Facing ballooning pension costs, the City is reorganizing public employees by shuffling vacant positions and eliminating certain jobs. On Tuesday, the City Council approved a proposed operating budget that alters 69 public positions to realign operations.
While the City will add a total of six full-time positions in the next year, seven positions in the airport and broadband departments will be eliminated. Even with the departmental shuffling, the city will need to raise fees to keep up with a 4.4 percent rise in compensation costs for Fiscal Year 2018-2019.
“We think we need to set this city on a different trajectory, which means reducing our overall staffing,” said City Manager Rick Cole at a recent Council meeting. “That doesn’t mean layoffs. We are not in a crisis situation.”
Santa Monica has more public employees than any comparable city in the region. A recent audit found the city’s 2,293 workers make about average when compared to regional peers like Beverly Hills and Pasadena. Employee expenses make up about $332 million of the city’s $508 million budget, according to the audit by accounting firm Moss Adams.
The numerous public workers magnify a statewide problem of escalating public pension costs here. While the city is currently operating in the black, skyrocketing pensions weigh heavy on economic forecasts. The City currently has a $461 million unfunded pension liability. Finance Director Gigi-Decavalles-Hughes has led the effort to curb climbing costs. By the end of the year, Santa Monica will have paid $77.5 million in voluntary advanced payments, which will save the city about $6 million a year in annual contributions.
However, over time the offsets are not enough. Decavalles-Hughes says without additional measures the City will find itself in the red.
“Over the next several months we will be analyzing various alternatives to manage these pension cost increases and potentially lower our unfunded liability further,” Decavalles-Hughes said. “Continuing along our current path will lead us to deep, structural deficits in year four and five.”
The finance director says it is critical city leaders control operating costs. The anticipated 4.4 percent increase in staffing costs include salary, healthcare, retirement and workers’ compensation.
“We have some control over salaries but we have other things outside that we can’t control as much so that’s a big challenge for us,” said Mayor Ted Winterer.
While the city is in a hurry to fill 20 vacant police department positions, the city manager says there is potential to save money by repurposing or eliminating at least some of the 130 other unfilled positions. Cole has committed to cap the size of staff at current numbers for the next two years.
“The first rule of holes is when you find yourself in one you stop digging. So we have stopped digging,” Cole said.
Over the next year, the City will add three new jail employees, a part-time Deputy City Attorney and extend two limited term positions: the Senior Advisor on Airport Affairs and a Human Resources Information Systems Analyst. Staff also recommended hiring a Network Engineer and eliminating an open position for a Community Broadband Analyst. The new positions add $100,000 to the general fund.
To offset the additional employees, the City will delete five airport positions and transfer two broadband-related positions to the General Fund.
The City Council approved five new fees to help pay for escalating costs, including a $95 impound fee for dockless bikes and scooters left in the public right-of-way, a $20 administrative fee for having a parking ticket dismissed and a $361 fee for processing new address assignments and change requests.