Wed, Apr

Whoa! City Employees Compensation Package Explodes … to $175,000


LA WATCHDOG--A simple investigation into how much it would cost to implement Councilmember Mitch O’Farrell’s motion to establish Indigenous Peoples Day as a legal holiday in the City of Los Angeles revealed that the average city employee’s fully loaded compensation is in excess of $165,000 a year for each of the City’s 31,000 civilian and sworn employees. 


This includes salaries of at least $3.4 billion, understated pension contributions of more than $1.1 billion, and human resource benefits of over $600 million, a total that exceeds $5.1 billion. 

However, if the City lowered its overly optimistic investment rate assumption of 7.5% to a less aggressive return of 6.5%* when it calculated its contribution to its two seriously underfunded pension plans, the annual pension payment would balloon by an estimated $400 million.  This will result in an average pension contribution of almost $50,000 per employee and will increase the average fully loaded compensation package to over $175,000. 

This staggering amount leads us to question whether we are getting the bang for our buck, especially when you look at the sorry state of lunar cratered streets and broken sidewalks, the failure of the Planning Department to develop Community Plans that respect our quality of life, and the recent increase in the crime. 

Or phrased differently:  Is the City is working for us or we are working for the City and it unions? 

In any case, it is time for City Hall to clean up its act and begin to earn the trust and confidence of the City’s voters, especially if they want us to approve any tax increases (including the Metro’s proposed half cent increase in our sales tax to 9.5%) in the upcoming November election or the City election in March of 2017. 

For openers, the City should follow the lead of our Department of Water and Power and begin an open and transparent process of benchmarking the efficiency of its operations and work force. This would require the help of an experienced, independent consulting firm that can collect, review, and analyze the data and offer constructive solutions.  

This will take political courage, something that is in short supply at City Hall, as the campaign funding union leadership will go ballistic, throwing up numerous road blocks and claiming, once again, that we have the most efficient and hardworking employees in the country. 

The City Council and the Mayor should also limit their ability to interfere with the day to day operations of the many City departments and hire an experienced Chief Operating Officer (City Manager) to oversee the City’s sprawling and poorly managed operations. 

The Herb Wesson led City Council would also be wise to implement the April of 2014 recommendations of the LA 2020 Commission, including the establishment of the Office of Transparency and Accountability to oversee our cash strapped City’s finances and operations.  It also includes the formation of the Commission on Retirement Security to review and analyze the City’s unsustainable pension system and make “recommendations to achieve equilibrium on retirement costs by 2020.” 

Unfortunately, the likelihood of the City Council and Mayor taking the bold steps necessary to reform our City’s government by making it more transparent and accountable are unlikely.  But then again, so is our willingness to approve any tax increases.  

As for the cost of establishing another legal holiday for the City, the rough calculation is in the range of $25 million.  This assumes that the average fully loaded compensation package exceeds $175,000 and that City employees have almost nine weeks of holidays**, vacation and sick leave. A few less days off would result in significant savings, allowing the City to fund its homeless initiative or the repair of our streets and sidewalks.   



*The 6.5% investment rate assumption is still an aggressive rate given current market conditions and significantly greater that the rate used by the private sector and the Federal Government.  On the other hand, Budget and Finance Chair Paul Krekorian and Personnel Chair Paul Koretz have called for an 8% investment rate assumption because it would “save” the City money for its current budget needs. 

**The City’s thirteen (13) holidays are New Year's, Martin Luther King Day, Presidents' Day, Cesar Chavez Day, Memorial Day, July 4, Labor Day, Columbus Day, Veterans (Armistice) Day, Thanksgiving, the Friday after Thanksgiving, Christmas, and a floating holiday.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  [email protected].)


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