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Do We Owe City Employees Lifetime Employment?

Original post made by Chris on Mar 20, 2007

Diana Diamond, who has become the bete noir of those wishing to expand the size of government in Palo Alto on another thread here (Web Link ), has likely jumped from the frying pan into the fire with her column in the print edition of the Weekly (posted online here Web Link.

Before the usual suspects drown us in vituperative dogma, it might be interesting to get a rational discussion about the issue started.

Diamond makes some very good points that seem to counter very effectively the union's arguments on cost, quality and safety of outsourced work. She also compares Palo Alto to neighboring cities in a way that makes it look like we have more workers than we need at first blush.

She also confronts head-on the moral/political arguments about what we "owe" the union employees. She says the city's first responsibility is to provide services to its residents in the most efficient way possible. She seems to dismiss any argument that we owe the union employees something "just because" they're on the payroll, regardless of whether they're doing best what the city requires.

Is this right? Are we, in some manner, responsible for the welfare of anyone who works for the city - for life? The mayor's recent state of the city speech indicated just how deep a hole we're in specifically in large part because of pension liabilities. Do we want more of this, or can we shed them by getting rid of any 'excess' employees?

More broadly, given the union flyer Diamond describes, are we on the way to becoming something akin to the old line East Coast Industrial cities where municipal unions are perhaps the strongest political players - players that have to be satisfied before any policy change affecting their interests is made? Is this what we want given that most employees don't even live here?

Comments (31)

Posted by kfeWT, a resident of Crescent Park
on Mar 20, 2007 at 2:00 pm

Diana Diamond seems to be in the Frying Pan :-) She seems to enjoy it. If I were her I bet I would enjoy this.

Actually lets look at this carefuly. It is not Diana Diamond who is in the frying pan. It is the residents of Palo Alto who are in the frying pan. She is just telling us so in no uncertain words.

It is true the city is in trouble thanks to the excess city employees (who keep saying that they are hard working souls) and the management is to be blamed, and the mangement blames something else.
We need a council who can control this mess by not listening to any side whatsoever - because when that happens the entire situation gets murky - and when you look at the arguments presented nothing can be cut.
The ONLY way to fix this - and I hope the council is listening - cut employee workforce 20% across the board. No discussion - no arguments. We simply cannot afford this mess. After that allow some time to reorganize, then cut another 10%.

Needless to say we have too many city employees. Wait for these employees to get older and we have an EVEN BIGGER PENSION mess.

Who do you REALLY think is in the FRYING PAN ???


Posted by Naysayer Slayer, a resident of Another Palo Alto neighborhood
on Mar 20, 2007 at 3:06 pm

With apologies, in advance, to Ogden Nash....

Ho-hum...yawn...here they come
Naysayers shouting again, all as one

(by the way, one's just shy of what they have
the polls clearly show they can't be saved)

"We can't" "we won't", they scream and yell
As they follow their fearless fiction-writer, Diana

"Watch out" they warn
Whoops! they exhort as slip on their very own rotten bananas

The naysayers say "The City conspires to make us poor"
What they forget is that their fading day is over; it's a bore
(can't they see that Palo Altan's want more?)

What Palo Altans want is a positive future -
not one that requires suture after suture

From vicious cuts and slashes made
as fading naysayers drink their kool-aid

So let them scream and let them shout
Let Diana help them knock themselves out

Soon our city will be fresh and new
With helpful city employees, and me and you

Living our lives in a city with hope
Instead of the naysayer's cries of "nope!"


Posted by Peter, a resident of Southgate
on Mar 20, 2007 at 3:31 pm

It seems to me that draconian solutions such as those proposed by kfeWT are simplistic and would cause more problems than they might fix.

First, how do you define an "excess employee"? How do you know the city has too many employees? I don't understand how someone sitting on the sidelines can decide these questions without hard evidence, and I don't mean anecdotal evidence ala "My friend saw a utilities worker standing by idle."

Looked at closely, I also suspect that the population/employee ratios that Diamond is fond of citing, would, on closer inspection be influenced by the kinds of demands the citizens make on the government and the level of services the citizens had become used to over the years.

Another culprit is the crippling effect of Proposition 13 on the ability of municipalities to fairly spread its citizens' tax burden, coupled with the unwillingness of the citizenry to be taxed to deal with infrastructure maintenance and other legitimate ongoing needs.

