The silence on the following issue was deafening at the meeting: my understanding is that decreasing property taxes gives Atherton the right to renegotiate Teamsters contracts.

if a financial emergency allows Atherton to renegotiate union contracts, why isn't it doing so? Every other city on the peninsula is taking decisive action to curb the pension costs and union salaries that have broken California's financial back. Is it because once the union salaries are up for renegotiation the top management salaries may be also?

During the meeting, Mr. Gruber alluded to my not understanding "how the public sector works" and "mandatory contracts" based on my private sector experience. However, I do understand this: Atherton's finances are surely not the strongest amongst these peninsula cities. It may even be the weakest Why are we putting things off the table that well-managed neighboring cities are doing proactively?

My prediction is that unless these issues are addressed head on, property values in Atherton will take a major hit.

In December 2008 I authored the following Guest Opinion which called upon local governments to be proactive in the face of what I felt was the certain decline in revenues. Atherton, and other local agencies, chose to ignore my advice and have now lost 18 months during which expenditures could have been reduced and consensus developed on fundamental programmatic change in their budgets. It is now imperative that swift action, NOT talk, take place. The longer expenditure reductions are delayed, rather than talking about expenditure increases, the greater and the more difficult to manage will be the budget gap.

************
Palo Alto Weekly
Spectrum - Friday, December 5, 2008

Guest Opinion: Economic 'perfect storm' is brewing for local agencies

by Peter Carpenter

For many years I have been directly involved in local government agencies or in federal programs designed to support local and state agencies.
Never in that period have I seen such financial storm clouds as now appear on the horizon of local governments.
For the last eight years I have had the privilege and the responsibility of serving the citizens as an elected director of the Menlo Park Fire Protection District (which serves Menlo Park, East Palo Alto, Atherton and parts of San Mateo County) — one of the finest fire districts in the country.
Previously, I served as a Planning Commissioner in Palo Alto and, many years ago, as the federal official in the Office of Management and Budget who was responsible for coordinating all federal assistance to state and local governments.
With falling property values yielding less property-tax revenues, falling consumer and business spending yielding less sales taxes, increased retirement costs (because CalPERS has suffered significant loss of capital in the current financial downturn), continued demands for well-above-average salary increases by public employees, and the governor declaring a financial emergency, local governments in California are facing a Perfect Storm.
Unless local governments act promptly to respond to these dramatic changes we will see more of them joining Vacaville and Rio Vista in being forced into bankruptcy.
Housing prices and hence property taxes will be depressed for at least another two years — just about everywhere except the Palo Alto area, it seems.
And if a lot of the current homeowners request reassessments the decreases will be dramatic.
Similarly consumer and business spending are forecast to be depressed for the next two years.
And CalPERS, which is obligated to continue to pay out fixed-benefit retirement payments and which has seen huge losses in its capital, can only turn to local governments to make up the difference.
And local governments have no choice but to pay what CalPERS will demand.
And while this is all happening local-government unions are continuing to ask for significant increases in both salaries and benefits.
The total labor costs for most local governments are between 60 and 80 percent of their total budgets. While California's local governments are blessed with very talented and capable employees, the current process of salary-and-benefit negotiation has gotten out of hand.
Local-government employee unions insist that the standard for setting their pay be that they be above the average of other public employees. But if everybody is above average then the average goes up very quickly.
While we have many superb employees working for local government, those employees should not expect to receive salaries and benefits that are inconsistent with those of the citizens whom they serve or that will bankrupt their employers.
And in most cases those inflationary-spiral labor agreements are being approved in secret without any public input or scrutiny.
As an elected member of the Board of Directors of one of the finest fire districts, what do I think should be done to respond to this Perfect Storm?
First, local governments need to recognize that there is a crisis and act now.
Second, they need to involve their citizens in a careful look at each of their programs to determine which programs are no longer affordable — however nice or special they might have been in better times, or even how worthy any single program might be.
Third, they need to plan now for hiring freezes, elimination of overtime, reduction in services, layoffs, renegotiated labor agreements and, in the extreme, bankruptcy.
Fourth, they should consider accelerating essential capital-improvement projects (the operative word is essential), as construction costs during this downturn will be substantially less than if the projects are delayed until the recovery begins.
Finally, they need to move the review and approval of new labor agreements out from behind the current wall of secrecy from which the public is excluded.
Once new labor agreements have been agreed upon by the negotiators then those agreements should be simultaneously submitted to both the union members and to the public that will bear the costs well before the city councils and special district boards meet in public session to vote on those agreements.
The Perfect Storm can be weathered but not by sunbathing on the deck.

