Unions | District 6

Shucking Corn

Picture a corn field with a farmer shucking corn by hand. His focus is on shucking the corn and he does it very well. However, this farmer can only do so much in a day and thus is provided an opportunity to assemble farm equipment which will shuck more corn than present resources allow. However, to do so will mean that he will stop shucking the corn in the interim and consequently lose some portion of the crop to crows and rodents who will eat the corn if the farmer is not present.

Fortunately, our farmer has the money to pay a qualified retired farmer to assemble the farm equipment while he continues to shuc. He will soon have extra help in the field and thus be more productive. Sounds like a good plan. Our farmer is out in the field being vigilant of his farming duties, which includes warding off crows and rodents while the farm equipment is being assembled.

However, what would you say if the farmer was too proud and refused to allow a qualified retired farmer to help him assemble the farm equipment? Instead, he continues to farm the field himself into the evening hours, becoming tired and overworked. He may make a mistake while falling further behind. Hence, the farmer is never able to take advantage of augmenting his farming with the equipment and thus loses a large portion of the crops to crows and rodents.

Sounds silly to me. Why not accept qualified assistance so the farmer can do a better job in the field and remain vigilant in farming duties?

Well, this is currently the situation for our San Jose Police Department (SJPD). We have more qualified candidates who would like to join SJPD than open positions. The next step is to require a background check. Typically background checks are done by current SJPD, which means that 17 police officers are pulled from patrol. These police officers cannot be in two places at once and therefore this results in less police on patrol.

This topic among others was discussed at Public Safety committee two weeks ago. Police Chief Chris Moore would like to hire a private company to do the background checks rather than pulling police officers from patrolling the neighborhoods. The private company does this for other cities and they employ retired police officers to do much of the work and some of them are actually retired SJPD. However, the Police Officers Association objects to this and would rather pull police from patrol to do the background checks. I am told that on-duty police officers would do a better job since they have higher standards than retired police officers. However, the absence of 17 police officers from patrol creates a heavier burden on the remaining officers on patrol and less police presence on the streets.

I admire our San Jose police officers that work hard and return home safely after each shift. However, I also believe that law enforcement officials in other jurisdictions are good people as well. Retired law enforcement from the Sheriff’s office, Fremont and Mountain View, for example, are qualified to do background checks on prospective candidates for SJPD.

The idea of using retired police officers to do backgrounds triggers the process of union negotiations called meet and confer. I do not like the secrecy of meet and confer and would rather have negotiations public. In my view, the utilization of retirees should be something the city and police union could easily agree upon. I would prefer that this issue be discussed in public, rather than behind closed doors, to avoid hurt feelings and focus on more important matters.

I understand the need for union negotiations for wages and benefits. However, it does not look good when unions contest small items like assistance from retired officers or waste time and money defending people who should be terminated.

For example, the firefighters union filed a grievance for the right to have pornography in each fire station. In addition the firefighters union argued that termination of a fireman was too excessive when the civil service commission recommended he be terminated for sexual harassment of two female co-workers that included unsolicited massages, kisses, birthday spankings, and other inappropriate touching and banter. This is sad.

Making a mountain over a molehill creates negative PR for the union and in my view should be dropped since it hurts their credibility on negotiations that pertain to wages and benefits.

Also posted in Chris Moore, Culture, POA, Police | Comments closed

Influence of Society on Career Choices

When I was a kid, I would watch the old 1950’s show, The Honeymooners. I remember one scene where the main characters, Ralph and Ed, were talking about future vocations for their children. Ralph spoke about his child going to college, while Ed said—if he had a boy—that he would get him a job working with him side by side in the sewer. At that point, the audience laughs and Ralph’s eyes bulge out. He yells that Ed is nuts for suggesting a career in the sewer.

Although parents and their children may not always agree, more often than not parents only want the best for their children. For example, it is not unusual for a parent to want their child to be a doctor or a lawyer because these occupations often offer prestige, autonomy and good pay. These occupations require an academic education rather than trade school. The 1967 film “The Graduate” comes to mind when Mr. McGuire says to Ben, “Just one word. Are you listening? Plastics. There is a great future in plastics.”

For many high school graduates, college may not be pursued. Like Ed in the Honeymooners, many in society are employed in vocations that use a trade and/or manual labor that is also mentally challenging.

Last week, the City Council approved spending money from sewer fees—not the general fund—to hire a private company for the next year to assist at the Water Pollution Control plant. These private contractors will be used to augment city staff and do tasks that current city employees will choose in the near future not to do. The contractor will also provide relief for city employees to take vacations.

In 2007, when I started on the council, I heard over and over again that the plant employees were predominantly baby boomers and that getting new staff would be a challenge. Why though? Is it not just like filling a job in any other organization?

This takes me back to the Honeymooners analogy. Out of the general population, not many people were pursuing working in the sewer system because society did not deem it a positive career. We do know that these positions require a learned skill set over time and the jobs pay well and it is literally lifetime employment.

The general public has become more interested in sewers with the connection to keeping our environment clean. I believe individuals may choose a previously overlooked vocation in the sewer system once they understand the salary and job security. However, this will not change in weeks or months; it will most likely take time to garner the skill set for senior positions.

As I have written before, there is an opportunity for veterans returning to the USA if they choose to obtain work with the city. Or, perhaps it is the chronic unemployed who get laid off during every economic downturn and want more stability. Perhaps a better use of an outside contract would go to a company to help the city set up an apprentice program, so people with entry-level skills could learn the ropes and all the positions are permanently filled.

In an organization like the city, which has thousands of employees, 11 unions and a litany of job titles, it is nearly impossible to pay certain positions more within a union because it requires negotiation. If one job classification has people who work in the Water Pollution Control Plant and also work in City Hall, the increased salary must go to both even though they are inherently two different jobs. In any other organization you could simply raise the salary of that specific job, but that is not the case in municipal government. This instead must be dealt with in the long, arduous and secretive meet-and-confer process with the union.

Issues like this one would seem to be an easy matter, where the discussion could be held in public so we could get to “yes” faster and allow everyone to understand the details easily.

