1. West County Connectors Construction Highlights And Closures For The Week Of Jan. 6
Orange County Breeze
Landscape maintenance activity is ongoing adjacent to the College Park West community. Crews are removing dead trees, brush and other shrubbery to clean out the drainage channel near the southbound I-405 / westbound SR-22 / 7th Street connector.
2. Benefits Plush Even For Non-Safety Agency Workers
O.C. Register
The high cost of retirement and health benefits for agencies that do police and fire work are well-known. But the costs of benefits can be almost as meaty for public agencies that have nothing to do with risky public safety work, an analysis by The Watchdog has found.
Consider: The Orange County Fire Authority spent almost 51 cents on benefits for every dollar it paid in wages. As its workers are required to put their lives on the line, they are compensated accordingly, officials said.
But several other districts – whose work might be no less important, but arguably a good deal less dangerous – spent nearly as much as the Fire Authority on benefits.
The Serrano and Trabuco Canyon water districts, for example, spent some 45 cents on benefits for every dollar paid in wages. The Orange County Transportation Authority spent more than 42 cents for every dollar paid in wages.
The Midway City Sanitary and Orange County Cemetery districts spent 40 cents, and the Santa Margarita and East Orange County water districts spent upwards of 39 cents.
Countywide, the average among districts with total payroll of at least $400,000 (almost all of them) was 33.6 cents for every dollar spent on wages.
We told you Sunday about our review of average pay at special districts in Orange County – sovereign little governments focusing on narrow missions, such as battling mosquito-borne disease or delivering water or treating sewage, which operate largely out of the public eye. Data from the 30 special districts in O.C. reporting paid wages to the state controller showed that most had average total comp exceeding $70,000.
Much of that total compensation – averaging 33.6 percent – came in the form of benefits, primarily retirement and health care. The swelling cost of these benefits is not news to the agencies, and all of them are taking steps to bring the cost of benefits down.
The most popular methods, enforced by recent state reforms: Granting newly hired workers more circumscribed retirement benefits, hiking the retirement age (though this won’t make much of a dent in the bottom line for years) and asking workers to kick in more towards their own retirements.
SCALING BACK
Sometimes things have to go up before they can go down.
The Fire Authority wrestles with the most expensive of retirement formulas: 3 percent of pay for each year worked once firefighters hit age 50. Translated, that means firefighters under the old formula – the overwhelming majority of them – can retire after 25 years of service with 75 percent of pay, or after 30 years with 90 percent of pay.
The Fire Authority faces a daunting unfunded pension liability of $473.8 million.
That’s the difference between what it needs to fulfill its present promises, and what it has. Currently, it spends 22 percent of its general fund budget on retirement costs.
In September, it approved a plan to aggressively address the gap – shortening the period over which it intends to pay, dedicating what’s left at the end of the year to paying down this debt, and kicking millions more into the kitty each year.
In the short term, that will mean more goes toward benefits. But it will also mean that the bill is paid off sooner, which will cost the Fire Authority less over the long-term.
“We work hard to be responsible/good stewards of the public’s tax dollars,” said Battalion Chief Kelly Zimmerman by email. “Over the last 3 years, we’ve taken many steps to proactively reduce compensation costs. Our employees share in the paying of pension costs. We implemented a reduced tier of retirement benefits for new employees in 2012, prior to changes imposed by pension reform in 2013. Our employees entered into a partnership with OCFA to maintain service to our communities and sustain OCFA’s financial health as top priorities over salary increases.”
Over time, the savings will be reflected in the numbers, he said.
The Orange County Sanitation District, which ranked No. 2 for highest average total comp among O.C. special districts, embraced a lower retirement package for new hires back in 2010 – years before the state mandated it, spokeswoman Faviola Ochoa Miranda said. Benefit formulas were trimmed back, the retirement age was increased and medical plans were changed to help control overall health insurance costs, she said.
The agency, which treats sewage for 2 million people in Orange County, also anticipates that the numbers on The Watchdog’s charts will change going forward.
Daniel R. Ferons, general manager of the large Santa Margarita Water District, said that his district doesn’t provide health benefits for retirees – something many other governments do, and another multibillion-dollar problem statewide. In exchange, though, SMWD does provide “more robust” retirement pay, he said.
But workers in his district will be picking up more of those costs over the next three years. By the middle of 2015, all SMWD employees will be paying their full share of retirement contributions – 8 percent of their pay, he said.
All governments that have been paying the worker-required contribution to retirement accounts, as well as the employer’s required contribution to retirement amounts, will be doing the same. And that will help bring costs down.
At the little Midway City Sanitation District, such reforms have been under way for a while. Workers started making contributions towards their retirements back in 2011, said Ken Robbins, general manager, by email.
“MCSD was the first government agency in Orange County to add a second tier for retirement and we now have four employees in that tier,” Robbins wrote. “We also have one in the new third tier that took effect on January 1, 2013.”
BIG PICTURE
The U.S. Bureau of Labor Statistics keeps its eye on things like this. It looks at things through a different lens than we did, but here’s what it saw in September for both private, and public sector, workers:
Overall, compensation costs among private industry employers nationwide averaged $29.23 per hour. Wages and salaries were $20.55 per hour, or 70.3 percent of compensation costs; while benefits, at $8.68, made up the remaining 29.7 percent. (Keep in mind that these private sector numbers include legions of lower-paying service jobs for unskilled workers.)
Meanwhile, compensation costs for state and local government employers nationwide averaged $42.51 per hour. Wages and salaries were $27.38 per hour, or 64.4 percent of compensation costs; while benefits, at $15.13, made up the remaining 35.6 percent. (Keep in mind that public sector jobs often involve higher-level skill sets.)
We often hear from our labor friends that, rather than trying to drag public worker comp down to the level of private workers, folks should be trying to raise the level of private workers to that of public folks. Which would be pretty awesome if we could afford it, no?