It's time to outsource police department. Do the math, Menlo Park spends 1/2 per capita on police than Atherton, Woodside, 1/4th as much.

As Smart Money suggests outsourcing is a great opportunity for savings.

Why does Atherton need its own police dispatch? Fire dispatch was consolidated on a county wide basis years ago and that consolidation reduced the total costs and increased responsiveness and improved mutual aid.

Why does Atherton need its own building department? While the planning function is critical to preserving local values and standards once a building permit is issued ensuring compliance with such a permit could easily be outsourced. The result would be precisely matching building inspection and compliance costs to individual projects, which could then be properly and fairly passed on dollar for dollar to the builder, and avoiding either expensive over staffing or time delaying under staffing.

Why does Atherton need its own Emergency Operations Center when the Fire District has a multi-jurisdictional Emergency Operations Facility that already includes space and communications facilities for Atherton - but which the Town has never used?

How much more of the public works function could be outsourced as we already do for road construction?

These are the kinds of questions than need to be asked and answered.

All good ideas Peter, except outsourcing the building department. That would mean it would go to the San mateo County Building Department, which in my experience, is bar none the worst building department to deal with in the area. Their poor performance does nothing but cost us builders and our clients money.

If the inspection services were outsourced to one of the many special inspection companies it would cost the citizens even more. Those services are expensive and they almost always have a four hour minimum charge.

Menlo Voter states:"All good ideas Peter, except outsourcing the building department. That would mean it would go to the San mateo County Building Department"

I would not recommend outsourcing to the County. I propose outsourcing this function for each individual project on a competitive bid basis to private inspectors. The Town already does this for some projects, why not do it for all projects?

Peter:

I think the inspection services you are refering to are special inspections. These are inspections required by the building code to be done by special inspectors outside of the building department. If that is the case, in my experience, they are much more expensive.

An alternative that works pretty well in San Jose is that when a permit is pulled an estimate of the time required for inspections is made and fees for those inspections are paid for those hours. If you need more you pay for more time. In that way the cost of inspection for each project is actually accounted for.

Gone are the days when smaller municipalities can afford to have all their own services. Outsourcing or consolidation seem viable options. In a county our size there is no need to have 15+ dispatch centers, 15+ police chiefs, 15+ fire chiefs, and 20+ school superintendents, etc.

But local governments would rather fall on fall on their proverbial sword or consider raising taxes than opt for efficiency and effectiveness. What will it take for our officials to set aside their pride and do what makes sense? But maybe I expect too much of them. If they aren't doing their job, remember election day is coming soon!!

Cities and towns can and do contract out the entire building process on a project by project basis to pre-qualified private organizations.
These organizations do the plan review, the site inspections and the final sign off. If Atherton did this for all of its projects it would not have to staff for the highly variable workload that occurs and it could instead have one or two highly qualified and experienced people to oversee the entire process. The cost of each project would be borne by the builders who could also pay extra if they wanted faster turn around on any step in the process.

Based on its tiny size, Atherton has huge per capita costs for keeping certain functions in-house that require overhead. Police is obviously the elephant in the room, taking over half the budget (well over half if the unfunded pension liabilities are properly accounted for). The building department is another good example.

Outsourcing all of these functions to save money is obviously a common sense approach to deal with the crisis. However, most of the Town Council has been extremely reluctant to even discuss this.

"Special Services" is the motto, but in my view, it's really "Special Services...for Special People" that would not endure with outsourced functions they can't control.

This is where, in my opinion, the ethics issues Mayor McKeithen has been pounding on (and getting labeled as a witch hunter) and the financial issues come full circle. When the people making the decisions have conflicts of interest, and these manifest themselves in actions (or in this case, the failure to act) that have an extremely dire effect on our financial situation, something must be done.

