Management Salaries Drown San Francisco

By Patrick Monette-Shaw, special to Fog City Journal

July 20, 2008

The growth in management fat in San Francisco city government goes unabated, driven by Mayor Gavin Newsom and rubber-stamped by the Board of Supervisors.

Even while the Board of Supervisors are attempting to mitigate draconian cuts in Newsom’s proposed slash-and-burn, and crash-and-burn budget for Fiscal Year 2008-2009, both the Mayor and the Board of Supervisors have neglected to seriously reduce the amount of City employees earning three-figure salaries, most of it management fat.

Fully $127,493,252, or 12.3 percent, of the $1.038 billion spent on salaries (excluding fringe benefits) for San Francisco employees earning more than $100,000 are dedicated to just 918 employees with the word “manager,” “director,” or “department head” in their job titles, yet very few of them have been targeted for elimination by either Supervisor Aaron Peskin or Mayor Newsom. There are hundreds of other managers in the City who do not have the word “manager” in their job titles, driving the cost of management of the City’s interests even higher.

While we’re drowning in management salaries, surely there must be some low-hanging fruit for the picking.

Details are outlined in an open letter to the Board’s Budget and Finance Committee:

An Open Letter to San Francisco’s Board of Supervisors’ Budget and Finance Committee

July 13, 2008

Re: Board’s Failure to Mind the Store: “Low-Hanging Fruit” in City’s 8,180 (and Growing) Employees Earning Greater Than $100,000

Dear Members of the Budget and Finance Committee,

While I commend the Budget and Finance Committee’s efforts to close the purported $338 million budget deficit, I believe data readily available to the general public under public records requests has been grossly ignored by your Committee, despite your ready access to available data. With the powers and resources at your disposal you should have been able to uncover and analyze data presented here yourselves. Accountability in City government remains in question, as if all eleven City Supervisors have forgotten to mind the store — again.

Last March, the San Francisco Daily (now known as the Daily Post) broke a story that 8,180 City employees who are paid more than $100,000 annually are costing San Francisco over $1 billion, or more than half “of the total $2.3 billion the City budgets for wages and salaries.” (The Daily may not have reported on fringe benefits.)

In 2003, I placed a public records request for salaries greater than $90,000, which salaries Supervisor Tom Ammiano claimed at the time were a huge problem. Now four years later, salaries over $100,000 are an even greater problem, given the three-quarters of a billion dollar increase, and the increase of 5,262 employees now earning six-figure incomes — as if all eleven City Supervisors continue forgetting to mind the store — as shown below.

Table 1: Comparative Growth in “Fat Cat” Salaries
Between 2003 and 2007

Possibly, the growth in salaries paid to employees earning over $100,000 annually may not have kept pace with the amount of revenue the City of San Francisco pulls in annually, even while revenues have soared. Clearly, the City may have been awarding astronomical pay raises to police officers, firefighters, and nurses that the City did not have sufficient new sources of revenue to award such lucrative sweeteners during contract bargaining with powerful unions.

Let’s assume for a moment, that data provided by then City Controller Ed Harrington in both 2003 and 2007 did not report the same metrics. Comparing only base salary data reported in the San Francisco Daily to data from 2003 (entertaining a possibility that overtime and “other” pay had not been accurately reported in 2003) shows the City has cut (or “reclassified”) 794 positions in the past four years under Newsom’s administration, eliminating $88 million from the City’s payroll. But Newsom — with the Board of Supervisor’s approval — added or re-classified 6,056 employees earning more than $100,000, adding $632 million to the payroll for a net increase of $543 million, as shown in Table 2:

Table 2: Comparative Growth Between 2003 and 2007,
Excluding Overtime, “Other” Pay, and Fringe Benefits

All of this needs your careful examination and close attention.

