A round of applause for our City Council for agreeing to implement the “Manfredi blueprint.” But let’s not forget the relentless and hard-charging Maderans who kept this issue front and center. Ron Manfredi schooled members of the council and those in attendance Wednesday evening. He was plain-spoken and brutally honest in his assessment of the city’s compensatory system. He began by addressing the council saying: “I’m explaining this to you because I know you don’t know it.” No one blinked. Throughout his two-hour lecture; “transparency” was the constant refrain.
Amid the fiscal crisis, charges of mismanagement and worse, recall underway, promise of increase fees and reduction of general services, all the economic development touted by council is wishful thinking. Not only would this economic dark cloud drive away potential businesses, but also homebuyers. There are ripple effects. MUSD is already saying that it needs another $31.7 million to complete the high school and the district is looking to put a bond measure on the November ballot to establish a research and technology academy.
Even well-intentioned voters will find it hard to vote for more taxes. Underperforming and underfunded schools will likewise deter new businesses and homebuyers from considering Madera. It’s a vicious cycle that gets worse.
The current budget deficit was first reported by David Tooley in 2017, the genesis of which has been long in the making. Annual budget deficits are projected for the next 4-5 years with the amount increasing every year as the city edges closer to bankruptcy. Overhauling the compensatory system must be the first order of business. After all, salaries and benefits comprise two-thirds of the budget.
A little context is in order. Mr. Manfredi painstakingly went through his report, step-by-step, explaining how the current compensation system is fraught with all kinds of giveaways to top management that has been in place for well over a decade. The audience was reminded that all top management salaries are at least 10 percent above the median, ranging from a high of 21.8 percent to a low of 10.2 percent.
What was shocking was this does not even reflect the actual full wage compensation which is substantially above the base salary. At the heart of this broken compensation system is the additional income that is outrageous and outright abusive, including accumulation of leave, paid leave cash out, longevity pay, management incentive pay, full coverage retiree medical insurance, PERS plan, automobile and technology allowance reimbursement.
Higher salaries translates to higher employer contribution to retirement. The paid leave cash outs are “PERShable” which means it’s a gift that keeps giving.
In 2014, the city commissioned an ill-advised market median study that was seriously flawed. Nonetheless, it proceeded to raise salaries across board for all employees by 4.4 percent. Unsurprisingly, some top management got more than the market median. A year later, the city compounded that generous overpay by adding an additional 11 percent increase spread over three years.
The effective increase is even higher, due a compounding effect of further increases. It goes without saying that top management with a higher market median reaped the most benefits. The cumulative raises ranged between 11 to 44 percent, depending on job classification. On average, workers got a 20 percent salary raise, and we can’t forget the pension implications. This is particularly egregious because the city was not experiencing a critical hiring and retention problem and in the main, government workers’ compensation far exceeds those of their private sector counterparts. This windfall is unconscionable when viewed in light of the fact that Madera is the poorest city of comparable size in the Central Valley.
Mr. Manfredi provided council with a menu of options for its consideration. As was reported, management and employee contracts, salaries and benefits and related budget methodologies are complex, convoluted, confusing, dense and secretive (Madera style) and incomprehensible to anyone other than a human resources geek. Much of this is simply outside the ken of council members. Hiring an independent consultant provides council with “another set of eyes” as they say and reassures the wary public that things are above board. This is especially important since a lot of the negotiations will be done offline in executive session.
Some council members were reticent about continuing to use Mr. Manfredi. Some of those still in denial wanted to rely on staff. One would think the fact staff was none the wiser while these abuses ran rampant would be cause for pause. We have living proof that this is a terrible idea. The outsized influence and entanglement of staff are unseemly. The city paid through the nose in the last 15 years purportedly to hire the best and brightest to run our city. We are where we are today because council relied on staff for input. It’s understandable that public servants believe themselves to be honest. However, being honest is also recognizing the inherent unconscious bias arising from personal conflict (salary, retirement benefits, promotions, etc.), sense of loyalty to peers and staff, and the bureaucratic pressure not to rock the boat which makes it hard to do the right thing even when they want to. The end result is the interest of the general public becomes a casualty of Madera reality.
The fact is, government doesn’t move unless there is leadership at the top. Council can easily divine an end to the fiscal crisis. The idealistic resolve is rolling back the 11 percent salary increase granted in 2015 that will realize a savings of $1.3 million (Transparent California) and another $403,000 ($1.3 x .31 percent) in additional PERS cost. Eliminate the giveaways and perks to top management and the city would realize another savings of $250,000 to $300,000. Viola! Problem solved, surplus of approximately $200,000 and nullification of compaction to boot. Too radical? As starters, how about eliminating the redevelopment director position and folding agency functions into city planning. There are no examples where a city the size of Madera has a freestanding redevelopment agency with its own director. Moreover, many former RDA functions no longer exist. Bottom line, there are no sacred cows.
Time is of the essence. On a related note and not to make the collective heads of council explode, but the city needs to rectify the outdated and excessively low development impact fee schedule for new development like yesterday. This 30-year long failure has led to our crumbling water and sewer infrastructure that will lead to rising fees not to mention neglect of our parks, streets and bridges. In that connection, the City has been all but MIA in the current Sustainable Integrated Groundwater Management Group planning meetings. If staff is not present to protect city interest, county special interests will rule the day ensuring higher costs for the city to produce water in the future.
The taxpayers are demanding macro-steps, not micro-steps. No need to harden arteries. While arguably it may be unfair to lay the blame of the current fiscal crisis at the feet of the sitting members of this council, if they allow things to languish, then the blame deservedly falls squarely in their laps. Carry on!
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Baldwin S. Moy is an attorney with California Rural Legal Assistance.