Also posted in Business, City Council, City Hall Diary, Culture, Education, Politics | Comments closed

Broad Support for Performance Evaluations

After much discussion at the City Council meeting last week the Council voted in favor of having city staff study performance as a criteria when it comes to employee layoffs.

The review will determine if the City should include job performance when considering layoffs, or keep the current system in place, which is based solely on seniority. Due to budget shortfalls, the City has eliminated “vacant positions,” which were budgeted with the intention of hiring someone to fill them. Elimination of those positions generated savings, since the savings came from no longer budgeting for the positions.

As a result, the City is forced to do layoffs, based on seniority only. For example, you may have someone on the job for nine years who is under performing yet someone who has been on the job for six years and is a great worker. The person who has been with the City for nine years will “bump” the better performing employee, in the same or different department.

In some situations the person going into the new position does not have the skill set to do the job. This causes disruption to that department and disruption to the client (residents, business,etc). For example someone who has never stepped foot in the water pollution control plant now has a job at the plant, which requires a special skill. Skill sets and domain expertise are lost when people bump to other departments based only on seniority.

There are two points which I think get overlooked in this debate. One: My proposal does not eliminate seniority as a measurement but instead adds performance as a factor. Whether performance will be 10 percent or 20 percent of the total criteria remains to be seen. We may eventually also decide to include education and certification as well. We need some way other than months on the job to make a informed decision.

The other item being overlooked is that performance should be considered when getting a raise or a promotion—not just the current situation of layoffs. Today, salary step increases are rewarded only based on seniority. Adding performance as a criteria should also be considered.
In addition, city staff will study the current evaluation process, which has not always been followed. Some say that evaluations do not matter since the current system is only based on seniority. I would personally be interested in a affordable software evaluation solution so that HR can track all evaluations in real time, and that there is a standard format with the option of allowing some customization of questions for specialty jobs.

I am surprised that this issue was not resolved in prior decades and that there is strong opposition from the leadership of public employee unions. Several city employees in different departments have mentioned to me that it is disappointing to work with someone who does not carry their weight. This is about civil service rules and not about unions, however there will be a lengthy meet-and-confer discussion with the 11 unions. In comparison, the numerous building trade unions do not have seniority and bumping. Union trade members are hired and fired based on work performance.

Seniority is being raised also in Los Angeles, where the ACLU has won in court against the school district, by Mayor Antonio Villaraigosa, a former teachers union organizer. “We cannot continue to automatically guarantee lifetime employment to all teachers,” Mayor Villaraigosa said, “nor can we make decisions about assignments, transfers and layoffs solely on the basis of seniority. Tenure and seniority must be reformed or we will be left with only one option: eliminating it entirely.” If a former union organizer and now Democratic Mayor of California’s biggest city can support performance evaluations, plus 79 percent of San Jose residents, so to should the San Jose City Council.

Congratulations to Arizona-based Microchip Inc, a veteran semiconductor company. They recently located their Silicon Valley office to San Jose from Sunnyvale filling up 100,000 square feet in North San Jose.

Saturday, the Willow Glen Rams defeated the Burlingame Panthers for the division two boys varsity soccer championship. It was first championship soccer win for Willow Glen. Congratulations to Julio Morales who scored two of the three goals.

Ten seats remain unclaimed for tonight’s 6:30pm showing of “The Olmstead Legacy” at City Hall. Please email me to hold a seat(s) atPierluigi.Oliverio@SanJoseCA.gov

http://www.theolmstedlegacy.com/

Also posted in Budget, City Council, Politics | Comments closed

What Should the City Do With Sick Leave Payouts?

Sick leave payouts are part of the City of San Jose budget deficit problem. These payouts do not discriminate; every employee including management accrues sick leave, and if employed with the City long enough, will be eligible for sick leave payout when they retiree. One exception is that councilmembers do not accrue sick leave.

The City of San Jose has paid over $28 million over the last two years for sick leave payouts. Upon retirement, the City pays out those sick leave hours at the current base pay plus other premium pay(s). Unfortunately, the Council/City failed to design a system that would track sick leave at the pay rate it was accrued. The City cannot go back and retroactively change the structure so that all employees sick leave is adjusted to the specific pay that their sick leave was accrued at. In hindsight the sick leave structure should have been one that pays out sick leave on the rate it was actually earned with a maximum cap but this was not how the past Council set it up.

Two years ago, I called for capping sick leave pay outs to no more than $100,000 but there was little support to change the existing system. Any change to sick leave payouts then or now would require the City of San Jose to go through the Meet and Confer process with the unions. The Meet and Confer process can take as long as a year.

$28 million is a significant amount of money; more than the annual citywide library budget and quarter of our budget deficit. In my view, we need to change the benefits on sick leave just as we will on pensions for new employees. It should be eliminated for new employees so that it is like the private sector, a use it or lose it benefit for those that are actually sick.

So now what do we do with everyone that was promised to be paid on their accumulated sick leave hours? There are different options, however, any change goes to the “Meet and Confer” process with the 11 Unions.

One option is to cap the amount of the payout to say no more than $100,000, or $80,000, pick your number. The other is to phase out sick leave over a number of years where the payout is reduced X percentage each year until the benefit is eliminated. Another option would be that the City pays out over time.

If the City must pay out another $14 million in sick leave this year that means we do not have $14 million to employ police or librarians to provide services to residents. Paying out another $14 million in sick leave would cause an undue burden to our residents. So instead of paying out $14 million in one lump sum I would suggest we pay it out over 10 years or roll it into the employees’ pensions. This would leave us with money on hand to keep city employees employed. Then, in the next budget year we would know the amount of the sick leave payout from the prior year and make subsequent budget cuts in the next fiscal years. However, we will have the same fiscal liability every year unless we change the current system.

Government is known for making promises it cannot keep. People and businesses downsize or use bankruptcy to reorganize their debt and obligations. If The City is avoiding the “B” word then we must figure out a way to keep San Jose afloat, since we will continue to have $50 million increases in the pension system each year that is paid directly by the taxpayer.

