The city paid more than $130M in interest alone on its pension debt—far more than its $100M annual deficit, which it just sold the Coliseum to pay. It has unutilized options to mitigate these costs.
PEPRA also caps the annual salary used in the average of the final 3 years of compensation at far less than PERS classic. So higher paid workers don’t benefit from wages earned above that cap. Excellent reporting thank you!
Excellent work. Acknowledging the problem is the first step. Thank you. I am discouraged by the fact the in Dist 1 a former firefighter is running for election. This problem will never be solved by wolfs in the hen house.
Great article. This is one of the best summaries of the issues with public unions, all in one sentence. "Presently, wages are set in closed-door negotiations between the city administration, the City Council, and union leaders that helped elect the very city leaders who are negotiating with them."
Do you have any plans (or recommended sources) to evaluate the candidates in the 2024 election, in particular on the public safety and city finances issues? Sorting through the candidates based on their vague fliers is tricky for us Oakland voters.
Thanks Ian. Oakland Report will not be issuing a voter guide. Our mission is to highlight the issues, and their root causes, using primary data and evidence. But we stop short of endorsing or advocating for any candidates. We respect the voters to draw their own conclusions and choices from the analyses and perspectives we present.
Though more directive guidance would certainly be valued by many, we have to keep our independence of the politicians themselves, so that we can pick apart any issue -- no matter the who or how behind it.
As for addressing your need, you might check out Empower Oakland which has now issued such a guide. As well as SOS Oakland. There may be others doing the same.
On the other hand, we will launch next week a Candidate Forum. This is a section of Oakland Report with original contributions and perspectives from any candidate who wishes to share their view. We will not control the content except ensuring that it adhere to Oakland Report's editorial standards of reasoned, evidence-based, and verifiable information.
Interesting that the Coalition on Police Accountability (I was treasurer from inception until last January when I was kicked out for supporting the recall of DA Price and opposing suspension/termination of Chief LeRonne Armstrong) sent all candidates a questionaire asking if they supported public contract negotiations for police, but no mention of any other union.
All union contract negotiations should be public.
Len Raphael CPA for Oakland City Council District 1 November 2024
If I had generated the cartoon, I'd have used a young woman or man because as CM Kaplan said early in her first term, in her last candid public statements about our city's retirement obligations: "They are generational theft"
It was disheartening to participate in the MGO Democratic Club endorsement forum tonight and see all the candidates gloss over our massive fiscal elephant in the room.
All of them except one At-Large said public safety was their number one priority. That guy said stopping housing displacement was his number one priority.
All of them except Kanitha and maybe Baba talked big about adding zillions of new affordable housing units.
Zac did mention the need to make tough choices (but not what choices he preferred), LeRonne stated his departmental budget experience, and Kanetha touched on the budget crisis as a major problem. Charlene did address it but with a straight face assured us she could get State and Federal grants to fix our money problems.
Erin avoided the whole question of the cost of more police with the incredibly naive "We need to utilize our mutual aid agreements with neighboring police departments.
They're all afraid of losing votes by saying they'd cut something popular or god forbid, raise taxes.
I haven't looked at it in detail. The version that Rob Bonta tried to pass in CA a few years ago did not impose a CA wealth tax on realized or unrealized gains within retirement plans. Would be surprised if the Federal would because it would upend the entire premise of retirement plans of encouraging saving for retirement.
Another reason for the govts not try to capture unrealized gains within retirement plans is that they always get captured when distributions are made unless coming from Roth IRA's. Roth IRA's have so many restrictions on contributions to them, that extremely few high millionaire individuals, let alone billionaires, even have Roth IRA's.
The average labor cost is typically 20-35% of gross sales, depending on the industry. Chris Kolmar, "23 Trending Average Labor Cost, Statistics [2023]: Labor Cost Percentage By Industry And More, " (Zippia, Nov. 3, 2022). https://www.zippia.com/advice/average-labor-cost-statistics/ That the city of Oakland pays 25% of its budget toward compensation for employees is consistent with the national average across Industries. the conclusions reached in this article are not meaningful.
