Palo Alto City Council City of Palo Alto Palo Alto, CA 94301 Cc: James Keene A recent announcement

by certain managers at the Palo Alto Utility about their needing a union (or bargaining unit) to protect their status and to make their voices known, causes one to wonder just how unfairly treated these people are, or how different they are from other City of Palo Alto managers? The following quotes from various players in the Utility, briefly outlines their case:
The utilities group, the petition states, "functions as a utilities business unit separate and distinct from other city business." "The management and execution of the successful delivery of water, gas, wastewater, electric and telecommunications products is very different than the normal City of Palo Alto government business of providing information, planning, permits, protection and recreational outlets," the petition stated. The salaries of utilities managers currently range from about $100,000 to about $185,000, according to data from the Administrative Services Department. Though their salaries are generally higher than those of other managers, they are lower than those of their peers in investor-owned utilities such as PG&E, according to utilities officials. "You'd be surprised at how uncompetitive some of the salaries are within utilities," Fong told the committee at the June 7 meeting.

The following data, taken from the 2009-2010 budget year, provides some hard details about the take home salaries of the PAU managers
Supv Elect Systems Dir Utilities Asst Dir Ut/Res Mgmt Assistant Director Utilit Assistant Director Utilit Assistant Director UTL Cu Sr Resource Originator Supv WGW Engr MGR MGR Util Oprns Wgw Sr Resource Planner Supv WGW Supv Elect Systems Engr MGR WGW Sr Resource Planner Supv Elect Systems Sr Electric Project Engin MGR Util Mkt Svcs Supv Elect Systems Sr Electric Project Engin Sr Resource Planner Sr Resource Planner Sr Electric Project Engin Sr Project Engineer MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT 227,475.74 217,142.87 170,823.43 165,616.00 155,212.00 153,839.74 153,368.69 148,560.71 146,230.80 144,194.27 143,134.14 139,730.57 138,436.58 137,901.36 134,312.63 133,693.23 132,856.00 132,218.09 129,875.19 129,829.77 129,316.00 128,681.04 128,622.05 128,005.64

Sr Electric Project Engin Sr Project Engineer Sr Project Engineer Sr Resource Planner Supv WGW Supv Water Trans Supv Elect Systems Supervising Electric Proj Sr. Administrator Sr. Business Analyst Supv WGW Sr. Administrator Sr Project Engineer Sr Technologist Supv WGW Contracts Administrator Project MGR Admin Assistant Sr Resource Planner Sr Resource Planner

MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT MGMT

127,794.30 127,109.83 126,597.57 123,801.05 122,396.45 121,932.51 121,664.88 118,963.18 118,838.92 118,511.83 118,009.26 115,849.77 113,439.77 112,304.58 109,754.52 100,304.80 99,525.91 82,084.95 74,681.91 71,210.58

(Notecash payouts at the time of retirement can result in one-time yearly salaries that are significantly higher than salaries prior to retirement.) Source: 2009 City of Palo Alto Salaries The claims that these salaries are uncompetitive, given that municipal utilities are not competitive--by their very natureis somewhere between unrealistic, and more likely dishonest, than not. The Palo Alto Utility provides life-long employment, regardless of the economic environment in the surrounding private sector ecosystem. Moreover, the core competence that leads to profitability of utility companies in the private sector is never an issue for continued employment at the Palo Alto Utility. What certainly seems to be job security should be considered by any City Management Team, when negotiating salaries for Utility managers. Pensions Not Considered What the Director of the Palo Alto Utility seems to have quite adeptly ignored in her claims of uncompetitiveness is that in addition to the salaries paid the Utility managers, there is also a life-long, taxpayer-guaranteed pension, that will, in most cases, pay each Palo Alto Management retiree payouts in the millions of dollars.