Special People are about to get $1.6M of money we don't have. The Almanac did not report on the fact that 3/5th of the council decided last Wednesday to remove the 4/5th requirement to spend money out of the general fund.

Mr. Buckheit, all I hear you do is complain. If you think so many things are wrong, and you have the solutions, why not run for office or join one of the committees where you can try to make a difference? Is it because you'd just rather sit back and complain about the people you dislike based on your own situation that has nothing to do with the financial issues?

Buckheit = Chronic Complainer asks:"If you think so many things are wrong, and you have the solutions, why not run for office or join one of the committees where you can try to make a difference?"

Mr. Bukheit has done exactly that and, in spite of being highly qualified for the Town Finance Committee for which he applied, was turned down by the Council because, in my opinion, they found him too well informed. He is probably one of the most involved citizens in the Town - however, the standard for community involvement in Atherton is quite low.

In addition to the consolidation/outsourcing suggestions made above another whole set of cost savings could be achieved by establishing shared services with other nearby communities to provide human resources support, combined purchasing and vehicle maintenance among others. Sharing these services with other communities would significantly lower the overhead costs for these functions for each of the participating locales.

The key point is that making marginal reductions in the existing budget line items simply will not achieve the structural changes that are necessary for the Town to have a balance budget including meeting its unfunded pension liabilities.

Now is the time for big changes not tinkering.

McGRUBERS BUDGET = improvised explosive device -- the next one will bomb as well and he won't have to care too much about what shape he leaves the town in as he heads off to his beach house in Cambria. I can hear the engine of his BMW warming up right now.

A better idea than having John Buckheit run for office or committee appointment--would be to beg him to take the town into temporary conservatorship. I agree with Carpenter, that this is a moment for very BIG corrective changes.
I really can't think of a better person to come in and clean house for us--for maybe a year or so--and then it won't matter so much what idiotic selection for next manager that some future council decides on.

Let the buck stop with Buckheit!

What Atherton needs most, but seems to fear most is a hard nosed and successful businessman like Jon Buckheit having influence within Town Government.

Jerry Gruber chided Buckheit for not understanding the public sector. I have been acquainted with Mr. Buckheit for over a year. Mr. Buckheit has an ability to acquire an intimite understanding of subject matter that is foreign to him in a very short amount of time.

This distinguishing characteristic of Mr. Buckheit is a result of intense curiosity, combined with extraordinary inelligence.

What those who work for the Town seem to fear is that the gravy train will stop running, that their meal ticket will be torn in two and that all that they will be left with is the stub. Those who work for the Town fear Mr. Buckheit because, like any good businessman, he expects value for services rendered.

There are many ideas I have shared with him about how to economize on Town finances, he has taken these suggestions to heart and he has thought of others that I did no think of myself, even with more than two decades of public service.

For those who would say John Buchkeit = Complainer. I say get used to it, get over it. He wil complain until this Town begins to function with a modicum of efficiency.

For those who say, stop sniping and do something, I say, Mr. Buckheit in one year has done more for this town than 97% of its residents will do or have done in a lifetime.

For those who sit and scratch their heads about what to do about the Town's miserable financial condition, I say implement the following:

Roll back salaries to the median salaries paid to comparable employees working for comparable jurisdictions. At present Atherton's employees are making a wage at the 70 percentile. This is way too generous for a small town like Atherton.

Eliminate the finance director position and consolidate the finance, city clerk and HR within the Deputy City Manager position. This position is paid very handsomely. It is about time responsibility came with the job.

Require employees to absorb the cost of their health plan and retirement. Atherton has a Cadilac health plan and a Cadilac retirement plan.

Eliminate one of two detectives in the Atherton PD. Do away with special services. Do away with the whole police department for that matter, it is the Police Department's incompetence, corruption and arrogance that has cost the Town so much in legal fees as of late.

Had Jon Buckheit been appointed to the Finance Committee, these ideas would have gotten traction.

It is no wonder that Buckheit is being shut out. His presence is far too threatening to the overpaid and underworked.

Dear Town Council,

It is clear that Atherton faces a significant shortfall in its property tax revenues, has a significant unfunded pension liability and has escalating expenditures. This is not a short term problem and it cannot be resolved with minor adjustments to the current budget. The time has come for making fundamental structural changes in the Town's expenses.