Clearly if a person is about to retire, then they are getting out at a lucrative time and probably do not care about concessions. However, if you are an employee with less seniority (since merit is not a factor today) you may be more inclined to accept concessions to keep income coming in as being laid off is a 100 percent pay cut. Only time will tell but it will all hit the fan in the next few months.

Congratulations to the Association of Legal Professionals of The City of San Jose for being the first collective bargaining group to conduct their negotiations as public meetings. I attended and was enlightened to watch as a member of the public last Thursday.

Joint Venture Silicon Valley held their annual State of Silicon Valley 2011 last Friday at the San Jose Convention Center. Much of the time was spent on how cities and counties will have hard times the next five years due to rising pension costs and decreased revenues. The outlook was grim and the notion of never recovering and delivering services the same way was discussed. Therefore they advocated outsourcing and consolidating services among cities to cut out duplicate administrative positions.

Also posted in Budget | Comments closed

Budget Planning for 2011-2012

Last Thursday, the council had a study session for San Jose’s 2010-2011 budget. The public meeting received little media attention. Perhaps, since the holidays are near, we only want to hear the good news…and next years budget is far from good. There is no dispute on the data—just the direction we shall choose to balance the budget.
Here is a link to the 88 page presentation given to Council by the budget office. (Click on “2011-12 Organizational & Budget Planning” to view the presentation.)

The Council was challenged by the grim financial data and gave direction to continue with the 10 percent total compensation cuts that was requested last year. This is not an additional 10 percent but rather a request to keep the current 10 percent concession that was already agreed to by some of the labor unions. The 10 percent concession that several of the unions agreed to last year were “one time only,” meaning only for this fiscal year (2010-2011) and not ongoing. The three largest unions did not accept the 10 percent reduction last year and one actually got a raise.

If the Council chose not to ask for 10 percent pay cuts and spare public safety we would layoff two of every five non-sworn positions. So two out of five librarians, attorneys, IT staff, finance, auditors, code enforcement, planning department, public works, department of transportation, economic development, community center staff, etc….This would result in 81 percent of the budget allocated to public safety. If however 10 percent total compensation cuts were achieved then 72 percent of the budget would be allocated to public safety. (Slide 32)

Outsourcing is back on the table as a way to reduce costs and keep other city departments from having more layoffs. Last year we outsourced janitorial services which resulted in a $4 million savings and the facilities are just as clean.

I made several statements from the dais that included:
• not converting employment land to housing
• eliminating discretionary funding of charities with Healthy Neighborhood Venture Funds
• not raising fees so we become uncompetitive with our neighboring cities,
• keep the jobs/revenue team in place for companies locating to San Jose,
• Council should be limited to how many memos (flavor of the day) for new policies they can submit in a year
• rank current staff workload on what is most important (selling Hayes mansion and getting out of golf business)
• allow for union negotiations to be done in public
• instead of closing fire stations or laying off police officers reduce staffing at the slower fire stations to the same staffing levels as our neighboring cities
• finalize a new retirement system for new employees
• new facilities not be opened with full staffing
• outsourcing park maintenance or look at outsourcing by attrition where we hire private contractors as people retire
• look at new revenues once Council makes the hard decisions
• over time look at taxes that have positive environmental results and not only focused on property owners like parcel taxes instead look at solid waste dumping fee and the utility tax (water, electricity & gas)

We are suffering from severe financial duress; however, we do have options, as I have shared above. Perseverance and goodwill are not dependent on budget numbers, therefore “this too shall pass.”

Also posted in Budget, City Council | Comments closed

Arbitrator: Retired Judge or Out-of-Town Labor Lawyer?

At first glance, modifying binding arbitration back in July was not my first choice over new pensions for new employees. I support the Mayor on fiscal issues, so voting in favor of Measure V and giving residents the opportunity to support this measure is consistent with my line of thinking.

In a nutshell, Measure V would put limits on outside arbitrators. During the course of the campaign I have become more and more supportive of this measure. There are two primary reasons why it is important, neither of which are getting much publicity. One, the passage of Measure V will mandate that binding arbitration for public safety unions would be held as public meetings. Public meetings that the taxpayer could attend and see how tax dollars are allocated.

As it stands today, even Councilmembers that you elect are not allowed to attend these meetings.

Second, Measure V would require that the current out-of-town labor lawyer acting as arbitrator be replaced with a retired judge. Most people share the belief that a judge is more fair than a lawyer. Not every judge is perfect, however, I would pick a retired judge instead of an out-of-town labor lawyer to make a final financial decision under binding arbitration.

I have known many of our public safety professionals for more than 30 years. They are good people who do good work. However, the status quo of pay and benefits increasing faster then revenue actually results in less police and less firefighters for residents. The City has a legal obligation to pay pensions and does not have money left over to hire more police or firefighters.

I would suggest moving forward that the critics of Measure V explain the value of how the current closed-door binding arbitration process overseen by an out-of-town labor lawyer is better than Mayor Reed’s suggestions that would control costs and let taxpayers in the room. Instead, those against Measure V are attempting to mislead the voting public by sending out materials that are incorrect and contradictory as reported in a Mercury News article on Sept. 12 and again on Oct. 22.

As a side note, it was announced at the council meeting last week that the city paid out $14.6 million in accrued sick leave to retirees in July. It is a record breaking year that beat last year’s all time record of $11.7 million. Next year the potential sick leave pay out could be as high as $21 million which is equal to this years entire city wide library budget.

Also expected property tax revenues next fiscal year will be approximately $194 million while payments for pensions will be approximately $250 million! Perhaps we all write “reform pensions to hire cops” on our check this year to the Tax Collector or better yet: Vote yes on Measures V & W.

Also posted in Budget, Measure V, Measure W, Politics | Comments closed

From Last Place to First

As most of you are most likely aware from the front page article in the San Jose Mercury News on August 12, The San Jose Municipal Rose Garden was selected as America’s Best Rose Garden. What an incredible achievement! Congratulations and thanks to all involved including the paid park maintenance city staff and the non paid volunteers.

