Recent community discussion of the pay of city employees merits further consideration. There is no question that City of Santa Barbara employees are overcompensated. The comprehensive compensation of city workers places many in the category of the “top 1 percent.” To be clear, the City of Santa Barbara is making many of its employees multimillionaires at public expense.
Consider, for example, the top four paid city employees — the city administrator, the city attorney, the police chief,and the fire chief. In 2017-18, these four employees received an average of $369,000 each in compensation from the city in salary and benefits. This is unsustainable. It amounts to current comprehensive compensation of approximately $1.5 million per year for merely four city employees.
I should hasten to add that these comments are in no way directed against the current incumbents of these positions, merely against their unsustainable compensation. It gets even worse when considering the retirement benefits these city workers will receive. Although I have earlier estimated that these four employees will likely receive more than $20 million in pension payments, a more accurate estimate would be that the current top four city employees may receive more than $25 million in pension payments.
This is unsustainable. The current annual general fund budget of the City of Santa Barbara is approximately $130 million, but merely four employees — of more than 1,000 who work for the city — will, over the course of their retirements, receive more than $25 million.
A day of reckoning is coming. The long-term estimated rate of return on investment in public employee pension funds of approximately 7 percent is not likely to be realized. Between 1966 and 1982, during a time of substantial inflation, the stock market did not rise at all. The fact is that the $25 million that the top four current city employees will probably receive in pension payments will come at the expense of essential city services. In order to pay city employees their pensions, vital city services will have to be cut.
But it is not only with respect to pensions that city workers are overpaid. The “flexible schedule” of city employees whereby they are to work about half an hour more on other days so they receive every other Friday off means that for the bulk of rank-and-file city workers, they have more then 30 three-day weekends per year.
In addition to the benefits of the “flexible schedule,” whereby city offices are closed every other Friday, city workers receive 10 holidays per year and FOUR “personnel necessity” days in addition to generous sick leave and vacation benefits. To be crystal clear, in the City of Santa Barbara, to receive multimillion-dollar pensions, it is only necessary to be a part-time worker from the standpoint of most positions in the private sector.
Finally, the influence of Social Security should be emphasized. City employees do not pay Social Security taxes. This is a benefit of approximately 6.2 percent of salary that city of Santa Barbara employees do not pay compared to the private sector.
City of Santa Barbara employees are overpaid. It will be incumbent on the next City Council to negotiate fairer employment agreements for the people of Santa Barbara, rather than city employees.