The article must demonstrate what percentage of the city's annual budget should go to employee compensation and provide a principled reason for that percentage. Titillating articles regarding wages and compensation with a public or private sector always start with the false premise that having employees must be a problem, but the same boosters offer the sales pitch that industry exists to "create jobs" and tout job and wage growth (while omitting declining real wages) to legitimize the social order. A premise in the article is that retirement funds should be funded by the roulette wheel of the stock market, exposing workers to Enron fraud. A better analysis would be a public policy explanation of what productivity and return the taxpayers should receive for paying salaries and wages to any Municipal workers, including the upper level administrators within a city, fire, police etc. when cities run into financial problems, they decide to reduce their expenditures by laying off the lowest paid people who are the sidewalk sweepers and janitors, while leaving the highest number of highest paid workers in place.
The city of Oakland Police Department represents a significant part of the budget. entry level police officers are paid over $100,000 per year, with no meaningful education.
Defunding means dismantling and transforming direct police service relative to the penal work police actually do and redirecting funding to health/social work that police are not fit to do. The police engage in very little crime fighting, e.g. 1 crime per officer per year. Kappeler, Victor E. Ph.D, "How Much Crime Fighting Do ‘Crime Fighters’ Really Do?" ( Eastern Kentucky University, 2013).
Crime rates have been dropping irrespective of the amount of policing. Latter and Li, "New FBI Data: Violent Crime Still Falling :2018 drop extends decades-long trend, but rapes rise for lo sixth straight year," (The Marshall Project, 09.30.2019).
The police are trained to indiscriminately use unlimited force anytime, any place. The use of police for non-violent, non-criminal administrative, social work, and health matters, for which the police are not qualified, is poor public policy, putting everyone at risk (especially disfavored minorities).
When your only tool for social work is a hammer, everything looks like a nail. Persons in the society must ask the who what when where and why things are the way they are.
Has Oakland ever compared staffing levels to other agencies? I believe I read on Oaklandside they have over one hundred engineers employed or budgeted in the traffic department whereas in Hayward where I work there is about 7.
Another important contribution to slowly trying to get a grip on all of the mismanagement that has effectively plundered Oakland. While you can see how severely out of whack things are by looking for example at the pension costs for Zac Unger, D1 candidate for city council, for whom we paid $115,000 in 2022 while SFFD paid $51,000 and $52,000 for their top two people with the same job title of Paramedic Firefighter (so we paid MORE than double for Zac Unger for benefits THAT AS LEAD NEGOTIATOR FOR OAKLAND FIRE he negotiated FOR HIMSELF along with everyone else), your article provides so many important details about how and why this happens.
People who care should read this article several times until you really understand what is happening.
Any discussion of how to deal with our massive structural deficit should include recalling Mayor Thao.
She had two chances to engage the electorate in public sessions to reach consensus on a sustainable budget that provided adequate funding for essential, core services and utterly failed. First one was last year when she proposed the June 30 202 two year budget. The second time was in Nov 2023 when her own budget staff submitted a report to the entire Council projecting another large deficit.
Instead she had council pass a resolution this past June that we faced an unanticipated fiscal emergency.
At the Piedmont Ave candidate forum last night, Council candidates were asked a set of questions that included what they would do about our deficit.
Zak gave his standard strategically vague response about how we'll have to make tough choices, without saying even what the choices were. He scored a valid point against me for my summary platform saying we'll fix the structural deficit and pay for doubling the number of police with compensation cuts from city employees, that wouldn't be anywhere enough. When I got a chance to talk on another topic, I pointed out that my detailed platform online states that a large parcel tax will be needed. My detailed platform makes it clear that tax increase will be needed after cutting many anti violence programs, the useless Economic Development Dept,, reigning in MACRO costs, flattening management, and amending the charter to prevent the use of "fiscal emergency" as a legal excuse to raid dedicated parcel tax revenue such as libraries and parks, a Congressional Budget Office type function given to the City Auditor to certify the short and long term sustainability of our budgets.
I'm chewing over the approach suggested by Tim and how to present it to the voters.
Voters have to ask all the local candidates for specifics on how they would fix our structural deficit and not accept the fiscal policy equivalent of "Public safety is my highest priority" which is "We have to make hard choices".