The rebirth of the Rose Garden could not have been done by only park maintenance staff or only by volunteers. It is the combination of both that allows for this fantastic achievement. And the leadership of Beverly Rose Hopper and Terry Reilly.

Just over three years ago, I walked through the Rose Garden park with numerous concerned neighbors and saw the decline and devastation. I knew then that our City did not have the resources to pay for staff to care for the park, nor would a band-aid approach allow the park to reach its potential. I also knew the City was behind the times with it’s volunteer policy. Instead, I proposed a pilot for outsourcing park maintenance. That caused the unions to assemble and defend the status quo.

Bringing up the topic of outsourcing allowed for the larger message to get out that this park and other parks need attention, especially with our structural budget deficit. Although outsourcing park maintenance, even as a pilot, was not approved in May 2007, I did push for and was successful in having council support amending the City’s volunteer policy in October 2007.

I remember asking several times then-Vice Mayor Dave Cortese to accept my friendly amendments to allow more flexibility in the volunteer policy, including a stipulation that corporations be allowed to have their employees donate time at San Jose parks on their community service days. This change allowed 250 Google employees and 150 Recology employees to volunteer in the Rose Garden this summer, for example.

The Municipal Rose Garden is a city landmark and now a national one. Volunteers include residents of San Jose and people from all of over the county. The volunteers are doers and not talkers, as they enjoy giving back to the larger community. I think they serve as an example of the JFK quote (with a twist): “Ask not what your city government can do for you, but what you can do for the community you call home.”

Municipal governments will continue to shrink as revenues will be constrained as pension costs rise. Therefore—now more then ever—residents could provide small increments of their time improving their local park, trail, traffic medians etc… Waiting on government will be taking longer then ever before.

However, residents may ask a fair question as to why cities do not do more to provide services at a lower cost. As the Wall Street Journal reported recently, San Jose will be saving approximately $4 million a year by outsourcing janitorial. The $4 million in savings was substantial enough to garner national attention and is the trend nationally.

I am very proud to live in a city where doers start with a dead vine and do not give up. As a result of the conviction from the Rose Garden volunteers, the City of San Jose Rose Garden is Number One!

Also posted in Budget, Parks, Politics | Comments closed

Pension Reform: Speak Now or Forever Hold Your Peace

The Rules Committee allowed my memo on Pension Reform to go before the City Council Tuesday, Aug. 3, to be considered as a ballot measure for San Jose voters this November. At the Rules Committee meeting, members of the public were few compared to the number of paid lobbyists that were in the audience.

I have a supplemental memo coming out today which will ask the Council to adopt the language below:

“To provide fiscal stability, control costs and maintain City services to residents, shall the Charter be amended to allow the Council, by ordinance and subject to the requirements of applicable law, to exclude any officer or employee hired on or after the ordinance’s effective date from any retirement plan or benefit of any plan?” (For example, this means we could exclude new employees from the 250% pension match.)

I have been a Councilmember for over three years and pensions have only increased in cost for residents of San Jose. The ability for the Council to have the flexibility and the option to negotiate a 2nd Tier would be a positive step for everyone involved, union members and taxpayers alike. Only through developing a new fair pension for new employees can we get to a point of trying to balance the structural budget deficit. However, during my three-plus years on the Council, discussions of 2nd tier always get postponed. “Kicking the can” is the easy thing to do, but San Jose can no longer pretend that our problems will go away.

Many of the union speakers at the Rules Committee last Wednesday mentioned that there needs to be dialogue, a process and time to discuss 2nd Tier. Actually my proposal does just that since changing the charter means we will still have dialogue and negotiations with the unions as obligated by law. A union lobbyist said Pension Reform would waste money since a second election would be needed once a 2nd Tier was agreed upon. Not so. As stated by the city attorney on Wednesday only one election would be needed since the 2nd Tier would then be implemented by ordinance which only requires a vote of the city council. The cost to the City to have Pension Reform on the ballot now is less expensive then a special election advocated by others.

Another union speaker was critical since my pension reform proposal did not mandate a specific 2nd Tier. This instead gives the Council flexibility in decision making as actuarial studies need to be completed as well as negotiation with our unions. Also, this allows the Council in future years to have the flexibility in adopting changes to a 3rd Tier should city revenues continue to deteriorate.

A letter submitted by a lobbyist for the union talked about needing two to four years to negotiate a 2nd Tier. This would be problematic—we should conclude negotiations within one year. Delay misses the opportunity to stop the bleeding. Another union speaker claimed the city is not hiring when that is not so. The City must hire to replace retiring employees. In fact 35 percent of the workforce is retiring in the next four years and it is important to lock in those cost savings. If we do not, each new employee carries 60 years of fiscal pension liability (30 in their career and 30 in retirement).

With all due respect, I believe the union leadership is missing the point. If we do not provide new pensions for new employees then the alternative will be to lower wages significantly and/or layoff employees. Laying off employees will affect residents. If the pension costs had not soared by $60 million this last year then we would not not be closing fire stations, libraries, postponing police academies and laying off other city workers.

The criticism I have heard from non-union people is that my proposal is not draconian enough and that the pension plans should be blown up. To them I paraphrase Voltaire: “Do not let the perfect be the enemy of the good.” Failing to act now will only lead to more obligations we cannot afford . Otherwise, do nothing and we will have more layoffs. Again, the increase in pension costs of $60 million dollars this year led to the layoff of city employees who provide services.

The ball has been teed up for the public. Speak now or forever hold your peace. Aug. 3 at 3:30pm. No need for a babysitter—City Hall is open to children. Bring a book or some knitting needles or both. If it is your first time to a Council meeting you may find you enjoy watching your city government in action.

The results of last week’s survey on November ballot measures, with 129 respondents, are viewable by clicking this link.

Also posted in Budget, City Council, Politics | Comments closed

Pension Reform Now!