Solutions like "...cut employee workforce 20% across the board. No discussion - no arguments. We simply cannot afford this mess. After that allow some time to reorganize, then cut another 10%..." simply ignore the reality of running an organization as complex as a city government. Try that and listen to the anguished cries of the citizens. Also deal with the flood of good governmental employees who leave after being overloaded with the work they'll be asked to take on as a result of such a bloodbath.

I think you'll find that, If necessary, selective pruning is much more productive.


Posted by Paul Losch, a resident of Community Center
on Mar 20, 2007 at 4:29 pm

I consider Diana to be a friend, and she has graciously quoted me in one of her recent aritcles. I really would like to see Diana or someone engender a discussion on what it is we want this community to be all about in the next 30 years--I refer to it as "The Character of Palo Alto."

If we were to do this as a community, I believe that it would be much more clear what sort of revenues should be generated, what the sources of those revenues should be and what the "mix" of those sources should look like over a multi-year time horizon. We also would be much more clear about what aspects of our community's services, infrastructure and other expenditures are "mission critical" and which ones are either no longer needed, possible to do differently going forward than they have been done in the past, which should continue as they have, and which ones are needed we don't have presently.

The small company I own does business with certain types of retailers. Whole Foods is an example of one of our customers. Safeway is an example of another grocer which is not one of our customers. Why is that? Because my company makes products that fit well with the character of Whole Foods as a store, and with the character of the people when they choose to shop there. Not a fit with Safeway. This is just a fact, not a value judgment.

I am sure that Whole Foods compares itself to Safeway on a number of measures, and I suspect Safeway does the same. But, my hunch is that Whole Foods is not attempting to figure how it does what it does with an employee head count that matches that of Safeway. Nor do I think Safeway feels that it can charge the types of prices that Whole Foods does for what on the surface may be comparable items.

But they're both grocery stores, right? And Palo Alto is a city, just like other cities, right? Maybe there is a bit more to it than that....

With all the good strategic thinking capabilities we can harness in this community, I think it is time to really get a clear, well developed statement (a "mission") of what those of us who care about Palo Alto believe that character of Palo Alto is to be for the next 30 or so years. What we have right now is an elephant getting its various parts described by the blind men.

To my way of thinking, if our community leaders can engender and reach closure from such a discussion, many choices we face about our revenue options and our expenditure decisions will start making better sense.

There are times when I stay at Motel 6, and times when I stay at the Marriott, and at other times Four Seasons. I do them all. But I know what to expect at each, and they are not the same expectations. After all, each has its own distinct character.

What is the Character we want Palo Alto to have?


Posted by Fred, a resident of Barron Park
on Mar 20, 2007 at 6:57 pm

Benchmarking is a good place to start, but it is usually more useful for diagnosing problems, not so much for fixing. If we found out that Mountain View (say) gets by with a lot less city workers, then the question is which departments? How are they organized differently? Do they do the same things? Etc. Usually, not always, you find that the differences are not quite so broad as maybe they seemed at first blush and bridging those gaps often require bigger changes than you might have hoped. But it often points at good places to look more closely.

THAT SAID - organizations get fat and need to go on a diet. This is a well-established fact, driven by simple human and organizational dynamics (I won't bore you with my grad school baggage!). McKinsey, the consulting firm, used to (and maybe still does) do a good business in OVA - Overhead Value Analysis - basically doing detailed benchmarking and analysis on where to cut overhead workers. The cool thing - even after the cuts, they could be pretty sure they'd be back in 3 years, since the underlying drive to fatten up was always still there.

So, it would make sense that if Palo Alto hasn't cut much in a while, we probably could use a diet. Probably not 10% across the board - though interestingly, the newly elected Democratic Governor of Massachusetts just announced similar across-the-board cuts, all the more interesting since his predecessor, Republican Mitt Romney, made his considerable fortune as a tough-as-nails captain of industry - but some goal like that needs to be hit, to drive the organization to make hard decisions.


Posted by Chris, a resident of Palo Alto Hills
on Mar 20, 2007 at 7:32 pm

Paul makes a good point. At some level of analysis, we do have to decide what kind of city we want to have, and that will determine (to a degree) both the number and kinds of employees we have.

But I think Fred's post is more apposite. Whether we stay in a Motel 6 or a Four Seasons, we want the establishment to be well-run for what it is, and we want value for our money.

The essence of Diana's column, and of the comments of many posters on this forum is that this is not the case in Palo Alto. It is a question that is out in the open, and it bears on so much of our budgetary problems, that it will have to be addressed sooner or later. Given the precariousness of our finances, sooner likely is better.


