Holbrook Palmer park. We do not need to furnish a park for mostly non-Atherton residents.


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Posted by peter carpenter
a resident of Atherton: Lindenwood
on Jun 14, 2011 at 3:59 pm

peter carpenter is a registered user.

Right On states:"Second step is to close Holbrook Palmer park."

If the park is closed it will revert to the estate which gave it to the Town and the Will of that Estate specifies that the land would then be donated to Stanford University. Stanford is, of course, a tax exempt institution so the Town would derive no tax revenues from the land but would still be required to provide public services for the land.


Like this comment
Posted by Right on
a resident of Atherton: other
on Jun 14, 2011 at 4:15 pm

So what. Much cheaper than what we dump into the Park.
Close to one million last year


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Posted by Ms. Piggy and the piggybank
a resident of Atherton: other
on Jun 14, 2011 at 6:03 pm

I'm for cannibalizing the whole Town at this point
Let's just get really efficient and outsource the entire administration--I think the APD could manage our taxes internally just fine on their own without all this bureaucracy nonsense, since apparently the Town now only exists for the police department's benefit any more anyway.
Lets give them the entire park and build them a 17 million dollar monument over there so that they can continue to grow into it proudly and increase the realtor's commissions here in Atherton.
The whole democratic government thing is just not working anymore and a full military junta just makes a lot more sense.


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Posted by Menlo Voter
a resident of Menlo Park: other
on Jun 14, 2011 at 7:30 pm

Yes, Mr. Dobbie and Mr. Carlson are correct, unfortunately they are starting with the cut and ignoring the gunshot wound. Gentelmen: the APD is bleeding your town dry. Outsource it. They're nothing more than a glorified private security force anyway. That kind of service can be found at a MUCH lower price.


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Posted by 21SAM1 -Retired
a resident of another community
on Jun 15, 2011 at 9:34 am

After reading blogs from several residents of Atherton, it seems to me that they have forgotten (or never knew)the history of Atherton and why it exists today. Some residents complain that the APD should be replaced with the San Mateo SO. Think again Atherton...you will will not have your safe haven that you have today. The SO is being reduced like other cities.

The problem I see is from 1962 to present the Atherton City Council has ALWAYS declined to annex any businesses within the city limits. No businesses no revenue, except from residents. So enjoy the peace and safe haven that you all have with in the "Walled City of Atherton"


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Posted by dann
a resident of Atherton: other
on Jun 16, 2011 at 12:37 am

It is interesting how every conversation ends in the APD corner. For sure I agree that budget has to be balanced and compensations reduced in most departments including APD, but Athertonians do want their APD and in that sense if really necessary, they would vote for another parcel tax, but before that costs have to be checked.

Outsourcing is a valid method, but it has its disadvantages. Contracts need to be reached, signed, and then fullfilled. If bad contracts are signed, you can bury the town with endless liabilities. Think about contracts with Allied Waste that somehow ended in huge liabilities for the town. Nothing to do with building dept or APD. Once contracts are signed flexibility is lost. Renegotiating contracts takes time and money, too.


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Posted by Jerry Leugers
a resident of Atherton: Lindenwood
on Jun 17, 2011 at 6:07 am

It is also time to outsource the police department.


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Posted by too many questions
a resident of Atherton: West Atherton
on Jun 18, 2011 at 1:33 pm

Outsourcing most of the town's non-police services and laying off a majority of non-police staff without a proper public discussion first? Without a report from the city manager showing the cost-savings, if any, and impacts? And why is a self-funded department like building being outsourced? Something's fishy here.


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Posted by peter carpenter
a resident of Atherton: Lindenwood
on Jun 18, 2011 at 1:40 pm

peter carpenter is a registered user.

From: Peter Carpenter
Date: June 15, 2011 8:06:04 PM PDT
To: William Widmer <billwidmer4atherton@gmail.com>, Theresa DellaSanta <tdellasanta@ci.atherton.ca.us>, Jerry Carlson <jcarlson@ci.atherton.ca.us>, Elizabeth Lewis <lizlew08@gmail.com>, kathy mckeithen <kmckeithen@ci.atherton.ca.us>, James Dobbie <jdobbie@ci.atherton.ca.us>, John Danielson <jdanielson@ci.atherton.ca.us>, William Conners <bslawstuff@yahoo.com>

Subject: The challenges of a survey

Dear Council,
It was suggested tonight that the Town conduct a survey of its citizens regarding appropriate responses to the current fiscal crisis.

First, we have a representative system of Town government and the five of you have been elected to represent us. We the citizens have already spoken in electing you and in placing our trust in your judgement.

Second, surveys done properly are expensive and take time - we have neither the luxury of time nor a surfeit of funds.

Third, surveys are very difficult to do well:
- A key issues would be the exact wording of the questions and the price tag to put on each item that people are being asked to say yes or no to. Everybody will want anything that is free.
- Another issue will be to get a statistically valid response rate in a Town that has primarily unlisted phones, lots of locked gates and with a propensity to discard unsolicited snail and email.
- Previous surveys were compromised by low sample sizes and a biased response rate by advocates.
- Similarly, past elections were biased by very aggressive campaigns to get out the Yes vote and no organized opposition.
- Finally, there will be the difficult problem of more people saying in an anonymous survey that they would be willing to pay X than people who would actual pay X or vote for a corresponding parcel tax.

I recommend that you move forward with your decision making via properly agendized public meetings with full opportunity for public comments and that you continue to exercise the individual judgements that you were elected to make.


Respectfully,


Peter Carpenter


Like this comment
Posted by R.Gordon
a resident of another community
on Jun 19, 2011 at 3:16 pm

[Portion deleted.] All those posts and no one addresses the real reason why nothing can be done.
MONEY or the lack of it.
Ms.Piggy says it all.


Sorry, but further commenting on this topic has been closed.

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