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San Jose spends $142,000 per FTE on wages and benefits
Made popular 342 days ago in
Take a look at the attached chart from San Jose, California. As you can see, San Jose had an average of 7.5 employees per 1,000 residents from 1986 to 2005, and never dropped below 7.0. But in the last two years, that ratio has cratered -- to 5.6 per thousand this year, with further cuts expected next year.
This is partly because revenue has risen only modestly, with general fund receipts rising 19 percent in a decade. But the main reason is that costs for a full-time equivalent employee are astronomical and skyrocketing. San Jose spends $142,000 per FTE on wages and benefits, up 85 percent from 10 years ago. As a result, the city shed 28 percent of its workforce over that period, even as its population was rising.
A lot of that increase is due to rising required pension payments, as the assets in the city’s pension funds have lost value. But much also had to do with what Mayor Chuck Reed, a Democrat, describes as “irresponsible policy actions” over the last 15 years. Here’s his list:
1. Giving out raises faster than revenues were growing.
2. Giving out raises and increasing benefits when revenues were falling.
3. Giving out raises and benefits retroactively.
4. Allowing employees to cash out unlimited amounts of sick leave when they retire.
5. Providing lifetime health care for retirees.
He also notes that “the City Council and outside arbitrators also significantly enhanced retirement benefits. The maximum benefit for public safety employees grew from 75 percent of final salary to 90 percent, and a guaranteed 3 percent cost-of-living adjustment was awarded to all employees.”
In other words, the city made a lot of promises that it could barely afford when times were good, and now that times are bad, it really can’t afford them.
So, why doesn’t San Jose just take away some of these generous benefits so it can afford to hire? Well, Reed is trying. But California law makes it easy to give out a pension sweetener and very hard to take one away. And binding arbitration laws make it difficult for the city to claw back benefits from police and fire workers.
Reed and San Jose’s City Council have declared a fiscal emergency, and used that declaration in order to put a referendum before voters that would sharply cut the pension benefits that workers (even those on the payroll today) earn in the future. That proposal passed on Tuesday with 70 percent of the vote, but the city’s public employee unions are suing to block its implementation.
Obama is right that it’s a problem that states and cities can’t afford to expand or retain their workforces. If the president wants to know why state and local governments can’t afford to hire, he could start by asking his own supporters in public employee unions.
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Should cities cut employee pay & benefits, increase taxes or go default?
Increase taxes & fees
This is not a scientific survey,
to learn more. Results may not total 100% due to rounding and voting descrepencies.
342 days ago
It's a combination of many things, but as usual when you try to increase and reduce expenses you're going attack the whole pie and that is an attack on all pockets.
The Property taxes in California are between 1% - 1.25% of assessed value. In Texas it's between 2.25% and 2.65%
Here's two ideas to start with. That will go no where.
342 days ago
@Free As usual, you don’t have a clue to what you are talking about. James is talking about THIS planet.
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