I suggest that the Council quickly and carefully examine the following means of reducing the Town's current and future expenditures in order to produce a balance budget and an adequate level of reserves:

1 - Outsource police services to either Menlo Park or the Sheriff.
2 - Outsource all building permits and inspections to a pre-qualified list of private inspectors with the full costs being borne by the permittee.
3 - Enter into an MOU with the MPFPD to provide the Town with access to the Fire District's ECC and to utilize that already established and superbly equipped site as the Town's EOC.
4 - Outsource all public works activities to qualified contractors on a competitive bid basis
5 - Consolidate the Town's human resource function with the human resources functions of one or more nearby communities.
6 - Consolidate the Town's finance function with the finance functions of one or more nearby communities.
7 - Consolidate the Town's purchasing function with the purchasing functions of one or more nearby communities.

I pursuing these options there will be some front end costs. Labor agreements will have to be renegotiated to accomodate these changes but that is being done successfully throughout the State. It may be mutually advantageous to offer early retirement to some long term employees. These front end costs can be further mitigated by having some of the Town's current personnel and equipment transferred to the outsourcing agency or to the new consolidated function. In addition, the freed up office space could be used to house one of the consolidated functions.

The bottom line has to be a long term expenditure line which is less than the projected revenue line after making provisions to fully fund the Town's unfunded pension liabilities while also maintaining an adequate reserve. Ideally this should be done with the expectation of NO future parcel taxes.

The Town has very little time in which to deal with these issues and the longer we wait the greater will be the gap between revenues and expenditures.

May 19, 2010
All Together Now: More Cities Consider Consolidation to Weather Recession
City officials in Glendale, Burbank, and Pasadena are the latest batch of cities to consider consolidation of services as a way to save money in light of multimillion-dollar budget deficits. The focus of their consolidation efforts have centered on technology services, joint police dispatches, and even coming together to buy the most basic of supplies. While ideas are in the early stages of development, city officials have recognized that some action must be taken to make it through the recession, even if it means such regionalization of services could lead to staff cuts. Each city has large shortfalls to address, as revenues have continued to fall short of rising salaries and benefits. The LA Times reports that Glendale City Manager Jim Starbird said the following:

“I think we have tremendous relationships with Burbank and Pasadena and in the past we've had a number of areas where we've cooperated effectively. There can be more areas, though. And in these times of budget pressure, there is enough critical mass to get over some of the organizational resistance that might arise.”

As a long term proposal, the cities are also considering a bus service that would link the three cities. Budget issues have of course only been exacerbated by the raid of RDA funds. Burbank has considered cutting some services and freezing vacant positions and Glendale officials want to pursue $3 million in employee salary and benefit concessions. Burbank City Manager Mike Flad said, “You have to look at the impacts on labor, budget savings, service levels, and then look at the amount of brain damage you have to go through to actually pull this off. When you are dealing with 80% of your budget being labor, efficiency means less people.”

Peter,

1 - Outsource police services to either Menlo Park or the Sheriff.

You might want to include the Redwood City Police Department in the mix.

Michael

Peter:

you want to bet lunch that none of your suggestions are adopted by the town council? To adopt any of them would remove control and cover from those that need or want it (Elizabeth Lewis, et al) and they don't want to have that happen. Given their lack of appointment of someone as highly qualified as John Buckhiet to the finance committee I'm betting they will adopt none of your fiscally prudent suggestions. Is it a bet?

I was asked "what options do we have to put pressure on the City Manager and Council to get the budget balancing process in motion?"

My response was:

1 - show up at Council meetings

2 - lobby individual Council members

3 - get 100 residents to sign a petition calling a Special Meeting of the Council to address this issue
"Special meetings may be called at any time by the mayor, or by three members of the city council, or by a petition bearing a minimum of one hundred signatures of adult residents of the town. (Ord. 382, 1980: Ord. 344 Ch. 1(e) § 1, 1976)"
Web Link

4 - increase the ACIL membership to 400-500 people so that ACIL has significant political clout

5 - write Letters to the Editor of the Almanac
Web Link

6 - participate in Almanac Town Forum discussions on this issue
Web Link

7 - pray that anyone in Town cares enough to do anything

*****
And I think the one most likely to work is #7 so I am not taking any bets on what the Council will do.

7 is my favorite number

The people in Atherton should thank God they don't live in Menlo Park- the home of the most dysfunctional City Council in the history of San Mateo County. Even more dysfunctional than the GS City Council back in the early nineties.

