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Linkage Between City of Palo Alto Utility Manager's Salaries and Pensions

Linkage Between City of Palo Alto Utility Manager's Salaries and Pensions

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Published by wmartin46
A short study of the salaries of City of Palo Alto Utility Managers, and the pension payouts these managers will receive during their retirement years.
A short study of the salaries of City of Palo Alto Utility Managers, and the pension payouts these managers will receive during their retirement years.

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Published by: wmartin46 on Jun 19, 2011
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06/19/2011

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Palo Alto City CouncilCity of Palo AltoPalo Alto, CA 94301Cc: James KeeneA recent announcement by certain “managers” at the Palo Alto Utility about their needing a “union” (or bargaining unit) to protect their status and to make their “voices”known, causes one to wonder just how unfairly treated these people are, or how differentthey are from other City of Palo Alto managers? The following quotes from various players in the Utility, briefly outlines their “case”:
The utilities group, the petition states, "functions as a utilities business unit separate anddistinct from other city business.""The management and execution of the successful delivery of water, gas, wastewater,electric and telecommunications products is very different than the normal City of PaloAlto government business of providing information, planning, permits, protection andrecreational outlets," the petition stated.The salaries of utilities managers currently range from about $100,000 to about $185,000,according to data from the Administrative Services Department. Though their salaries aregenerally higher than those of other managers, they are lower than those of their peers ininvestor-owned utilities such as PG&E, according to utilities officials."You'd be surprised at how uncompetitive some of the salaries are within utilities," Fongtold the committee at the June 7 meeting.
The following data, taken from the 2009-2010 budget year, provides some hard detailsabout the “take home” salaries of the PAU “managers”— 
Supv Elect SystemsMGMT227,475.74Dir UtilitiesMGMT217,142.87Asst Dir Ut/Res MgmtMGMT170,823.43Assistant Director UtilitMGMT165,616.00Assistant Director UtilitMGMT155,212.00Assistant Director UTL CuMGMT153,839.74Sr Resource OriginatorMGMT153,368.69Supv WGWMGMT148,560.71Engr MGRMGMT146,230.80MGR Util Oprns WgwMGMT144,194.27Sr Resource PlannerMGMT143,134.14Supv WGWMGMT139,730.57Supv Elect SystemsMGMT138,436.58Engr MGR WGWMGMT137,901.36Sr Resource PlannerMGMT134,312.63Supv Elect SystemsMGMT133,693.23Sr Electric Project EnginMGMT132,856.00MGR Util Mkt SvcsMGMT132,218.09Supv Elect SystemsMGMT129,875.19Sr Electric Project EnginMGMT129,829.77Sr Resource PlannerMGMT129,316.00Sr Resource PlannerMGMT128,681.04Sr Electric Project EnginMGMT128,622.05Sr Project EngineerMGMT128,005.64
 
Sr Electric Project EnginMGMT127,794.30Sr Project EngineerMGMT127,109.83Sr Project EngineerMGMT126,597.57Sr Resource PlannerMGMT123,801.05Supv WGWMGMT122,396.45Supv Water TransMGMT121,932.51Supv Elect SystemsMGMT121,664.88Supervising Electric ProjMGMT118,963.18Sr. AdministratorMGMT118,838.92Sr. Business AnalystMGMT118,511.83Supv WGWMGMT118,009.26Sr. AdministratorMGMT115,849.77Sr Project EngineerMGMT113,439.77Sr TechnologistMGMT112,304.58Supv WGWMGMT109,754.52Contracts AdministratorMGMT100,304.80Project MGRMGMT99,525.91Admin AssistantMGMT82,084.95Sr Resource PlannerMGMT74,681.91Sr Resource PlannerMGMT71,210.58
(Note—cash payouts at the time of retirement can resultin one-time yearly salaries that are significantly higher than salaries prior to retirement.)Source: 2009 City of Palo Alto SalariesThe claims that these salaries are “uncompetitive”, given that municipal utilities are not“competitive”--by their very nature—is somewhere between unrealistic, and more likelydishonest, than not. The Palo Alto Utility provides life-long employment, regardless of the economic environment in the surrounding private sector ecosystem. Moreover, thecore competence that leads to profitability of utility companies in the private sector isnever an issue for continued employment at the Palo Alto Utility. What certainly seemsto be “job security” should be considered by any City Management Team, whennegotiating salaries for Utility managers.
Pensions Not Considered
What the Director of the Palo Alto Utility seems to have quite adeptly ignored in her claims of “uncompetitiveness” is that in addition to the salaries paid the Utility managers,there is also a life-long, taxpayer-guaranteed pension, that will, in most cases, pay eachPalo Alto Management retiree payouts in the millions of dollars.
 
The following table provides the pension to salary linkage in effect for Palo Altomunicipal employees at the current time--
 
Public Employee Initial Pension At Time of RetirementUsing 2.7% Multiplier 
 Years$150,000$200,000$250,000$300,000$350,000$400,000$450,0005$20,250$27,000$33,750$40,500$47,250$54,000$60,75010$40,500$54,000$67,500$81,000$94,500$108,000$121,50015$60,750$81,000$101,250$121,500$141,750$162,000$182,25020$81,000$108,000$135,000$162,000$189,000$216,000$243,00025$101,250$135,000$168,750$202,500$236,250$270,000$303,75030$121,500$162,000$202,500$243,000$283,500$324,000$364,50035$141,750$189,000$236,250$283,500$330,750$378,000$425,25040$162,000$216,000$270,000$324,000$378,000$432,000$486,000
(Note—Table data represents group averages. Details of individual retirement “packages”could easily result in higher exit salaries at retirement.)The following table provides the minimum payouts any City of Palo Alto managementemployee (non-public safety) can expect to receive, for up to 30 years of retirement—  
Pension Payouts For 10-30 Years
Pension10-Year Total20-Year Total30-Year Total$150,000$1,675,307$3,717,498$6,206,916$200,000$2,233,743$4,956,663$8,275,888$225,000$2,512,961$5,576,246$9,310,374$250,000$2,792,179$6,195,829$10,344,860$300,000$3,350,615$7,434,995$12,413,832
(Note—totals include CalPERS COLA enhancements.)It is not hard to see that Palo Alto Utility managers, quite well paid for their work in anon-competitive government enterprise, will become multi-millionaires during their retirement. For the most of them, they will receive more than twice the money in pensions that they received for actually working! And, given the current pension system,these retirees are free to return to work, further increasing their lifelong earnings if theywish.

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