Median Total Compensation for Redwood City Firefighters – At Least $226,365

Back in February 2014 the California Policy Center publicly announced the Transparent California website, developed in partnership with the Nevada Policy Research Institute. An article covering this announcement was posted on the Forbes Magazine website, entitled “Hundreds Of California Government Employees Are Paid Over $400,000 A Year,” which a review of 2013 Transparent California data (2014 data is still being assembled) easily confirms. As a matter of fact, in 2013, total compensation in excess of $400,000 was paid to 1,292 public servants in California. A staggering 2,818 of California’s public employees collected total compensation in excess of $300,000 in 2013.

Some have argued that it is misleading to claim people are making, for example, over $400,000 per year, when in fact the $400,000 being referenced is total compensation, not regular earnings. We reject this argument categorically. It is incumbent on anyone who assesses compensation to treat total compensation as the only valid measurement both for comparative purposes and, especially, when considering employer costs. Total compensation represents the actual cost to the employer, and it represents the actual value earned by the employee. Every penny of total compensation, whether it’s to fund future retirement benefits or to pay for current benefits such as health insurance, is something a worker will have to pay for themselves out of their regular earnings, unless it is instead paid for by the employer.

When talking about how much we pay our public servants, we contend that it is misleading to reference anything but total compensation.

The Forbes article published in Feb. 2014 also cited examples of excessive pay from Redwood City, which raises another issue, which is the reliability of the data gathered. As it turns out, and as the city acknowledged, the data provided to Transparent California by the city was not intentionally misleading, but easily misunderstood. This lead to the author of the Forbes article claiming that “nine employees made over $400,000 in total compensation with a total of 33, mostly police and fire department employees, making over $300,000 in total compensation in 2012.” The city’s response:  “No Redwood City employee earned more than $400K. Furthermore, the correct number of employees earning more than $300K is 28, not 33 as stated in the op ed.” The city had put “exit incentive” payments into two data columns instead of just one and they got double counted by Transparent California’s researchers during the formatting process.

These are innocent mistakes. It’s worth noting that even the State Controller issues this disclaimer on all of their downloadable raw data spreadsheets showing public employee compensation – “the information presented is posted as submitted by the reporting entity. The State Controller’s Office is not responsible for the accuracy of this information.”

The real question, the real issue that isn’t going to go away, is how much should we be paying our public servants? How much can we afford to pay, and how much is fair both to these employees but also to taxpayers? So let’s take a look at 2013 data for Redwood City’s firefighters. We choose firefighters because the fire department in Redwood City, just as in nearly every other city in California, has the highest average pay and benefits of any major department.

To make this assessment, we used data provided to the State Controller for three years, 2011, 2012, and 2013. Here are the results:

Redwood City Compensation Analysis  –  Full Time Firefighters
20150601-UW-Redwood

As can be seen, during 2012 these firefighters earned significantly more overtime pay, probably because in 2012 full-time staffing was down from 2011, but then recovered again in 2013. It’s important to observe that the median total compensation is higher than the average. This is common when evaluating public safety pay and benefits in California, and refutes the claim that highly compensated executives skew the averages.

When evaluating the median total compensation of Redwood City’s full-time firefighters in 2013 of $226,365, it is necessary to consider what primary variables are driving that amount. The issue of overtime, for example, can be quite misleading. If you read the MOU in effect between Redwood City and IAF Local 2400, you will see that the 56 hour (fire suppression personnel who work 24 hour shifts) employees are apparently paid overtime when they work on any of the 12 paid holidays (MOU page 22, section 8.1). This makes sense, but if you assume these firefighters are, on average, earning 224 hours of vacation per year (10 years service, ref. MOU page 25, section 9.3), then their estimated actual 24 hour shifts per week are 2.32, an amount that includes only 3.9 hours of overtime. Holiday coverage is a sacrifice, to be sure, but apart from holidays, it does not appear that Redwood City’s firefighters are working significant amounts of overtime. Yet their median total compensation was $226,365 in 2013. Making these estimates is admittedly a fairly complex exercise and readers are invited to review the calculations on the “notes” tab of the downloadable spreadsheet “Redwood City 2013 – Firefighter Pay Analysis.xlxs,” a document that also shows all original SCO compensation data and the median/average calculations.

Another important variable affecting total compensation are pension contributions made by the employer. It is necessary to make two points on this topic with respect to Redwood City’s firefighters:

(1)  The Firefighter MOU grants a raise to cover every increase to their payroll withholding for pensions:

To fully appreciate this, read page 33, section 17.3 of the MOU, which covers the calendar years 2013 through 2017. In year 1 (2013), the employees begin to pay 2% towards their pension costs via withholding, and their pay is increased by 2%. In year 2, another 2% is withheld, and another 2% raise is granted. In year 3, another 2% is withheld, and another 2% raise is granted, and in year 4, another 1% is withheld, and a 1% raise is granted. In all, by 2017, Redwood City firefighters will be paying 7% of their pay towards their pensions. As a percent of regular pay, the city (the taxpayers) in 2013 made a 40% pension contribution. That’s 7% (eventually) from the employees to pay for their pension, and 40% from the city. That’s a nearly six-to-one employer match for retirement.

