Cities exist to provide services to the community.  Most of those services are provided by employees, and employee-related costs represent approximately 80 percent of the City's General Operating Fund budget.  Taxpayers provide most of the funding for City services.  City officials must carefully use public funds to set reasonable and competitive wages and benefits in order to recruit and retain a well-qualified work force necessary to provide quality services to the community while keeping costs as low as possible.

The City of Mountain View and the Mountain View City Council carefully assess appropriate compensation for all of its employees as well as the City's financial condition prior to considering any compensation adjustments.

 

The same principles apply to executive compensation.  Compensation for employees who work directly for the City Council is based on a number of factors, including performance and a comprehensive review of compensation levels for positions with similar responsibilities in organizations with similar service levels and of comparable size in Santa Clara County, San Mateo County and southern Alameda County.  Additionally, the compensation level of peer professionals with similar levels of experience is also a factor.  Because the City Council takes seriously its responsibilities as an employer, an objective outside advisor occasionally is used to assist the City Council with the annual evaluation process for Council-appointed employees and to advise the City Council regarding appropriate compensation levels.  Additionally, all compensation adjustments for Council-appointed employees are publicly noticed and approved at regular City Council meetings.

 

LINKS:

 

 •  Employee Compensation FAQs (below)

 •  FY 2011-12 Salary Plan

 •  Labor agreements

 •  2011 Calendar Year Salary Data

 •  City Council Policy No: D‑3—MANAGEMENT DEVELOPMENT & COMPENSATION PROGRAM

 

Employee Compensation FAQs

How does the City determine how much employees should be paid?

In most cases, the City is required by State law to meet and confer with its employee organizations regarding wages and benefits. The City negotiates labor agreements with its employee organizations, and the City Council establishes parameters based on such factors as changes in the cost of living, salary comparisons with other cities and available funding.

In its analysis, the City Council examines all components of compensation, including salary, "salary equivalent" compensation (including deferred compensation and the sharing of pension costs) and benefits. No adjustments are made without examining all of these factors. The City's goal is to be competitive and fair in compensation while keeping costs at a reasonable level.

Can salary information alone from other cities be accurately compared as like compensation?

No. When you see salary information posted or published comparing various cities' compensation, the data does not generally include other factors, such as the cost of benefits provided to employees, or whether those costs are paid by the employer or employee. Also, it may not reflect unusual situations like retroactive or one-time payments. An example is that some employees receive vacation cash-outs when they do not use all of their vacation in a year. Another variable is the number of pay periods in a calendar year. For example, in calendar year 2009, the City of Mountain View had one additional pay period compared to other years. This was needed to synchronize biweekly pay periods with the calendar year (similar to the addition of a day during a leap year). Comparing Mountain View's 2009 annual salary information for this year would not be accurate with cities that did not have the additional pay period.

Can the public find out when there are increases in employee compensation?

Yes. Compensation changes are placed on the agenda of open City Council meetings and clearly identified. Current compensation information is available by clicking the links above.

How much of the City's budget pays for employee compensation?

Approximately 80 percent of the City's General Operating Fund and 42 percent of all the City's funds are utilized towards personnel costs. The fundamental functions provided to the community are service-based. A majority of the costs associated with providing services is through people who perform essential functions.

What retirement system covers City employees?

City employees participate in the California Public Employees Retirement System (CalPERS). Employees in CalPERS are not covered by Social Security. Employees contribute 1.45 percent of their salary to Medicare, and the City pays a matching 1.45 percent to Medicare.

Who pays for employee retirement plans?

CalPERS pension costs are a shared responsibility between the employee and the employer. First, there is an employee member contribution, whereby the employee pays a rate fixed by state law. The rate varies from group to group depending on the retirement plan. In Mountain View, the base employee contribution is 8% for non-safety (miscellaneous) employees and 9% for safety employees. Second, there is the employer contribution, whereby the employer pays a rate which varies from year to year. In Mountain View for FY 2011-12, the employer rate is 19.914% for miscellaneous employees and ranges from 26.599% to 30.599% for safety employees. In Mountain View, employees also pay a “cost-share” portion of the employer rate in addition to the fixed employee rate. This practice in Mountain View is greater than what is customary in most other public agencies. The cost-share amount is a negotiated amount to help pay for the cost of retirement benefits. It is also a way that employees have helped balance the City’s budget during the recent recession. The amount of the cost-share can vary from year to year.