My memo below will be discussed, next Wednesday, July 28 at 2pm at the Rules Committee which includes Mayor Reed, Vice-Mayor Judy Chirco, Councilmember Nancy Pyle and Councilmember Pete Constant. This is a public meeting.

Recommendation
Direct City Attorney to prepare legally binding ballot language for a ballot measure to be considered at the August 3, 2010 Council meeting for the November 2010 election allowing residents of San Jose to vote on changing the City charter by removing charter language regarding “minimum benefit” and “contributions/ cost sharing” in regards to pensions (Sections 1504 and 1505). Removing this language would allow the flexibility to negotiate a 2nd Tier pension for new employees whose hiring date is after January 1, 2011. This proposal would not change current legally vested benefits for existing employees.
Background:
Public pensions costs are soaring and forcing our City to reduce essential services to residents. In fiscal year (2009-2010) the cost of pensions was $138 million. In fiscal year 2010-2011 the amount jumped to $200 million. (The $62 million increase is double the citywide Library budget). In fiscal year 2011-2012 that number will grow to $240-250 million ( $240-250 million is approximately the annual Police budget) and could balloon to $350 million by 2015-2016 ($350 million is double the citywide Fire Department budget or more than the annual property tax and sales tax revenues)

The average private sector employer match is 3% for a 401K in the USA. In comparison, the City of San Jose as an employer matches at an 8 to 3 ratio or 250%. Individuals with retirement plans like a 401k, IRA and SEP IRA bear 100% of the investment risk. However San Jose employees do not have this risk and are guaranteed a net return of approximately 8% which means the gross return must hit 9%. The average combined return on the retirement funds for the last 10 years has only been 4.4% thus the taxpayer makes up the difference; this fiscal year alone it was $52 million. Therefore, since the taxpayers are responsible for paying the difference in pensions, I believe that residents should have the right to vote on whether or not they want to continue to pay sums such as $52 million in a single fiscal year.

It is imperative that the 2nd Tier pension be put on the 2010 ballot for the following reasons:

1). The City should give voters the opportunity to vote on the pension system. To not allow the voters the chance to vote on this issue is undemocratic. Some may say that we should just handle this “in house” and create a committee to look into alternatives and/or have closed meetings with the unions to try and negotiate an agreement. Closed door meetings would not be transparent and we do not know how many years it will take to negotiate or if a consensus of any kind can be reached by a committee or negotiations. Additionally, any recommendation that may come out of negotiations or a recommendation by a committee would need to be voted on in a citywide election anyway. We need to take advantage of the November 2010 election to know whether or not the residents of San Jose support a 2nd Tier retirement system for NEW employees. Delay will result in missing out on the numerous “Baby Boomer” retirements that will take place and be filled by new employees.

2). A 2nd Tier provides flexible options. The 2nd Tier may have a 1 to 1 match instead of 8-3 or it may have a 1 to 2 instead of 8-3 or it may be simply a new system like a 401K with a generous match from taxpayers of some reasonable percentage. Actuarial studies must be completed and presented prior to making a final decision. Retirement contributions from new employees and the city shall be put in an escrow account until a new 2nd Tier pension plan has been selected.

3). Reforming the pension system now will allow the city to balance the structural budget deficit and over time hire additional police officers, extend libraries hours and pave more roads in San Jose. If this is not addressed the rapid growth of the pensions will force our city to make additional cuts to essential city services or layoff more employees. Delay of pension reform may force our City into bankruptcy and raise taxes significantly. Even with higher taxes the new revenue is unlikely to keep pace with pension growth. This proposal maintains the benefits for retired and existing employees.

If the City Charter is not changed to allow the option for 2nd Tier system, the City will face continued severe financial duress.The current pension system is absolutely unsustainable and threatens the quality of life for San Joseans. Let the voters vote!

Also posted in Budget, Politics | Comments closed

Prioritizing Services That Touch Residents

Hope your Fourth of July holiday was fantastic. On June 29, prior to the holiday the Council made the final vote for a balanced budget. More than 20 people spoke at the Council meeting and all but one advocated that the Council not outsource janitorial services but rather keep the janitorial staff employed, since they provide an incredibly valuable service. You would have thought janitorial was listed in the city charter by the speakers’ comments.

All but one of the speakers advocating for the janitors were affiliated with a labor union or religious congregation. The religious leaders ranged from Methodist to Lutheran to Jewish to Presbyterian. I understand the brotherhood and sisterhood concept of labor unions uniting to advocate for spending taxpayer money to help another union member. I also understand the calls for social justice from the clergy. However I wonder if the janitor at the church or temple makes approximately $55K a year plus a 250 percent pension match and free lifetime medical (minus co-payments) for themselves plus spouse/partner. My guess is no.

The Council was called, “shameful” and criticized for “picking on the most vulnerable.” There were undertones of racism, since the majority of janitors are not caucasian.

The notion that janitors make the least amount of money is incorrect, as I have stated for months. A recreation leader in our parks and community centers makes in salary only $38,001 and a senior recreation leader makes $54,496. A library clerk makes $50,897 in salary only while a senior janitor makes $54,787 in salary only.

So since all three of these positions come from the same pot of money and around the same dollar amount, then it is a trade-off. If the Council chose to not lay off and outsource the janitors we would have to make those same cuts elsewhere to lay off staff that work in our community centers, or lay off staff that work in our libraries.

I chose and will choose to keep services that actually touch the million-plus residents of San Jose over services that do not add value for our residents. The ability to have a community center or library open is more valuable to our residents then who cleans City Hall. The new janitorial staff will be paid like janitors at Cisco and Apple but possibly more with the city of San Jose’s living wage requirement.

A big thanks you to the Alameda Business Association and Larry Clark for another great Rose, White & Blue Parade on Sunday! Congratulations to Cleveland Ave for winning 1st prize in the parade (three years in a row) for their creative float.

Finally, as an observer early this morning it was quite a sight to see six out of 35 stations working on suppressing the fire at Trace Elementary. Thank you to our Fire Department—fortunately there were no major injuries.