(2)  The city’s required pension contribution is going up, way up, no matter what. In February 2015 the California Policy Center published a study entitled “California City Pension Burdens,” compiling data and projections provided by the various pension systems, including, in this case, CalPERS. Here are some pension facts that confront Redwood City: Their estimated pension contribution in 2015 will be 6.61% of total revenue (all taxes and fees). Their pension contribution between 2015 and 2020 is assumed – according to CalPERS own projections – to increase by 54%, which, barring significant increases to employee withholding, means that instead of paying, on average $47,191 per firefighter (that is the 2013 number, the 2015 number is almost certainly higher), they will be paying $72,674 per firefighter. Just to fund their pensions. And barring pay decreases, that will elevate the median total compensation per full-time firefighter to at least $251,848.

All of these numbers are conservative, because in reality the increases to required pension contributions for firefighters will be more than what CalPERS projects for all of Redwood City’s employees, because firefighter pensions are far more expensive than those offered to miscellaneous employees. These numbers are also conservative because Redwood City is almost certainly not adequately funding their “OPEB” benefit (other post employment benefits), in particular, retirement health insurance (MOU page 49, section 19.2). And, of course, these numbers are grossly understated if you have any doubts regarding CalPERS’ ability to earn 7.5% per year through 2020 and beyond.

Asking whether or not California’s taxpayers should be paying firefighters roughly $250,000 per year is a question fraught with controversy. Clearly firefighters deserve a pay premium for the risks they take in their job. But firefighter unions have exploited the well-deserved respect firefighters have earned, and used that in conjunction with their dues revenue, to exert almost irresistible pressure on local politicians.

The rates of total compensation currently earned by Redwood City’s firefighters are by no means unique. Comparable levels of pay and benefits for firefighters are in place throughout California’s cities. When firefighter jobs that pay a quarter-million a year in exchange for slightly over two 24 hour shifts per week open up, literally thousands of people apply for them. The goal of public safety would be enhanced if we could hire more public safety personnel, firefighters in particular, for less money. But today there is no viable political coalition, anywhere, with the power and will to make that happen.

*   *   *

Ed Ring is the executive director of the California Policy Center.

19 replies
  1. art says:

    This is true all over the country and nobody seems to care. I have read that only 2% of fire calls are fires and should be handled by EMS which many private companies provide. There is a huge marketing effort by firemen with schools being visited to “touch a trunk”, “fill a boot”, and “hunk calendars” that keep their actual duties a mystery. Many young guys in the area spend their days at the gym lifting and will travel 50 miles in each direction to take the exam even up to age 30 as they know it is the “golden ticket”

  2. Equal Time says:

    While Union Watch rejects this approach, some believe the fairer comparison for taxpayers and employees is to talk about taxable earnings. This in part because in some cases non-taxable benefits, such as physical screenings, employee assistance programs, health care insurance, and uniform purchase are handed out by politicians to political contributors without much regard to cost thereby inflating any total compensation calculation.

  3. john m. moore says:

    Pension Reform writers have clearly made the case that California’s DB plans have created a new group of millionaires at the expense of local govt. services.

    But local pension reform groups have no idea about how to take charge. Take the county of Marin: the county grand jury just made a precise report of 38 pension increases that were but hard core embezzlement ($500M and counting); the reformers response=back COIN and Reed’s softball Initiative. All five supervisors ignored the charges, but NO Recall movement to replace the five with hardball pension reformists.

    Reform, in terms of new legislation, is not curative. Elect a legislative majority, negotiate, then, after impasse reduce salaries by 30% until pension deficits are eliminated. Sure it will take work and there will be anger among the workers who have obtained the impossible pensions feloniously (but ok’d by the lawyers-the biggest hucksters in this swindle – see Marin experience).

    Pension reform is not a pillow fight, it is a knife fight. It is time to take charge.

  4. Rex the Wonder Dog! says:

    In all, by 2017, Redwood City firefighters will be paying 7% of their pay towards their pensions. As a percent of regular pay, the city (the taxpayers) in 2013 made a 40% pension contribution. That’s 7% (eventually) from the employees to pay for their pension, and 40% from the city. That’s a nearly six-to-one employer match for retirement.

    They should be paying half, or 24%. Actually, at their salary structure it should be 75%, or 32.5% of their payroll.

  5. Rex the Wonder Dog! says:

    Reform, in terms of new legislation, is not curative. Elect a legislative majority, negotiate, then, after impasse reduce salaries by 30% until pension deficits are eliminated.
    I was the one who originated this plan 8 years ago. I would cut base salary 25%, freeze it there and take that 25% and add it to the pension deficit until the deficit was cured.

  6. Equal Time says:

    Rex – the California pension reform legislating of 2012 known as PEPRA requires, as I remember it, that no later than 2018 employees must pay 50%, so it should get there. Of course that does not require sharing in funding of any unfunded liability though.