So the argument is that to improve city services, which we're all convinced are inadequate, we should... pay city employees less? And pay no attention to the fact that the cops everyone keeps demanding more of have by far the most generous pension agreement.
Given they are paid more than SF Oakland should have amazing public services. I talk with people who do non-profit and volunteer-lead projects and, at least in Public Works and Parks and Rec. there is constant turnover and a demoralized staff and inefficient system. Another analysis could look at the department leadership and and how long they stay in their jobs. Seems every time I read about a new appointment, they are taking a job that was vacated after a year or less. It's not just a problem with the police chief.
Also union negotiations aren't held in private because of some deep-seated conspiracy. They're expressly permitted to be closed sessions by state law, and this is the typical practice used by all public agencies both state and local.
Public sector bargaining is typically exempted from open meeting laws in states controlled by the Democratic Party. States with competitive politics and those heavily Republican tend not to make an exception for union negotiations.
Whether this is a “conspiracy” or simply the foreseeable effect of rational incentives depends upon whether one has a seat at the negotiating table or is one of the offerings on the menu.
PEPRA also caps the annual salary used in the average of the final 3 years of compensation at far less than PERS classic. So higher paid workers don’t benefit from wages earned above that cap. Excellent reporting thank you!
This piece is beyond excellent. Thank you.
Excellent work. Acknowledging the problem is the first step. Thank you. I am discouraged by the fact the in Dist 1 a former firefighter is running for election. This problem will never be solved by wolfs in the hen house.
Great article. This is one of the best summaries of the issues with public unions, all in one sentence. "Presently, wages are set in closed-door negotiations between the city administration, the City Council, and union leaders that helped elect the very city leaders who are negotiating with them."
Do you have any plans (or recommended sources) to evaluate the candidates in the 2024 election, in particular on the public safety and city finances issues? Sorting through the candidates based on their vague fliers is tricky for us Oakland voters.
Thanks Ian. Oakland Report will not be issuing a voter guide. Our mission is to highlight the issues, and their root causes, using primary data and evidence. But we stop short of endorsing or advocating for any candidates. We respect the voters to draw their own conclusions and choices from the analyses and perspectives we present.
Though more directive guidance would certainly be valued by many, we have to keep our independence of the politicians themselves, so that we can pick apart any issue -- no matter the who or how behind it.
As for addressing your need, you might check out Empower Oakland which has now issued such a guide. As well as SOS Oakland. There may be others doing the same.
On the other hand, we will launch next week a Candidate Forum. This is a section of Oakland Report with original contributions and perspectives from any candidate who wishes to share their view. We will not control the content except ensuring that it adhere to Oakland Report's editorial standards of reasoned, evidence-based, and verifiable information.
Interesting that the Coalition on Police Accountability (I was treasurer from inception until last January when I was kicked out for supporting the recall of DA Price and opposing suspension/termination of Chief LeRonne Armstrong) sent all candidates a questionaire asking if they supported public contract negotiations for police, but no mention of any other union.
All union contract negotiations should be public.
Len Raphael CPA for Oakland City Council District 1 November 2024
City Hall Needs an Intervention
www.LensForChange.com
info@LensForChange.com
If I had generated the cartoon, I'd have used a young woman or man because as CM Kaplan said early in her first term, in her last candid public statements about our city's retirement obligations: "They are generational theft"
It was disheartening to participate in the MGO Democratic Club endorsement forum tonight and see all the candidates gloss over our massive fiscal elephant in the room.
All of them except one At-Large said public safety was their number one priority. That guy said stopping housing displacement was his number one priority.
All of them except Kanitha and maybe Baba talked big about adding zillions of new affordable housing units.
Zac did mention the need to make tough choices (but not what choices he preferred), LeRonne stated his departmental budget experience, and Kanetha touched on the budget crisis as a major problem. Charlene did address it but with a straight face assured us she could get State and Federal grants to fix our money problems.
Erin avoided the whole question of the cost of more police with the incredibly naive "We need to utilize our mutual aid agreements with neighboring police departments.
They're all afraid of losing votes by saying they'd cut something popular or god forbid, raise taxes.