Also posted in Budget, Parks, Politics | Comments closed

Drama and Trauma

The two city council meetings held last week regarding the budget and labor negotiations demonstrated the need to make all labor negotiations public. If you are interested, you can click on this link and see for yourself the drama and trauma that took place that still does not have closure. This week’s meeting, June 22, will hopefully close this chapter.

I am and have been a proponent of conducting labor negotiations as a public meeting. Unfortunately, when the vote was taken last year to open up labor talks, the vote was a 9-2 against changing the process with only Councilmember Constant and I voting in favor. The process that exists is broken or to say the least, it is severely flawed. The current process of labor negotiations as private meetings hurts those it is meant to help: the employees and taxpayers.

Employees have no choice but to join their respective labor union and are dependent upon having someone else represent them at the bargaining table. It is up to those labor union representatives to inform their membership about the status and timely updates can be a challenge to a large unions. At the same time, Councilmembers are informed by the Office of Employee Relations (OER). However, councilmembers cannot really update residents of what is happening with labor negotiations and their tax dollars since these meetings are private instead of public. In addition the Council only gets one side of the story.

At both Council meetings last week, we saw the drama unfold of broken promises, innuendo, conspiracy theory, stories of personal financial hardship, co-opting of religious clergy and the reading of prepared statements. Behind the smokescreen of this drama were the real people feeling the pain and getting hurt, the employees and residents of San Jose. Both of these groups had to undergo the trauma of being tossed around in public with no one being able to share the full story. As I said at the meeting, 99 percent of city employees do a great job and are real people not faceless bureaucrats.

These city employees protect our safety, our property, our water, our young people, etc. However when you interject labor unions and secret meetings then it can lead to demonizing city employees when this is not fair. The blame should be on the current process which is maintained by both the labor unions and the city of San Jose management.

The taxpayer ultimately has the most at stake since they are the single largest group in San Jose yet they are the least powerful. The taxpayer has a right to know early on how much we have and what we can afford. Only through this dialogue can there be the opportunity for everyone to be on the same page and understand that if we as a city want more services or the same services we might have to pay more for it. On the other hand, if everyone is on the same page then structural change can be demanded so services are delivered more efficiently.

I am hopeful that the June 22 meeting is peaceful and we accomplish our duties civilly.

On a happier note, I am hosting the raising of the Rainbow flag at City Hall at 1PM, Tuesday, June 22 in celebration of the accomplishments and contributions of the Lesbian Gay Bisexual Transgender (LBGT) community in San Jose.

Also posted in Budget, City Council, Politics | Comments closed

Walk in Their Shoes

The Good News: The City has a counter offer from seven out of 11 unions to take a temporary reduction in compensation (by paying more of their pension contribution temporarily on a pre-tax basis). The Not So Good News: The offer is equivalent to $14.6 million of the $118 million deficit, thus layoffs and service cuts are inevitable.

The “Not So Good News” reminds me of what Bob Brownstein said at the meeting I attended about the budget deficit hosted by the labor unions last month: “Layoffs are unavoidable since the deficit is so large.”

First, I want to thank those unions that made a counter offer to the Council direction. The Council directed the city manager to ask for a 5 percent ongoing pay/compensation reduction and another 5 percent in one-time reductions for a total of 10 percent. Although the offer from the unions is only a temporary reduction and is less then 10 percent, it is still an offer which should be respected.

I think it is important to look at this current situation from the union’s point of view. Unions have their own internal power structure. There is the union business agent and other hierarchy that need to satisfy their membership while at the same time managing the unions overarching goals.

The membership is divided within a union; there are those would wish to not be represented by the union but they have no choice. Other union members object to the larger policies the union hierarchy may support and these policies may have nothing to do with the workers that are represented. Beyond that, there is more division between union members that have seniority and those who are new on the job.

I think it is an extreme challenge to be a union boss at this time. You have public opinion that has plummeted in viewing labor unions more negative then positive; falling union membership in this country to approximately 12 percent (or in other words 88 percent of Americans are not in a union), government revenues declining, residents resistant to tax increases and a membership body that is divided and oftentimes upset.

With this said, I think it is a big deal that labor unions made the city of San Jose a counter offer. I believe the union leadership has taken a lot of punches internally just for making a concession.

The concessions offered (although thoughtful) are not enough and the City will still have significant layoffs and service cuts to residents of San Jose. One-time cuts push the problem out to future years as past city budgets have done. Pushing off discussions regarding new pension benefits for new employees is problematic. Also, draining reserves at a time when we see falling property valuations in Santa Clara County which will result in lower property tax revenue for cities, instability of the economy, our “pick-pocket” state legislature that constantly takes money from cities are all reasons why draining the economic uncertainty reserve now as suggested by the unions is risky.

If concessions are not easily understood by the general public, then the public may continue to distrust both unions and city government (Another reason we need to have these negotiations held as public meetings). This distrust may not allow for any potential increases in taxes that may have merit for city services. For example the city of Campbell raised their sales tax to pay for city services. San Jose may indeed look at a November ballot measure to raise taxes like Campbell.

Therefore, I would encourage discussions at the negotiation table to see where the gap can be bridged between the Council’s goal of $49 million in concessions from these seven unions and the present offer of $14.6 million in temporary savings.

On a separate and happier note, hats off to the Willow Glen High school varsity baseball team and Coach Mike Reilly with an incredible record of 27 consecutive wins.

The 2010 San Jose Budget Trade-Offs Survey closes this week.

Also posted in Budget, Politics | Comments closed

Survey: Budget Deficit Tradeoffs

This year, the San Jose City Council is forced to make drastic cuts. Unfortunately, the city of San Jose has had a deficit for the last decade even before the Great Recession. In fact, even without the recession, San Jose’s financial obligations are significantly higher then revenues coming into the city.

As a result current elected officials are left with trade offs often having to pit necessary services against each other. This year the deficit is $118 million. This is more then the entire library, transportation, planning, code enforcement, information technology, city attorney and public works departments combined.

The purpose of the survey is to gauge your thoughts about what means the most to you knowing that difficult decisions are going to be made and for you to share your thoughts on how the city can save and make money.