Posted by Fred, a resident of Barron Park
on Mar 20, 2007 at 8:04 pm

What is all the "naysayer" stuff? I've seen that on other threads. What does it mean? Who are the "naysayers"? Are there "yeasayers" as well?


Posted by Paul Losch, a resident of Community Center
on Mar 20, 2007 at 8:21 pm

There have been cuts in staffing and employees over the past several years, and so far, it does not appear that they have "hurt" in the sense that it has meant the community is not getting "something" that it was getting before. What people in City Hall say now is that if there are further cuts at this point, they will be felt.

One area that I think may help us more fully understand the cost structure question is "work flow." The Palo Alto process is revered by some, reviled by others, but one hypothesis I have is that since it is part of this community, it may have caused work flow within many departments to become a more costly matter, compared to work flow in other cities dealing with similar projects, such as approval of a new building.

I do recall a few years back that the Auditor found some efficiencies that could be brought to bear within the Planning Department, and its Director Steve Emslie (whom I also know and have worked with a bit) was very supportive of the findings. I don't recall the specifics, and to what extent it was work flow related, nor do I know to what extent the Auditor has been asked to examine work flow in various City functions to see if Palo Alto's are or are not comparable.

So, I think a reasonable question to ask is "To what extent does the work flow for common city activities in Palo Alto compare with other cities?" This is a different question than "how many employees do we have compared with other cities?" If the answer is that work flow is different for Palo Alto on certain things, it then becomes a question of whether it is that way for understandable reasons, or if it has gotten that way that is not explainable.

It may be that if certain work flow is quite different, it is that way because the "Character" of Palo Alto calls for such an approach. In such a case, it is acceptable, provided we have addressed the character matter. Or it may be quite different for no explainable reasons, and it may need more careful review and modification.

I don't know to what extent Frank Benest and his key folks have thought about this sort of thing, I may ask him next time I see him. If they have been looking into it, it would be great to learn more about what they have concluded, not much has been said about it. If it has not received much scrutiny from them in this way so far, it may be that now is the time to start doing so.


Posted by Chris, a resident of Palo Alto Hills
on Mar 20, 2007 at 8:56 pm

Paul,

If I read you correctly, you're suggesting that perhaps the Palo Alto Process adds inefficiencies to the city's operation which accounts for the apparent lower output per employee here as compared to other towns.

An interesting hypothesis, which you would think that city management would be quick to investigate since it seems to say "it's the residents' fault" (which naturally is a common sentiment among the rank and file of city workers from what one hears.)

Do you have any thoughts about the tenacious efforts of the SEIU to thwart any plans for (further) outsourcing? This would seem to suggest that the unions are engaged in rent seeking activities - This is not necessarily inconsistent with your hypothesis, but it suggests that maybe there are some excess costs for labor not accounted for by your notion.


Posted by Paul Losch, a resident of Community Center
on Mar 20, 2007 at 9:30 pm

Chris,

I really don't think the work flow matter is intertwined with efforts of the union representing certain employees as I think you are suggesting.

Here is an example of something I have first hand knowledge about, which I will disguise a bit for reasons of confidentiality.

There is a function in the City which involves several employees, one of whom is full time, and others who are involved in it for 1/4 to 1/2 of their time. It involves dealing with members of the public at several levels--individuals, organizations, neighborhoods. It also is quite complicated logistically, and invariably no matter what the city employees do around this matter, some parties will feel that they are getting the short end of the stick.

So, the employees allocate a great deal of time meeting up front each year with various stakeholders both formally and informally to make sure there are clear understandings all around, and when something does not appear "right" to certain stakeholders in the course of the year, a good deal of time is expended getting issues and concerns on the table. At a minimum, people leave with a fuller understanding, and often actions can be taken to reduce perceived negative impacts of some of the actions the city employees must take to do their jobs in this area.

From what I observe of this set of employees, they do a great job of keeping a potential powder keg from exploding. But, the approach they take could be described as very much in keeping with the Palo Alto process, and I suspect other cities are not as diligent in working with various stakeholders--there is more of a "Tough luck" posture elsewhere.

On the surface, there probably are more FTE's involved in this set of activities in Palo Alto compared to other cities because of the way it is handled. (The level of demand by the community may also be greater compared with other communities, but let's not get overly complicated here.) More of a 4 Seasons approach than a Motel 6 approach, if you will. The work flow in Palo Alto is likely very different from what we see in other cities. It is explainable why. Does that mean it should be that way? I hope my disguised but very real example demonstrates that the answer to the question is not exactly a "no brainer."

