Atherton: Compensation cuts OK'd, but reconsideration likely | December 5, 2012 | Almanac | Almanac Online |


News - December 5, 2012

Atherton: Compensation cuts OK'd, but reconsideration likely

by Renee Batti

The vote may have been unanimous, but the outcome of the Atherton City Council's approval of compensation changes for 10 unrepresented town employees is far from certain.

In voting yes on the compensation resolution Nov. 28, council members Jerry Carlson and Elizabeth Lewis stated they were unhappy with some of its terms, and promised to call for reconsideration of the matter next month, when council member-elect Cary Wiest replaces Kathy McKeithen on the council.

(Only a council member who has voted in favor of a measure can call for its reconsideration, according to City Attorney Bill Conners.)

Mr. Wiest, who attended the meeting, did not return phone calls seeking comment for this story.

The resolution would affect only the town's unrepresented employees, including the town manager, police chief and lieutenant, city clerk, and finance director. It would require the employees to pay for more of their retirement costs, and cap vacation and sick-leave accrual and the town's contribution to health-care premiums. It would also create a two-tier retirement system for new hires, and eliminate post-retirement health benefits for new hires.

The resolution would also furlough most of the employees, those considered "nonessential," during the week between Christmas and New Year's Day.

Most of the police department staff will not be affected by the resolution, but that hasn't stopped the police union from entering the debate with guns blazing.

David Metzger, president of the Atherton Police Officers' Association (APOA), urged the council to reject the resolution, calling it bad policy. In late November, the APOA issued a scathing statement criticizing the "lame duck" council for considering the compensation changes.

"Widmer, Dobbie, and McKeithen will use their last majority vote to exact revenge for their political loss upon Atherton's residents and its employees," the statement said — the "political loss" a reference to the perceived shift in political leanings on the council resulting from the Nov. 6 ballot victory of Councilwoman Lewis and newcomer Wiest, both of whom were endorsed by the APOA.

Some observers, including Councilwoman McKeithen, see the APOA's involvement in the issue as a preemptive move to protect its members' benefits when contract talks open next year for police officers. Calling the future police negotiations the "elephant in the room" no one wants to talk about, Ms. McKeithen said, "This is a policy issue. ... That is why we have the APOA here."

Noting that 55 to 60 percent of the town's budget goes to the police department, she added, "That's what this is all about, ladies and gentlemen."

The council has been struggling to get the town's financial house in order for some time, and last year, to address an estimated $856,000 structural deficit, approved the layoff of most non-police staff members and the privatization of services.

Although the budget is now balanced, the council is trying to address unfunded liabilities involving post-retirement benefits that are estimated to be between $12 million to $30 million. "We need to do something about that," Mayor Bill Widmer said. "It's time that Atherton start doing something, (and) these steps are reasonable ... not aggressive."

Changing position

Although they voted for the compensation resolution in closed session prior to the Nov. 28 action, council members Carlson and Lewis expressed concerns about some of the terms during the public meeting.

Ms. Lewis noted that the speed with which some of the measures would be put in place made the changes "too aggressive," and would create too much of a financial burden on employees before they had time to adjust to them.

As an example of how the pace could be slowed to ease the burden, she suggested that the resolution be amended to expand the 18-month period for incremental increases in employee retirement-cost contributions to three years.

Councilman Carlson said early on in the discussion that he supported the changes as means to improve the town's financial viability. "But whatever we do, we should strive to be fair to our employees, and we should also listen to residents' concerns."

After the public comment period, during which a number of residents spoke against acting on the measure before next month, when Mr. Wiest is seated, Mr. Carlson said he would rather put the vote off.

"My colleagues and I are very close if not in complete agreement about the policy" driving the resolution, Mr. Carlson said. But after hearing from the public and from an employee who will be affected by the change, he said, he questions whether the resolution reflects "the road map" that should be followed to achieve the town's policy goals.

The town might instead want to "sit down with the employees and consider more flexibility in how we approach" achieving the goals, he said.