This letter contains the following sections:

· Forgetting to Mind the Store: Ineffectual Efforts to Eliminate “Low-Hanging Fruit”
· Inequities of Mayor’s “Low-Hanging Fruit” Proposed Cuts
· Subsets of the 8,180 Employees Earning > $100K in 2007
· Comparison of 2,918 Employees Earning > $90K in 2003 vs. 8,180 Employees Earning > $100K in 2007: Rapid Growth in City Management “Fat”
· Conclusions

Forgetting to Mind the Store: Ineffectual Efforts to Eliminate “Low-Hanging Fruit”

As shown in Enclosure 1, Supervisor Peskin introduced an ordinance on April 8 (background file 080482) to amend Ordinance No. 175-07, the Annual Salary Ordinance for FY 2007–2008:

1. To date, the draft ordinance in background file 080482 has not been passed by the Board of Supervisors, so it’s unlikely that Supervisor Peskin’s proposal to eliminate a total of 81 positions from the City Attorney’s Office, the District Attorney’s Office, the Department of Public Works, the Public Defender’s Office, and the Department of Telecommunications and Information Services has actually been implemented.

However, an analysis prepared by the Board of Supervisors Budget Analyst Harvey Rose, on June 12 includes a table on page 9 showing the net change in full-time equivalent (FTE) positions across all City departments between FY 2007–2008 to FY 2008–2009. (Note that the Budget Analyst analyzed all positions, regardless of salary, whereas Supervisor Peskin had addressed only positions earning $150,000 or more.)

By comparing the list of positions proposed for elimination by Supervisor Peskin to the data prepared by the Board’s Budget Analyst, it appears the 81 positions Supervisor Peskin proposed to be eliminated may not have been cut yet. For instance, although Supervisor Peskin proposed to eliminate 21 positions earning greater than $150,000 in the District Attorney’s office, Mr. Rose reported a net reduction of only 7.8 positions in FY 08-09 compared to FY 07-08 in the DA’s office. Similarly, while Supervisor Peskin proposed to eliminate another 20 positions in the City Attorney’s office, Mr. Rose showed a net reduction of only 8.9 positions in the City Attorney’s office.

As well, the Board of Supervisors web page containing ordinances that were approved and passed in 2008 indicates two changes were approved to Ordinance 175-07, but neither of the approved changes included Supervisor Peskins’s proposal to eliminate the 81 positions.

2. Supervisor Peskin’s proposal to eliminate only 81 positions represents just 1.0 percent of the 8,180 employees earning more than $100,000 annually. This is not a meaningful reduction in management fat. Supervisor Peskin should have tried harder.

3. Although Supervisor Peskin proposed to eliminate a total of 41 positions earning more than $150,000 from the City Attorney and District Attorney’s offices, combined, the Examiner just reported that only three attorneys employed by the City continue to be at risk of losing their jobs.

Also shown in Enclosure 1, the Mayor’s proposal to eliminate 190 positions — widely reported in the press as his “easy” proposal to cut “low-hanging fruit” — is wholly inadequate:

1. While the Mayor’s proposal to eliminate 190 positions represents 2.3 percent of the 8,180 employees earning more than $100,000, since 92 of the positions were vacant only 100 positions would actually be reduced, for just 1.1 percent of the 8,180 employees. The Mayor should have tried harder.

2. Notably, the Budget Analyst’s June 12 report shows a net reduction of just 99.1 full-time equivalent (FTE) positions between FY 2007-2008 to FY 2008-2009, again for a change of just 1.2 percent of the 8,180 employees. It appears the Mayor’s 190-position reduction was not incorporated into the Budget Analyst’s report.

Admittedly, the Budget Analyst’s report as of June 12 shows the Mayor proposed an actual reduction of 560 FTE positions being eliminated Citywide, but 467.8 new positions are being added, as shown in Enclosure 2, for a net change of 99.1 positions being eliminated between last fiscal year and the new fiscal year. However:

1. No data has been released, for instance, about the salary ranges of the 122.4 FTE positions being eliminated in the Fire Department, nor how many of the 227.1 FTE positions being eliminated in the Department of Public Health actually involve employees who earned more than $100,000.

2. Similarly, no data has been released indicating how many of the 9.9 positions being added to the City Controller’s staff, how many of the 130.7 positions being added to the Police Department, and how many of the 168.8 positions being added to the Municipal Transportation Agency will involve employees who will earn more than $100,000 annually. Nor is it known whether new employees earning more than $100,000 annually will negate the Mayor’s supposed 190-position reduction.