LensForChange.com
Sobering information. Thanks for getting this out. We have a lot of work to do
Thank you Tim well done.
Question 🙋🏻♂️ if unrealized gains tax was passed by the Harris administration, would that destroy the pension funds.
I haven't looked at it in detail. The version that Rob Bonta tried to pass in CA a few years ago did not impose a CA wealth tax on realized or unrealized gains within retirement plans. Would be surprised if the Federal would because it would upend the entire premise of retirement plans of encouraging saving for retirement.
Another reason for the govts not try to capture unrealized gains within retirement plans is that they always get captured when distributions are made unless coming from Roth IRA's. Roth IRA's have so many restrictions on contributions to them, that extremely few high millionaire individuals, let alone billionaires, even have Roth IRA's.
The average labor cost is typically 20-35% of gross sales, depending on the industry. Chris Kolmar, "23 Trending Average Labor Cost, Statistics [2023]: Labor Cost Percentage By Industry And More, " (Zippia, Nov. 3, 2022). https://www.zippia.com/advice/average-labor-cost-statistics/ That the city of Oakland pays 25% of its budget toward compensation for employees is consistent with the national average across Industries. the conclusions reached in this article are not meaningful.
The article must demonstrate what percentage of the city's annual budget should go to employee compensation and provide a principled reason for that percentage. Titillating articles regarding wages and compensation with a public or private sector always start with the false premise that having employees must be a problem, but the same boosters offer the sales pitch that industry exists to "create jobs" and tout job and wage growth (while omitting declining real wages) to legitimize the social order. A premise in the article is that retirement funds should be funded by the roulette wheel of the stock market, exposing workers to Enron fraud. A better analysis would be a public policy explanation of what productivity and return the taxpayers should receive for paying salaries and wages to any Municipal workers, including the upper level administrators within a city, fire, police etc. when cities run into financial problems, they decide to reduce their expenditures by laying off the lowest paid people who are the sidewalk sweepers and janitors, while leaving the highest number of highest paid workers in place.
The city of Oakland Police Department represents a significant part of the budget. entry level police officers are paid over $100,000 per year, with no meaningful education.
Defunding means dismantling and transforming direct police service relative to the penal work police actually do and redirecting funding to health/social work that police are not fit to do. The police engage in very little crime fighting, e.g. 1 crime per officer per year. Kappeler, Victor E. Ph.D, "How Much Crime Fighting Do ‘Crime Fighters’ Really Do?" ( Eastern Kentucky University, 2013).
https://plsonline.eku.edu/insidelook/how-much-crime-fighting-do-%E2%80%98crime-fighters%E2%80%99-really-do
https://plsonline.eku.edu/insidelook/so-you-want-be-crime-fighter-not-so-fast#_ga=2.55304172.653556305.1592478355-1613989569.1592478355
Crime rates have been dropping irrespective of the amount of policing. Latter and Li, "New FBI Data: Violent Crime Still Falling :2018 drop extends decades-long trend, but rapes rise for lo sixth straight year," (The Marshall Project, 09.30.2019).
By JAMILES LARTEY and WEIHUA LI
https://www.themarshallproject.org/2019/09/30/new-fbi-data-violent-crime-still-falling#:~:text=FBI%20data%20released%20Monday%20suggests,by%203.9%20percent%20in%202018.&text=Property%20crime%20rates%20continued%20to,following%20a%20decades-long%20trend.
https://www.brennancenter.org/our-work/analysis-opinion/crime-rates-largest-us-cities-continue-drop
https://www.brennancenter.org/our-work/research-reports/crime-2018-final-analysis
https://www.google.com/amp/s/www.pewresearch.org/fact-tank/2019/10/17/facts-about-crime-in-the-u-s/%3famp=1
https://www.bjs.gov/index.cfm?ty=dcdetail&iid=245
The police are trained to indiscriminately use unlimited force anytime, any place. The use of police for non-violent, non-criminal administrative, social work, and health matters, for which the police are not qualified, is poor public policy, putting everyone at risk (especially disfavored minorities).
When your only tool for social work is a hammer, everything looks like a nail. Persons in the society must ask the who what when where and why things are the way they are.
