Tuesday, August 24, 2010

hiatus

Posting will be light to nonexistent, this week, due to competing obligations.

Friday, August 20, 2010

Getting a Clue

Marc Grisham was hired in 2004 to be the city manager in Pittsburg, California, a working class city of 65,000 people. His contract is below. Grisham's starting salary was $169,000 a year. His contract was amended five times in the years since. By 2008, he was making a base salary of $231,938 a year (see the Novermber 4, 2008 letter in the same file below). In just four years, Grisham added $63,000 to his annual base pay -- cumulative increases worth more than a third of his starting salary.

But reality appears to be making its appearance in Pittsburg: last month, Grisham recommended that the city council forego his salary increase for the year. The council said yes. See how simple that is?

When tax revenues were strong, city government officials did well for themselves. In a weak economy, they can live on salaries that have grown very rapidly over the last few years. No bailouts or tax hikes are necessary. There's another solution, and it's easily implemented.

Pittsburg Cm Contract

Wednesday, August 18, 2010

Plundering the Carcass

Below, received today in response to a request made under the California Public Records Act, the complete employment contract between the University of California and its president, Mark Yudof. I'll let the document speak for itself, but do be sure to look at Section 6, "Retirement Plans," which starts on page 3.

Yudof 3-27

Tuesday, August 17, 2010

let's just eat the whole thing (II)

Between 2000 and 2010, the cost of living went up by about 30%.

In the same period in the city where I live -- West Hollywood, California -- government salaries went up by rates that, in many instances, come remarkably close to 100%. (The city manager's salary growth actually topped 100%, as I've already noted.)

The proof is easy to come by. Salary control rates establish the top and bottom available pay for a particular position. Here are the salary control rates for the current fiscal year, posted on the City of West Hollywood website. The document below, received in response to a public records request this week, shows the city's salary control rates for the 1999-2000 fiscal year.

Last week, a local news website, Weho Daily, posted a story saying that the city's payroll costs had more than doubled in ten years, rising from $12.9 million ten years ago to $26.6 million over the last year. The story noted that city staffing had remained static over those years, parked around 200 in a contract city that gets its most significant local government services from county agencies. But what caused that payroll growth, then?

Simple answer: let's compare salaries across the years.

Pay range for a department director, 1999-2000: $6,560 to $8,958 a month.

Pay range for a department director, today: $12,479.81 to $14,652.56 a month.

Pay range for the job title "human resources manager," 1999-2000: $5,385 to $7,540 a month.

Pay range for the job title "human resources manager," today: $9,690.11 to $12,753.43 a month.

Pay range for the job title "associate planner," 1999-2000: $4,058 to $4,910 a month.

Pay range for the job title "associate planner," today: $6,376.46 to $8,147.43 a month.

And so on -- it's a long pair of lists, with some job reclassification that makes comparisons tricky. But the general trend is clear enough: government salaries have grown well ahead of the cost of living over the last ten years. Note also that the upward movement of salary control rates is just one way that salaries grew; a department head starting at the bottom of his control rate ten years ago and rising to the top of his control rate now would have gone from making $6,560 a month in 2000 to making $14,653 a month now.

And this is why, as the economy receded and tax revenues declined, California government frantically worked to make up its losses: they have to sustain their untenable growth in payroll (and the related growth of their pension obligations).

In practical terms, this now means that I can walk out of a store where I just paid 9.75% sales tax on a box of diapers -- just in time to see the meter maid put a $57 parking citation on my car (that would have been a $45 citation last year). The rest of us are being drowned to keep public sector salaries from softening into mere opulence.

I'll invite the City of West Hollywood to respond to this post, and will post whatever message they send. In the meantime, you have both sets of salary ranges -- hunt around on your own, and post a comment if you see anything particularly interesting.

Salary Schedule 99-00

Monday, August 16, 2010

and then, keep looking

Robert Rizzo, city manager salaries, yadda yadda. And now everyone and his grandmother are looking at how much their own city manager is paid.

But. There are 480 incorporated cities in California.

