$25 Million in Santa Ana Police Raises Up for City Council Approval

JULIE LEOPO, Voice of OC

Gerry Serrano, president of the Santa Ana police union, at a City Council meeting in early 2019.

Santa Ana City Council members will vote Tuesday on the largest pay raises for the city’s police officers in more than a decade, totaling $25 million in taxpayer money over the next two and a half years and adding $12 million per year going forward in additional costs.

The raises amount to a 13.6 percent to 19.3 percent increase in base pay for each officer and sergeant between now and July 2020, according to the city. Officers and sergeants with 15 to 19 years in law enforcement would receive raises totaling 16.5 percent, and those with 20 or more years would receive 19.3 percent in increases.

Before the last set of raises in 2017, the median compensation for a Santa Ana officer totaled about $213,000 per year, including $111,000 in pay before overtime and $88,000 in benefits, according to city data published by Transparent California.

The city staff report doesn’t offer an explanation for the raises, beyond saying they resulted from negotiations between the police officers’ union and City Council.

Supporters of Santa Ana’s most recent police raise in 2017  argued it was key to filling vacant police positions and thus shortening emergency response times, by keeping Santa Ana’s pay competitive with other police departments. Ahead of the new proposed raises, city officials didn’t provide a pay comparison showing how Santa Ana ranks among other cities.

The union’s president, Gerry Serrano, didn’t return phone messages seeking comment about the proposed raises.

Michele Martinez, a Santa Ana City Council member for 12 years until she was termed out in December, said the proposed raises would put the city on the path to bankruptcy.

“How will the city maintain and sustain the current service levels? The city currently has a major structural deficit and a looming pension crisis,” Martinez said in a public Facebook post last week. In an email to Voice of OC, she called the raises “scary” and a “pension nightmare.”

“(The raises) will continue to cripple the organization employee morale, and it will be forced to reduce or eliminate more city services,” Martinez wrote in a Facebook post.

The raises likely increase the city taxpayers’ long-term costs for employee pensions, which already have been skyrocketing in recent years from $12 million in fiscal year 2014 to an estimated $53 million this year, to more than $80 million per year starting in fiscal year 2023.

The city staff report didn’t estimate how the raises would affect taxpayers’ long-term pension costs for police, and city officials, including Acting City Manager Steve Mendoza’s office, declined to provide that information Monday.

Santa Ana has been facing ever-growing budget shortfalls, largely due to the increasing pension costs, which led the City Council to ask voters in November to approve taxing themselves at the highest sales tax rate among the 34 cities in Orange County, 9.5 percent. The shortfalls were estimated by city officials to grow to $40 million per year in the 2021 fiscal year and widen further from there, putting the city at risk of steep cuts to services and potential bankruptcy.

Voters approved the 1.5 percent sales tax increase, bringing the city sales tax to 9.25 percent, which is estimated to bring $60 million extra each year into the city general fund. City officials estimated $40 million per year would be needed to cover the budget shortfall as of 2021, and the rest – about $23 million – could be used to expand city services.

The proposed police raises, for existing employees, would cost $12.3 million per year starting in the 2021 fiscal year, equivalent to more than half of the estimated extra sales tax money available for expanding city services.

As voters decided on the sales tax increase, its ballot title was “Santa Ana Neighborhood Safety, Homeless Prevention and Essential City Services Enhancement Measure.”

Under the proposed contract, the raises start retroactively to July 2018 and continue to rise across three additional dates though July 2020. The first two raises would push this year’s city budget shortfall from an estimated $600,000 to $4.8 million, after accounting for the extra money available from the sales tax increase, according to city finance officials.

Almost all the money for the raises – about 97 percent of it – is coming out of the city’s general fund, which is its main operating money and covers a variety of services like police, firefighting, youth programs, parks, and libraries.

The union, also known as the Santa Ana Police Officers Association or POA, has been Santa Ana’s largest campaign spender in the last two elections, which shifted the balance of power at City Hall.

Serrano, the police union’s president, remains a sworn sergeant with the department, and the union’s current contract and proposed contract both free him from his city job duties while receiving his full taxpayer compensation, plus premium pay equivalent to 35 percent of his salary.

Serrano was the fourth highest paid Santa Ana city employee out of over 1,800 people in 2017, the most recent year available, according to city data published by Transparent California. He received $353,000 in total pay and benefits, and the only employees compensated higher that year were then-City Manager David Cavazos and the two men who served as police chiefs, Carlos Rojas and David Valentin.

The city financial analysis of the proposed raises doesn’t include costs for filling vacant police positions, nor how the police raises will affect the city’s pension liabilities under the California Public Employees Retirement System (CALPERS).

City staff estimate they’ll have to devote 288 taxpayer-funded work hours to update pension reports due to the proposed raises.

Pensions for all city employees, without the police raises, are already slated to cost $52 million in the current fiscal year, according to a city report last year. It’s projected to steadily grow in the coming years, reaching $81 million by 2023.

The city hasn’t said whether or not each of the four raises for police would be compounded, meaning each raise percentage would build on the previous one, and whether staff accounted for that in their financial impact estimates. So it’s unclear if the city could be looking at a larger total cost than they’re publicly estimating.

And calculating the new costs of the raises to the city will delay upgrades to the city’s “aged” payroll system to July of this year, long after the software supporting the payroll system is set to expire on March 31, according to city staff. Between that time, City Hall’s entire system of accounting for taxpayer-funded employee salaries will be at risk of failing.

Martinez said overall, the police pay raises “will not make Santa Ana safer.”

“Instead we will see more senior officers retire at a faster pace after they reach their highest paid year,” she said in one of her Facebook posts.

“The vote on Tuesday can be the final nail in the coffin for Santa Ana.”

Brandon Pho is a Voice of OC intern. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.