Why We must pay our city employees a fair and competitive wage

By Ken E. Cuneo

Pacific Grove needs to hire and retain qualified employees. To do this we must have fair compensation. This will lead to contented and productive workers.

There are three compensation strategies that Pacific Grove can use for its employees. These are: pay more than the average; pay the average; or pay below the average. Pacific Grove needs to pay according to the first two, that is pay more than the average or pay the average. This will insure that there will be a sufficient pool of qualified applicants who apply to Pacific Grove and also there is a good chance that Pacific Grove can retain the services of these employees. The third choice of paying below the average will only lead to fewer and less qualified people applying and high turnover. It is thus in our city's best interests to use the correct compensation.

Now in the conundrum of what pension plan to choose, CALPERS or a 401K plan,there are really two questions. First, which is the better plan CALPERS or a 401K plan. Second, which plan can the city afford to pay.

In my opinion, CALPERS is a better retirement plan for several reasons. It is a well known retirement plan throughout the State of California. It has also served the people of California extremely well. Applicants who apply for positions in Pacific Grove know what a CALPERS retirement plan is all about. Staying in CALPERS will enhance recruitment to fill positions and then to retain the employees. A 401K plan is a unique plan and does not relate to other cities' retirement programs that are CALPERS. Also CALPERS removes the responsibility of managing the retirement porfolio from the employee to the state. If privatized to a 401K plan, it becomes the individual employee who must manage the porfolio. I have spoken to my son who is in estate planning for a subsidiary of Goldman Sachs about this issue. He mentioned that a few employees by investing on their own will do very well with their 401K pofolio. Many will do just average with their individual investments. There will be a number of employees however who simply do not understand the skill of investments and for these employees, they will lose badly. Do we want a firefighter or a police officer or a gardner who was worked for us over 20 years' to retire with little or nothing? I think not. This alone is a very good reason why I believe that CALPERS offers a better retirement plan than a 401K.

The next question deals with the ability to pay for a retirement plan. The current CALPERS plan like Social Security needs to have some updating and reforms if it is to provide for California workers in the 21st Century. Over the past few years, CALPERS has not performed well as it has dropped huge charges against every city to include Pacific Grove. These charges have imported havoc upon the financial foundations of every city. If reforms are not enacted at the state level, CALPERS will price itself out of the cities' abilities to pay for it. Pacific Grove being a charter city can more easily opt out of CALPERS and adopt a 401K plan for its employees. If Pacific Grove is unable to continue to pay for CALPERS, I would reluctantly support changing over to a 401K plan as a way to prevent bankruptcy.

In summary, Pacific Grove needs to provide its employees with a fair and competitive compensation plan, with benefits and a retirement plan; CALPERS if the city can afford it or a 401K plan if it cannot afford CALPERS and as a reaction against city bankruptcy such as Vallejo is now undergoing.