As well, both Enclosures 1 and 2 illustrate that while there were 553 employees in the Department of Public Transportation and 231 employees in the PUC’s Water Department earning over $100,000 in calendar year 2007, neither Supervisor Peskin nor Mayor Newsom proposed any reduction to the “low-hanging fruit” of management employees in both departments who earn more than $100,000, despite the fact that between the two departments, the City spends $114,586,403 in compensation, including fringe benefits, for these 784 employees. Was there no “low-hanging fruit” in either department? Or did political patronage somehow win out over pruning the low-hanging fruit clearly ripe for the picking?

Inequities of Mayor’s “Low-Hanging Fruit” Proposed Cuts

As shown on Enclosure 3, 81.1 percent (138.79 FTE) of the positions the Mayor proposed to eliminate occurred in just eight City Departments, the vast majority of which are in the Department of Public Health (125.04 of the 190.2 positions). Notably, Enclosure 3 also illustrates:

· The Mayor proposed to eliminate just 7.71 of the 399 senior manager FTE positions across nine City departments. Of the nine departments, only three departments faced cuts to senior management positions (the Department of Public Health, the Department of Human Resources, and the Department of Telecommunications and Information Services). Why were no other senior management positions proposed for elimination in the City’s remaining 50 City departments? Why were no senior management positions proposed to be cut in the MTA and DPT, or in the PUC, the Controller’s Office, the Airport or the Public Utilities Commission?

· The City has 724 senior managers, but only 17.31 FTE’s (2.4 percent of the 724) were proposed by the Mayor for elimination. While City Departments were asked by the Mayor to take cuts of 13 percent to 18 percent to their overall budgets, why did the Mayor propose to only reduce senior managers by only 2.4 percent?

· The City has, at minimum, 1,118 employees (at a conservative estimate) in senior- and middle-management positions, yet the Mayor proposed to eliminate only 36.15 FTE’s, or just 3.23 percent of these employees, again at the same time the Mayor asked departments to make cuts of 13 percent to 18 percent to their overall budgets.

· The City had 337 employees (not vacant positions, but actual warm bodies) in Information Systems job classification codes 1023 – 1071, yet the Mayor proposed eliminating only 14.64 Information Systems FTE’s, for just 4.86 percent of these filled positions, again while asking departments to make cuts of 13 percent to 18 percent to their overall budgets.

· Of the 105 City employees earning more than $200,000 annually, the Mayor appears to have recommended not one of the 105 be eliminated.

· The Mayor recommended only 2.31 senior managers be eliminated in the Department of Public Health, even while recommending eliminating 8.41 FTE physician positions in DPH. It is clear the Mayor values more highly retaining senior managers even while cutting direct patient care, increasing waiting times to see a City physician, and risking adverse outcomes of patients throughout DPH.

· The Mayor proposed eliminating 125.04 FTE’s in the Department of Public Health, or 12.82% of the 1,345 DPH employees earning more than $100,000, even while he recommended eliminating not one position in MTA and DPT, the Airport, the Fire Department, or the District Attorney’s Office. As well, the Mayor did not recommend eliminating any positions earning over $100,000 in the Office of the Mayor main budget (with the departmental code of “MYR”).

As well, although the Mayor’s “low-hanging fruit” proposed budget threatened to take aim at $100,000 salaries by eliminating managers, police captains, and a police department commander, just-released data shows that there are no managers, police captains, or the police department commander still on the chopping block, even though three physician specialists remain on the list of jobs still at risk of being eliminated.

Subsets of the 8,180 Employees Earning > $100K in 2007

· As shown at Enclosure 4, fully $536,905,461, or 51.7 percent, of the $1,038,720,395 in total compensation the City pays out annually in salaries over $100,000 (excluding fringe benefits) goes to 4,107 employees in just six City Departments: The Airport, the City Attorney’s Office, District Attorney’s Office, and the Police, Department, Fire Department, and Sheriff’s Department. Like its neighbor — the City of Vallejo, which recently declared bankruptcy — the City and County of San Francisco is rapidly approaching a financial meltdown due to six City departments gobbling half of the salaries of employees earning greater than $100,000 annually.

