It's time for public sector to change its fiscal ways

Modesto Bee EDITORIAL: Thursday, Mar. 12, 2009

A four-day series of front-page stories in The Bee put the spotlight on public-sector salaries in Stanislaus County, especially the number of employees making six-figure incomes. In this tough economy, with unemployment at 16 percent and with the county's median family income only slightly above $56,000, many people can get riled at the thought of hundreds of government workers making more than $100,000 a year. It would be easy, even tempting, to rant about what might appear to be government extravagance.We're not going to do that. We don't begrudge city, county and school district employees for being compensated fairly. Their jobs require expertise, experience and making difficult decisions; we want local agencies to attract and keep the best people. Paying competitive wages is essential in doing that.

It's also worth noting that many of the top salaries go to people who have far more education than the average Stanislaus County resident. Most school administrators, for example, have at least a master's degree. But we also believe that elected officials who set these salaries -- either through individual or collective negotiations -- need to be mindful of several key points:

Private-public comparisons and competition: Increasingly, public-sector compensation outpaces that in the private sector, especially here in the valley. Salaries are only one component, and not necessarily the most important. In general, public employees have more generous health insurance and retirement benefits. Business owners take note of the disparity, especially as they struggle to provide minimal levels of medical coverage for employees.

Public employees also get defined retirement benefits, with less risk, and at an earlier age than most people in private business can afford to retire. And many government agencies allow employees to accumulate sick leave and vacation pay, cash that out just before retirement and raise retirement based on the last year's income. This practice is seldom seen in the private sector.The long-term costs of public employee retirement is not simply a matter of competition with the private sector. It also is proving to be a looming long-term burden for taxpayers, as agencies such as Stanislaus County face the prospect of laying off current employees in order to meet the financial obligations to those who are retired.

Is overtime managed efficiently?: Overtime contributed greatly to many of the fire and law enforcement salaries greater than $100,000 in city and county governments. In true emergencies, overtime can be unavoidable. But cities and counties need to examine their operations to determine whether overtime simply has become an expectation. Further, is it the most efficient use of grant money -- whether it's for speed control or DUI checkpoints -- when the work is done at overtime rates?

Always up, never down: When a chief executive retires, often after years of service, elected boards usually bump the salary for his or her replacement. Why is a newcomer to a job worth more than the experienced person who just left?

Is the agency "top-heavy"?: It is not surprising that an agency with hundreds or thousands of employees would pay its top executive $150,000 or much more. What's startling in the salary stories is how many people are bringing in these six-figure salaries at the level of assistant superintendents, deputy directors and so forth. Are all those positions essential?

Current conditions: In recent years, two arguments for raising public sector salaries were that 1) people would leave for other public agencies that pay more, and 2) employees had to cope with the high cost of living. As we all know, housing prices are way, way down, and people are less likely to leave the security of their current job to end up at the bottom of a seniority list elsewhere.

The market has changed, and the public sector must adjust -- just as the private sector is doing.