Oakland city employees endured substantial cutbacks during the Great Recession. Since 2008, the city has slashed 720 full-time jobs, or roughly 16 percent of its workforce, and public employees have agreed to unpaid furlough days, pay cuts, and salary freezes. Understandably, many public employees are now hoping to finally get raises during bargaining sessions this spring. But a recent budget report makes clear that while Oakland’s tax revenues have rebounded somewhat as the economy has improved, the city is still facing a tough financial situation and salary bumps appear to be out of the question right now. Plans to increase the size of the city’s police force also seem unrealistic — unless overpaid police officers agree to more givebacks.
The city, according to a budget report produced for a council meeting last week, is facing a $18.6 million shortfall in the 2013-14 fiscal year, which begins July 1, and a $27.9 million shortfall the following year. And that’s assuming that the city will not fund a police academy in 2014, a move that will shrink the size of the already understaffed police force. If the city does pay for a police academy next year, the shortfall will grow to $35.2 million in 2014-15, and yet the police department will have about the same number of officers as it has now — about 650 — because of attrition.
So what’s driving these shortfalls? According to the report, several financial concessions made by public-employee unions during the past several years are about to expire. And when they do, the city’s costs will jump a total of about $20 million annually. For example, when the unpaid-furlough-days program expires on July 1, the city’s salary costs will increase by about $5.6 million next year. In addition, the agreement by firefighters to take a 9 percent temporary salary reduction is scheduled to expire July 1, 2014, which will cost the city about $8 million annually.
In other words, just restoring some of the givebacks that unions agreed to in recent years will be difficult to accomplish — without making devastating cuts elsewhere, such as to libraries and parks. Councilwoman Libby Schaaf, chair of the council’s finance committee, said in an interview that the city is also facing about $44 million in increased benefits costs over the next two years, mostly from CalPERS — the state’s public-employee pension program. “It’s going to be a really tough budget year,” she said.
In fact, it’s going to be tough for several years, unless the economy roars back to life and tax revenues skyrocket. Why? Not included in the above numbers is the fact that Oakland has more than $1 billion in unfunded liabilities, of which $426 million comes from the city’s old police and fire retirement system. Under the current plan, the city would start paying off that $426 million debt in 2017.
In short, balancing the city’s budget, restoring employee givebacks, and increasing the size of the police force may not be achievable at the same time. Having said that, it’s nonetheless understandable that some city employee unions are somewhat resentful of the police and fire departments and how much Oakland spends on them. According to this year’s budget, Oakland will spend about $264 million on those two agencies in the 2012-13 fiscal year, for a total that represents about 64.5 percent of the city’s general fund budget (41.23 percent for police and 23.24 percent for fire).
As the Express has noted repeatedly, Oakland spends plenty of money on its police department, but the department is understaffed because officers are overpaid. Oakland, in fact, spends about as much money per capita on policing as other large cities with high-crime rates. However, the city has fewer officers than similar cities because the average cop in Oakland costs about $180,000 a year in salary and benefits — an unsustainably high figure.
As such, it seems clear from the city’s budget problems that Oakland likely will not be able to restore the size of its police force to more than eight hundred officers this decade — unless the police union agrees to much lower salaries for new cops. According to the city’s most recent budget report, if the police union refuses to reopen its contract and agree to this concession, increasing the size of the force to 833 officers by 2018 will cost the city an extra $23.4 million in 2014, $31.6 million in 2015, $48.7 million in 2016, and $67.5 million in 2017, because of police academies, training sessions, and salaries and benefits.
Those are costs that Oakland simply can’t afford.
Big Loss for OUSD
The Oakland Unified School District suffered a major blow late last week, when Superintendent Tony Smith announced his surprise resignation, citing the poor health of his wife’s father. Smith said he and his family are moving back to Chicago to take care of his father-in-law, who was recently hospitalized.
Smith was the school board’s first major hire after regaining local control of Oakland public schools, and he proved to be a smart choice. Under his command, the district’s test scores not only continued to improve, but he also created a compelling vision for the district’s future — one that emphasizes the need to focus especially on low-income children (see “Tony Smith’s Vision,” 10/5/11) and help them succeed.
In interviews last week, longtime school board members David Kakishiba and Jody London, who were instrumental in hiring Smith, said they hoped to find a replacement who will carry on his plans. “As a board, as we’re selecting a successor, the context is that we’re looking to find someone who will keep us going in the direction that were already on,” Kakishiba said.
That’s good news for Oakland. But it could take a while, because it’s late in the school year to find a top-level replacement for the fall.