The majority of these six City departments have been largely untouched by any serious attempt to reign in excessive salaries, as if there are no low-hanging fruit to be found in these six departments.

· As shown at Enclosure 5, fully $127,493,252, or 12.3 percent, of the $1.038 billion being spent on salaries (excluding fringe benefits) for employees earning more than $100,000 are dedicated to 918 employees with the word “manager,” “director,” or “department head” in their job titles, yet very few of them have been targeted for elimination by either Supervisor Peskin or Mayor Newsom. There are hundreds of other managers in the City who do not have the word “manger” in their job titles. Surely there is some low-hanging fruit here for the picking. Perhaps you should lift up some of the leaves and branches so you can see clearly the low-hanging fruit.

Comparison of 2,918 Employees Earning > $90K in 2003 vs. 8,180 Employees Earning > $100K in 2007: Rapid Growth in City Management “Fat”

· Senior Managers: The Chronicle under-reported that there has only been an increase of 212 “city managers” since the 2004-05 fiscal year, and the Chronicle reported that Newsom’s spokesperson Nathan Ballard claims “Chris Daly has his facts wrong.” But it is Ballard and Newsom’s budget director Nani Coloretti who appear to have their facts wrong.

As shown in Enclosure 6, between 2003 and 2007, there has been a growth of at least 401 senior managers — not 212 — in just the City’s job classification codes 0902 through 0965, which classifications represent Mayoral Staff, Managers, various deputy directors of departments, and Department Heads. The current 570 employees in these classifications cost $57 million in salaries annually. And this is without including fringe benefits. There is no question that the increase in these job classification codes represents an explosive growth in management positions, even while the Board of Supervisors continues to turn a blind eye to managing the store.

Coloretti said it’s more accurate for Newsom’s critics to include staffing for the 2003-04 fiscal year, because that is the budget inherited when he took office as mayor. What Coloretti is forgetting is that Newsom didn’t “inherit” that budget, he helped create it when he was a sitting Supervisor! And since 2003, managers within just the 0902–0965 job classification series have more than tripled under Newsom’s watch as mayor, and that’s not counting the many other managers in additional job classification codes (for instance, the MUNI managers who have different job classification codes). The Board of Supervisors and the Chronicle should closely review all of the additional job classification numbers in Enclosure 5.

· Information Systems Staff: As shown in Enclosure 7, between 2003 and 2007, there has been a growth of at least $8 million in salaries for City job classification codes 1023 through 1073, which represent information systems professionals. And this is without including fringe benefits. It is not known how much information technology may have changed during the past four years requiring hiring 48 additional positions in these job classification codes.

· Employees Earning Over $100,000 By Change in Number of Employees:

Even while the Mayor and the Board of Supervisors continue to fail minding the store, the Mayor and his spin-meisters have claimed that the increase in top managers was a result simply of reclassifying job classifications of some city positions represented by the Municipal Executives Association, the labor union representing top City managers, nothing could be further from the truth.

The net change of 5,262 more employees earning in excess of $100,000 between 2003 and 2007 cannot be attributed simply to job reclassifications alone.

Enclosure 8 illustrates, among other things:

— While there were no #H2 Firefighters earning more than $90,000 in 2003, the City now has 837 #H2 Firefighters earning over $100,000, for a total cost increase of $73.1 million.

— While there was only one #Q4 Police Officer III earning more than $90,000 in 2003, the City now has 657 #Q4 Police Officer III’s earning over $100,000, for a total cost increase of $61.2 million.

— While there were no #2320 Registered Nurses earning more than $90,000 in 2003, the City now has 552 #2320 Registered Nurses earning over $100,000, for a total cost increase of $55.5 million.

— While there were no #8177 Attorneys (Civil/Criminal) earning more than $90,000 in 2003, the City now has 312 #8177 Attorneys earning over $100,000, for a total cost increase of $43.2 million.

— While there were no #Q3 Police Officer II’s earning more than $90,000 in 2003, the City now has 236 #Q3 Police Officer II’s earning over $100,000, for a total cost increase of $21.4 million.

