2013 Employee Compensation Information

January 31, 2014

Dear Los Altos residents,

It has been my pleasure to serve as your City Manager for nearly two years. I have been warmly welcomed by so many of you and made to feel part of the family called 'Los Altos.'

With the closure of the 2013 calendar year, I want to take this opportunity to share with you City financial information, particularly as it relates to employee compensation and pension costs. One of my responsibilities is ensuring that City operations run effectively and efficiently. This includes developing and managing a well-trained and skilled workforce. Of our 130 full-time authorized positions, a total of seven (7) were previously frozen as a cost savings measure with an additional five (5) positions deferred last July.  I recommended this as a proactive measure understanding the City’s pension costs in 2015/16 would increase, potentially significantly. We also utilize numerous part-time temporary staff in many parts of the organization. City employee salaries and other compensation are subject to public disclosure and can be viewed here for the calendar year 2013.

Because cities are service-oriented organizations, personnel costs are typically the largest expenditure category. Other large operating expenditures include the cost of capital, utilities, contract services, and supplies. To view the 2013/14 – 2014/15 biennial City of Los Altos Financial Plan, click here.

As your City Manager, I serve at the pleasure of the City Council and work under an agreement that spells out the terms and conditions of my employment. To view my employment agreement and the 2013 amendment, click here. All other employees, except the City Attorney, are the responsibility of, and report to, the City Manager or her designee.

Another important topic, and of interest to many Los Altos residents, is the structure and cost of City employee retirement plans. Los Altos, like most California cities, is part of the CalPERS state-pooled retirement system. In October 2011, the City established a second tier of reduced retirement benefits in an effort to prudently manage its long-term retirement costs. I, along with other employees hired on or after July 1, 2012, am included in this second tier. With passage of the Governor's pension reform act, AB340, cities all across California are now required to enact another lower tier of retirement benefits. For Los Altos, this is our third tier which will further reduce costs by lowering retirement benefits for employees new to the CalPERS system hired on or after January 1, 2013.

Additionally, beginning in 2014/15, the Government Accounting Standards Board will require cities to reflect on their balance sheets the amount of unfunded liability for employee retirement. This highly anticipated number represents a long-term liability related to the funding of future projected employee pension obligations. CalPERS, for the first time, has recently released and provided its members with this and other related information. To view a memo that explains this very complex topic and how it affects Los Altos, click here.

I feel fortunate to work side-by-side with an outstanding group of professionals who are dedicated to providing you with exceptional customer service, and look forward to continued collaboration with residents, business owners and community organizations in order to ensure that Los Altos remains a great place to live and raise a family.

Respectfully yours,

M Somers
(Former) City Manager