I would not characterize what goes on in this area as inefficient, to use a word you suggest. People in this area seem to go about their jobs in a diligent manner, and I have seen some very interesting innovations over the years I have had dealings with this group of folks that have greatly improved their work product and their productivity. But I would be the first to say that the responsibilities could be handled very differently, and the work product the community would get also would be very different, and regarded less favorably.

Back to the Character question. Chocolates on the pillow? Quarters for the magic fingers bed? Pay at check in or at check out?


Posted by Chris, a resident of Palo Alto Hills
on Mar 21, 2007 at 8:45 am

Paul,

I think there is some validity to your point that the attempts of the city staff to accommodate the demands of the Palo Alto Process account for some of the differences in measured output per worker some have noted between Palo Alto and neighboring cities. (If we have workers who are engaged in mollifying various interest groups instead of doing what is normally measured, we will seem less efficient because the statistics don't measure everything our employees are doing.) I will accept that there is some of this going on in Palo Alto, and even your inference that it's something the community wants more than some surrounding communities. It would be nice if we could get a better handle on this phenomenon, but I have many doubts that this can be done since it's by nature ill-defined.

I continue to think that a more fruitful line of inquiry in the short term might be to look for more straightforward examples of real, measurable inefficiency as traditionally defined. I think the outsourcing 'controversy' described by Diana Diamond is a good example. Mowing the grass at the parks doesn't involve a lot of handholding of stakeholders. If outside contractors can do that part of the job more efficiently, shouldn't they.

Whether we decide we want chocolates on the pillow or magic fingers, shouldn't we insist they be provided in the most financially advantageous way?


Posted by Paul Losch, a resident of Community Center
on Mar 21, 2007 at 9:47 am

Chris,

We are largely on the same page. I merely am pointing out that when one looks at work flow on many things done here in town, we may find it is different, and that is because that is the way people have wanted to be served in the past.

The tricky thing with work flow analysis is that there may be situations where even if it is done well and efficiently, there is a re-engineering opportunity that can improve the costs, or the level of service, or whatever. We see this all the time in the private sector, and it has occurred in Palo Alto government, although it is not something that always is recognized as such.

My other point is that we are more likely to find ourselves facing these types of questions, as opposed to low hanging fruit. There may still be some, but it won't fill the basket.


Posted by Chris, a resident of Palo Alto Hills
on Mar 21, 2007 at 11:50 am

Paul,

You may well be correct that the low-hanging fruit (inefficiencies as usually defined) has been largely harvested, though events like the SEIU action on outsourcing, described by Diamond, would seem to put that in some doubt. (I don't mean to belabor this point, but I was struck by Diamond's column - the basic facts of which I assume are accurate, and to my mind there are few explanations of it that don't involve some sort of rent seeking by the union.)

In any event, there seems to be widespread perception that we are wasting significant amounts of money on our workforce, and the comparisons with surrounding cities like Mountain View are striking - no matter how difficult one tries to explain the differences in employees by describing higher service levels. (And I would think - as a political matter - the task of attributing the differences to some sort of stakeholder satisfaction maximization strategy would be even more problematical.)

I don't think there will be a lot of support toward moving forward on the kind of civic philosophical discussion on what we want the character of the city to be like until and unless something is done to address the perceptions - mythical or not - that our labor costs are out of line with other cities, and that we aren't receiving value for expenditures in that area.

In my mind, this should be the first order of business. I don't think most sceptics would trust the city to do its own investigation or study - though Sharon Erickson does seem to have a lot of credibility. Perhaps as Fred's post above implies, some outside Mckinsey-type expertise might be appropriate.


Posted by Paul Losch, a resident of Community Center
on Mar 21, 2007 at 12:59 pm

I think it is a matter of managing expectations. It is very easy to project in any direction from one data point--in this case what happens around parks maintenance employees or outsourcing.

Diana's larger point, as I understand it, is what sort of understanding does the city have with its employee base? If the model of employment, in this case a compensation structure that dates back 3 decades or more, no longer fits with the current conditions, we need to come up with an approach that is appropriate for the next period of time.

As to the widespread perception around this issue, I really would like to get past perceptions, and into reality. I am not suggesting that there are not ways to better manage our headcount and payroll, of course there are. There always are. But the "perception" or "suggestion" that we are wasting significant amounts of money on our work force is a non starter for me. If we want to have a stated objective of reducing payroll as a percentage of total city expense by a certain amount, we need to do that. I just have some serious mis-givings that it will be done with efficiency experts coming in and finding huge pockets of opportunity to garner such savings. It is a more subtle and sophisticated game that we have to play, even if the stated objective is clear, simple and straighforward.