I enjoyed the many comments. They should be preserved somehow. Here is mine, much different than the others which seem to follow a pattern:
The City Council IS THE PROBLEM. Being unpaid for long hours, the job attracts lawyers, developers, and such who profit from the exposure and inside information. Just look -- most of them are lawyers, here in Atherton where many of us have high qualifications not in law. My suggestion: pay for service on the council. In the long run, a variety of skills will be present, not just lawyers and developers. For the short run some of the comments of others apply, but for the long run we must change the makeup of the council.

Hank:

you've got to be kidding? Atherton's city council is by far more dysfunctional then Menlo Park's. And Menlo Park's council is a damn sight less corrupt.

Tom Croft -

You make a good point that the elected officials are the problem. I agree.

But I don't think anyone runs for office for the money, especially a highly skilled attorney or developer. Paying these people will just add more spending to an already bloated government and you'll get exactly the same people running and winning.

What's truly needed are NEW people to run for office. People who are reading these threads and disgusted. People who realize that their elected officials do not have some special skill set that qualifies them for office.

If you want to change your government, you have to do it yourself.

"especially for a highly skilled attorney or developer" !!!!!!!!!
THOSE are the very people who make the millions by causing the problems then defending them for a piece of whatever action is in question.
What is more, there are not "highly skilled attorneys" to be found all the way to Bend Oregon and especially the Bay Area.
Name a really large case or suit a local attorney has won since the days of yore in San Francisco. Today, all good lawyers are hired from elsewhere, and the developers are responsible for most of the corruption which oozes into the payoffs of local elected officials' pockets......very deep pockets. Even assemblymen cum ex supervisors have a questionable pasts linked to the major developers....and all of them have deep pockets to accept any offerings.

Thank you for your comment Mr. D. Thomas:
To Mr. Kroft: The "highly skilled attorneys and developers" don't need to get paid anything more than they take for themselves already, in self importance and favors provided by the special interests who put them in office to manipulate process to their advantage.
The idea that wise City fathers are representing the citizens out of civic duty has been almost entirely replaced by lobbyist wannabies hoping to feel important while being shmoozed up over a nice power lunch pitch from some big developer. In Atherton, the project in question is as likely as not to be the actual residence of a developer and not necessarily just a property developed for speculation. I have attended council meetings where a single resident developer has bragged about having built over 125 ten million dollar homes in Atherton alone - and several hundred in Menlo Park for 1 to 4 million.
They were there speaking at the council meeting expecting recognition, thanks, and special favors in return for these major contributions to their own wallets. The attitude is that the town actually exists to provide services solely for them to continue to make money.
When the town goes completely broke accommodating them, and the parcel tax is raised to 5,000$ a year-- they won't mind at all. It will force out all those who can't pay it and give the developers even more property to redevelop--got to keep those hungry machine fed.

While a bit off topic, D Thomas challenged me to "name a really large case or suit a local attorney has won since the days of yore in San Francisco." I'm hardly a cheerleader for attorneys but I can name TWO without even breaking a sweat.

David Steuer who won the Pelican Bay decision, a landmark case that he litigated pro bono. Steuer is considered one of the finest litigators in the COUNTRY and works in Palo Alto.

Woodside's Ted Hannig, who won a critical lawsuit against Redwood City for unlawfully "taking" property from private individuals for the private use of a developer. This was another major case with constitutional implications.

Both of these gentlemen are a credit to their professions and an asset to our community.

So there.

Jon Buckheit for city manager

Note how high Atherton's per capita cost for police services is and how low it is for those that use the Sheriff.