For example, there are alternative cost savings ideas that I support like second-tier pensions for new employees the taxpayer can afford, selling the Hayes Mansion, selling one of three golf courses, requiring affordable housing to pay property taxes, outsourcing cleaning/maintenance to save money, capping accrued sick leave payouts, to name a few. These will take longer to implement, however. If our City would have considered these items when I first discussed them, we would benefit from the cost-savings today.

This survey covers choices that must be made by June 4. The Council and all non-union personnel have taken a 10 percent pay cut and have requested that all of the 11 employee labor unions do the same so we can bypass massive layoffs—thus we would be able to provide expected services to residents. A 10 percent pay cut from all employees will help; however we would still be left with an approximate $60 million deficit.

The survey closes May 30 at noon. Survey results will be published on May 31 on SanJoseInside.com

CLICK HERE TO TAKE THE SAN JOSE CITY BUDGET SURVEY.

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The Center of our City Center

Last week I attended evening budget meetings in Districts 3 and 5. The center of our city (District 3) had a high turnout from residents who find great value in community centers. Particularly, the Gardner and Washington Community Centers. Both facilities provide a place to go and where residents can be positively impacted. Classmates and friends of mine from Willow Glen High grew up in the Gardner area, formerly known as “Barrio Horseshoe.” It was a problematic neighborhood with many gang issues.

My friends in Gardner managed to stay out of the gangs because their parents would physically discipline them if they hung out with people involved in gangs, and kept them busy with chores and work. David Pandori and Cindy Chavez both worked hard to make improvements in the Gardner neighborhood and should be complimented for turning that neighborhood around with the help of passionate residents like Rudy Martinez. Also, praise to my colleague Sam Liccardo for continuing the Pandori/Chavez legacy in Gardner.

The other facility is the Washington Youth Center located in the neighborhood around Washington Elementary and Sacred Heart church. This is another area that has been dealing with gangs for decades. The Redevelopment Agency funded the construction of the Washington Youth Center and the adjacent library along with physical improvements to Washington Elementary. However the general fund is responsible for the day-to-day expenses. Many came to tell their stories of what these facilities meant to them. Some stories brought people to tears as they had family tragedies but also success stories of their children.

Some attendees came from other cities to advocate for our Therapeutic Services program that enables kids in wheelchairs to participate in sports like basketball. They come from other cities like Cupertino and Monterey since surrounding cities stopped offering these services.

There were those who asked, “Why did we ignore the structural deficit all these years?”

Many expressed their opinion that public safety unions should accept wage cuts to save city services and binding arbitration was unfair. Pastor Sonny Lara asked, “Why are people so generous with money for tragedies in other countries but we do not donate to our own local community?” My favorite quote of the night: “We need to stop electing politicians that promise us everything!”

If there was one theme in the District 3 budget meeting it was to keep community centers open. It was stressed by many that community centers and libraries save lives in certain neighborhoods and that these facilities act differently than in Almaden, Cambrian, Evergreen, Rose Garden and Willow Glen. Many felt that community centers and libraries should be open more hours in neighborhoods that have higher needs, which could be determined by crime rate, poverty rate, etc..

I was asked afterwards by several young people who were good role models if would I support their specific community centers over others. I said, “The easy answer is to tell you yes and then walk out the door and vote no.” However, I continued, “the idea of, should some neighborhoods get more services then other neighborhoods is worth debate.” I then asked the youth if they cared who cleans City Hall or would prefer that their community center stay open. They chose the community center.

I believe we should maximize cost savings in areas of our city that do not directly touch residents before cutting services that impact residents. Otherwise we are saying, “Sorry young people, the status quo on cleaning city hall is sacred and better then providing you services that would directly impact your future.” If you do not like this trade off of cleaning staff versus community center employee, then how about community center employee versus librarian or community center employee versus a police officer? Take your pick. Side note: Laying off new police officers is a double loss since we lose the investment/cost to recruit, test, background, academy, field train the new officer.

But let’s get back to the debate on providing more services to certain neighborhoods and less to other neighborhoods. I would acknowledge that higher needs exist in certain neighborhoods and that prevention is less costly than the worst-case scenario of incarceration. There is a disconnect between costs and responsibilities of the city and final costs that may end up on the County or State, but there is also limited sharing of revenue to achieve these goals. On the other hand, I do not believe every person in a certain neighborhood or zip code is affluent.

Within each neighborhood perceived to be upper-middle income, there are those who rent, have a mortgage they are struggling to pay, long- term unemployed, a single mom with kids, seniors on a fixed income, disabled veterans, etc. I assume these residents and specifically youth would want to have the opportunity to read a book or partake in an activity at a community center.

In addition these perceived upper-middle income neighborhoods pay higher property taxes and may feel that they should at least have equal neighborhood services. Personally, I think each neighborhood should get equal infrastructure like sewers, streets, sidewalks and streetlights. Equity in parks is more difficult because of the build-out of nearly all open space and the cost to procure it at today’s prices. (Such a tragedy that we lost out on approximately $90 million in park fees from exempting affordable housing from this fee.) When it comes to what amount of neighborhood services for each zip code, I am open for debate and would like to hear your views.

Is it fair to provide more service to specific neighborhoods? Is that Marxist? “Each according to his abilities to each according to his needs. Should government be neutral and provide exactly the same to all areas?

When people buy a more expensive home does that mean something? People choose to buy or rent in areas based on surrounding amenities and pay a price determined by other property owners and renters. Do we let that be the barometer?

Also posted in Budget, Parks, Politics, RDA | Comments closed

A Dollar Borrowed is a Dollar Earned

Last week, I attended budget meetings in council districts 9 and 10 as well as the labor unions’ budget meeting at the Tully library. The people that attended this meeting were mostly union members and city council staff. It was admitted at the meeting that significant layoffs were inevitable since the deficit is enormous.