— While there were no #8304 Deputy Sheriff’s earning more than $90,000 in 2003, the City now has 230 #8304 Deputy Sheriff’s earning over $100,000, for a total cost increase of $17 million.

— While there were no #9139 Transit Supervisors earning more than $90,000 in 2003, the City now has 95 #9139 Transit Supervisors earning over $100,000, for a total cost increase of $7 million.

— While there were 19 #0932 Manager IV’s earning more than $90,000 in 2003, the City has added or reclassified 80 additional #0932 Manager IV’s, for a total of 99 #0932 Manager IV’s earning over $100,000, for a total cost increase of $10.5 million.

— While there were 55 #H30 Fire Department Captains earning more than $90,000 in 2003, the City has added an additional 26 #H30 Fire Department Captains, for a total of 81 #H30 Fire Department Captains earning over $100,000, for a total cost increase of $3.5 million. Why the City needed an additional 26 Fire Department Captains is not known, although it is known that there have been no more fires in 2007 than in 2003.

— While there were 23 #2323 Clinical Nurse Specialists earning more than $90,000 in 2003, the City has added an additional 9 #2323 Clinical Nurse Specialists, for a total of 32 #2323 Clinical Nurse Specialists earning over $100,000, for a total cost increase of $2 million. Why the City needed an additional 9 Clinical Nurse Specialists is not known, although it is known that there has not been an overall change in the public health of San Francisco residents likely in need clinical specialists.

— While the City had a single #9382 Government and Public Affairs Manager in 2003, the City now has three #9382 Government and Public Affairs Managers, two new #9393 Maritime Marketing Representatives, and two new #9251 Public Relations Managers that it did not have in 2003. The increase in these three job classification codes, involving six new employees, is costing an additional $653,188 annually. It is not known why additional marketing people are needed in City government.

In additional to the above, Enclosure 8 shows vast changes in job classification codes that simply cannot be explained by reclassification among job classification codes, as Newsom’s publicity staff wrongly claims.

· Employees Earning Over $100,000 By Change in Salary:

Enclosure 9 is the same list as Enclosure 8, but sorts the Change in Salary between 2003 and 2007 in descending order.

Table 3: Subset of Top Nine Job Classification Salary Increases Between 2003 and 2007 (click here for image.)

Notably, the 3,316 employees in these nine job classifications represent 55 percent of the 6,056 employees shown in Table 2 who earned in excess of $100,000 between 2003 and 2007, and represent fully 50 percent of the $632 million increase in City salaries paid to those earning over $100,000. While the City was negotiating labor contracts between 2003 and 2007, it appears neither the Mayor nor the Board of Supervisors were minding the store by awarding these nine job classifications hefty raises, since the cash register simply didn’t contain sufficient revenues to award such largesse.

· Employees Earning Over $100,000 By Job Classification Codes:

If you are interested in finding a specific job classification code easily, Enclosure 10 is the same list as Enclosure 8, but is sorted by ascending job classification number.

Conclusions

Since Gavin Newsom took office as Mayor, fully one-third of the increase in the City’s budget from $5.1 billion to $6.5 billion can be traced directly to the $543.9 million increase paid to City employees earning more than $100,000 annually, while City Supervisors have turned a blind eye toward minding the store and keeping an eye on the cash register.

City employees have been told over and over during the past four years of Newsom’s administration that following each of his draconian budget submissions, the remaining City employees not laid off would be required to “work harder.” It is now time for the Budget and Finance Committee, and the full Board of Supervisors, to work harder, yourselves: You must find ways to “chop from the top,” reducing wasteful City spending on fat-cat salaries.

Back in 2003, Supervisor Ammiano (bless the bleeding heart on his sleeve) made great noise about the number of City employees earning more than $90,000 annually, although he made no substantive effort to do anything about reducing their drain on the City’s budget at the time. All eleven members of the Board of Supervisors are now reported on the City’s salary database available on the Internet to be earning $98,660, at a combined cost to taxpayers of $1.08 million annually, without including their fringe benefits valued at 30 percent of base salary.

