Alameda’s fiscal quagmire has many people pointing fingers. I say point up. The money that will help solve long-term budget and pension problems is at the top of the pay scale.
In Alameda, we’ve already eliminated jobs, combined departments, and cut hours while trying to increase revenues. Aside from ever-increasing healthcare insurance premiums, we’re left with cutting employee compensation costs.
In 2010, 461 city employees earned more as individuals than Alameda’s median “household” income of $77,868. Many working families are up in arms over the high earnings and the out-of-line pensions they generate, as they know they work hard for a lot less.
Some are questioning the hiring model that says you need exorbitant salaries to attract and retain “competent” employees. But it was these high-paid employees and the outside consultants hired to assist them who made the recommendations that led us down the unsustainable financial path we now find ourselves on, and who are now scrambling to find a way out.
Others question using an across-the-board percentage when giving raises or making cuts. Although it sounds fair, this is the easy way out and leaves those at the top much better off.
Collective bargaining has brought generous retirement packages and other benefits to union members. But all working families deserve the security of a reasonable defined-benefit pension in their retirement years. Our current pension problem comes from calculating benefits based on excessive wages and allowing retirement at an early age.
Alameda should consider two recent proposals that don’t put the burden of long-term budget balancing on new workers and that address inherent flaws in the current system. Both proposals offer a pathway to sustainability in the local budgeting process.
On February 24, the Little Hoover Commission, “a bipartisan and independent state agency charged with recommending ways to increase the efficiency and effectiveness of state programs,” issued recommendations to deal with California’s financial situation. They recommended capping at $90,000 the amount of salary used to calculate pensions, raising the eligibility age for receiving pension benefits, requiring both employees and employers to share the costs of funding pension plans, and preventing “pension spiking” of one’s final compensation.
On March 31, Governor Brown announced a series of pension reforms he plans to pursue. In addition to some of the Hoover Commission’s recommendations, he proposes eliminating the purchase of “airtime” (buying time without working it), calculating final compensation based only on the last 36 months of employment and the employee’s normal rate of pay (no overtime or perks), limiting post-retirement public employment, and providing a hybrid retirement benefit option.
Pointing fingers gets us nowhere, unless they are pointed to the solution. The top is a good place to start.
Originally published in the Alameda Sun.