Residents tell Menlo council to get employee costs under control | May 1, 2013 | Almanac | Almanac Online |


News - May 1, 2013

Residents tell Menlo council to get employee costs under control

by Renee Batti

Menlo Park City Council members said they wanted to hear what the public thinks about matters they should consider during upcoming labor negotiations. They got what they asked for in spades on April 23 when about a dozen speakers, some representing multiple residents, addressed issues that included possible outsourcing of services, the level of pay for city staff, and the generosity of employee benefits.

The meeting was a first for Menlo Park: an opportunity for residents to make their views about employee compensation and other contract matters known before the city begins labor talks with each of its employee groups. All city employee contracts expire this year, with police officers' and sergeants' contracts ending in June.

Councilman Ray Mueller, responding to residents' requests to have a public discussion of the issue, organized the meeting, which was held in the council chambers just before the council met in closed session to confer about pending negotiations with the two police employee unions.

Among the speakers were the three men who led the successful pension-reduction Measure L campaign in 2010 — Roy Thiele-Sardina, Henry Riggs and Edward Moritz.

Mr. Thiele-Sardina, who was also speaking for residents including former councilwoman Lee Duboc, cited a list of concerns, including the number of city employees. The staffing equivalent of 230 full-time people "is a number most of us think is way too high," he said.

Mr. Riggs' suggestions ranged from a hiring freeze and the outsourcing of some services to considering higher employee contributions to their pension and health-care benefits.

He and several other speakers advocated having independent parties, including "taxpayer citizens," on the team representing the city in negotiations. Because the city's negotiators are also staff members, "it is now commonly known that all members of the negotiating team stand to benefit when benefits are increased," he said in a written statement, much of which he read from the podium.

Although Measure L addressed only non-police employees, reducing the pension benefits of staff members hired after the measure passed, Mr. Moritz said it's time to deal with police pension benefits, which are significantly higher than non-safety workers' and are the "major driver" of the city's skyrocketing pension costs.

Hank Lawrence and several other speakers urged the council to consider switching pension plans from a defined benefit system, in which employees are guaranteed a specific amount of income after retirement, to a defined contribution plan such as a 401(k).

Chuck Bernstein recommended that the council freeze compensation and benefits until the city has a clearer understanding of its financial picture, particularly regarding its employee costs. "Personnel costs are increasing faster than revenues," he said. "The city doesn't have the financial expertise to understand these things."

He recommended that the city bring in a financial expert who would report directly to the City Council.

As with cities across the state, Menlo Park must come to grips with a multimillion-dollar unfunded liability resulting from post-retirement benefits. Complicating matters is that the California Public Employees' Retirement System (CalPERS), which manages public employee pensions, is likely to increase the financial contributions required of cities, in part to make up for investment losses in recent years.

City employees had one advocate speaking on their behalf: Rene Morales of the Service Employees' International Union (SEIU), Local 521, which represents the majority of city staff. Mr. Morales warned the council that employees are under much stress because of current staffing levels, and existing work conditions have resulted in failed recruitment efforts.

He noted that outsourcing services can be more costly in the long run because outside employees don't have the institutional knowledge of the city and the workplace, and often won't have the personal commitment to the job that permanent staff members have.

Councilman Mueller noted at the beginning of the meeting that council members couldn't indicate support of speakers' opinions, or make commitments to a course of action, because doing so could be construed as bad-faith negotiations with employee groups. But he said giving residents a chance to participate in the process was crucial for government transparency and accountability, and he hopes the practice "will be adopted by future councils."

Although restricted in what they could say, several council members signaled their concern about specific matters by asking questions of city staff and the city attorney. Those issues included workers' compensation, disability, and binding arbitration, which in at least one recent case allowed a fired police officer to reclaim his job.

After the meeting, Mr. Mueller told the Almanac that in recent months some residents expressed an interest to him in a public dialogue on employee contracts. But as the council prepared to discuss contract issues in closed session, he was frustrated that there had been no meeting scheduled specifically to encourage members of the community to state their views, he said.

He began working to organize an unofficial meeting where the community would be invited to comment, but that developed into an official council meeting after more than two council members said they wanted to attend, he said.

Although many speakers at the meeting thanked Mr. Mueller for organizing the session, he later said: "I appreciate the thanks I got, but I do feel that I don't need to be thanked. I'm a public elected official and ... I don't think it was asking a lot of me to schedule a meeting."

Also, he said, it gave him a chance, as a new council member, to learn more about what is important to residents, and about the issues the council will have to consider in approving new employee contracts.

The staff report prepared before the meeting shows that employee costs represent 71.6 percent of the general fund budget. "It is projected that increases in personnel costs will continue," according to the report.

In the 10 years from fiscal year 2002-03 to 2012-13, the average per-employee cost increased by 79 percent — from $79,900 to $142,700, the report says.


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