Agencies which have their own Police Department:



Atherton

As of the census of 2000, there were 7,194 people

4.9 square miles (12.8 km²)

Police budget $4.9 M

$681 per capita



Redwood City

As of the census[1] of 2008, there were 75,508 people

34.6 sq miles

Police budget $31.7

$419 per capita



Palo Alto

As of the census of 2000, there were 58,598 people

23.7 sq miles

Police budget $29M

$494 per capita



Foster City

As of the census[4] of 2000, there are 28,803 people

The city has a total area of 19.9 square miles (51.6 km²), of which 3.8 square miles (9.7 km²) is

land and 16.2 square miles (41.9 km²) is water.

Police budget $9.6 M

$333 per capita



Burlingame

As of the census of 2000, there were 28,158 people

The city has a total area of 15.6 km² (6.0 mi²).

11.2 km² (4.3 mi²) of it is land and 4.4 km² (1.7 mi²) of it (28.19%) is water.

Police budget $9.5M

$337 per capita



Hillsborough

As of the census[5] of 2000, there were 10,825 people

The town has a total area of 6.2 square miles

(16.1 km²), all of it land.

Police budget $8M

$739 per capita



Los Altos

The population was 27,693 according to the 2000 census.

6.3 square miles (16.4 km²).

Police dept budget $13,456,595

$485 per capita

***********************************************************
Agencies which contract out their police services:



Saratoga

The population was 30,318 at the 2007 census.

The city has a total area of 12.1 square miles (31.4 km²)

Police costs via County Sheriff $4.34 M

$143 per capita



Woodside

11.8 square miles (30.5 km²)

As of the census[9] of 2000, there were 5,352 people

Police services via County Sheriff $1.3 M

$242 per capita



Portola Valley

The population was 4,462 at the 2000 census

9.2 square miles (23.7 km²)

Police services via Sheriff $498,601

$111 per capita

Here is how much the San Mateo County Assessor says were the declines in Atherton property assessments and estimated drop in property taxes:

2009.10
Total Residential Parcels 2,542

Residential Parcels DECLINED 131

% of Parcels DECLINED 5%

Average Reduction Per Parcel $ 922,000

Total Reduction In Assessed Value by City $ 120,800,000

Estimated Reduction in Prop Taxes $ 1,208,000

Peter Carpenter is a numbers guy, and the numbers don't lie. What do these numbers show?

1. Atherton property taxes have decreased dramatically, but the council is too cowardly to confront the unions with the salary renegotiation that has to take place (and may be triggered by the decreasing taxes). I know, I know, Gruber doesn't want to because maybe his salary gets cut as well, but it's irresponsible not to ESPECIALLY WHEN EVERYONE ELSE IS DOING IT!

2. We can't afford the police department. A proper "satisfaction survey" would show these statistics in summary form, and ask residents the question: are you willing to pay $____ EXTRA per year to have an independent police department. You'll get the following perks: …

This puts the issue out there. Talking about a survey from six years ago that merely asked if residents were satisfied and using that 97% number (questionable to begin with) to justify the police department now is flawed logic.

Who can do the math on all of this and get it through the heads of the council? I know Buckheit had a few PHDs from Stanford, but I guess he must not be allowed to do it because he may not make the mistakes in his arithmetic that the Lewis/Carlson axis needs to perpetuate their development agenda.

Dear Council members,

I will be out of town when you meet next week to consider the Town's 2010/11 budget, so let me share two thoughts with you.

1 - The Town faces a structural deficit in its on-going budgets which cannot be addressed by small changes, deferring unfunded pension liabilities or utilizing reserves. The time has come to make significant structural changes in the Town's expenditures as I outlined in my earlier emails (included below).

2 - I urge your to be very skeptical regarding the expected 2010/11 property tax revenues. I believe that the Town will see either no or a negative change in property tax revenues. Unfortunately the San Mateo County Tax Collector does a horrible job of informing local jurisdictions regarding their expected revenue. However, the San Mateo County Tax Assessor has already provided detailed information on the estimated amount of lost property tax revenue due to reassessments - a whopping $1,208,000. We also know that the 'usual' 2% increase for other Atherton properties which have not be reassessed, transferred ownership or were newly built will, because of the decrease in the CPI, actually go down very slightly. I seriously doubt that the increases from transferred ownership and new homes, a very small fraction of Atherton's 2542 parcels, will be sufficient to offset these two declines. And I do not expect this decline in property tax revenues to be quickly reversed in the next few years.