The Oakland report has great potential
Has Oakland ever compared staffing levels to other agencies? I believe I read on Oaklandside they have over one hundred engineers employed or budgeted in the traffic department whereas in Hayward where I work there is about 7.
Another important contribution to slowly trying to get a grip on all of the mismanagement that has effectively plundered Oakland. While you can see how severely out of whack things are by looking for example at the pension costs for Zac Unger, D1 candidate for city council, for whom we paid $115,000 in 2022 while SFFD paid $51,000 and $52,000 for their top two people with the same job title of Paramedic Firefighter (so we paid MORE than double for Zac Unger for benefits THAT AS LEAD NEGOTIATOR FOR OAKLAND FIRE he negotiated FOR HIMSELF along with everyone else), your article provides so many important details about how and why this happens.
People who care should read this article several times until you really understand what is happening.
Thank you, thank you, thank you, Tim Gardner.
Any discussion of how to deal with our massive structural deficit should include recalling Mayor Thao.
She had two chances to engage the electorate in public sessions to reach consensus on a sustainable budget that provided adequate funding for essential, core services and utterly failed. First one was last year when she proposed the June 30 202 two year budget. The second time was in Nov 2023 when her own budget staff submitted a report to the entire Council projecting another large deficit.
Instead she had council pass a resolution this past June that we faced an unanticipated fiscal emergency.
At the Piedmont Ave candidate forum last night, Council candidates were asked a set of questions that included what they would do about our deficit.
Zak gave his standard strategically vague response about how we'll have to make tough choices, without saying even what the choices were. He scored a valid point against me for my summary platform saying we'll fix the structural deficit and pay for doubling the number of police with compensation cuts from city employees, that wouldn't be anywhere enough. When I got a chance to talk on another topic, I pointed out that my detailed platform online states that a large parcel tax will be needed. My detailed platform makes it clear that tax increase will be needed after cutting many anti violence programs, the useless Economic Development Dept,, reigning in MACRO costs, flattening management, and amending the charter to prevent the use of "fiscal emergency" as a legal excuse to raid dedicated parcel tax revenue such as libraries and parks, a Congressional Budget Office type function given to the City Auditor to certify the short and long term sustainability of our budgets.
I'm chewing over the approach suggested by Tim and how to present it to the voters.
Voters have to ask all the local candidates for specifics on how they would fix our structural deficit and not accept the fiscal policy equivalent of "Public safety is my highest priority" which is "We have to make hard choices".
𝗟𝗲𝗻 𝗥𝗮𝗽𝗵𝗮𝗲𝗹 𝗖𝗣𝗔 𝗳𝗼𝗿 𝗢𝗮𝗸𝗹𝗮𝗻𝗱 𝗖𝗶𝘁𝘆 𝗖𝗼𝘂𝗻𝗰𝗶𝗹 𝗗𝗶𝘀𝘁𝗿𝗶𝗰𝘁 𝟭 𝗡𝗼𝘃𝗲𝗺𝗯𝗲𝗿 𝟮𝟬𝟮𝟰
www.LensForChange.com
So the argument is that to improve city services, which we're all convinced are inadequate, we should... pay city employees less? And pay no attention to the fact that the cops everyone keeps demanding more of have by far the most generous pension agreement.
Given they are paid more than SF Oakland should have amazing public services. I talk with people who do non-profit and volunteer-lead projects and, at least in Public Works and Parks and Rec. there is constant turnover and a demoralized staff and inefficient system. Another analysis could look at the department leadership and and how long they stay in their jobs. Seems every time I read about a new appointment, they are taking a job that was vacated after a year or less. It's not just a problem with the police chief.
Also union negotiations aren't held in private because of some deep-seated conspiracy. They're expressly permitted to be closed sessions by state law, and this is the typical practice used by all public agencies both state and local.
Public sector bargaining is typically exempted from open meeting laws in states controlled by the Democratic Party. States with competitive politics and those heavily Republican tend not to make an exception for union negotiations.
Whether this is a “conspiracy” or simply the foreseeable effect of rational incentives depends upon whether one has a seat at the negotiating table or is one of the offerings on the menu.