Now four years after Ammiano’s initial concern but gross inaction, we have nearly three times more City employees earning more than $100,000. His bleeding heart concern was not translated into meaningful action. Ammiano and the Board of Supervisors have done next to nothing to reduce this wasteful spending, or to take serious aim at reducing the amount of City fat, each time you have passed annual salary ordinance’s and the City’s budgets, as if you weren’t in a position to have been minding the store.

For his part, sitting Supervisor Sean Elsbernd authored Board of Supervisors Resolution 474-07 in August 2007, “resolving” that the Board of Supervisors should review the status of Civil Grand Jury recommendations as part of annual budget processes, and required the Budget and Finance Committee on which he sits to hold hearings on the Mayor’s and Controller’s implementation of Grand Jury recommendations. None of this happened in 2008, and the full Board of Supervisors is accept the Fiscal Year 2008–2009 budget in the absence of such oversight.

Ironically, former Supervisor Gavin Newsom is now calling as Mayor to restrict voters from creating new set-asides for mandated levels of spending without first identifying funding sources for any new programs. Newsom is demanding that the voter information guide include a Controller’s analysis of any fiscal impact of proposed new set-asides. Yet the Mayor, and the Board of Supervisors, appear to be reserving for themselves the ability to create new set-asides by way of increasing management salary compensation without voter approval, and without identifying new sources of revenue to award lucrative raises before signing labor contracts, simply by continuing to increase salaries of the most well-compensated public employees in California.

Indeed, while Deputy City Controller Monique Zmuda has stated that revenues for FY 2008–2009 are at an all time high and the City does not have a revenue problem, Newsom’s failure to identify new funding sources before he awarded fat raises to cops, firefighters, and nurses contributed to adding well over $100 million into the City’s $338 million budget deficit this year (which will be repeated in subsequent City budgets in coming years), since he failed to check if he had sufficient new revenue before signing labor contracts in the summer of 2007.

In the face of record revenues, how ironic is it that Newsom and the Board of Supervisors continue to award fat raises (a form of set-aside), even while attempting to restrict voter-mandated set-asides?

It’s time you do your jobs: Get serious about cutting management fat out of the City budget! The first thing you should do is to get rid of the low-hanging fruit robbing the City store.

Respectfully submitted,

Patrick Monette-Shaw
Independent Community Observer
San Francisco, CA

Enclosures:

1. Comparison of Calendar Year 2007 Employees Earning Greater than $100,000 Annually to Proposals to Reduce Such Positions
2. Sorted Comparison of Calendar Year 2007 Employees Earning Greater than $100,000 Annually to Proposals to Reduce Such Positions
3. Mayor Newsom’s June 2008 “Low-Hanging Fruit” Proposed Reductions
4. Select City Departments Earning > $100,000 in 2007: Six Largely Untouched City Departments
5. Select City Departments Earning > $100,000 in 2007: Managers, Directors, and Department Heads
6. Comparison Between 2003 and 2007: Senior Managers
7. Comparison Between 2003 and 2007: Information Systems Staff
8. Comparison Between 2003 and 2007: 8,180 Employees Earning > $100K (Sort: Change in Employees)
9. Comparison Between 2003 and 2007: 8,180 Employees Earning > $100K (Sort: Change in Salaries)
10. Comparison Between 2003 and 2007: 8,180 Employees Earning > $100K (Sort: Job Classification Code)

cc: The Honorable Aaron Peskin, President, San Francisco Board of Supervisors, District 3
The Honorable Michela Alioto-Pier, Supervisor, San Francisco Board of Supervisors, District 2
The Honorable Bevan Dufty, Supervisor, San Francisco Board of Supervisors, District 8
The Honorable Tom Ammiano, Supervisor, San Francisco Board of Supervisors, District 9
The Honorable Sophie Maxwell, Supervisor, San Francisco Board of Supervisors, District 10
The Honorable Gerardo Sandoval, Supervisor, San Francisco Board of Supervisors, District 11
Angela Cavillo, Clerk of the Board, San Francisco Board of Supervisors
Ben Rosenfield, City Controller
UAPD
IFTPE Local 21
Service Employees International Union, Local 1021