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“Work in Progress” Government Employee Pay Tracker Still Grossly Inaccurate

Since reporting on the State Controller’s government employee pay tracker last month (ref. California State Controller’s Employee Pay Tracker Grossly Understates Actual Compensation), the State Controller’s Office has responded to one of our concerns, writing:

“…it is possible in certain situations to have the data from the Controller’s GCC database sorted by city or county.  When a city’s, or any other entity’s, compensation report is less than 100 pages, the entire report can be downloaded in either Microsoft Excel format or Portable Document Format (PDF) by choosing an entity and clicking on either the “XLS” or “PDF” button in the upper right hand corner of the page.”

By doing this, it is possible to identify exactly why the state controller is disclosing grossly understated average “wages” for government workers in California’s cities and counties.

Here are the results based on downloading the detailed city information for Costa Mesa:

Costa Mesa’s detailed payroll data on the state controller’s website, available here, are for 2010. If you download the spreadsheet you will see that there are 753 records, that the total wages are $53.7 million, which equates to an average wage of  $71,379 per year. This is precisely what the state controller provides in their summary for Costa Mesa. But there are significant reasons this number is understated.

First of all, “Wages” only tracks the direct pay – salary and overtime – that the employer pays the employee. But employers pay for more than just direct pay. In Costa Mesa, they pay a significant portion of the costs for each employee’s health benefits, and they also pay for the pension plan. If you add these reported additional employer paid amounts (according to the state controller on the downloadable spreadsheet), $4.1 million for pensions and  $3.1 million for health coverage, you arrive at total payroll costs of $80.1 million, yielding an average total compensation of $80,829 per year. But are these numbers accurate?

In the earlier post, referencing 2011 numbers provided by the City of Costa Mesa to the California Public Policy Center, available here, you get very different numbers, especially for the city’s pension contribution (ref. Costa Mesa Compensation Study). As can be seen in that analysis, during 2011 Costa Mesa had 649 employees, and they spent $46.2 million on payroll, $3.5 million on employer paid health coverage, and they made a pension contribution of $12.7 million; their total payroll costs were $62.4 million, which equates to an average “wage” of $71,222, and average total compensation of $96,173. What does this mean?

(1) It is extremely misleading to report “wages” without including the employer paid cost of benefits. The only correct measure of how much government employees make, and how much taxpayers pay to fund these earnings, is total compensation. And the difference is nearly $25,000 per year.

(2) Either Costa Mesa’s pension costs tripled between 2010 and 2011, or they are severely understating their pension costs in their report to the state controller.

And there’s one more HUGE gotcha.

Both the state controller’s data from 2010 and the raw data we have acquired for 2011 show ALL of Costa Mesa’s employees. This means that part-time employees, temporary employees, and employees who either were hired or terminated during the year are included. People who don’t work full time, or don’t work a full year, should not be included in any calculation of a supposedly representative “average.”

If you eliminate the part-time and partial-year employees from Costa Mesa’s payroll data, it turns out that in 2011 there were only 425 employees who worked the full year on a full-time basis. These records, and only these records, should be used for calculating an accurate average wage and accurate total compensation. And by this measurement, the spreadsheet compiled using Costa Mesa’s own 2011 payroll data, eliminating part-time and partial year positions, showed dramatically larger averages, as one should expect. Instead of an average “wage” of $71,222 in 2011, in reality Costa Mesa’s full-time personnel averaged “wages” of $108,761. And the average employer paid total compensation for Costa Mesa’s full time personnel was not $96,173, but $146,863 in 2011.

You can make average pay look relatively small when you ignore the cost of benefits, understate the amount you actually paid into the pension system, and include 224 part-time or partial-year workers in a database with only 649 records. It’s easy to bring averages down when you include include in your database of employees, for example, a part-time recreation instructor who made a whopping $14 (that’s $14, not $14K) during the entire year, and literally hundreds of others who obviously did not engage in a full year of full time work.

Here again are the differences between what the state controller is providing the public, and what the reality truly is for taxpayers:

State Controller: Anaheim city worker’s “average wages” = $53,927.
Truth: Anaheim City worker’s average total compensation = $146,551.

State Controller: Costa Mesa city worker’s “average wages” = $71,379.
Truth: Costa Mesa city worker’s average total compensation = $146,863.

State Controller: San Jose city worker’s “average wages” = $61,308.
Truth: San Jose city worker’s average total compensation” = $149,907.

