The impact of transparency

More great examples this week of the importance of transparency in government, all made possible as a result of California’s Public Records Act.

The Press-Enterprise continued their outstanding investigative reporting by following up on our finding that a Riverside utilities dispatcher tripled his salary to nearly $400,000 due to overtime.

In Riverside officials knew since 2015 about soaring overtime that exceeded some utility workers’ regular paythe paper dug deeper into the underlying issues, revealing that the practice caused at least some stuff to raise alarm bells years in advance of our report, which unfortunately went unheeded. A slice:

The utility’s large overtime tab in the electric operations division grew steadily beginning around 2012, but it became noticeable in 2015.

In June that year, the emails show that one dispatcher sent colleagues an email with the subject line, “Overtime and REST TIME in DANGER,” in which he proposed they all make suggestions on how to trim overtime costs before management did it for them.

One employee responded: “We have a contract. They have to honor it. … Don’t think stuff up for them.”

In March 2016, Electric Field Manager Ron Cox wrote to Utilities Principal Analyst Shelly Almgren to explain why the electric division had exceeded its overtime budget three months before the end of the fiscal year.

Read the full article here.

In other news, our CalPERS 2016 release received quite comprehensive coverage, as shown below:

Thanks to the tireless Jack Dean and his Pension Tsunami website for compiling the above!

All of this reporting then led to a fantastic Santa Cruz Sentinel editorial, California taxpayers pay high cost for public employee pensionswhich observed that:

… something is out of whack in our state, where government pensions, benefits and salaries are far beyond what most working people in the private sector could ever hope for.

A keen observation. While defenders of public pay extol their high pay as a virtue that others should seek to replicate, it is neither fair nor sustainable when that high pay comes at the expense of those earning much less.

If you value the work of Transparent California, please consider making a tax-deductible donation today!

TransCal in the News

A pair of articles demonstrates how TransparentCalifornia.com data helps to empower the public.

An East Bay Times op-ed entitled EBMUD, Central San rate hikes? Give us a break argues that continual rate hikes are the result of soaring pay packages:

In April, the Central Contra Costa Sanitary District approved its latest rate increase for treating wastewater flows, now charging $530 annually per single-family home.  That’s a 182 percent increase since 2000, when the rate was $188.  And, 2018’s planned rate boost to $567 will take the 2000-2019 increase to more than 200 percent.

Meanwhile, the district’s board approved a 4.4 percent salary increase for its employees in this last year of a current five-year contract that has guaranteed an increase every year.

Placing related figures posted at http://transparentcalifornia.com on a spreadsheet shows Central San’s 278 full-time and highly compensated part-time individuals as having already averaged $116,280 in 2016 pay, and $100,437 in benefits, including extraordinary pension contributions, funded by district ratepayers.

The benefits also provide 13 paid holidays and up to six weeks of vacation.

An excellent VoiceofOC.org report, “Amid Funding Shortfall, Santa Ana Raises Median Police Compensation Above $213,000″ exposes how elected officials sell out their constituents — who had median private earnings of only $27,000 — while enriching the public unions who get them elected.

A slice:

As for the market rate comparison, Kurtz, the interim city manager, said city staff’s analysis found Santa Ana was below the officer pay rate for comparable cities by a couple of percentage points.

Kurtz said she wasn’t able to immediately provide a copy of the analysis, but that it looked at cities of a similar size and level of service, and within the same geographic pool Santa Ana would be competing with.

Voice of OC reviewed police compensation data for Santa Ana and the other two largest cities in Orange County, Anaheim and Irvine. The review found that before Wednesday’s pay raise, Santa Ana was already compensating its officers more than its two largest neighbors.

Santa Ana’s starting salary for officers was $4,400 higher than Irvine’s and $6,100 higher than Anaheim’s. And last year, median total compensation for Santa Ana officers was higher than Irvine and Anaheim, both with and without overtime included.

The police union is by far Santa Ana’s most significant election campaign contributor, with over $400,000 spent on last year’s City Council and mayoral races, including support and attack ads. It is widely expected to be a major spender in next year’s city election as well.

Obviously the average Santa Ana resident is incapable of competing with the political influence of the police union, which is why the City Council continues to enrich them at the expense of residents.

 

Riverside gets it right!

Last month, Transparent California revealed that a Riverside utilities dispatcher had earned almost $400,000 in pay and benefits.

What happened next was a testimony to the importance of transparency in government.

The Press Enterprise covers our release, bringing the information to the attention of residents and city officials.

Then, just one month later, the Press Enterprise reports that Riverside changes policy after utility’s $257,719 overtime revelationThe City deserves credit for taking the appropriate action, as detailed below:

Riverside city and public utility officials are examining their procedures after a utility dispatcher collected $257,719 in overtime last year.

Audit: The city is reviewing some utility workers’ time cards to see who approved overtime hours.

Review: All city department heads are taking a survey on their use of overtime, and all will get monthly reports tracking future payouts.

Hiring: The utility will fill several vacant positions that officials said were partly to blame for the big overtime bill.

Rules: Officials will draft a policy to prevent excessive overtime.

Far too often governments take a reflexively defensive stance to justify the status quo, even when it is clearly to the detriment of the taxpayers they are obligated to serve. So it is extremely encouraging to see the City of Riverside do the right thing here.

We are happy to have played a small part in helping to effect positive change, something that only came about thanks to California’s public records law, the efforts of the Press Enterprise and, most importantly, the willingness of city officials to do the right thing.

As the Press Enterprise Editorial Board noted in a summary of the above events, now it is time for other government agencies to follow Riverside’s lead!

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.