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Santa Clara city employees must choose between pay cuts and layoffs

By Erik Silk | 17 Nov 2010

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At idyllic Santa Clara City Hall, city leaders are debating lay offs vs. pay cuts for city employees. (Photo: Erik Silk)

Santa Clara city employees have a choice to make in the coming weeks, and it could be a painful one.

The city has threatened to eliminate 9 percent of its work force in January – by laying off 82 people – unless the unions representing police officers, firefighters,  engineers and other municipal employees agree to either a 5.15 percent salary cut or 12 days of unpaid leave.

The unions also are being asked to give up a 4.5 percent pay raise that had been scheduled to take effect in December.

Three of the 10 bargaining units have tentatively agreed to the concessions, which Santa Clara officials say are necessary to dig the city out of a deep financial hole. The other bargaining units are in talks with the city, facing a Dec. 9 deadline. If terms are not agreed to by then, the jobs will be cut on Jan. 8, according to the city.

“Everyone feels sick that layoffs may occur,” said Ronald Garratt, an assistant city manager. “The very emotional aspect of this is that, throughout this city, of the [910] employees we have here, we may lose some folks through layoffs that we have worked with for decades, that we’re friends with. And for anyone laid off, it’s a crisis, one of those life-changing things; folks have mortgages, they have kids in school, so it’s a horrible outcome.”

Voula Brown is the president of the Santa Clara Employees Association, which represents 250 clerical workers. Brown said her bargaining unit reached a tentative agreement with the city, subject to approval by its membership.

As recently as two weeks ago, the employees she represents were unaware that many of their jobs were on the line, she said. Without an agreement, 32 clerical positions would be cut under the city’s plan.

“Our position is that we’re working with the city, trying to keep pressure off the employees,” said Brown, who has been a municipal employee for more than 20 years.

At a Nov. 9 City Council meeting, she appealed to city leaders to defer any talk of layoffs, calling it a distraction to workers and to the negotiations. “We’re very worried, we’re concerned, about each other, about the impact on our homes and families, and the services we provide to our citizens as well,” she said.

She added that Santa Clara, unlike many other Bay Area cities, has always been fiscally conservative, which is one reason why it hasn’t considered layoffs until now.

Santa Clara, like almost every other city in California, has been rocked by a “perfect storm” of negative fiscal circumstances, Garratt said. These include the national recession, a dip in the housing market, the state’s budget woes and related reductions in local funding, and greater obligations to pension funds.

Recently, the city manager’s office published an extensive list of proposed cutbacks to compensate for the loss of revenue. Even if they make all the reductions, Santa Clara officials anticipate an operating budget deficit of $20 million in the next fiscal year.

According to Garratt, higher pension costs have taken the largest chunk out of city funds. For one thing, retired employees are living longer. More workers from the Baby Boomer generation are approaching retirement.  And in 2000, the retirement age for Santa Clara police and fire department employees was reduced from age 60 to 50; it was reduced to 55 for all other city employees.

In addition, the California Public Employees’ Retirement System, or CalPERS, lost $100 million on a failed real estate investment in East Palo Alto in 2008, a victim of the falling real estate market. Santa Clara is just one city paying for that loss.

City Councilman William Kennedy said the current problems have been building in recent years but were sometimes obscured by the city’s success during the tech boom earlier this decade. “Santa Clara was blessed with many, many years of prosperity,” Kennedy said. “Now we’re dealing with some economic realities, and that’s not easy for anyone.”

At the moment, Megan Zimmershead isn’t concerned with the reasons. She’s worried about keeping her job.

Zimmershead is an office specialist with the Department of Planning and Inspection. She has been a city worker for a little more than a year. “Naturally, if you’re younger, you’ll be lower on the totem pole,” she said.

She questions the logic of targeting younger people.

“With the layoff plan, I don’t feel like it’s an effective policy to secure the future of the city. It’ll alleviate money problems, right here, right now, but I worry about five years from now, what they’re going to do?”

Even if she keeps her job initially, Zimmershead worries about the ripple effect that the downsizing would cause. The layoff list targets positions, not people, so it’s possible that someone with more seniority could be asked to accept a lower position  — Zimmershead’s, for example.

“They are more senior than I am, so they get to bump me out of my job. I am not even the person that is supposed to be cut, and on a personal level, that’s very frustrating,” she said.

The city’s finances bounced back from the recession, but projections show the numbers dropping again due to various factors, including continued diminished sales and property tax income. (Data courtesy of Santa Clara City Manager’s Office)

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