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MMWD
MMWD Rate Hikes Deserve Scrutiny
This is CSPP's take on the up-coming MMWD rate hike, from the salary / pension perspective. It's not good.
There will be a workshop on April 11 and a meeting - at which the directors will vote - on May 16. Please plan to attend both, if at all possible.
The new tax watchdog group, CO$T, is now organizing to alert the ratepayers on both events, the actual opposition process for writing to MMWD, and the need to contact your district manager right away. They were elected to represent you, and should be reminded of this. Once CO$T's founder, Mimi Willard, has a notice prepared, I will send it to you. There are obviously many aspects to this latest rate hike "proposal", aside from salaries and pensions, and CO$T will cover those thoroughly.
Special Districts have flown under the radar for so long that they are used to getting by with increases in rates and fees, with little - if any -public notice. I imagine they are quite uncomfortable with the new scrutiny of their operations and budgets.
This Marin Voice column is posted on the CSPP Facebook page. Please leave your comments there and below the article on line. Thank you.
Regards,
Jody
www.facebook.com/citizens4pensionreform
By Dick Tait:
On April 11, Marin Municipal Water District will conduct a workshop to inform its customers that the district is doing a great job by providing us top-quality water for about a penny a gallon and why rates must again be raised to do so.
Staff and its consultant, Carollo Engineers, will outline the need to replace worn pipeline and storage facilities in a staged manner to avoid another large rate increase, such as occurred in 2016.
Instead, the district is proposing to increase rates 7 percent per year for the next two years. But wait, there’s more. The Carollo study recommends that rates continue to increase 7 percent, then 8 percent for the following two additional years, which would result in a compounded rate increase of 32 percent during the next four years.
While most of the rate increase will be for funding improvements, what staff and Carollo won’t discuss is why management has allowed personnel costs to increase so rapidly that funds that would have been available for facility improvements have instead been diverted to excessive salaries, benefits and staffing.
MMWD claims that high salaries are necessary to remain a competitive employer. The district’s compensation policy is to match the average salary of those with comparative job titles in public works organizations. These salaries are determined by surveying only those organizations that are mutually agreed to by the employees’ union.
No survey of private organizations is made, even though fewer than 15 percent of the district’s 109 position titles relate to treatment plant operator or other water provider specialists.
While Citizens for Sustainable Pension Plans isn’t focused on salaries per se, salaries are of interest to us because excessive pensions derived from excessive salaries — in combination with overly generous pension formulas — together result in unsustainable pensions and the need for increasing contributions.
In 2015, MMWD contributed $5.5 million to CalPERS, the state’s largest public pension fund. In 2021, the district estimates its contribution will increase to $11.6 million. The latest CalPERS actuarial report — 2015 — indicates the district’s unfunded liability to be $74 million.
Regarding fringe benefits, the district’s vacation, sick leave, holiday pay, retirement and retiree medical contributions costs add over 80 percent to the salary costs of its employees. These benefits increased some 23 percent the year after the last rate increase, even though the number of employees did not change.
Current labor agreements lock in salaries, fringe benefits and cost-of-living increases until they expire in June 2018. These agreements also include lifetime retiree medical subsidies for both the retiree and spouse.
Nearly all Marin public agencies modified their retiree benefits after 2012 to exclude spousal medical coverage. Since then, the district’s annual retiree medical contribution has increased from $3.7 million to $4.8 million. Its unfunded actuarial medical care liability as of June 2015 was $34 million.
Combining unfunded pension and retiree medical benefit liabilities, the district’s retiree-related debt is well over $100 million.
With respect to staffing, the district has four employees devoted to public information and eight employees who work on information systems. It appears as though MMWD is more concerned with good PR and maintaining an overly compensated workforce than in fiscal prudency or giving its customers a break from burdensome rate hikes.
Looking ahead to personnel cost control, compensation surveys should include the costs of fringe benefits, as they are substantial. They also should survey private-sector employers.
These surveys should be initiated this year so that comparative data is available when the next round of negotiations begins.
In addition, the district should retain a consultant to review the district’s management structure and staffing, use of outsourcing functions that are more general in nature such as PR, human resources, administrative duties, etc. and to develop recommendations for improving operational efficiency.
We urge the board take these steps to eliminate or at least reduce the magnitude of future rate increases.
Dick Tait of Mill Valley is a founding member of Citizens for Sustainable Pension Plans, a Marin group focused on public employee pensions.