City of Burlingame - Budget, Pensions and Capital Needs

By Donna Colson

Please see below to explore answers to your questions of how I will manage city budget issues including pension and long-term capital requirements.

1. What solutions do you propose for any major budget problems currently plaguing your city?

The City of Burlingame is in a relatively strong financial position with conservative reserves and strong revenue from the varied business interests in our community. The key to future revenue success is to continue to encourage diverse businesses both large and small while managing the impact of this commerce on our schools, traffic, and housing. As for our deferred infrastructure needs, I would propose a study similar to what we have done with the schools, to understand ways that the community might support paying for capital requirements. This would include potential private/public partnerships, sponsorships, investment by way of bonds or other voter supported taxation proposals, and saving money in strong economic years to pay for future needs.

2. If forced to cut city general fund spending by 5% in what areas would you cut (staff, services, etc.)? Why and with whom would you consult?

A 5% reduction of general fund spending in Burlingame is approximately $5 million. I would first look to budget items that do not immediately impact the public or the services provided. For example, do we keep our field lights on longer than needed; do we need an outside vendor stringing holiday lights on trees year round? Focusing on non-essential services first makes sense. Then we would need to determine if this is a temporary reduction, or longer-term so as to prioritize cuts + first I would work to reduce non-essential services and then would look to areas we could consolidate staffing. When making necessary cuts, it is important to try to make reductions across multiple departments rather than just one or two so that the cuts are not as severe. To determine these areas, Council should work with the City Manager and department heads for direct input and ideas.

3. What is your position on using city reserves during difficult budget times?

I would use city reserves to help meet funding needs during difficult times while working for a longer-term solution to either increase revenue or strategically reduce spending to balance the budget. Once stabilized, I would work again to build the reserves.

4. What is your position on privatization of public services? If you do make the decision to privatize/outsource, what do you see as the potential consequences to the community of doing so? How do you monitor third-party vendors.

Our city provides many outstanding community services due to the amazing work of our public employees. However, there are times when outsourcing is practical, efficient, cost-effective and brings high levels of experience that would not be readily available with an internal posting. One example is the work that we are doing on our community center action plan + we have used an outside consultant with a specialized expertise to provide the most likely successful outcome for the community. This work is often short-term in nature or requires a very specific level of expertise.

I would consider privatized and outsource staffing if there were a significant cost savings or business rationale to the city, if the city were provided a specialized service that required expertise beyond our city staff qualifications, or if the work were short-term, temporary and it was inefficient to fully staff at the city level.

In addition to making sure that our third-party contracts are thoroughly reviewed by the City Attorney and Manager, the Council should also be sure to read their reports and thoroughly understand the costs (per the City of Oakland's recent debacle with the composting) of any third-party contract.

The City Council should direct through the RFP process a strong underwriting standard and evaluation criteria that pertains to providing living wages, appropriate work hours and working conditions that meet all federal, state and local mandates. Only candidates that meet the basic screening due diligence should be considered for services. This is the criteria we used during our Bond Oversight Committee work as we reviewed the process for retaining third-party vendors.

5. Currently, with a drastic increase in the cost of living in the Bay Area, many workers who retire with twenty or more years of service can no longer afford to stay and live in the communities they served while working. What is your view of the public employee pensions and how they are funded?

For nearly a decade, I served on the San Mateo County Employees' Retirement Association Board and have worked professionally with a variety of government pension plans. I have a thorough and comprehensive understanding of the fiscal responsibilities related to all parties involved in the pension management discussion. I fully support public employee pensions and advocate for the sponsoring agencies to contribute and maintain a high level of funded status.

The City of Burlingame has a competitive pension plan administered through CALPERS that should be kept in place. As a Council member I would take a very active role in the oversight of pension plan assets and making sure the city balances the current fiscal budget needs with the prudent reduction of the unfunded pension liability. I have worked with State Senator Jerry Hill and Supervisor Dave Pine on these matters and spent hours in discussion with our former City Manager Jim Nantell on pension related matters. I would look forward to bringing my expertise to the Council if elected.

6. How do you intend to support maintenance of the public employee pension system as it currently exists? What benefits do you see to it? What changes would you make.

Currently, the vast majority of public pension funds are defined benefit plans that pay out based on years of service and final average salary times a negotiated multiple. This is a very strong system that works especially well for lifetime employees who make a career of civil service. As long as the benefits are comparable to other government agencies and can be prudently supported in a fiscally responsible way by employees and the city tax base, then I support this system. Pension benefits encourage employees to stay in civil service and they provide a financial safety net that allows many people to enjoy a fulfilling retirement.

In my experience it is important to understand that city budgets are "zero sum" in that if the pension benefit costs are significant, then funds must be redirected from active employee salaries, and city services, and employees may be asked to contribute more from their monthly paycheck. Therefore, it is critical to have a strong understanding of pension complexities and engage in discussions so that all benefits and costs can be accurately considered before making policy decisions. At this time, the City has implemented a revised pension plan tier for new employees that is based on state level requirements. I strongly support continued payment of our unfunded pension liabilities and the continuation of this new plan tier.

7. Do you support defined benefit pension programs for all public sector and private sector employees in California? Please explain.

I support DB pension plans for public sector employees, but with the changing fluid workforce composition, I am not adverse to Defined Contribution and employee profit share plans for government, private sector employees and especially small businesses. Some progressive municipalities have recognized this idea that young employees may move from private to public sector work and have added DC plans that move with the employee in addition to the DB plans. My professional work experience focused significantly on employee education and helping young workers understand the importance and value of saving for retirement. To me education and action are the most important goals and education is the key to achieving this regardless of employment in the public or private sector.

8. What will you do to ensure that pension and other benefits are fiscally sound?

I have always advocated for transparency and full public disclosure on the issue of public pension fund costs. The jurisdiction taxpayer is ultimately responsible for bearing the financial burden of any public pension fund and healthcare benefits promised from local politicians. Therefore, the public should take an interest in these negotiations and understand both the need for strong pensions to attract and keep quality workers as well as costs that may ensue upon implementation and how that will impact future city budgeting. My goal will be to prudently pay the amortized pension liabilities, understand the impact of any plan enhancements, keep the city in a strong financial position to make good on the obligations and (even though it is nearly impossible to leave CALPERS), work to monitor and understand investment decisions so that the 7.5% actuarial rate of return assumption is met.

I hope that this summary provides insight into my fiscal strategies for dealing with two major costs of local government - infrastructure needs and pension/benefit/staffing costs. My objective is to be transparent, fair and open to new and creative ideas to achieve our financial goals, continue to provide strong city services and do so in a fiscally prudent way.