Pension reform in Healdsburg

We are a group of Healdsburg residents who represent a variety of political affiliations and opinions. But we are united in our belief that Healdsburg residents, City Council, City staff, and employee unions need to work together NOW to solve the financial/pension crisis that Healdsburg, like so many other communities, is facing.
Our 2012 budget deficit is nearly $1 million. Financial reserves will be exhausted within 2-3 years. The fastest growing City expenses are employee salaries, benefits, and pension.
Here are a few facts to contemplate. Healdsburg’s contributions toward employee pensions jumped 16% this budget year (2011-2012). Public Safety costs (police and fire) consume approximately 85% of the general fund revenues. In the 2012/2013 fiscal year, the City will pay as much as 37% of salary in benefits for public safety employees, and 24% for general City employees.
Generous concessions made during more prosperous times simply cannot be maintained under our current financial reality. Renegotiation is imperative. While we don’t profess to understand all of the intricacies of the legal agreements between the bargaining units and the City, we suggest that the following City staff compensation changes be considered for current, as well as future employees.
a. Public Safety employees to receive 2% at age 55, versus the current 3% at age 50. (This refers to a pension payment formula in which the retiree receives a percentage of their final year’s salary for each year worked. For example, under the current formula, a police officer retiring at age 50 after 25 years would receive 75% of his or her final annual salary. If he or she retires after 30 years, the pension would be 90%).
b. All other City employees to receive 2% at age 60, instead of the current 2.50% at age 55.
c. Public Safety employees to pay for the full 9% of the employee portion of the pension plan immediately. Currently, police pay 8% and fire pay 2% of the 9% employee portion. Other City employees currently pay the full 9% of the employee portion. We can’t help but wonder why an “employee’s obligation” is currently being funded by the City.
d. Pension obligations to be based on the average of the last 3 years of full-time service based on annual salary only. Currently, final pension obligations are based on the highest 12 months of full-time salary, which includes not only fringe benefits but the portion of the “employee pension contribution” paid by the city. This leads to the all-too-common practice of “pension-spiking.”
e. Down-sizing and/or contracting out City services to private vendors should be considered, if the City is unable to get substantial, long-term compensation changes with their employees.
f. Except for (e) above, these suggestions pertain only to pensions. Other payroll cost reductions that might be considered include temporary reductions in work hours or permanent reductions in salaries and other benefits in order to achieve a sustainable compensation model.
We support and appreciate our City employees. We are not anti-union, anti-public servant, or anti-retiree. But the current generous benefit packages are far out-of-step with those offered in the private sector, and are simply not sustainable within the City’s projected income.
At the last City hearing on pension reform, we learned that there is a financial crisis at hand. Unfortunately, the City Council doesn’t appear to feel the sense of urgency that we do.
We hope the three former Healdsburg public safety employees now serving on the City Council (Gary Plass, Susan Jones, and Steve Babb) will put to rest public concerns about possible divided loyalties by proactively seeking long-term solutions to salary, benefits, and retirement for City employees. We will be following the public comments (or lack thereof) of all the City Council members. In particular, we hope that those Council members running for re-election — Gary Plass, Steve Babb, and Tom Chambers — will soon publicly state their positions on this matter of urgent importance.
— Bruce Abramson, Leah Gold, Eric Ziedrich and Mel Amato