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How Public Officials Can Reduce the Burden of Unionized Firefighters

What started in Stanton, California as an anomaly is spreading quickly across North Orange County – the push to create local sales taxes in order to pay off the rising pay and benefits of public employees.

Stanton voters passed a one-percent sales tax in 2014, giving residents in one of OC’s poorest cities the county’s highest sales tax. But in the last several days, the enthusiasm for this most regressive of taxes has spread to Westminster, Fountain Valley and La Palma, and always for the same reason: public employee compensation.

Stanton councilmember David Shawver is elated, perhaps because he’s no longer alone. “The 2014 sales-tax increase saved the city of Stanton’s life,” Shawver told the Orange County Register last week. “The tax will be a really big thing for Westminster. They will see a regeneration of their community.”

In those cities, as in Stanton, the same dire warnings are broadcast from City Hall: The end is near. We’ve cut every other city service imaginable, and if you don’t pay more in sales taxes now, you’ll lose vital public-safety services – the police and firefighters who represent the thin line between civilization and Darwinian struggle.

When asked about this problem, many city officials respond that for all their apparent authority, they’re really impotent. They’re trapped by the rising pay and benefits of government workers, especially those who are unionized, and especially those in unions of police and firefighters.

A Stanton official told me there’s no way to change the cost of sheriff’s deputies and firefighters. The county sets the rate – averaging around $236,000 per year for firefighters and $189,000 for deputies. Stanton just pays.

“There’s absolutely nothing we can do about that,” the official said.

That’s absolutely wrong. The City of Stanton and its neighbors have an amazing opportunity in the midst of their crisis. And the U.S. military provides part of the answer.

20160630-CPC-SwaimFirefighters
U.S. Navy Firefighters in action
(Source: U.S. Navy)

For years, the U.S. has run on the assumption that a relatively small number of career professionals can mass-produce the world’s most powerful soldiers, sailors, Marines and airmen. In 16 weeks or less, for example, the Army outfits, trains and deploys men and women around the world. It arms them with life-saving and death-dealing equipment and techniques. It counts on them to carry out their missions in the most dangerous conditions imaginable. Bravery, loyalty and resilience are standard.

In exchange for this exceptional demand, we nevertheless pay our service people very little – about $1500 per month. After four years, most enlistees are discharged and pursue other careers. The military expects that only a few will stay on to rise through the ranks of officers and noncommissioned officers who oversee the recruitment, training, support and management of new trainees. Their leadership is invaluable, but the military may at its discretion decide to reduce benefits – even retroactively – or terminate employment.

The Department of Defense isn’t perfect. The scandal over veterans’ health care, the bloat, the crony-capitalist contracts and the politicians’ ham-fisted use of force are real. But if we can train 18-year-olds to handle lethal force and million-dollar equipment in a combat zone, we can train young people to put out fires – or, as is more likely in Orange County, to respond to medical emergencies.

We could pay these firefighters well, better than their military counterparts. And at the end of four years, we could thank them for their service and let them pursue their bliss – to sign on as firefighters in wealthier cities still wedded to the old model. Or they could move on to work or college. It would be cheaper to spend more – to pay for their health care and offer tuition support for several years, for instance – than to turn them into careerists.

Instead, for decades, we’ve chosen to hire high school graduates who win the firefighting lottery. Thousands apply for just a few openings anywhere. The reason for the long lines: The winners will work a few days per week in exchange for about $236,000 per year, early retirement and annual pensions of about 90 percent of their highest annual pay.

You’d have to be a millionaire to clock that kind of income in retirement. But our cities and counties hand it out as standard procedure.

Our elected officials can rarely see a way out.

That’s why Stanton – and Westminster, La Habra, Fountain Valley, Garden Grove, Placentia and hundreds of other California cities – are so deeply troubled. For decades, police and firefighters have backed (with their time and money) political candidates who deliver on the promise to sign off on higher pay and benefits. The sweetheart deals have driven countless Orange County cities toward insolvency.

Stanton can survive if it innovates. And, sure, it may seem a long-shot to expect that the city councilmembers elected to represent government employees will have the courage to represent the people instead. But there’s an old saying about necessity as the mother of invention – or as they say in bureaucratic circles, urgency functioning as the distaff progenitor of creativity.

