July 28, 2010: Santa Clara Citizens Advisory Committee Questions City Salary and Benefit Increases

By Carolyn Schuk

As cities and states across the nation face acute budget crises, attention invariably turns to the largest item in public budgets: public employee compensation costs.

For example, Business Insider (www.businessinsider.com) has been making journalistic hay recently with titles such as "The 899 NY State Employees Who Earn More Than [Gov.] David Paterson," "Maywood, CA Lays Off All City Employees, Dismantles Police Department," and "If You Thought New York Was Bad, Check Out The Ridiculous Public Sector Pensions In Illinois."

Santa Clara is no exception to the national conversation.

At the June 18, 2010 City Council meeting the Santa Clara Citizens Advisory Committee (CAC) objected to the salary and benefits increases included in the City's 2010-2011 budget, saying in a public statement that they were "not justifiable," and asking the City Council "not to pass this current budget until it can be proven that the necessary money exists to pay for these salary increases."

The CAC further recommended that the City's retirement plans be "restructured into a 401K type plan with City matching funds ranging from a minimum of 0% up to a maximum of 2% of individual employee contributions" – the common practice in private industry. In addition, "during any fiscal year in which the City experiences a deficit, the …City [should] refrain from matching employee contributions…and the retirement age of all employees be changed to 65."

The definition of "justifiable" is central to the question. And one measure of that is how public sector compensation stacks up against the private sector.

Last spring, USA Today reported that federal pay scales are outpacing private industry, according to the U.S. Bureau of Labor Statistics (BLS). Including health, pension and other benefits, USA Today's analysis showed that federal workers in 2008 received total compensation of about $101,000, compared with roughly $70,000 private sector total compensation for the same jobs.

The BLS's statistics show the same difference at the state and local levels as well. In its June 2010 Employer Costs for Employee Compensation (ECEC) survey shows that average total compensation in the private sector is roughly $28 per hour worked in March 2010, while total compensation for State and local government workers averaged just shy of $40 per hour worked.

Another basis of comparison is the amount of salary increases.

Santa Clara city employees, on average, will receive 5 percent raises in the coming year. By contrast, global human resources association WorldatWork reports that nearly 54 percent of U.S. businesses froze wages in 2009. Of these, about half say pay freezes will continue in 2010. Of Bay Area companies that are giving raises this year, job search website SimplyHired reports that increases will be 2 percent or less.

For more information about Santa Clara's budget, visit the City's website. Compensation agreements with Santa Clara's 12 bargaining units (public employee unions) are also available online.