The CalPERS pension fund’s investment earnings fund the largest portion of pension costs. However, investment earnings vary, and these variations drive the annual changes to the employer contribution rate. As of June 30, 2011, CalPERS reports that of every dollar paid to a CalPERS pensioner, $0.13 came from members, $0.21 from employers, and $0.66 from investment earnings (based on income over the last 20 years).

The following chart summarizes the employee and employer shared responsibility for funding pensions FY 2011-12.

FY 2011-12 Retirement Plan Contributions 

Employee Group	Employee Contribution			Employer Contribution
	Employee Normal Contribution	Employee Share of Employer Contribution	Total Paid by Employee
Miscellaneous:
Department Heads	8%	2.5%	10.5%	17.414%
Confidential/IT	8%	2.5%	10.5%	17.414%
EAGLES	8%	2.5%	10.5%	17.414%
POA Non-sworn	8%	1.5%	9.5%	18.414%
SEIU	8%	3.25%	11.25%	16.664%
Safety:
Fire Chief	9%	4.366%	13.366%	26.233%
Fire Managers	9%	4.366%	13.366%	26.233%
MV Firefighters	9%	7.566%*	16.566%	23.033%
Police Chief/Assistant City Manager – Public Safety	9%	0.148%	9.148%	30.451%
POA Sworn	9%	4.148%	13.148%	26.451%
Police Managers	9%	4.928%**	13.928%	25.671%

* Includes 3.2% one-time cost share, due to end June 2012.
** Includes 0.78% one-time cost share, due to end June 2012.

When a City employee retires, do they receive a percentage of their entire earnings?

No. Certain earnings, like overtime and leave payoffs, are not factored into employees' pensions. CalPERS regulates the types of final compensation that is calculated for retirement purposes. CalPERS has rules in place to ensure salaries are not "spiked" to reflect a higher than allowable compensation.

How much does an employee earn when they retire?

Retirement compensation is based on the retirement plan formula. Safety members (Police/Fire) have the 3 percent at 50 formula. Miscellaneous members (nonsafety) have the 2.7 percent at 55 formula. Benefit factors include the number of years an employee has worked in the CalPERS system and the amount of the highest year of eligible final compensation. Safety employees are limited to receive up to a maximum of 90 percent of salary.

For example, a Firefighter who is at least 50 years old and has worked 25 years is eligible for 75 percent of their salary. If they earned $104,000, they would receive an annual retirement benefit of $78,000. A Secretary who is at least 55 years old and has worked 25 years is eligible for 67.5 percent of their salary. If they earned an annual salary of $67,500, they would receive an annual retirement benefit of $45,560.

Who pays for employee health benefits plans?

In Mountain View, health benefits costs are a shared responsibility between the employee and the City. The City pays for a portion of the premiums and the employees pay for their contribution out of their own salary. Based on the 2011-12 plan year rates and enrollment, the monthly amount paid by an employee for health benefits ranges from $0 to $515 depending on the plan type (HMO or PPO) and coverage level (single, two-party, or family). The average monthly cost paid by employees is $46 for single coverage, $175 for two-party coverage and $248 for family coverage.

A limited number of employees participate in the Point of Service (POS) plan, which is closed to new enrollments. The monthly amount paid by those employees ranges from $230 to $2200.

Is the City doing anything to contain employee compensation costs?

Yes. The City achieved a structurally balanced budget through the cooperation of its employee organizations, the Service Employees International Union, EAGLES, Mountain View Firefighters and the Police Officers Association. Unrepresented employees, such as Confidential/IT Employees, Police Managers, Fire Managers, Department Heads and City Council appointees (City Attorney, City Manager, City Clerk), also agreed to concessions.

The City's executive team, including City Council appointees and department heads, have voluntarily forgone cost-of-living increases for the past three years.

The City is planning to continue to meet with its employee organizations in order to ensure employee compensation is sustainable.