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Will Swaim is the VP of Communications at the California Policy Center.

Average Orange County Firefighter Made $236,155 in 2014

The City of Stanton contracts with Orange County for public safety services. Like many cities in Orange County, and in an arrangement that is typical of many small cities in California, it makes financial sense for the city to pay the county in exchange for an allocation of police and firefighters who protect the citizens and property of their town. And every year, that fee is increased by 3%.

During 2014, Stanton paid $11.2 million for public safety services. For this, they secured the services of 15 firefighters and 33 sheriffs, although it is not clear how many of those positions were sworn firefighters or sheriffs or support personnel, or whether some of those positions were part-time or overlapped with other areas.

What we can determine with reasonable accuracy is the average cost for pay and benefits for Orange County’s full-time sworn officers and firefighters. Using data downloaded from the California state controller’s Government Compensation website, individual payroll records can be analyzed as far back as 2011. Here are the pay and benefits for Orange County’s sworn sheriff’s in 2011, and 2014:

Average Pay & Benefits, Orange County Sheriffs, 2011 and 2014
Full-time, “3@50” and “3@55” Officers

20160417-CPC-OC-Sheriff-pay

And here are the pay and benefits for Orange County’s sworn firefighters in 2011, and 2014:

Average Pay & Benefits, Orange County Firefighters, 2011 and 2014
Full-time, “3@50” and “3@55” Officers

20160417-CPC-OC-Firefighter-pay

If you don’t study public sector compensation, these numbers may come as a surprise. But they’re much the same throughout California. Firefighters nearly always make significantly more than police or sheriffs, despite the fact that while often overstated, it is challenging to recruit police, while firefighter positions routinely attract hundreds if not thousands of applicants for every opening.

While overtime constitutes a significant proportion of firefighter pay, it should be noted that taking into account vacation (but not sick leave) veteran firefighters only work two 24-hour shifts per week before earning overtime pay. Calculating based on time-and-a-half pay during overtime, the numbers indicate that OC firefighters on average work not quite three 24-hour shifts per week.

The reason so much overtime is paid raises troubling financial issues. Using Orange County as an example, cities and counties make the decision to schedule so much overtime because the benefits overhead for a public safety employee, calculated by dividing the total benefits by the regular pay, is a staggering 82% for sheriffs and 87% for firefighters. Whether firefighters, for example, can sustain three 24-hour shifts vs. two per week without burnout is debatable. But it is completely rational on the part of cities and counties to pay time-and-a-half for overtime, which is only a 50% premium, when adding a new employee would immediately entail an 82% or 87% markup on their time.

Something noteworthy – given all of the reputed reforms to pension benefits over the past few years is the fact that in Orange County in 2014, the employer still paid $13,805 of the employee’s share of the individual sheriff’s pension contributions. For the firefighters, the numbers did drop dramatically, from an average “employer pick-up” of $10,165 in 2011 to $3,434 in 2014. And speaking of pension reforms, how many of Orange County’s full-time sworn sheriffs did the state controller report to have “3@55” pensions? 337 out of 1,698, or 20 percent. All of the rest still had “3@50” pensions. And the firefighters? Four. Out of 829. One half of one percent were “3@55,” the rest were still “3@50.”

The consequences of trying to fund “3@50” pensions, or “3@55” for that matter, given the automatic cost-of-living increases and the high final salaries upon which these formulas are calculated, are dire. According to its most recent financial statements (ref. OCERS Memorandum reg. 2014 CAFR page 12), Orange County’s pension system was only 69% funded with an unfunded liability of $5 billion. Properly funding these “3@50” and “3@55” pensions would easily require increasing the defined benefit contributions by 50%, i.e., the employee pension contribution would cost more than the employee’s regular pay.

No reasonable person disparages the courageous and vital work performed by public safety personnel. But it is a matter of fact, not opinion, that every local tax increase contemplated on every local ballot in every city and county in California is still not enough to cover the increasing contributions to the pension funds. In small towns like Stanton, the costs for public safety leave policymakers with few other options.