The state controller’s “average wages” disclosures can be viewed here:
http://publicpay.ca.gov/Reports/Cities/Cities.aspx

The California Public Policy Center’s studies on total compensation, including actual downloadable spreadsheets provided by these three cities, can be found here:
http://www.californiapublicpolicycenter.org/cppc-studies/

As demonstrated here, if you take a deeper dive into the state controller’s data, per city, you will only validate our original claim. They are misrepresenting how much California’s city and county workers earn, and how much it costs taxpayers, by a factor of between 200% and 300%. This is not an incremental discrepancy. It is a shocking disparity. It is the difference between very good compensation according to the “transparency” website, and unbelievably generous compensation in reality, an unaffordable and unfair burden on taxpayers.

If the state controller is truly committed to transparency and fiscal accountability, it is these higher numbers – average total compensation for full-time, full-year employees, with accurate reporting of employer paid pension contributions – that should be written in bold, available at a click, impossible to ignore.

California State Controller’s Employee Pay Tracker Grossly Understates Actual Compensation

California state controller John Chiang has unveiled a website that tracks public employee pay. Unfortunately, the website provides grossly misleading information. The data compiled and summarized on this website report average wages that are literally one half to one-third the amount of total compensation actually earned by California’s state and local public servants. The impact of this will be to further obscure the reality of just how much California’s public servants really make. If you go to the state controller’s website and download the raw data spreadsheets several problems become immediately obvious:

(1) The records are not sorted by city or county, so it is impossible to look at the information – or extract the information for serious analysis – for any one city or county. Everything is mixed up.

(2) The records include columns for overtime and “other pay,” but there is ZERO data in them. Anyone who has reviewed public pay records knows that, for example, often the “other pay” is equivalent to 50% or more of the base salary, and overtime can also often equal as much as 50% or more of the base salary. The pay numbers summarized on this website are therefore grossly understated.

(3) The state controller’s reported pension contributions, on average, added up to 3.5% of city payroll and 2.9% of county payroll, which is absurdly understated. Payroll data obtained by the California Public Policy Center’s study showed that Anaheim’s pension contribution was 26% of direct pay (including overtime), and San Jose’s pension contribution was 41% of direct pay (including overtime). As a percent of total compensation, Anaheim’s pension contribution was 17%, and San Jose’s pension contribution was 26%. These amounts, far greater than what the state controller’s data suggests, are typical of California’s cities and counties, and do NOT take into account how much pension costs are going to increase once the pension funds lower their projected earnings.

(4) It is also clear from viewing the raw data that tens of thousands of part-time and temporary positions are included in the records. Including data for part-time workers dramatically distorts the averages downwards.

The casual visitor to this website will view the interactive map, click on their city or county, and see the “average wages” figure, thinking it is representative of what these employees make. But reporting wages while including part-time workers and while excluding the costs of benefits, overtime, and other pay, results in extremely understated averages. Total compensation, accounting properly for all these factors, is the only accurate way to assess how much an average worker really earns. Here is the data for three cities, comparing “average wages” as reported by the State Controller, vs. “average total compensation,” using actual payroll data obtained by the California Public Policy Center from the same three cities:

State Controller: Anaheim city worker’s “average wages” = $53,927.
Truth: Anaheim City worker’s average total compensation = $146,551.

State Controller: Costa Mesa city worker’s “average wages” = $71,379.
Truth: Costa Mesa city worker’s average total compensation = $146,863.

State Controller: San Jose city worker’s “average wages” = $61,308.
Truth: San Jose city worker’s average total compensation” = $149,907.

The state controller’s “average wages” disclosures can be viewed here:
http://publicpay.ca.gov/Reports/Cities/Cities.aspx

The California Public Policy Center’s studies on total compensation, including actual downloadable spreadsheets provided by these three cities, can be found here:
http://www.californiapublicpolicycenter.org/cppc-studies/

Merely averaging base wages paid, without including the costs for overtime, “other pay,” and employer paid benefits, is not an accurate measurement of how much someone makes. And the much higher total compensation figures reported by the CPPC still do not take into account what’s going to happen to required pension fund contributions when CalPERS and their counterparts finally abandon the fraudulently optimistic projection of 7.5% annual returns on the pension funds. As it is, the state controller has, for example, mislead viewers into thinking the average worker for the City of Anaheim only makes $53,927 per year, when in reality the average worker for the City of Anaheim makes $146,551 per year in total compensation. This is shameful deception.

The fact that the State Controller has gone to this much trouble to produce an overwhelming mass of data that, in fact, understates the amount our public servants make by at least a factor of 2x, undermines the credibility of the office, to put it mildly.