Compensation Task Force

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Executive Summary

Few issues are as emotional or important for the fiscal health and performance of Ventura City government as the policies guiding employee compensation. As a full-service city government, the City provides a range of vital services to every resident and business. Most of those are directly provided by City employees which translates into nearly 70% of the cost of government paying for the staff who deliver those services. These professionals provide either direct front-line service to the public (such as police officers, building inspectors and wastewater treatment operators) or perform critical support services (such as accountants, computer specialists and vehicle mechanics.)

Compared to other public employees in similar jobs in our area, Ventura employees are generally paid at or below the average. Yet they generally produce outstanding results in comparison to other agencies. What concerns many citizens, however, is the perception that public agencies provide higher pay, greater job security and more generous benefits and pensions than those working in the private and non-profit sectors.

Faced with deep budget cuts, they question whether Ventura can afford to continue to try to match the pay and benefits currently offered by comparable public agencies. Here are some key facts:

  • Perceptions aside, Ventura city employees’ salaries have generally tracked with the overall private sector labor market. During the period 2001-2008, average salaries and wages rose an average 4.37% annually compared to the overall regional labor market increase of 4.29%.
  • Pension plans for Ventura employees are in line with those offered by other public agencies in California. While the 2008 commitment to provide Ventura firefighters a 3%@55 formula was locally controversial, 93% of firefighters statewide are already covered by a formula equal to or greater than that. The Ventura Police formula of 3 @50 covers more than 81% of public safety employees statewide. All remaining Ventura employee pensions are calculated using the 2@55 standard. Statewide 96% of general employees work under a formula equal or greater than that – 62% have a higher benefit formula.
  • Ventura does not offer post-retirement medical benefits. A State of California compensation study showed these costly benefits are provided by 86% of the cities they surveyed.
  • The most pressing issue is the rising cost of public pensions generally. Riding the dot.com and stock market booms of the last fifteen years provided a windfall for public agencies and enabled CalPERS (the State plan covering most public employees in California) to offer enhanced pension formulas. CalPERS projects that by 2016, total pension contributions will rise to 30% of salary for general employees and 46% for public safety employees.
  • While such costs do not appear to be sustainable, these pension formulas are “vested” for all existing employees. Reducing the adverse impact on public services will require greater cost sharing with employees, the introduction of a lower tier for new hires and/or the replacement of current plans through negotiation with current employees.

The Task Force, made up of Councilmembers, knowledgeable citizens and City employees, took a hard look at these realities and challenges. The Task Force did not come to conclusions or make recommendations. Instead, this report outlines some agreed on facts and lays out differing perspectives and alternatives for the City Council and community to consider going forward.

While not coming to agreement on new recommendations, the Task Force unanimously affirmed the Council’s current Compensation Policies. This reflected recognition that in recent years the Council has clearly adopted new efforts to keep public pay and benefits more closely in line with the private and non-profit sector labor markets. For example, the Policies state:

The City’s practice is to compensate staff in accordance with the City’s financial condition. The City will seek to keep staffing levels and compensation at levels that can be sustained within fiscally prudent projections of revenue capacity and adequate operating contingency reserves. To ensure that the labor pool is broadened to allow Ventura to compete despite the high cost of living and housing in the area, job postings and recruitment efforts will be broadened to encourage applicants from the non-profit and private sectors to apply and receive serious consideration based on talent and potential to effectively perform essential job functions rather than be evaluated primarily on skills and experience that are solely acquired in local government employment.

While generally affirming the City’s approach to regular pay and benefit, the Task Force spent considerable time on the growing concerns over the costs of CalPERS pensions.

This again is not unique to Ventura. There is growing national concern about the ability of the national economy and local tax bases to meet the growing pension obligations taken on by the public sector. The exceptional investment performance of CalPERS over the previous thirty years led to higher pension formulas that may not be sustainable over the next thirty years. Ventura must face this looming challenge.

Opinions diverge on the gravity and urgency of the challenge – and what steps Ventura should take to address it. However, given the faltering performance returns of CalPERS in recent years due to the international economic crisis, the projections of CalPERS and independent analysts point to steadily rising pension costs. This will force ever more difficult choices about our ability to deliver quality services to the community.

What is also clear, however, is that the pension commitments made to current employees cannot be unilaterally altered or reduced. That provides few short-term alternatives to rising pension costs. Savings from any new approach to pensions will only come from newly hired future employees – at a time when local government is shrinking and there are very few new hires.

There is opportunity for employees to help pay for the rising costs of pension commitments – but that can only be done through collective bargaining for the vast majority of Ventura employees who are represented by unions.

The Task Force hopes and believes that the Council and the community would benefit from a much fuller understanding of the facts and perspectives on employee compensation. Additional study and analysis are required. Emotion and exaggeration stand in the way of sensible solutions.

We hope our report begins to provide needed background for future policy and decision-making.

 

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