Ideas were presented on what money-saving measures could be implemented and what new sources of revenue could be found to balance the $118 million budget gap. Ideas ranged from replacing natural lawns in parks with artificial turf (lower ongoing maintenance costs, but more costly upfront) to turning down the air conditioning at city hall during the summer. Others included putting banner ads on the city website for advertising revenue and charging owners of vacant property a fee/fine since they do not have a tenant.

Although many “creative” ideas were mentioned, none of them seemed to really tackle or help offset our deficit of $118 million—nor did the suggestions even get close to $1 million. Other thoughts were a “crash tax.” For example, if you were to get into a car accident and police or fire truck showed up, then you would pay $500 to $2,000, since you used city services. Another idea would have the city attorney sue code enforcement violators for fines owed rather then placing liens on their property as we do today.

There was a proposal advocating outsourcing. Really?! This concept would outsource the workers compensation program to a third party since it would be cheaper and faster then if the city continues to run it. Interesting that it makes sense for this program but not outsourcing city hall janitorial to keep swimming pools open!?

The major theme at the meetings, however, was about borrowing more money. There was a discussion advocating pension obligation bonds (POBs), which is an arbitrage scheme where the city borrows tens of millions of dollars in the bond market, and then we give that money to the city retirement funds, hoping the retirement board investment strategy earns more money than the city pays for its bonds. If the retirement fund does make more money than we owe the bond holders (and the associated investment fees), then the city can spend the difference. However if the investment return is lower than the city’s cost, then city loses even more money. Similar to a cash advance on a credit card and then investing the cash advance amount in the stock market and hoping that the stock will have a higher return then the credit card interest rate. Also, by issuing POB’s the pension obligation, which can vary over time due to investment returns, becomes a hard liability in the sense that debt service is fixed for 30 plus years.

Probably, the «best» idea, was to borrow money by taking out tens of millions of dollars in one-year notes/commercial paper to pay for ongoing city services. Then, when these notes come do in 2011, we would issue more notes to cover the original 2010 notes. When the 2011 notes come do in 2012, we would issue more notes again for 2013 and so on or until city tax revenue came back.

First, the revenues will not come back to pay for existing city services since pension obligations as a percentage of the general fund will continue to grow faster than revenue coming into city coffers. Second, this bright idea is like a consumer who charges up one credit card and then gets another credit card to pay off the previous one and so on. Issuing commercial paper to cover ongoing operations would hurt our bond rating and banks that provide San Jose with Letters of Credit will look at the city as irresponsible. I cannot recommend this type of borrowing/financing for city services as it passes on the problem to another eneration. We are partly suffering now because of the lack of tough decisions by previous elected officials at all levels of government.

“We should avoid ungenerously throwing upon posterity the burdens that we ourselves ought to bear.»—George Washington

Also posted in Budget, City Council, Politics | Comments closed

Here Come the Cuts

The City Manager will release the list of proposed cuts to balance the city budget today (March 29). These cuts are based on no concessions from any of the labor unions nor savings gained through outsourcing of janitorial services (among others) to save money.

Money saved from outsourcing could help pay for library hours or the aquatics program, for example. The question of concessions has been out there for months and could be included in the budget. Agreement would need to be reached in early April since layoff notices would start going out April 19. If concessions are made then some of these cuts could be avoided but in lieu of an agreement in hand here are some of the proposed/likely cuts.

As it stands now, 802 positions would be eliminated, of which 656 are filled positions, which closes the deficit of $118.2 million. In addition, there were services that were funded last year with one-time funds ($7,476,000), such as library hours, community centers and the SJPD horse-mounted unit, which will be going away as well, accounting for 77 filled positions.

Library:
Eliminate 104 positions to save $7.4 million in 2010-2011 and $7.9 million in 2011-2012. Neighborhood branch libraries would be open three days a week and the MLK Main library would reduce hours 12 percent. Delay opening of new Seven Trees and new Bascom libraries saves $2.3 million for library staffing. Does not include community center staffing costs.

Parks, Recreation & Neighborhood Services:
Eliminate 38 positions to save $4.3 million in 2010-2011 and $5 million in 2011-2012. Close smaller community centers.
Eliminate 12 positions, saving $836,000 in 2010-2011 and $854,000 in 2011-2012. Reduce maintenance staffing at parks; restrooms open only on weekends except in summer. Eliminate 10 park rangers, saving $634,000 in 2010-2011 and $848,000 in 2011-2012. Eliminate 24 positions, saving $630,000 in 2010-2011 and $637,000 in 2011-2012. Reduces aquatic program to only 2 pools in San Jose. Eliminate two positions in Code Enforcement, saving $302,000 in 2010-2011 and $323,000 in in 2011-2012.

Fire:
Eliminate 90 positions (88 are filled), saving $12 million in 2010-2011. 2011-2012 costs determined through binding arbitration. Reduce/suspend fire apparatus and fire fighters at station 30 Auzerais, Station 33 Communications Hill, Station 34 Las Plumas, Station 35 Poughkeepsie, Station 3 Martha Street and one other station yet to be identified.

Police:
Eliminate 160 positions (153 are filled), saving $25.5 in 2010-2011. 2011-2012 costs determined through binding arbitration. Reduce police patrols; eliminate funding for new officers; reduce Metro Unit; reduce Investigations unit; reduce Downtown services unit; delay opening of Police Substation; reduce Financial Crimes unit. Reduce the Crossing Guard program by 8.3 positions to save $354,000 in 2010-2011

Transportation:
Eliminate 12 positions for capital projects, including transit and bike/pedestrian projects. Saves $1.4 million in 2010-2011 and $1.6 million in 2011-2012. Eliminate 9 positions for Neighborhood Traffic Calming. No more traffic studies and no implementation of traffic calming tools. Saves $921,000 in 2010-2011 and $999,000 in 2011-2012. Eliminate five positions for residential street sealing. Saves $375,000 in 2010-2011 and $415,000 in 2011-2012.

Convention Center:
Eliminate 25 positions to save $1.9 million 2010-2011 and $2 million in 2011-2012.

This list is not comprehensive and may/will fluctuate based on final Council adoption of the budget in June.

Also posted in Budget, Parks, Police | Comments closed

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