PUBLIC PAYROLL SOARS (wealth transfer gone from citizens to people in Govt)

From the city of Los Angeles to California state government, the cost of salaries and benefits for public employees has soared far faster than inflation in the last five years -- three times as fast in the case of the Los Angeles Unified School District, a Daily News analysis has found.

The study showed that spending for public employees' salaries and benefits at the state and local levels increased overall at more than twice the rate of inflation and grew faster than the per capita income of average Californians. The cost of pensions was excluded from the analysis because of the wide disparity between different levels of government.

The spending binge started at a time that tax revenues were soaring, at the peak of the 1990s dot-com boom. Now that the boom has gone bust and the economy remains weak, state and local officials are making deep cuts in public services and looking for ways to raise fees and taxes. The review covered the fiscal years from 1997-98 to 2002-03.

"At all levels of government, the rate of compensation has gone up much more rapidly than it has in the private sector and, most importantly, faster than the personal income of the people who pay for this," said Steven B. Frates, a senior fellow at the Rose Institute of State and Local Government at Claremont McKenna College.

"There has been a wealth transfer. It has gone from the citizens to the people in government".

"You often hear people in government cry that there are going to be cuts and we're hurting the poor and the little children. The fact of the matter is the citizens of the state, county and city are making life better, not necessarily for schoolchildren or people in need, but for government employees."

The review covered the state of California; the city of Los Angeles; Los Angeles County and three neighboring counties; the LAUSD; and the Metropolitan Transportation Authority. Overall salary and benefit expenditures increased between 18 percent at the MTA and 53 percent for San Bernardino County during the five-year period.

In comparison, the inflation rate in California rose 17 percent, and per capita income in the state increased 24 percent.

Pension costs varied widely and dropped at some public agencies like Los Angeles city government, which has its own pension fund that profited from the booming stock market, and skyrocketed by as much as 79 percent at other agencies. Many local governments now face huge pension bills largely because of expansion in pension benefits.

Workers' compensation costs rose between 29 and 141 percent, and overtime costs increased by 13 to 60 percent.

In the last five years, per capita income in California increased 24 percent, from $26,521 to $32,898. Nationally, employees in the private sector earn an average of $34,299 a year, plus $13,374 in benefits.

That compares to the $49,005 annual salaries local and state government employees enjoy, plus $21,528 in benefits, according to U.S. Department of Labor statistics.

The highest average salary and benefits package is in Los Angeles County, where compensation jumped from $59,126 to $79,057, although officials point out that many employees went without raises for several years in the mid-1990s.

Local and state government officials said they approved compensation increases for their employees to remain competitive with other government agencies and the private sector, and that some cost increases, such as health care and workers' compensation, were outside of their control.

"We represent over 50,000 county employees whose salaries increased 24 percent over 10 years, an average increase of 2.4 percent a year," said Bart Diener, assistant general manager of Service Employees International Union, Local 660, which represents Los Angeles County workers. "We believe this is appropriate and in line with the growth in the economy."

But H.D. Palmer, spokesman for the state Department of Finance under Gov. Arnold Schwarzenegger, said the 41 percent rise in state salary and benefits costs under former Gov. Gray Davis clearly exceeds similar increases in the private sector.

"Looking at that growth in the rearview mirror, it's clear that kind of growth is unsustainable over the long haul," Palmer said. "It's one of the reasons the governor has said he'd like to reopen a number of contracts with state employee unions."

With the state facing a massive shortfall even after voters approved a $15 billion bond issue mainly to refinance existing debt, state and local government agencies now face making steep cuts. Much of the problem was caused by a five-year state spending spree that raised expenditures 43 percent while revenue rose only 25 percent.

Los Angeles County faces making nearly $500 million in cuts, while the city of Los Angeles faces $250 million and the LAUSD $600 million.

County Supervisor Michael D. Antonovich said the biggest portion of the salary increases comes from often unnoticed 2.75 percent and 5.5 percent annual "step" increases, or merit raises, which local and state government workers get during their first five to 11 years of employment.

"And many times employees who reach the fifth step after five years will be reclassified for another five years," Antonovich said. "This is above any cost-of-living adjustments negotiated in labor contracts. That's why those numbers go up so much each year and services are cut.

"So what they need to have is a two-tiered system. Labor laws need to be modified. You could develop a new classification that would allow step increases based upon merit and performance with a smaller increase. So what you would have is something similar to the private sector where promotions are based on merit and performance, not just showing up and having your eyes open."

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the figures confirm that the only "growth industry" in California is government.

"It's clear that the size of government and the slice it takes from the private sector continues to expand," Coupal said. "And while private sector businesses have suffered, it appears that local and state government believe they are beyond economic pressures."

Coupal said local and state officials should renegotiate contracts with employees unions, consider salary and benefit cuts, work furloughs and layoffs to reduce spending.

But Robert Stern, president of the Center for Governmental Studies, said government employee unions are powerful in California and he's not aware of any agencies cutting salaries and benefits since the Great Depression.