You and I have exchanged thoughts about this before. I do believe that what we have right now is actuarily unsustainable, and we need to figure out what can be a structure that is fair to employees, attracts and keeps high quality personnel, and that is within the city's financial capacity going forward. That is where we will get savings and sustainability, I think, not by finding egregious waste.

I canot respond to your Mtn. View comparison, because if we are talking about structure, that is different than head count and job responsibilities, which are part of the work flow question we had earlier.


Posted by Chris, a resident of Palo Alto Hills
on Mar 21, 2007 at 1:49 pm

I have a couple of responses to your latest post.

You may very well be right that there are no efficiency gains to be had through examination of the current workforce and management structure. I am not conclusively persuaded by the anectodal evidence offered by Diana and others, but it seems to me there is enough there to merit some sort of analysis. My bigger point is that as a matter of political reality, there is enough worry in the community about this, so that addressing the point is necessary to gain enough political consensus to do anything at all. (You have, I am sure, taken note of the discussion of the apparently forthcoming bond issue, much of the opposition to which hinges on the employee cost issues.) So whether it is a non-starter for you or not, it is very much an issue for many others. I think it needs to be addressed both because it may offer more significant savings than you seem to think, and because in any event, it will (perhaps) get an issue that is interferring with everything else the city tries to do behind us.

I do not disagree substantially with your list of paramaters which you say must be addressed going forward. However I do think that it's maybe more constrained than it needs to be. That is, I think you over-define the problem and therefore the possible solutions.

I don't think we necessarily have to get too far into what you call work-flow and structure as a starting point to any analysis. Palo Alto, like all cities, provides services to its residents. Mountain View, by all the metrics available, seems to do it more efficiently than Palo Alto. Whether there are unmeasured aspects to the service that Palo Alto provides (like your stakeholder mediation) that accounts for the differences in the measured metrics is quite possible - but to me at least, very much open to question. Would it not be desirable to at least examine this?

I agree with you about Diana's larger point - the "understanding" with respect to the employee base. It is interesting that not many people seem to want to talk much about this. It's not a hard problem to define: Diana does it very well in a short column. But it's (apparently) dicy to talk about. I keep returning to the outsourcing issue in our conversation because I think it's relevant. Assuming, for sake of argument, that Diana is right about the cost savings and quality equivalence of outsourced park maintence, do we nontheless owe it to the prople who showed up at the CC meeting in purple shirts to employ some of them at higher cost because of some moral or legal or other obligation? If we don't, we may have more flexibility than we think in addressing our budgetary problems. If we do, then perhaps we have fewer options, and a more preordained future than we like to think




Posted by Paul Losch, a resident of Community Center
on Mar 21, 2007 at 3:26 pm

Chris,

We are largely in agreement around the various questions this string is posing. I call it a non-starter because I don't think we will find a great deal of what we have been referring to as waste or low hanging fruit. If we do, great, but I think I know enough about what is going on to have a point of view that it will not be that easy.

This question of why are there seemingly more employees here in Palo Alto compared to other cities has been around for some time. Different people from various vantage points have posed the question with different tones in their voices over a number of years. And it is a reasonable question to be asked. And it does appear that the "answer" still eludes us.

So, perhaps what really is needed here is a focused effort to get a well developed answer to that very basic question. No pre-conceived notions about what the asnwer will be, or what it may or may not imply for how the City conducts its affairs going forward. It could help all of us, those highly engaged and those less so, to have a common understanding from which we can continue the dialog as a better informed community.

Now, how do we go about "answering it?" I do not have an answer to that question!


Posted by John, a resident of College Terrace
on Mar 21, 2007 at 4:08 pm

Paul,

With all due respect, I do not think we need a thirty year outlook, or even a five year outlook. Priorities change with each new electoral swing in the Council. The population changes, too...and new perceived needs arise. It is a real stew.

We need to deal with the here and now. The City is getting low on money, so where do we cut? Be specific.

Here a few suggestions:

1. Abolish all monies for the outdoor arts commission. Why should we pay to be affronted with some artists ego trip? All that stuff can and should be handled by an unpaid volunteer council of interested citizens.

2. Abolish the City arborist. Just contract with a tree trimming company for necessary trimming and maintenance. Get rid of the law that protects oaks and redwoods - maybe people will start planting them again!