If you take the word of the California Special Districts Association, there are at least 2,300 special districts in the state. If you believe the California League of Women Voters, there are more than 3,400.

Water districts, public health districts, mosquito abatement districts, fire protection districts, flood control districts, on and on. This is how accountable these districts are: we have a pretty good idea how many there are, give or take a thousand or thereabouts. So how closely do you think anyone is watching what they spend? While the results may not be comparable to the runaway public salaries in Bell, or the runaway public gift baskets in Indio or Rosemead, they can be...well, interesting. Compare:

Ventura is a county seat, with a population of about 105,000. The city budget is over $200 million, with a general fund budget of about $80 million. The city manager is paid a base salary of $174,158.04 a year.

Irvine is a rapidly growing city of about 215,000 people, with a general fund budget of over $120 million and a total budget that, amazingly enough, approaches a half-billion dollars. The city manager is paid a base salary of $257,816 a year. (Here's his contract.)

Now: the Central Basin Municipal Water District is a middleman agency that buys water from the Metropolitan Water District and sells it to local water retailers in two dozen Southern California cities. It has an operating budget of about $2 million, and a staff of eighteen (see the tenth slide). Looking at that last link, you'll see that the district actually handles more money than this, selling tens of millions of dollars worth of water a year to its local customers and buying tens of millions of dollars worth of water a year from the MWD. But this movement of money through the organization reflects the district's role as an intermediate wholesaler, moving money from retailers to a larger wholesaler, and doesn't reflect the complexity of an operation where a dozen and a half people come to work.

Below, the employment contract for the district's general manager. His base salary: $220,000 a year.

There's a lot of money being spent in local government that isn't being spent in what most people think of as "local government." And it still comes out of your pocket. A hospital district loses its hospital? It becomes a "health district," and still gets a million dollars a year in property tax money.

Look around. Have fun.

Central Basin Gm Contract

Friday, August 13, 2010

congratulations

we're showing you the door

Rosemead, part two. Tax money to burn.

I first heard about Oliver Chi from the indescribably sharp Claremont Insider, a local blog that does better journalism than the several newspapers in town. More than a year ago, the Insider covered much of the ground I'm about to revisit. But with documents in hand, it's worth another look -- it's a jaw-dropping story.

Chi was the 27 year-old assistant to the city manager in Claremont -- assistant to the city manager, not the assistant city manager -- when he was offered the city manager job in Rosemead, a bigger city twenty miles down the I-10 freeway. Chi survived significantly less than two years in his new job, and it has never been clear why he was invited to leave. As the documents below will show, Chi and Rosemead agreed to keep the whole thing between themselves as a condition of the large gift of public funds severance package that the city gave their departing manager.

Chi's September 11, 2007 employment contract with the City of Rosemead begins on page 34 of the Scribd document below. Quite unusually, Chi's contract offered him an "initial term" as city manager, with that term to end in August, 2009. (Page 35 of the Scribd document.) A May 27, 2008 contract amendment extended Chi's initial term through May, 2011. (Page 31.)

Other terms of the contract made this a pretty sweet deal for a young guy who had never been a city manager before, and was coming from a job as an assistant to a city manager in a fairly small bedroom community. Chi got the free use of a city car, and "Management Incentive Pay in an amount equal to 10% of base salary," among lots of other goodies (Pgs. 38-39)

Here's what the really good part begins. Pages 21-30 of the Scribd document is Chi's April 7, 2009 "Separation Agreement," in which he agreed to resign from his job in exchange for a package of departing gifts. Start on page 23, and here they are:

- Unpaid wages to date, including compensation for unused leave time (no biggie)

- "a lump sum payment in the amount of TWELVE (12) months of salary and incentive pay"

- "an additional lump sum severance payment in the amount of SIX (6) months of salary and management incentive pay"

- ten months of city-provided medical insurance and "welfare insurance options"

- title to Chi's city car, which the city declared to be "surplus property"

- a $1,000 check to Chi to help him pay for the lawyer who reviewed his separation agreement

- and ownership of his city computer, for which he strangely enough had to pay the city $250

So: Oliver Chi worked as Rosemead's city manager from September, 2007 to April, 2009 -- nineteen months on the job. Then, with a contract that guaranteed him one year's pay if he was fired, he resigned...and got eighteen months of pay, plus performance bonuses on top of his salary for those eighteen months. And, what the hell, take the car, too.