"These are pretty stout increases in both salaries and benefits," said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. "But the attitude in Sacramento was, 'Look at all this money coming in,' and they spent us into a massive budget deficit."

And, with the state plagued by a structural deficit of up to $10 billion a year, Kyser added: "We are either going to have to increase taxes or make painful cuts in spending. We are not out of the woods yet."

"They gave the farm away," Frates said. "California politicians need to be candid and open about what they are actually spending taxpayer money on.

"They frequently use the shorthand of, 'It's for public safety, education and public health,' when in fact it's for lavish salary and benefit increases for public employees at the expense of the general citizens of California. There are many public safety employees who now make more in retirement than they did when they were working and they get to retire at age 50."

Schwarzenegger is trying to renegotiate contracts. Los Angeles city officials have talked about renegotiations as well and County Chief Administrative Officer David Janssen has proposed a 1 percent salary cut for county employees and furloughs to save about $20 million.

"The question is do we make these necessary adjustments, or do we fire people?" Antonovich asked. "I'd rather make reductions and keep people employed. I believe you will find from workers a willingness to move forward and take reductions to retain their jobs and continue providing services to the public.

"The union leaders have traditionally opposed these reductions and would rather lay off people than have any reductions in compensation. To me, that is cruel and unnecessary. They don't want to jeopardize the benefits they have already gotten." l=8s=8 Troy Anderson, (213) 974-8985 troy.anderson@dailynews.com AT A GLANCE Here are highlights of the changes over the last five years based on figures from state and local governments, comparing fiscal year 1997-98 to fiscal year 2002-03. State:

Spending for salaries and benefits, excluding pensions, was up 41 percent, from $13.3 billion to $18.7 billion.

The number of full-time employees increased 10.5 percent, from 192,377 to 212,563.

The salary for correctional officers increased 25.4 percent, from $65,450 to $82,066 a year. City of Los Angeles (Not counting the departments of water and power, airports and harbor):

Spending for salaries and benefits, excluding pensions, rose 26 percent, from $1.8 billion to $2.2 billion.

The average salary of civilian workers rose 23 percent, from $45,534 to $55,919, while the average for police officers grew 28 percent, from $60,397 to $77,537.

Overtime costs increased by 61 percent, and workers' compensation costs went up 81 percent. Los Angeles schools:

In the Los Angeles Unified School District, expenditures for salaries and benefits rose 51 percent, from $3.6 billion to $5.4 billion.

The average salary and benefits package of an LAUSD employee grew by 27 percent, from $51,424 to $65,526.

The number of full-time employees expanded 18 percent, from 69,140 to 81,691. Los Angeles County:

Expenditures for salaries and benefits rose 39 percent, from $5.0 billion to $6.9 billion.

The average county employee's salary increased 31 percent, from $37,664 to $49,343.

Workers' compensation costs soared 96 percent, from $143.1 million to $281.0 million. Ventura County:

Workers' compensation costs skyrocketed 141 percent, from $4.5 million to $10.7 million. MTA:

Posted on Tue, Mar. 23, 2004

Cash-Strapped Philadelphia Overspends on Overtime

By Jim Nolan, Philadelphia Daily News Knight Ridder/Tribune Business News

Mar. 23 - Overtime in the cash-strapped city of Philadelphia has gone overboard, jumping from $74 million to $134 million between fiscal year 1999 and 2003.

And a small group of city workers are lapping up the lion's share of the extra public payout.

Call them the Overtime Kings.

They are the 1,560 city employees who made more than 50 percent above their salaries in overtime last year, according to a Daily News analysis of fiscal 2003 payroll records generated by the city controller's office.

Consider:

--At about 6 percent of the city's work force, the Overtime Kings earned roughly one third of the O.T. paid out -- nearly $45 million in calendar year 2003.

--Among their ranks are 88 workers who earned more than 100 percent in overtime above their salaries.

--More than two-thirds of the Overtime Kings work in law enforcement -- as cops, prison guards, sheriff's deputies and Youth Detention Center counselors. But others rule in the Water Department, at Philadelphia International Airport, in the Streets and Health departments, the Recreation and Fire departments, and in Fairmount Park.

Among the hardworking royalty are:

--Lyle K. Canada, who made $40,317 in overtime on top of a regular salary of $35,870 as a labor crew chief in the Water Department.

--Mahlon J. Taylor, who made $52,313 in overtime on top of $34,325 as a custodian at the airport.

--Henry Mims, who made $43,615 in overtime on top of $37,313 as a lawn-cutter for the Recreation Department.

--Tanya M. Blackwell, who made $37,910 in overtime on top of $35,938 as an equipment dispatcher for the Fire Department.

At the very top is corrections officer John Sahou, who made $68,132 in extra pay last year, 179 percent of his regular salary of $38,078 working for the Philadelphia Prison System.