3. Allow the use of all approved herbicides and pesticides by our park maintenance people.

4. Renegotiate the union contract. This will mean taking on a strike. This will be a very healthy thing for the City, as it was the last time it happened.


Posted by Paul Losch, a resident of Community Center
on Mar 21, 2007 at 4:34 pm

John,

Pick your time frame. I think we need some time frame that provides the types of predictability we should expect from the municipal government, it serves as a platform on which other things are planned and done. It is not nimble by design, changes slowly as a result. At least 10 years for this sort of exercise seems indicated to me.

My opinion specifically is that we need to change the compensation strucuture for all employees, not just unionized employees, particulalry around retirement and health benefits. My wife works for the Federal government, and around 8 or 9 years ago during the Clinton administration, changes were made that affected her pension, her 403B retirement plan, and her social security participation, and her health care. They still are very good, but they are less costly to fund by the USG than they were previously.

We need a structure that does not saddle us with obligations that last long into an employee's retirement and we no longer are getting the fruits of the employee's work. This is not unique to Palo Alto, by the way, it is a matter cities up and down the state must face.

I'd start there. And I'd keep the arborist.


Posted by sonny, a resident of College Terrace
on Mar 21, 2007 at 8:48 pm

John has the most pragmatic approach to the issue. Listen to his suggestions and sleep on them. You may find a different opinion in the morning. Evvwerything should be made as simple as possible, but not one bit simpler.


Posted by Mike, a resident of College Terrace
on Mar 22, 2007 at 12:53 am

Boy-o-boy, Is this all we can come up with - slash, cut, lean out, etc. etc.? Is this really Palo Alto, or a shadow of the innovative demeanor that made this a great city? I have not heard one idea for expanding revenue streams. Get busy, people, it's the only way out. We need to *grow*.


Posted by cooper, a resident of Barron Park
on Mar 22, 2007 at 12:53 am

I am in favor of reducing expenses for park maintenance; however, the labor practices of any contractor should be a part of the contract process. Does contracting out mean the City saves money because they hire a maintenance company that has lower labor costs because they hire illegals or provide or offer little or no benefits to their employees (e.g., sick leave, vacation, medical plan, pension plan) or don't pay them a living wage?

Do you think all the nannies pushing kids in strollers around Palo Alto in the afternoon are legally in the U.S. and their employers issue 1099's for tax purposes, and provide medical benefit or contribute so some medical plan? I think not.

If contracting out is the way, it should at least not be a low-bid only situation and other factors mentioned above should be considered.


Posted by Fred, a resident of Barron Park
on Mar 22, 2007 at 5:08 am

Cooper,

My understanding is that we already contract out some park maintenance, presumably keeping in mind some of your factors. I expect, from what I have read, that the city offers above-market benefits for park workers, and perhaps many other positions. If that is the case, and the Council decides they don't want to be above market, contracting out may be a less disruptive way to transition to market terms.

I agree with Mike, that we need a revenue strategy as well as a cost strategy. But I would not ignore the cost side and in fact would want the leadership to push hard there to gain credibility and goodwill when difficult decisions need to made on revenue proposals (e.g., bring in stores that might harm local merchants; site retail that may increase traffic).



Posted by Dave, a resident of Professorville
on Mar 22, 2007 at 7:45 am

Fred has a mostly correct balanced view of the situation. It is essential that we look at the revenue side of the budget. But no matter what our revenues are, we also need to make sure we spend them in the most efficient way possible. As employee costs make up something like 85% of the budget, there is no way getting around examining them.

And I think the poster above who posed the question as what do we owe our employees has addressed the issue directly. Do we owe them more than what we'd pay another outside firm for the same work? The verbiage about illegals and lack of benefits really is a distraction.

No one is suggesting that we hire illegals or sweatshop level firms. But I'm not sure that we need to feel bad if we contract with a firm that pays market wages (even if they're below city worker wages), and doesn't have a pension system that allows its workers to retire in their 50's with 80 or 90% of their pre-retirement wages like city workers can.

Some on the city council seem to disagree with this. Maybe that's what the majority of residents think too. Either way, it has to be addressed if we're to move forward, of only so we know what our options are.

So we can thank Ms. Diamond for raising the issue - and for her courage.


Posted by Paul Losch, a resident of Community Center
on Mar 22, 2007 at 10:51 am

This thread is specifically about what we do around hiring, compensating and managing employees--and there has been some good thinking expressed at various dimensions of the matter.

