Focus on Premium Pay in Santa Ana’s Budget Mess

Monday, Oct. 3, 2011 | Hundreds of Santa Ana employees earn at least $10,000 annually in premium pay, which is far above the norm for cities in California, according to the city's budget consultants.

It has long been a practice in public agencies to give employees extra pay if they have special skills or experience. But it is unusually prevalent in Santa Ana and cost the city $9.2 million in 2010, according to the consulting firm Management Partners Inc., which recently completed a budget stabilization study for the city.

The bulk of the premium payouts in Santa Ana — nearly $8.5 million — went to police officers and firefighters and those departments' managers, the report declares. Among the city's employees, 441 made more than $10,000 in premium pay in 2010, and 105 made more than $20,000, according to payroll data provided by the city.

The top three premium pay recipients — all firefighters — received more than $31,000 each, the data show.

Three Santa Ana employees received $600 each last year for being able to take dictation; firefighters are paid a premium for hazardous materials training, even if they aren't on the hazmat team; and employees also received special pay for speaking more than one language.

In all, Santa Ana has 67 premium pay categories, which is significantly more than most California cities, according to Management Partners.

"They [premium pay provisions] tend to get negotiated over time and get embedded into the system. Clearly some of these [categories] are outmoded," said Andy Belknap, regional vice president for Management Partners Inc.

City Council members and union officials alike acknowledge that pay cuts are inevitable if the city is to reduce the $30-million budget deficit that is threatening its solvency. They've begun the process of renegotiating already approved contracts.

"Every single thing is on the table," said Councilwoman Michele Martinez. "How we're doing business today is not how we did business 10 to 20 years ago."

Yet it is clear that the negotiating process won't be easy.

John Franks, president of the Santa Ana Police Officers Association, said "everything across the board" would be considered. He would not, however, divulge details of the union's current negotiations with the city and refused to say whether premium pay is on the table.

Chris Roelle, president of the Santa Ana Firemen's Benevolent Association, declared in a prepared statement: "The association is very interested in working together with staff and the City Council to help find solutions to get the city back on track financially."

But no one is expecting the unions to yield pay concessions easily.

Franks said the police union hired the consultant Harvey M. Rose Associates to conduct a separate audit of the city's finances. The audit should be done in two of weeks, Franks said. The audit was ordered "just to be diligent and to make sure everything they [city officials] say is true," Franks said.

Unions in the Northern California city of Vallejo also hired Harvey M. Rose to conduct an audit of that city's finances. The audit asserted that Vallejo could have solved its budget deficit by agreeing to concessions the unions had offered and other cost-saving measures.

Vallejo later made national headlines when it became only the second city in California history to declare bankruptcy.

Paul Walters, Santa Ana police chief and interim city manager, has said he will make his first set of recommendations to close the budget gap in January. The plans will likely include outsourcing some city services.

Joaquin Avalos, SEIU's regional vice president of the Service Employees International Union , did not return a phone call seeking comment. But a source close to the union said that while union leaders are receptive to big cuts, including cuts in premium pay, they're worried about negotiating a deal and then seeing city jobs outsourced.

"That's what's making us worried," the source said.

As a starting point, union sources said, the city has handed down figures to the police and service employees unions and told their leaders that wage concessions must equal those amounts. The fire union has not yet received its figure.

The situation is tricky, Walters said, because the union contracts are closed contracts. Singling out premium pay or any other compensation is difficult because the unions can lawfully refuse to talk about contract specifics, Walters said.

"How do you convince them [labor groups] to give up money and benefits in a closed contract?" Walters said. "That's the $64,000 question."

Possibly making negotiations tougher, Walters said, was the intense media attention given to the city's budget crisis. "All the noise is harmful," Walters said.

Councilman David Benavides said that the unions must reopen their contracts and make concessions and that everything, including premium pay, is on the table. Without the unions making painful choices, the city will probably have no other choice than to file for bankruptcy, Benavides said.

"I'm confident at the end of the day we'll be able to make some bold decisions on both sides," Benavides said.

Councilman Vincent Sarmiento said he would like to see a review of the premium pay program. For those categories that make sense to keep, Sarmiento said, it might be best to incorporate them into the employees' base salaries.

"I think that's going to be an area that we're going to consider reviewing. We're going to analyze whether it makes sense to continue that," Sarmiento said.

Councilman Sal Tinajero said that he couldn't comment on "hypothetical" cuts like reducing premium pay because it's up to the unions to determine what to cut.

"Fortunately, everybody's coming to the table. That's the difference between us and Vallejo," Tinajero said. "Their guys didn't want to come to the table."

Mayor Miguel Pulido and council members Claudia Alvarez and Carlos Bustamante did not return phone calls seeking comment.

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