Now is the time to make difficult and fundamental changes in the Town's expenditures.


Peter Carpenter
1 Larch Drive
Atherton

****************

From: Peter Carpenter <peterfcarpenter@gmail.com>
Date: May 23, 2010 2:04:53 PM PDT
To: James Dobbie <jdobbie@ci.atherton.ca.us>, charles marsala <cemarsala@yahoo.com>, Jerry Carlson <jcarlson@ci.atherton.ca.us>, kathy mckeithen <kmckeithen@ci.atherton.ca.us>, Elizabeth Lewis <lizlew08@gmail.com>, jerry gruber <jgruber@ci.atherton.ca.us>
Subject: Time for the Town to make fundamental structural changes in its current and future expenditures

Dear Town Council,

It is clear that Atherton faces a significant shortfall in its property tax revenues, has a significant unfunded pension liability and has escalating expenditures. This is not a short term problem and it cannot be resolved with minor adjustments to the current budget. The time has come for making fundamental structural changes in the Town's expenses.

I suggest that the Council quickly and carefully examine the following means of reducing the Town's current and future expenditures in order to produce a balance budget and an adequate level of reserves:

1 - Outsource police services to either Menlo Park or the Sheriff.
2 - Outsource all building permits and inspections to a pre-qualified list of private inspectors with the full costs being borne by the permittee.
3 - Enter into an MOU with the MPFPD to provide the Town with access to the Fire District's ECC and to utilize that already established and superbly equipped site as the Town's EOC.
4 - Outsource all public works activities to qualified contractors on a competitive bid basis
5 - Consolidate the Town's human resource function with the human resources functions of one or more nearby communities.
6 - Consolidate the Town's finance function with the finance functions of one or more nearby communities.
7 - Consolidate the Town's purchasing function with the purchasing functions of one or more nearby communities.

I pursuing these options there will be some front end costs. Labor agreements will have to be renegotiated to accomodate these changes but that is being done successfully throughout the State. It may be mutually advantageous to offer early retirement to some long term employees. These front end costs can be further mitigated by having some of the Town's current personnel and equipment transferred to the outsourcing agency or to the new consolidated function. In addition, the freed up office space could be used to house one of the consolidated functions.

The bottom line has to be a long term expenditure line which is less than the projected revenue line after making provisions to fully fund the Town's unfunded pension liabilities while also maintaining an adequate reserve. Ideally this should be done with the expectation of any future parcel taxes.

The Town has very little time in which to deal with these issues and the longer we wait the greater will be the gap between revenues and expenditures.



Peter Carpenter

All good ideas Peter. All (and I mean all) of these ideas can be implemented.

Don't let the entrenched, the underworked and the overpaid tell you differently.

Unfortunately, Jerry Gruber does not have the vision, nor does a majority of the Council have the will.

There is time honored slogan in our profession: The tone starts at the top.

With little interest in economy and efficiency the tone at the top is complacency at the moment. I dare say that the tone will be different come this November.

With any luck, Marsala will honor his promise not to run, and the electorate will hold Jerry Carlson accountable for his failure of leadership.

With any luck, there will be a new City Council and a new banner hanging over the intersection of Marsh Road and Middlefield Road with the inscription "Under New Management".

By the way, if anyone is looking for a new City Manager, look no further than your own community. There might just be a man or woman who has both courage and vision to set things right in this Town.

There's plenty of talent right here. You folks might as well put it to work.

Dear Town Council,

I believe that the proposed budget as presented in the 16 July agenda packet has an ongoing structural deficit which will continue to grow in future years.

If the cost of fully funding the Town's unfunded pension liability is added to this growing structural deficit then the only possible way to close the gap without making fundamental changes in the Town's expenditures would be another parcel tax. By my calculations the next time the Town seeks a parcel tax it would need to be at least 4 times as large as the current parcel tax. In addition, future year's deficits may well be impacted by a slower than expected economic recovery.

The Town's budget, as proposed, is simply not sustainable. I urge you to take a 5 year planning horizon and to include the funding of all of the Town's pension liabilities and to then make the very necessary and painful structural changes in the Town's expenditures.