  7. John Moore says:

    PEPRA eventually requires employees to pay 50% of “normal cost” which is the actuarial cost of that years pension benefit. Total cost includes a substantial annual contribution by the Agency to pay for a small portion of unfunded deficits (deficits that grow at the income rate of about 7.5%) In my city, the total cost is about an extra 10% of salary, plus a large sur-payment based on the size and character of excessive unfunded deficits (usually caused by reductions in force and by contracting for services).

  8. Nostromo says:

    Ed Ring discusses this a bit, but the following point bears repeating: $226K for the Redwood City firefighters is way low because payments required by CALPERS are substantially less than value of the pension that is being awarded. Given the “spiking” that is still allowed, COLAs that are still in place, and a correct discount rate, a year of pension credit is worth about the same amount as a firefighter’s regular pay. So add another $68K to Ed’s $226K = $294K (before retiree healthcare).
    Redwood City is relatively prosperous (2013 median household income = $86,358, total compensation $150K?), but most of its residents would be very unhappy if they fully comprehended why those nice guys down at the corner fire station always seem so jovial.

  9. john m. moore says:

    The hard part is to get citizens to process a Recall and thereby replace pro-pension embezzlement supervisors(like in Marin and Sonoma Co.) pursuant to a political campaign that spells our the pension cure through the across the board salary cuts. Then and only then will there be pension reform. I tried, so I understand how difficult it is. A real problem is that there are few young citizens with the time and passion to pursue real reform. It is a lot to expect senior citizens to dedicate their last years to create a necessary turn about. And the Press is not capable of understanding the hideous message of the pension and health ins. deficits.

  10. Rex the Wonder Dog! says:

    Rex – the California pension reform legislating of 2012 known as PEPRA requires, as I remember it, that no later than 2018 employees must pay 50%, so it should get there.

    Public employees will NEVER pay “half” of pension costs because the CAP is @ 14% for them, MAX, so if “normal cost” of a 3%@50 pension is 60% of base salary the employee will pay 14% MAX and the muni will pay 46%, or 300% MORE than the employee, that is not half.

  11. Rex the Wonder Dog! says:

    100% correct, using an inflated discount rate underestimates the true costs. It is like gov accounting during budget season; over estimate income and under estimate expenses. It would get you 20 years in CO Super Max if you did it in the private sector, but it gets you a windfall in the public sector.

  12. john m. moore says:

    My point is that we do not need more evidence and trick fixes.CaLPERS records prove our case. Pension reform requires confrontational power tactics: a Recall of the legislative majority based on the promise of a 30% across the board salary cut until pension debt was eliminated would force the press to focus on the pension disgrace. Medium warm pension reform candidates at regular elections will be ignored by the press, it likes to choose incumbents because the press has only a superficial understanding of the depth of the pension fiasco. Recall action is a readily available reform, but reformers must stop this crazy daily dialogue and do it: pension revolution via the Recall.

  13. Richard Rider says:

    Actually the ratio is even worse than the 6 to 1 ratio that you project. That’s because 100% of the pension unfunded liability is deemed the responsibility of the taxpayer — and no city, county, etc. fully accounts for this shortfall.

  14. Richard Rider says:

    Also contributing to the unfunded liability is the use of outdated mortality tables. Retirees will live much longer than projected, but that’s not included in the calculations.

  15. Richard Rider says:

    One fun aspect of the “jovial guys down at the fire station” is that few if any live in the district where they work. They live far out in the boonies, where one can buy a much bigger house for less bucks than in the district.

    Firefighters can do this because they commute to work only 6-7 times a month — they do double shifts and then stay home 5-6 days. So their paychecks “stimulate” the boonies, at the expense of the districts paying them.

    One related problem is that, if there’s a recall for a big brush fire, these firefighters are unavailable for two hours or more. We needlessly lost 330 homes in my subdivision during the 2003 Cedar Fire in San Diego — in no small part because of this incredible delay in manning the reserve fire trucks.

  16. S Moderation Douglas says:

    Is it really a Washington Post (gasp!!) “article” if it is in the opinion section and authored by one Fred S. McChesney.

    Self described as “a professor of law and economics at the University of Miami who studies the intersection of economics and public institutions.”

    AKA,

    Fred S. McChesney, research fellow with The Independent Institute
    Just how “independent” is the institute?
    http://www.washingtonmonthly.com/features/1999/9911.callahan.think.html

    Just take it with a grain of salt.

  17. Robert Fellner says:

    Steven likes to resort to ad hominem attacks when unable to refute facts; which says much more about him, than the author he attempts to discredit.

  18. S Moderation Douglas says:

    My bad. What I meant to say was that, although the number of fires per year has decreased, the US population has increased. Also the number or households and businesses have increased.

    30 years ago, their were 1.73 career firefighters per 1,000 population. In 2013, there were 1.7 career firefighters per 1,000.

    During the same period, the number of volunteer firefighters per 1,000 population also decreased.

    Logically, it would seem that if a city of 100,000 increased it’s population by 50% in 30 years, with concomitant increase in buildings and infrastructure, it would need an increased number of firefighters to keep response times reasonable, even if the number of actual fires decreased.

    I am certainly no expert on firefighting or person year requirements. But this article seems simplistic.

    Here’s one other side, for what it’s worth.

    http://campusreports.com/?p=2103

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