105 Santa Monica city workers cleared over $300,000 last year

CBS Los Angeles did a report on Santa Monica’s extroardinarly high compensation packages, using TransparentCalifornia.com data.

The TV segment can be viewed here.

Given the time constraints, the segment could only cover a fraction of the excess. Here are some additional examples:

Santa Monica tops statewide list for a variety of jobs:

The current city manager — hired during the 2015 year — makes a $340,000 base salary, which will easily place him in the top 3 next year, when there is a full year’s compensation package (I estimate it will be around $450,000 when benefits are included) to report.

Two more anecdotal examples:

  1. Farmers’ Market Supervisor: $142,903.
  2. Assistant City Librarian: $220,558.

This excess is pervasive throughout the city, with Santa Monica outspending its peers in total department wide spending as well:

Spending on attorneys (includes assistants and deputy city attorneys)

  • Long Beach: $4.75 million for 28 attorneys at an average cost of $170,000.
  • Anaheim: $4.45 million for 24 attorneys at an average cost of $185,000.
  • Santa Monica: $7.55 million for 29 attorneys at an average cost of: $260,417.

In total, Santa Monica spends 59% and 70% more on attorneys than their much larger neighboring cities.

Perhaps most compelling is what Santa Monica spends on transit, which is the city’s largest department both in raw dollar terms and number of workers — with bus drivers accounting for more than 13% of the city’s entire workforce.

The Bureau of Labor Statistics reports that the median city transit bus driver in the Los Angeles-Long Beach-Glendale metropolitan area earns a wage of around $39,000. The median Santa Monica bus driver makes $59,000 in regular pay — which excludes overtime, other pay and benefits.

This disparity is then amplified via overtime and retirement benefits based on a regular salary that is already 50% higher than the market wage for other city transit bus drivers in the Los Angeles area.

Adding benefits, overtime and other pay increases the compensation package for the median Santa Monica bus driver to $111,585 — with the highest earning just under $168,000.

Finally, at $3,200 per resident, Santa Monica is tied with Beverly Hills for spending more on employee compensation than any other city in California.

Fairness

Santa Monica’s city manager defends this pay as a matter of “fairness” based on speculation that TV news anchors might make even more.

But this misses the point: government is spending other people’s money. Everyone would love to see all bus drivers earn over $100,000, but it’s the definition of unfairness to take money from those earning much less to fund lavish pay and benefits for a select few.

The impact

Santa Monica’s roughly $300 million in employee compensation accounts for 72% of the entire General Fund operating budget. This goes a long way to explaining why Santa Monica has some of the highest taxes in the nation, such as:

  • 10.25% sales tax
  • 10% utility tax
  • 14% hotel tax
  • 10% parking tax

Consequently, when the next funding need comes up — be it paving roads, bailing out pensions in the event of a market downturn, etc. — the City will likely have to hike their already record high taxes yet again.

But when that tax hike comes, taxpayers have a right to know its true cause:

Santa Monica’s General Operating Fund, FY16piechart

Transparent California receives international coverage!

The findings from Transparent California’s recent report on a BART janitor has been republished by some of the largest news organizations around the world.

The Easy Bay Times got tremendous mileage out of our work, publishing a series of stories on the topic. They added tremendous context, with none better than interviewing an area janitor who explained that there was no amount of OT he could work to earn a comparable wage.

From there, it went viral as we were cited in every print and TV media outlet in the San Francisco Bay Area, before going global.

Some of the larger outlets to cite our work included:

I did a brief interview with the local ABC affiliate that ended up airing in Chicago, Arizona and other regions as well.

The video can be viewed here.

It should be noted that the claim uncritically repeated by BART that OT is more efficient than hiring a new worker is false.

It’s incredibly easy to show that. BART paid $162,000 for 2,485 hours of OT for a position they say has an average wage of $50,000. The average benefits package for a BART janitor is $30,000. Ironically that’s what most private janitors in the San Francisco area earn, and it’s very safe to assume that their benefits package, if any, is less than $10,000.

The $50,000 wage works out to about $24 an hour.

A new BART worker would earn $50,000 for the first 2,080 hours and then $14,603 for the next 405 hours at an overtime rate of $36 an hour ($24 X 1.5).

Adding those two numbers up, with an extra $30,000 for benefits, brings the total to around $94,603. This is obviously far short of the $162,000 in overtime pay BART claims is cheaper than hiring a new worker.