This is what you get if your employer doesn't want to keep you around.

Chi's next move, after receiving his $350,000 severance package? He filed for unemployment benefits. Ladies and gentlemen: are you not entertained?

I say it again, and will undoubtedly keep on saying it: If you ask about your city manager's "salary," you don't know how much your city manager will make for doing his or her job. City managers frequently get parting gifts, which you have to add to their total compensation to understand what the job is worth to them.

Oliver Chi got 37 months of pay, plus bonuses, for 19 months of work. That's what a city manager's job can be worth.

(Parting note: the Scribd document also includes the contracts for Rosemead's current city manager, and for the interim city manager who filled in after Chi resigned. The whole package of contracts can also be found here on the City of Rosemead's website, which is where I got them.)

Rosemead Cm Contracts

let's just eat the whole thing

Here comes a perfect illustration of the way local governments behaved during the bubble years.

A quick note on the way there: the promised second half of my look at the City of Rosemead has been delayed by a two year-old who believes with all her strength that sleeping is for other people. If the universe cooperates, I'll post it tonight. Nobody cares about the City of Rosemead, but you'll be amazed by what they did with your taxes.

In the meantime, below is the remarkable employment contract for the city manager in my own town, West Hollywood. The contract was posted on Thursday in the Weho News, an online newspaper, and I downloaded it -- it's a public document -- from that site. (About the file name: Scribd turned the city manager's name, Paul Arevalo, into "Pa Rev a Lo," which he should totally use on his business cards from now on. It has a ring to it.)

The benefits defined by Arevalo's original contract are notably limited, in an agreement that reflects caution and restraint on both sides. If you care, take a look at pages 6 and 7 of the Scribd document below to see that West Hollywood's city manager signed a contract that doesn't just allow him to casually Southard out his vacation days and fill his pockets with extra cash. So far, well done.

But then. In May, 2000, the West Hollywood City Council chose Arevalo (who was already a city employee) to be its city manager. They agreed to pay him $10,833.33 a month -- $130,000 a year -- to do that job, with annual merit raises of up to 7%.

Now look at page 23 of the Scribd file below, and here's the good one: In December of 2008, the council amended Arevalo's contract for a third time, raising his salary to $21,486.42 a month -- $257,837.04 a year. With later annual raises, Arevalo now makes a base salary of $285,496.

Started at $130,000. Now is paid $285,496. Same job. Ten years.

So. Ten years ago, Paul Arevalo and the West Hollywood City Council thought that $130,000 a year was a good salary for a city manager in a contract city of 34,000 people. They thought that it was reasonable to say that annual pay raises could run as high -- in a case of exceptional merit -- as seven percent. Assuming that Arevalo was the best darn city manager ever, and merited the maximum contractually defined pay raise every single year without exception, he would have been making $223,365 by 2008. But that wasn't good enough, so the city council amended its own contract.

Ten years ago, if you had told Paul Arevalo that he would still be West Hollywood's city manager in 2008, and that he would be making $223,365 a year, he would have been pleased to hear it. But the real estate bubble drove tax revenues skyward, and local government officials took their share. They were managing growth; they were making the big decisions that improved their communities. They had succeeded, had caused the better world, and deserved to benefit along with the people they had served so well with their wise leadership.

Now the bubble has popped. It's going to stay that way for a long while. Property taxes have fallen off the table, and sales taxes are following as credit dries up and people live within their means. And the government managers who more than doubled their salaries during the bubble years don't want to be carried along the downward slope with everybody else.

Government officials argue that they have a tax revenue crisis, and need to raise taxes to fix it. They don't. They have a spending crisis that has been exposed by the economy's return to earth.

The solution is perfectly clear.

Pa Rev a Lo Contract