Ms. McKeithen, Mayor Widmer and Councilman Jim Dobbie pushed for acting on the resolution that night, saying that the council had been discussing the proposal in closed session for more than six months before unanimously accepting it, and that if the issue were postponed, it would take months for the new council member to get up to speed before the council could take the matter up again. The council's goal is to put the changes into effect by January.

The affected employees have participated in the discussions along the way, so the claim that the proposal was sprung on them is inaccurate, they insisted.

Unexpected timing

Steve Tyler, the town's public works supervisor, told the Almanac that the town had kept employees informed about possible changes in their compensation, and the employees did participate in discussions. But there was no indication that a proposal was going to be acted on so quickly, and employees were surprised to learn that the resolution was on the Nov. 28 council agenda, he said.

The employees "are all for getting things right and making concessions. But (the speed of the changes) will put some serious pain on some of us," he said.

At the meeting, Mr. Tyler urged the council to slow down, saying employees didn't get a chance to see the final draft of the resolution until the day before Thanksgiving. During their brief review, they found errors and confusing language, he said, and they'd like the chance to work with the town to "clean it up."

Employees also would like the changes, which will cut their income through more paycheck deductions, to be put in place more slowly to ease the pain. "I realize this problem isn't one you created," he told the council. "But we didn't create it either.

"We're not bad guys ... and we are with you 100 percent in terms of making concessions."

Councilwoman McKeithen's statement that the resolution will create a policy that will set the stage for police negotiations prompted Mr. Tyler to abruptly leave the meeting.

"I thought they were negotiating with us," he said later, adding that the employees affected by the resolution were the very ones who "did our best to right the ship and keep it going" after the town laid off about 15 staff members and outsourced most of its services.


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a resident of Atherton: other
on Dec 4, 2012 at 4:16 pm

Posted by BenchMark, a resident of the Atherton: other neighborhood, 20 hours ago

Notes from the meeting from the You tube tape.


Council & City Attorney Initial Comments.

Part 1 - Web Link Part 2 - Web Link The City Attorney disclosed last minutes changes to the resolution. The changes were prompted by the examination of an outside Attorney who found problems.

That attorney believes it’s “bad form” to approve at this meeting.

The City Attorney says he would liketo have CalPERS review and approve a portion of the resolution and will reintroduce that part at the next Council meeting.

Dobbie observes few private sector jobs have the benefits included in this resolution andbelieves Atherton employees are being very well paid even with this resolution. Hewants Town employees paid at the same levels as the private sector. He says theCouncil has been looking at this for a long time.

He says “it wasn’t complicated” to outsource the Public Works, Building, and Parkemployees last year.

Jerry Carlson asks if the unrepresented employees have seen the completed resolution.

The City Attorney says he doubts the unrepresented employees have seen the resolution being considered at the meeting.

Carlson notes there is no 5 years financialprojection and it would give the Council better information on the impact of the changesin this resolution. Carlson says the Council should listen to employee and residentconcerns regarding these changes.

Elizabeth Lewis recognizes the City Attorney’s comment that CalPERS has not vetted the resolution and suggests it would be prudent to continue the item to the next meetingfor that reason. She suggests some of the elements are too aggressive (18 monthimplementation.).

She observes the rushed implementation does not provide theeffected employees time to plan for the changes. The Town is going to reducecompensation by 20% in some cases.

Kathy McKeithen says they are trying to reach parity with the private sector. She alsobelieves that the Town is not in parity with other public sector agencies. She says the Town pays the employee’s entire 9% portion of their CalPERS contribution. (EPMC issomething used in the 70th percentile calculation; though the Town pays the employee’s share, it is not extra compensation.)

Bill Widmer says the fringe rate in the private sector is 30%; he claims it is 100% (or greater) in the public sector. He believes the pension liability is $12 million. Based on a Moody’s report, he thinks Atherton’s is $20-36 million.Widmer recaps his opinion of the State pension problem and suggests these changesare meant to correct the issue. He notes Palo Alto requires their safety employees to paytheir full CalPERS pension requirement (9%). He believes these compensation reductions are “humane”. He believes that the outsourcing of Public Works, Building,and Parks has been successful.Widmer says the Council has been discussing this since the end of the first quarter andthe employees have known since mid-year.