You can tweak the numbers however you’d like, and we’re not getting anywhere close to $162,000.

For example, let’s assume that BART workers only work an 1,820 hour year instead of the standard 2,080.

So now the total OT hours from the original 2,485 would be 665. Let’s further assume that half of those OT get a 2x multiplier, instead of 1.5x.

1,820 * $24 = 43,680

332.5 * $36 = $11,970

332.5 * $48 = $15,960

That brings total pay to $71,610. Adding $30k of benefits gets us to $101,610. Even dropping the regular hours to only 1,420 and paying the remaining 1,065 in OT (half of which we apply a 2x multiplier to) gets us to only $108,810.

Heck, you could even hire two additional workers and still spend less than $162,000!

Splitting the hours evenly would come out to a wage of around $30,000 each. The benefits would be lower, given retirement are based on a percentage of non-OT wages, but even if we want to give the full $30k in benefits to both, we’re at only $120,000 for two new workers with full (overstated) benefits.

There is simply no way that paying $162,000 for 2,485 hours worth of janitorial work is efficient, contrary to BART’s claims.

 

 

Don’t wait for next bankruptcy wave

A new op-ed published in the Vallejo Times-Herald highlights the devastating effects that the public pension crisis can have on communities. A slice:

When public pension systems miss their investment target, taxpayers are required to make up the difference, and the actions described above represent some of the hard choices that are facing local governments. Soaring pension costs have already forced many agencies to cut core services. In 2011, for example, the city of Stockton announced it was going to lay off 116 police and fire employees, before eventually filing for bankruptcy the following year.

Making the problem worse, the weakening market comes at a time when many agencies are already paying record-high contribution levels.

Presently, Vallejo is paying CalPERS a staggering 60 cents per dollar of police and fire officers’ salary in retirement costs, which is projected to rise to 75 cents in the next five years — in large part to help fund average $125,000 pensions for recent, full-career retirees, according to data from TransparentCalifornia.com.

Experts across the ideological spectrum have sharply criticized U.S. public pension systems for utilizing a funding strategy that is heavily reliant on investment returns. Scholars from the Brookings Institute, the American Enterprise Institute, the Federal Reserve Bank, the Federal Reserve Board, the Congressional Budget Office and Moody’s Investors Service all agree that public pensions are using inappropriately high discount rates that promote excessive risk-taking. Nobel-laureate professor William F. Sharpe was particularly blunt, describing the use of a 7.5 percent rate as “crazy” and based on “idiotic accounting.”

Public pensions prefer higher investment targets because they make their debt appear smaller. The downside is that they must average annual investment returns at that rate in order to be fully funded — a gamble far too risky to fund a guaranteed pension.

Be sure to read the full piece here.

Vallejo’s 2015 CalPERS pension payouts can be found here.

Shining a light on the public pension crisis

In an exclusive op-ed for the RealClearPolicy website, I address the U.S. public pension crisis. A slice:

While underperforming investments receive the most attention, they aren’t the real reason for the tax hikes and cuts in government services needed to bail out public pensions. In reality, the culprit is the extraordinarily generous nature of the benefits themselves, whose costs are only now coming to the surface.

Take my home state of Nevada, for example. Like most U.S. plans, the Public Employees’ Retirement System of Nevada (NVPERS) outperformed its investment target over the past 30 years, yet costs soared anyway — totaling 12 percent of all state and local tax revenue in 2013, the second highest rate nationwide.

Be sure to read the whole thing here.

 

TransCal in the News – June 2016

FOX40: How much overtime is unsafe?

FOX40 Sacramento aired a segment on our findings regarding high overtime pay at the Sacramento Metropolitan Fire District.

The group Transparent California compiled a list of some of the highest overtime amounts paid out to fire captains across the state for the 2014 fiscal year, some of whom are a part of Sacramento Metro Fire.

As wildfires burned across hundreds of thousands of acres, firefighters from across California answered the call, often racking up long overtime hours.

But how much overtime is too much?

“I can’t disagree, I won’t disagree that those numbers are too high,” said Chris Holbrook, Sacramento Metro Fire Deputy Chief.

Holbrook’s talking about overtime pay, which in 2014 tripled salaries for dozens of fire captains statewide.

Including some in Sacramento, two who make $93,000 and $98,000 a year, earned $155,000 and $180,00 more in overtime alone.

Read the rest and watch the television segment on the FOX40 website.