2009-2010 Santa Clara County Civil Grand Jury Report Cities Must Rein in Unsustainable Employee Costs Issue Employee

Note: Missing finding numbers detected: F18

Conclusions 40

• CL1 Page 19
  The costs of total compensation for employees have grown substantially in the past decade and now threaten the cities’ fiscal stability.
• CL2 Page 20
  Salary and wage increases do not reflect changes in economic conditions; e.g. even with minimal inflation, yearly COLAs are granted with little bearing on the actual increase in cost of living or market conditions.
• CL3 Page 20
  Step increases are arbitrary and do not adequately represent an employee’s added value to a city. Combined with COLAs, new employees’ wages increase quickly and are not necessarily reflective of improved knowledge and skills.
• CL4 Page 20
  Medical insurance costs for active employees are growing year after year at rates that exceed most cities’ revenue growth, while the employee contribution to medical care is minimal.
• CL5 Page 21
  Pension formula changes instituted in the past decade, stock market losses, the aging “baby boomer” work force, and the growing unfunded pension and OPEB liability all contribute to making retiree pension and health care costs the most problematic and unsustainable expense the cities are facing. The city contribution to pension plans and OPEBs far exceeds the employee contribution.
• CL6 Page 22
  Cities traditionally determine their compensation packages by surveying the wages and benefits of other public sector employees in the same geographic area. There is major resistance to comparing themselves or mirroring trends with the private sector. This has allowed wages and benefits to become artificially high and out of sync with market trends.
• CL7 Page 23
  Cities can gain operational efficiencies and effectiveness with lower employee costs by making sure they are staffed with the correct numbers of people in the appropriate job classification in all departments and work groups.
• CL8 Page 23
  The San Jose City Auditor identified 88 positions currently being performed by public safety employees that can be performed by civilian employees at lower costs. The safety employees could be moved to positions that require their expertise and training. The auditor estimated this could be accomplished in less than 90 days and save approximately $5 million annually.
• CL9 Page 24
  In many cities, the contract negotiation process is completed by placing the negotiated collective bargaining agreements on the consent calendar for approval, which is acted on quickly at the start of council meetings by a single motion and vote of the council.
• CL10 Page 24
  Current contracts were negotiated in good faith by representatives of the cities and the bargaining units; they were approved by the city councils. Promises made to employees were made by elected officials, past and present. Responsibility for formulating and approving solutions to restore the cities’ financial stability resides squarely with our elected officials. The economic downturn has placed additional pressure on the situation.
• CL11 Page 25
  Binding arbitration is not open to the public and results in an adversarial process between the city and employee groups. Binding arbitration limits the ability of city leaders to craft solutions that work for the city’s budget. The process has resulted in wage and benefit decisions that have been greater than the growth in basic revenue sources.
• CL12 Page 21
  Public sector employees are granted a generous number of holidays, personal days, vacation days and sick leave annually. Rules and limits on accrual vary by city and union, but vacation days and sick leave can be accumulated and converted to cash or calculated into the pension benefit within those limits. 21
• CL13 Page 22
  All cities perform certain core functions to run smoothly and provide services to their residents. To reduce employee costs and streamline operations, the cities are in various stages of contracting services to private industry or partnering with other cities, special districts or the County to deliver services. 22
• CL14 Page 28
  What is the population of your city based on the 2000 census? _________
• CL15 Page 28
  What is the estimated current population? ___________
• CL16 Page 28
  How many total FTE’s (Full Time Equivalents) did your city have in 2000/01? _________
• CL17 Page 28
  How many total FTE’s does your city have now (2009/10)? _________
• CL18 Page 28
  How many FTE were in the Police department in 2000/01.? _______ Now ________
• CL19 Page 28
  How many FTE were in the Fire department in 2000/01? ________ Now ________
• CL20 Page 28
  What was your Total Revenue in fiscal year 2000/01 __________
• CL21 Page 28
  What is your Total Budgeted Revenue for 2009/10? __________
• CL22 Page 28
  What per cent of the General Fund were employee costs with benefits in 2000/01? ________
• CL23 Page 28
  What per cent are employee costs of the 2009/10 budget? ________ Employee costs include payroll, retirement benefits, health/dental benefits and other benefits.
• CL24 Page 28
  How much did the city contribute to non-safety Retirements benefits in 2000/01? ________ How much did the city contribute to Police/Fire in 2000/01? ________
• CL25 Page 28
  What is the non-safety Retirement cost for 2009/10? ______________ What is the Police/Fire Retirement cost for 2009/10? ______________
• CL26 Page 28
  How much did the City pay for Health/Dental Benefits in 2000/01? _________
• CL27 Page 28
  What is the 2009/10 City cost for Health/Dental Benefits? _____________
• CL28 Page 28
  What was the average monthly premium the City paid for employee Health/Dental Care in 2000? Individual ____________ Family ___________
• CL29 Page 28
  What are the current average premiums for Health/Dental Care? Individual ___________ Family ___________
• CL30 Page 28
  What was the median salary for non-safety employees without benefits in 2000? _________ With benefits _______ 18. 2009/2010 median salary without benefits __________ With benefits ____________
• CL31 Page 28
  What was the median salary for police employees without benefits in 2000/01? __________ With benefits __________
• CL32 Page 28
  Current median salary without benefits __________ With benefits ____________
• CL33 Page 28
  What was the median salary for fire employees without benefits in 2000? _________ With benefits _______
• CL34 Page 28
  Current median salary without benefits __________ With benefits ____________ 28 Appendix C - continued City Information – continued
• CL35 Page 29
  What is the average number of years for your non-safety employees? ________ What is the average number of years for police? _________ What is the average number of years for fire employees? __________
• CL36 Page 29
  How many vacation days, floating days, holidays, personnel leave days and sick days are employees entitled to annually?
• CL37 Page 29
  What are the vacation and sick leave accrual and buy out policies?
• CL38 Page 29
  Did you impose any furlough days this year? Y N If yes, which work groups? How many people are affected? How often?
• CL39 Page 29
  Prior to entering into each of your current agreements with organized labor, did your city Council, as part of regular business, encourage public comment in regard to the salaries or benefits being negotiated? Y N
• CL40 Page 29
  Are the MOU’s resulting from contract negotiations typically on the consent calendar when coming to the City Council for approval? Y N 29 Appendix D Santa Clara County/Cities Managers’ Association Policy Statement on Retirement Benefits 30 Appendix D - continued 31 APPENDIX D - continued 32 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 13th day of May, 2010. Angie M. Cardoza Foreperson Judy B. Shaw Foreperson pro tem Mary Nassau Secretary 33

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