It may be necessary to begin the new fiscal year with a temporary budget that would be revised once the necessary structural changes have been made. However, it would be foolish to adopt the proposed budget for the entire year and to defer any fundamental changes until next year or the year after.

Town Council,
Item 26 on your 16 June agenda calls for ratifying:

"On July 1, 2010, 2011, and 2012, the City Council authorizes compensation of management employees at the 70th percentile
for salary and Public Employees Retirement System (PERS) contribution as compared to like positions with the benchmark agencies."

This is simply preposterous - the Town is in a fiscal crisis and there is NO justification for paying at the 70th percentile of a comparable agency group (Menlo Park, Hillsborough, Millbrae, San Carlos, Los Gatos, Belmont, Brisbane, San Bruno, Los Altos, Woodside, and Saratoga) which includes nothing except other high paid employees. How do these proposed salaries compare to the private sector?

Please start to exercise SOME fiscal discipline.

There\'s another reason to roll back management salaries to the 50th percentile.

Atherton is a very small city, the level of responsibility managers have is much less than the benchmark cities selected for the most part. Saratoga, Menlo Park, San Carlos, Los Gatos, all have much larger staffs, much larger populations and much larger problems to deal with.

Why should Atherton managers collect a premium for sitting on their hands?

It would be one thing if things were going well and if the Town were doing well. But this is an outrage.

Here is a great overview of the CalPers mess and how we got there and where we are going:

Web Link

We work for a fraction of what people in this Town make. A small yet vocal minority begrudge a decent compensation package and the Council won't back us up. What gives?

Sooo frustrated -

I'm not sure why the income of your employer is relevant. Perhaps you can explain your logic.

If I worked as a security guard at Google or Apple or Goldman Sachs, should my salary be based on comparable salaries for similar positions in the area or should it be based on the company CEO's salary? If you are fireman or policeman, you should earn what a fireman or policeman earns, not what the people in your town earn.

No one begrudges the pay our town staff's earn. We just want it to be reasonable and reflect market conditions and not excessive and unsustainable.

San Carlos passes budget August 25, 2010, 03:52 AM Daily Journal Staff Report
Relying on outsourcing police services and park maintenance as well as freezing fire costs make up the bulk of the $3 million in cuts the San Carlos City Council expects to be made according to the $53 million budget approved Monday.
Still discussing ways to fill the budget gap, the council approved a plan in June granting the city manager power to keep the city running using last year’s budget as a guide until a final budget could be approved. On Monday, a $53.1 million total budget plan, which includes $9.9 million for the Redevelopment Agency, was approved by the City Council. A number of the money-saving ideas — freezing fire costs, outsourcing park maintenance, reducing city-wide salaries and benefits — were already approved. Outsourcing police services, estimated to save $1.014 million in its first year, has yet to be finalized but is part of the budget-balancing plan that includes a $600,000 deficit, according to a staff report by City Manager Mark Weiss.
Police outsourcing has been a divisive issue in the city. Contracts for the deal should go before the council later this month. But the budget relies on $1.014 million in savings from hiring the San Mateo County Sheriff’s Office for the first year of police services. Once fully implemented, the new police services setup should save the city about $2 million. Since the change will not happen all at once, nor will it be in effect through the entire year, the partial savings are estimated at $1.014 million, Weiss wrote.
About $315,000 in savings is expected from freezing the fire department costs at last year’s level, according to Weiss’ report. In April, the City Council sent a letter to the Belmont Fire Protection District of its decision to dissolve the Belmont-San Carlos Fire Department. San Carlos has received a proposal from the California Department of Forestry and Fire Protection that is significantly lower than what it now pays for the shared service with Belmont.

Outsourcing of parks maintenance was approved in June, a contract that should save $414,000. In addition, the city plans on saving $167,200 from reduction in salaries, and reductions to the risk management allocation and building professional services. The plan also eliminates the Healthy Cities Tutoring Program, Special Needs Program, 4.5 full-time positions and several part-time positions.


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San Carlos has done the groundwork and the RFPs - easy for others to now follow, or to simply watch and wring their hands.


Peter