Given the degree of influence exercised over small town politicians by PACs controlled by public safety unions, reform may have to come from within. Perhaps making $200K per year in pay and benefits doesn’t seem that much anymore in California. After all, the median home price in Orange County is $647,000. So maybe instead of fighting for higher pay and benefits, government unions, who are the real the power behind the politicians, might fight to lower the cost-of-living. These unions might throw their political weight behind the competitive development of land, housing, energy, water, quarries, and infrastructure would lower the median home price. That would dramatically lower the cost of living in Orange County. Then again, that might also pop the asset bubble that keeps public employee pension funds marginally solvent.

But tough choices is part of what public service should be all about.

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Ed Ring is the president of the California Policy Center.

'Outsiders': The powerful government unions that brought OC's highest sales tax to Stanton are at it again

Stanton city officials have taken to the streets to fight a November ballot measure that would repeal the city’s one-year-old sales tax.

In 37 community meetings and in a stream of communications from City Hall, officials tell residents the tax is essential to the city’s survival – and that its victory at the polls in 2014 was a local, grassroots effort. They say supporters of the repeal are outsiders.

The community meetings, called Talks with the Block, run on that insider/outsider impulse.

“Just because you’re rich and wealthy doesn’t give you the right to come and repeal our votes,” 28-year council veteran David Shawver told a Stanton audience in March. “We have the full support of everybody, and we make the decisions!”

In fact, the November 2014 campaign to promote the tax was funded primarily by outsiders – the county’s powerful firefighter and sheriffs unions, documents reviewed by California Policy Center reveal.

Sheriffs and firefighters who work in the city have much to gain from the sales tax. City officials say the tax brings in $1.5 million annually. This year, the city will pay an additional $1.1 million for public safety alone, most of that for the escalating pay and benefits of its $236,155-per-year firefighters and $187,000-per-year sheriff’s deputies.

Those are extraordinary pay packages, even in relatively affluent Orange County. And they stand out in Stanton, where the median yearly household income is $46,000 and 22 percent of the population lives below the poverty line.

The documents, which the city turned over following a California Policy Center public records request, show that the pro-tax campaign Yes on Stanton 9-1-1 received total 2014 contributions of $40,399 from three sources, two of them (maybe all three: hold, please) outsiders. The deputy sheriffs union gave $21,700, a bit more than half of all contributions. The county firefighters union gave the pro-tax campaign another $12,700. Together, the unions’ contributions accounted for 85 percent of the pro-tax campaign’s income.

But that number jumps when you include the one local contributor to the pro-tax campaign, council member David Shawver. The firefighters gave Shawver’s campaign committee $4,043.60 during the same election cycle, and Shawver in turn gave the pro-tax campaign $5,999.

Taken together, one could argue county firefighters union gave the pro-tax campaign a total of $16,743, and that Shawver’s real contribution to the pro-tax campaign (besides tactics) was just $1,955. In other words, outsiders gave the pro-tax initiative $38,443.60 – or 95 percent of all contributions to the pro-tax campaign.

But that’s not the message of city officials like Shawver. Without the sales tax increase, there’d be fewer cops, Shawver told the March gathering. He asserted that backers of the November measure to repeal the tax would cut public safety “50 percent.” No one questioned the number. Nor did anyone ask how much the county’s public-safety officers earn in pay and benefits.

“There are no finer government agencies than the OCSD and OCFA,” Shawver said of the agencies responsible for providing Stanton with deputies and firefighters. “I’m not going to fool you. Public safety is expensive, but I am concerned with maintaining the level of service that you demand.”

Who could oppose public safety? Outsiders, said Mayor Pro Tem Carol Warren.

“The group that’s against us, they live down in Newport, they live in Irvine, they all live in South County. They’re all wealthy. They don’t live here. They’ve just picked our city because we’re a small city and they want to control us. We’re low-hanging fruit.”

The desire to “control” Stanton seems a psychological abstraction – it’s never clear to what concrete end the outsiders want to control one of the county’s poorest and most violent cities – and at 3.1 square miles, it’s smallest. But the audience seemed satisfied with the explanation.

Warming to a boil, Shawver, a Republican with close ties to public employee unions, underscored Warren’s psychological analysis. “The rich, South County outsiders are going to try to get rid of our city council members,” he said. “They want their own people so they can control what goes on in our city.

“It’s time to tell the people who don’t live here to get the heck out of our city!”

The crowd roared its support.