Oakland city workers to strike for seventh day
11 Dec, 2017 by Chris Reed
A strike by nearly 3,000 Oakland city employees will continue for a seventh day today when a mediator agreed to over the weekend will begin meeting with civic and union officials.
Oakland city staffers depicted the decision by Mayor Libby Schaaf (pictured) to accept the mediator chosen by the Service Employers International Union Local 1021 – David Weinberg, who worked as a federal mediator for 17 years – as a sign of progress. But Schaaf was rebuffed after pleading that strikers return to work while mediation proceeds to minimize effects on elderly residents who rely on senior services and families that use Head Start.
Chief SEIU Local 1021 negotiator Rob Szykowny used a weekend interview with the San Francisco Chronicle to once again knock the Schaaf administration for "bad faith" and to question the mayor's claim that the city's finances are in such poor shape that it can't be generous on raises.
On Thursday, the city gave what Schaaf described as its "last, best and final offer" – a 4 percent raise in the first year of a two-year contract, with a 1 percent raise in the second year and an additional 1 percent raise if the city reached revenue goals. The SEIU responded by proposing a 4 percent raise in the first year and a phased-in raise in the second year that would add up to 4 percent.
Pension crisis driving city bargaining position
Schaaf immediately rejected the counteroffer, citing projections that Oakland's pension costs will soar by 49 percent over the next five years. The city has for many decades addressed the cost of retirement benefits on a pay-as-you-go basis, leaving $2.8 billion in unfunded liabilities. With an aging workforce increasingly retiring, this means the benefits will consume nearly one-quarter of Oakland's budget by 2022, according to a five-year financial forecast issued in March. A 2015 California Policy Center report concluded that Oakland had the heaviest per-capita pension debt of any city in the state.
Nevertheless, Szykowny rejected the gloomy talk and argued that many of the city's fiscal projections "are disingenuous at best."
While police, fire and emergency services have not been affected, most other city services have been shut down since last Tuesday, when the strike began. Besides the SEIU local, the much-smaller International Federation of Professional and Technical Engineers Local 21, which also has been unable to finalize a new contract with the city, also has been on strike. Further disrupting the city: members of the International Brotherhood of Electrical Workers Local 1245 and some other local unions are refusing to cross SEIU picket lines.
The pension crisis that Schaaf cited has been building for more than 60 years, with city officials consistently refusing to make annual payments that actuaries said were necessary.
In 1976, the 25-year-old Police and Fire Retirement System was so underfunded that desperate city officials shut it down and persuaded voters to issue long-term bonds to cover the system's liabilities.
In 1988, voters approved a proposal to extend the payback deadline for the bonds from 2016 to 2026.
Despite being warned that using bonds to pay for ongoing pension costs was a dangerous strategy, Oakland leaders have repeatedly done so. In 2012, for example, then-Mayor Jean Quan persuaded the City Council to issue $210 million in pension obligation bonds. Then-Councilwoman Schaaf was the biggest critic of the idea, warning that it put the city on track to having to spend much more on pension bond and interest payments than on pensions themselves by 2024.
Richard Rider 11 December, 2017, 08:20
Most CA city councils are owned and operated by the city public employee labor unions. In essence, the unions are negotiating with their sycophants. There are two goals:
1. Make sure that as much of the city budget as possible goes to city workers — the goal is 100% of the budget (though admittedly not achievable — but a goal is a goal). Actually counting benefit obligations, the goal is OVER 100% of the city budget — which indeed IS achievable, and indeed is what most CA cities face today.
2. Demand more and more city tax increases to pay for the largesse. More and more CA cities are "reluctantly" choosing that option.
Oakland's AVERAGE full-time city worker makes in excess of $112,000 in salary and overtime — not counting the opulent benefits. And they are on strike??
https://blog.transparentcalifornia.com/2017/12/08/average-striking-oakland-workers-pay-was-nearly-100000-last-year-data-shows/
Reforming guaranteed ("defined benefit") pensions is a Gordian Knot that is near impossible to permanently undue. Even if reforms are somehow implemented, the unions will work 24/7 to undo the reforms through the courts, or more frequently by electing their sycophants to city councils, school boards, etc.
The closest thing to a magic bullet would be to contract out every possible government service via a competitive bidding process. Presto! No further unfunded pension liabilities (though the present shortfalls would still constitute a huge problem). Stop the bleeding.
With private firms, the work can be done for less cost and more accountability. You can terminate or contractually fine a company for unsatisfactory work — good luck firing even one government employee — let alone an entire department.
And these firms are seldom unionized — eliminated the most active special interest group in local politics. That alone would be worth the change. Gut the government labor unions.
eck 13 December, 2017, 18:51
Amen, brother!! Only 2 quibbles. Competitive outsourcing of most services is a "no-brainer", but will never happen due to the aforementioned "city councils are owned and operated by the city public employee labor unions". I also think changing defined benefit pensions to something else, would pass and stick if done at the ballot level. Voters know the difference even if they're ignorant about who's puppet city candidate X funders.
Correct! In BOTH instances, it has to be done by initiative. And it has to be "city council" proof — no mean feat.
In San Diego we've had SOME success on competitive bidding (passed as a prop), but only a fraction of the savings we could have achieved. We were much more successful — again, via a proposition — putting all new hires into 401k plans (except for police).
Bogiewheel 11 December, 2017, 08:39
Unions always forget the harm they created in the past which
caused job flight overseas. This SEIU is a greedy socialist run
outfit that creates excessive debt to the public at large. The local governments are quickly depleting tax funds and this union is on the road to ruin for all. As I have argued before, the
world is changing, and if the U.S. is no longer the worlds reserve currency, there will be considerable hurt to go around.
Jean QuanLibby SchaafOakland strikeoakland pension crisisoakland pension bondsoakland city workers strike
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