On revenue strategy, there have been some separate threads, although not nearly as many. Very few of us, and I am one of them, have been calling for developing a pure, focused revenue strategy, and for some more of our Council Members to make that their priority during their time in office. I talk with Council members frequently, those with whom I have discussed this seem to agree in principal, but it has not been something that to my way of thinking has truly been embraced by them as a whole, or by more than perhaps two of the current council members as their personal "crusade."

Generating revenue is hard! For a variety of reasons, some of the revenue sources that contributed to this town's budget in the past are in decline. Others that are steady reliable contributors are not keeping up with the rate of increase in expenses we are facing as major portions of our infrastructure come due for significant upgrade as they reach the end of their useful lives. To my way of thinking, and I push this hard as a member of Parks and Recreation Commission, we need more "value based pricing" for many of the programs we provide. Not merely cost recovery pricing.

I could go on and on, this is one of my pet issues, but as much as we need to be vigilant on our cost side, there are quite simply demands we are facing in the community that we cannot "save" ourselves into funding, especially if revenues remain stagnant or face more decline. If we had as many people waxing about revenues in this town as we have commenting about costs, maybe we could start to get somewhere.


Posted by Dave, a resident of Professorville
on Mar 22, 2007 at 11:17 am

I'm not sure why Paul seems to think that pursuing cost savings - particularly with regard to labor expenses in Palo Alto is such a dead end.

Compared to other cities, Palo Alto is swimming in revenue, even after the recent dips associated with the local economy. Any realistic look at the situation reveals that labor costs - specifically wages and particularly benefits have been THE driving force behind the unrelenting rise in expenditure demands.

In other posts Paul seems to have recognized that this is unsustainable. Reversing an unsustainable trend that is backed by an entrenched highly motivated interest group will call for more than the vigilance with respect to costs that Paul alludes to.

I am sure Paul has seen some of the initial reaction from the business community to the tax proposals by some council members. Surely he must recognize that just as he says we cannot "save" ourselves into funding, neither can we tax our way to prosperity.

He is right about the fact that infrastructure in our town requires renewal. What he does not say, is that we are in this situation because, unlike many other cities, we did not plan for this well. So instead of having a healthy infrastructure fund to help with the needed and entirely predictable infrastructure renewal, we have one that has been systematically raided (or failed to be funded - practically the same thing) over the years for other "needs" - including especially employee costs - the subject of this thread.

These kinds of needs are virtually limitless if we don't take steps to address them. I don't think we need to do anything as drastic as intentionally precipitating a union strike as alluded to by another poster, but controlling costs is every bit as hard - maybe harder - than Paul says looking for new revenues is. Perhaps that's why we see so few in the city establishment eager to discuss it directly.


Posted by Paul Losch, a resident of Community Center
on Mar 22, 2007 at 11:52 am

Dave,

I never suggested that pursuing cost savings is a dead end. I still maintain that it will not be a slam duck, and you point to the reason why--most of it is in our employee compensation. I even suggested a place to start earlier in this thread on one way to start tackling that.

I also agree with you and I have stated on other strings that since we did not set aside into a lock box reserve monies that could be used to meet the demand to redo our infrastructure, we now face the daunting challenge of figuring out how to fund it. Many communities are faced with this situation, it is one "club" of which I wish we were not a member. But that is where we are. We have to face it.

I have had the benefit of seeing our revenue history and the revenue projections that the City uses to inform its planning assumptions, and it scares the hell out of me. That is why we need to develop a revenue strategy. Bern Beecham's recent idea around taxing businesses--where is the context? How does it fit into an overall revenue strategy? Might be a great idea, might be a terrible idea. It by itself does not a strategy, good or bad, make. Similarly, what do we really need to get out of retail locations at Edewood and Alma? Wouldn't it help to have a clear understanding and road map around such questions, a "master plan" if you will for our revenue streams?

So, don't misread what I am saying, we have some very serious cost issues that must be tackled, and we have some vary serious revenue generation issues that must be tackled at the same time.

Even if we keep the arborist, the tress will generate leaves, not money.