The Kings' rise to riches -- in many cases, a rise equal to or above the pay of top supervisors in their departments -- has been propelled by a dramatic increase in city overtime spending.

From fiscal year 1999 to fiscal year 2003, overtime paid out of the city's general fund to public employees skyrocketed 55 percent, according to the city Finance Department.

Overtime figures from the general fund do not include overtime spent on Water Department workers or workers at Philadelphia International Airport, which are funded differently.

The cost for fiscal year 2004, which ends June 30, is expected to be $117 million -- a reduction from the previous year, due in large part to cutbacks in Mayor Street's round-the-clock, anti-drug program, Operation Safe Streets, run by the Police Department.

Officials and experts on public spending cite a number of explanations for mounting overtime costs in recent years. Among them: an ongoing hiring freeze; a generous sick-time policy; mandated staffing requirements in law enforcement, and the city's obligations under union contracts.

But they also say that the concentration of high overtime payouts to individual employees raises questions of management oversight and productivity.

"It's an issue," the city's managing director, Philip R. Goldsmith, told the Daily News in an interview last week. "No question, some people ... know how to use the system."

David Thornburgh, executive director of the Pennsylvania Economy League, said the current system needs fixing.

"It strikes me that something is out of whack," he said.

"Either you are not deploying people correctly, there are too many gaps in the current system, or you don't have enough employees," Thornburgh said. "You've got contractual issues that are kind of handcuffing managers, or you've got cultural expectations that [paying overtime] is the way you're supposed to do things."

In his budget address last week, Street announced a series of cuts in services and raised the possibility of layoffs to quell the mounting fiscal crisis.

The city also has launched a review of overtime policy to help identify what costs are necessary and how much extra work it has gotten for its extra spending.

"It's simply impossible that the service provided in the first hour of a 90-hour week is the same caliber as the last hour," said City Controller Jonathan Saidel, who called for limits to be placed on the maximum amount of overtime hours city employees may work.

In the past, Goldsmith said, too many city supervisors had the power to authorize overtime, leading to a lack of accountability.

Now, department heads will have to submit biweekly and monthly reports on overtime, which will be monitored against previous years and current staffing levels.

In a March 8 memo to city department heads, Goldsmith wrote that it was critical that overtime be reduced in a "significant and responsible way."

"Overtime is not an entitlement," he wrote, "and it should not be viewed as a means to supplement salary or increase pensions."

Changing the system will be a difficult task.

The city is filling only 50 percent of the vacancies created by retiring workers and is down 800 jobs since September. There are now 23,877 city employees.

With the average city worker receiving benefits that amount to an additional 38 percent on top of salary, officials said in some cases it makes more sense to simply give overtime to existing workers rather than hiring more people.

Most overtime is paid at time and a half of a worker's hourly wage.

Each department has a supervisory level at which top managers are not paid overtime.

But certain departments, like police and prisons, have built-in, around-the-clock staffing requirements and emergency situations requiring officers to work extra hours at overtime pay.

Here is where most of the Overtime Kings are made.

The city's prison system paid 365 of its employees overtime that exceeded 50 percent of their salaries in 2003. Forty-five of those workers made more than 100 percent of their salaries in overtime.

"We have a fixed number of posts, places throughout the prison system, where we need people to man," said Leon King, prisons commissioner. "That's not to say we're satisfied with the way we have been doing things in general in the past."

The Police Department is the greatest single source of the city's overtime expenditures -- about $73 million of the $134 million paid out in fiscal 2003.

Nearly 600 cops made overtime that exceeded 50 percent of their salaries in 2003, according to payroll figures. The cost of these top earners came to nearly $21 million.

Former City Controller Joe Vignola said a major factor contributing to the department's overtime costs comes from court-related overtime the department pays out.

He cited a "lack of coordination and cooperation" among police, courts and the district attorney's office.

But sometimes, overtime is unavoidable, especially for cops. In fact, two of the top-10 gross earners in overtime were homicide detectives, according to payroll figures.

Detectives Leon Lubiejewski and William Egenlauf each earned about $60,000 in overtime in 2003, making them the highest-paid employees in the city among workers who qualify for overtime, at $120,687 and $118,757, respectively.

Vignola urged officials to "find a way to maximize taxpayer value" when it comes to overtime.

Street administration officials are already discussing one way to cut excessive overtime in a city that can't afford to hire more employees: reducing the sick-leave benefit and replacing it with a new disability-insurance program.

Under the current plan, city workers take off an average of 12 to 13 sick days per city employee year, "more than double the average in the private sector," notes Street's plan. "This has resulted in high overtime costs and service disruptions to cover the unplanned absenteeism."

The overtime buck is even stopping at the mayor's office.

A couple of weeks ago, Goldsmith said the Public Property Department told Street that it would come in over the weekend to do some work in his office. The mayor told them to come during the week instead.

He's work elsewhere -- and save the O.T.

"Everyone's getting sensitized," Goldsmith said.

Staff writer Mark McDonald contributed to this report.

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