The following table provides the pension to salary linkage in effect for Palo Alto municipal employees at the current time-Public Employee Initial Pension At Time of Retirement Using 2.7% Multiplier $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $20,250 $27,000 $33,750 $40,500 $47,250 $54,000 $40,500 $54,000 $67,500 $81,000 $94,500 $108,000 $60,750 $81,000 $101,250 $121,500 $141,750 $162,000 $81,000 $108,000 $135,000 $162,000 $189,000 $216,000 $101,250 $135,000 $168,750 $202,500 $236,250 $270,000 $121,500 $162,000 $202,500 $243,000 $283,500 $324,000 $141,750 $189,000 $236,250 $283,500 $330,750 $378,000 $162,000 $216,000 $270,000 $324,000 $378,000 $432,000

Years 5 10 15 20 25 30 35 40

$450,000 $60,750 $121,500 $182,250 $243,000 $303,750 $364,500 $425,250 $486,000

(NoteTable data represents group averages. Details of individual retirement packages could easily result in higher exit salaries at retirement.) The following table provides the minimum payouts any City of Palo Alto management employee (non-public safety) can expect to receive, for up to 30 years of retirement Pension Payouts For 10-30 Years
Pension $150,000 $200,000 $225,000 $250,000 $300,000 10-Year Total $1,675,307 $2,233,743 $2,512,961 $2,792,179 $3,350,615 20-Year Total $3,717,498 $4,956,663 $5,576,246 $6,195,829 $7,434,995 30-Year Total $6,206,916 $8,275,888 $9,310,374 $10,344,860 $12,413,832

(Notetotals include CalPERS COLA enhancements.) It is not hard to see that Palo Alto Utility managers, quite well paid for their work in a non-competitive government enterprise, will become multi-millionaires during their retirement. For the most of them, they will receive more than twice the money in pensions that they received for actually working! And, given the current pension system, these retirees are free to return to work, further increasing their lifelong earnings if they wish.

Lifetime Earnings Need Consideration Clearly, government employees need to receive salaries that are commensurate with their skill levels, but paying then at such levels that each of them become multi-millionaires is not an intelligent use of public funds, not a moral use of public funds, and not sustainable for very much longer. The giveaway at the Federal level for entitlements has now grown to the point that the Federal government has acquired somewhere between $70T and $200T in unfunded liabilities for government wealth transfer programs.
U.S. Debt $130 Trillion:

http://www.mygovcost.org/2010/09/11/u-s-debt-130-trillion-global-gdp-and-moneysupply-60-trillion/ Part of the failure of every level of government is that it has allowed unionized employment negotiators to take the income from pensions off the table, thereby reducing the actual lifelong earnings of municipal employees to be reduced by put to twothirdswhich amounts to untold trillions of dollars by the time that all of these municipal employees retire and demand that these pensions be paid by the unsuspecting taxpayers. When Will The City Council Represent All Of Us? Why? Why is it that the City of Palo Alto does not have the moral courage to put lifelong earnings on the table, and make it very clear that the total salaries/pensions paid to its employees far exceed those in the private sector? When will the taxpayers of Palo Alto have a place at the table? When will the City Government become a cost-effective service delivery mechanism, rather than an opaque tool of the employees to gouge the taxpayers, and the ratepayers, of their hard-earned money? The City Council may not be able to restrict the toxic effect of labor unions on the city government, but it has every right, every obligation (in fact), to make the salaries and benefits of the managers of the Palo Alto Utility made public, every obligation to publicly refute claims of any public employees (like the Utility Director) that salaries are uncompetitive when, given the truth of lifelong earnings, that that exceed those of the private sector many times over. The City Council has every obligation to demand the Utility Director demonstrate the total compensation package offered to Utility Managers (including pensions and post-retirement health care), are, in fact, uncompetitive. Sadly, the Palo Alto City Council sits quiet, saying nothing, no matter how bad the scandal in the Utility might be, no matter how disingenuous the claims of its Director might be. Sadly, the City Council does not openly encourage any Utility Manager who feels he/she is unfairly treated to seek employment elsewhereat more competitive salaries. Sadly, its up to the residents to do the job the Council should be doing, where the Utility is concerned.

Wayne Martin Palo Alto, CA www.twitter.com/wmartin46 www.scribd.com/wmartin46 www.youtube.com/wmartin46 On-The-Net: Comparing Pay in the Federal Government and the Private Sector: http://www.heritage.org/research/reports/2010/07/comparing-pay-in-the-federalgovernment-and-the-private-sector SF Pension Pays More Than Average Worker Earns: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/06/18/BA791JUFU5.DTL