Posted by pat, a resident of Midtown
on Mar 22, 2007 at 1:53 pm

Here's data from the Palo Alto 2006 -2007 budgets at:
Web Link

And from the Mountain View budgets at:
Web Link

Palo Alto: population 58,000

Department FTE Hourly Frozen

City Auditor 4.00 0.12
City Clerk 6.75 0.58
City Attorney 10.40 0.51
City Manager 11.50 0.25
HR 15.35 0.03
Library 43.25 13.61 1
Planning 55.50 1.16
Community Serv 96.25 49.37 3
Admin Services 97.00 1.20 1
Fire 126.00 0.49 1
Police 164.00 3.06
Utilities 213.50 0.71
Public Works 229.00 4.26
----------------------------------
Totals: 1072.50 75.35 6

Minus Utlities: 859.00

Mt. View: population 70,000

Department FTE perm Contract
part time
City Auditor
City Clerk 4.00
City Attorney 8.00
City Manager 5.00 1.25
HR 7.50
Library 23.00 10.75
Planning 29.00
Community Serv 92.00 11.75 7.52
Admin Services 36.00 2.00 22.00
Fire 86.00 0.50 1.00
Police 143.00 2.50
Utilities N/A
Public Works 122.00 0.50
----------------------------------------
Totals 555.50 29.25 30.52

It's interesting to note the differences in individual department staffing in the two cities.

The comparison between Palo Alto and Mountain View has been an issue for at least five years that I'm aware of. I, and other residents, keep asking, "Why do we have so many more employees than Mountain View?" The vague answer has been, "Palo Alto has more services."

I don't see what we have that Mountain View doesn't. It has a gorgeous city hall, performing arts center, relatively new library & police & fire department buildings, an Economic Development Division with a "quick response team," lots of sales tax revenue, tremendous redevelopment downtown, transit center, new senior center, Shoreline Park with a big lake, about 30 other parks, . . .

Why can't Council explain why we need twice as many employees as other cities?

Given all the concern over "sustainability," how does the city think we can sustain our compensation expenditures? Cutting $3m/year certainly isn't going to do it. It's not Council's job to guarantee full employment forever. It's Council's job to guard the fiscal health of the city.


Posted by pat, a resident of Midtown
on Mar 22, 2007 at 2:10 pm

Sorry I don't know how to make the tabular data appear cleanly on this blog. I guess you'll have to create your own spreadsheet.

There are three columns of staffing for each city. In Palo Alto, it's FTE, Hourly and Frozen. In Mt. View it's FTE, Permanent Part Time, and Hourly. I'll omit the Frozen.

Palo Alto: Population 58,000

City Auditor: 4 FTE, 0.12 hourly
City Clerk: 6.75 FTE, 0.58 hourly
City Attorney: 10.4 FTE, 0.51 hourly
City Manager: 11.5 FTE, 0.25 hourly
HR: 15.35 FTE, 0.03 hourly
Library: 43.25 FTE, 13.61 hourly
Planning: 55.5 FTE, 1.16 hourly
Community Services: 96.25 FTE, 49.37 hourly
Admin Services: 97 FTE, 1.20 hourly
Fire: 126 FTE, 0.49 hourly
Police: 164 FTE, 3.06 hourly
Utilities: 213.50 FTE, 0.71 hourly
Public Works: 229 FTE, 4.26 hourly

TOTALS: 1072.5 FTE, 75.35 hourly
Minus Utlities = 859 FTE

Mt View: Population 70,000

City Auditor: N/A
City Clerk: 4FTE
City Attorney: 8 FTE
City Manager: 5 FTE, 1.25 perm part time
HR: 7.5 FTE
Library: 23 FTE, 10.75 perm part time
Planning: 29 FTE
Community Services: 92 FTE, 11.75 perm part time, 7.5 contract
Admin Services: 367.00 FTE, 2 perm part time, 22 contract
Fire: 86 FTE, 0.5 perm part time, 1 contract
Police: 143 FTE, 2.5 perm part time
Utilities: N/A
Public Works: 122.00 FTE, 0.5 perm part time

TOTALS: 555 FTE, 29.25 perm part time, 30.5 contract


Posted by John W, a resident of Downtown North
on Mar 22, 2007 at 2:36 pm

Looks to me like the Council got some 'splainin' to do.

(Not that it seems likely.)


Posted by John, a resident of College Terrace
on Mar 22, 2007 at 4:07 pm

Palo Alto needs to prove to istelf that it has the intestinal fortitude to actually make significant cuts. Frank Benest made some modest suggestions, and he got shot down by the Council.

We, as Palo Alto citizens should reject any new spending, until serious cuts are made. It is OUR money, not the City's money!

We don't need a new strategy. We need some real character.


Posted by Walter_E_Wallis, a resident of Midtown
on Mar 25, 2007 at 4:56 pm

Loyalty needs to be a two-way street, but if the overall cost of in-house gets higher than 120% of the equivalent private sectoer compensation then it is time to either review why our costs are higher and correct, or put the work out to bid.


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