By Donnell Rubay

SOONER OR LATER, WE WILL BE ASKED to pay for the budget shortfalls caused by high city salaries and the generous pensions those salaries create.

Already our water bills are on track to rise by $400 per year for average use. Now — according to “Not out of the woods; Shortfall to persist” (Benicia Herald, Jan. 20) — city staff is suggesting a sales or parcel tax increase, or an even greater increase in water rates by the addition of a utility users tax. Then, of course, while city staff “appreciates the importance of supporting the community” via cooperative efforts with other organizations like the Benicia Unified School District (BUSD) or the Camel Barn, staff adds that given the current funding situation, perhaps the City Council should “revisit these funding arrangements.” (Translation: The city should hold on to more of its money.) And while cost-saving suggestions in the article do include reducing expenditures, staff believes it has little room to reduce employee costs much further.

Apparently, city staff has already taken a 10-percent pay cut — which sounds like a lot. But consider:

1. Any salary reductions have been primarily in the city-paid portion of employees’ retirement contribution. Paying one’s own contribution to one’s retirement is something most non-city workers already do.

2. By paying an employee’s contribution in the first place, the city can mask the amount the employee is actually paid. For example, Benicia teachers must pay their own retirement contributions. This means that for every $1,000 of a teacher’s published salary, he pays roughly 8 percent (or $80) to his retirement, leaving him with only $920 of usable salary. In contrast, if an employer is paying the employee’s contribution for each $1,000 of posted salary, the employee has a usable salary of $1,000 and an actual salary (salary including his retirement contribution) of $1,080.

3. It is not so easy to see what city salaries are. Yes, salaries are available on the city’s website, but the information can be confusing and is not easily searchable. Last year the Contra Costa Times and other newspapers created the Public Employees Salaries Database (“PESDatabase”), a marvelous, easily searchable database of public employee salaries in the San Francisco Bay Area. Many government entities provided their salary data, including the BUSD. Not included, however, is data from the city of Benicia.

4. A check of the PESDatabase reveals that for medical, dental and vision (MDV) in 2011, Benicia teachers topped out at $8,762 per year. A scan of the city of Benicia’s Compensation Report shows many employees receiving yearly MDV benefits of between $15,000 and $20,000.

5. Reviewing Benicia salary data for 2010, the city had at least 70 employees with a TOCE (Total Cost of Employee) of more than $157,000. (According to the Contra Costa Times, this is the salary of your average primary care doctor in 2011.)

6. High salaries yield high retirement costs. According to figures I received from the city in 2011, for 2011-12 the employer retirement contribution rates the city was required to pay — which are in addition to the rate employees are required to pay but which may be paid by the employer — were projected at close to 15 percent for non-safety and around 26 percent for safety (police and fire) personnel. This means for someone earning $100,000 per year the city pays an additional $15,000 to $26,000. Compare this to the retirement contribution rate per teacher paid by BUSD: around 8 percent.

7. From 2007 to 2011 all city staff groups received three to four salary increases. For most groups this was a 2-percent increase, with one being 2.9 percent or 3 percent, for a total increase of 6 percent or more. In contrast, Benicia teachers have not had a raise since 2007 and have been offered 1.5 percent this year. Interestingly, Sunday’s Benicia Herald also talked about the unhappiness of Benicia’s teachers who, in addition to not having had a raise since 2007, have also taken furloughs and seen their workload increase via an increase in class sizes. (Remember those 20-student elementary classes? They now typically have 32 students.)

From the above we also see that teacher medical benefits are a fraction of what city employees receive. Teachers pay the full amount of their share of retirement contributions and their employer contributes around one-half to one-third for its share, compared to what the city pays for its employees. On top of all this, city staff is proposing to close the city’s shortfall by reducing support to community organizations and raising taxes and fees — actions that will increase the burden on teachers by raising their cost of living.

I can hear the city now: “Well, the city has ‘agreements’ that it can’t change, so it is limited as to how much it can lower staff income and benefits.”

Perhaps; but here are some things the city can do:

1. Immediately submit its salary data to the PESDatabase. If citizens must pay higher taxes, they have the right to know — easily and clearly — how the money is being spent on salaries.

2. Allow union negotiations to be public. Obviously, personnel discussions concerning individuals should remain private, but discussions concerning proposed rates for bargaining groups — and involving final salaries that will be public information — will cause no privacy breach. If citizens must pay higher taxes, they have a right to observe negotiations determining how that money will be spent.

3. Consider adjusting medical benefits to match those paid by the BUSD. Teachers and city staff are equally important. One should not have to pay for the excessively generous benefits of the other.

4. If money is at such a premium, reduce employee costs via staff reductions and furloughs. If the city needs tips on how employees and the community can come together and do more with less, check with the BUSD.

5. Explore the use of contract workers or consider following the lead of Orinda, Lafayette and Danville, which have defined contribution retirement plans rather than pensions. Either system allows the public to know today the cost of city workers without creating a future pension liability (that will need to be paid even if the city loses its primary taxpayer, Valero).

But, staff insists, “compensation cuts are affecting Benicia’s ability to attract and retain employees.” It seems the city must continue to provide staff with overly generous salaries and benefits or it will be unable to attract, and keep, applicants worthy of hire.

Some thoughts on this:

1. Orinda thought about this at the time it implemented its defined contribution plan, yet no problem materialized. That city had more than 400 applicants for an office assistant position, while a search for a finance director yielded “a great pool of candidates” (“3 pension plans that buck trend,” Contra Costa Times, Sept. 10, 2012).

2. Apparently we need to provide high salaries and benefits to get quality city service, yet without such salaries and benefits we have an outstanding school district, which is the envy of many.

3. To insist that overly generous wages and benefits are necessary to get applicants worthy of hire is an insult to every person who earns less than city pay, including every Benicia teacher.

Ultimately, the best result would be plenty of money for everyone. Until we can reach that ideal, it is possible to achieve a fairer distribution of the money we do have. Reduced taxes and fees, for example, can benefit everyone.

Beyond that, if we must pay higher taxes — considering our needs as a community that include schools to educate our children as well as city hall — how, in good conscience, can we use that money to support overly generous city salaries and benefits?

Donnell Rubay is a Benicia resident. She has a degree in economics from the University of California-Berkeley.