Monday, July 23 , 2018, 2:23 am | Fair 70º


Harris Sherline: Are We Getting Our Money’s Worth with Public-Sector Compensation?

We frequently read articles or hear commentaries about the excessive compensation of government employees. Usually they are about people who work for the federal or state governments.

However, an article in the April 30 issue of the Santa Ynez Valley News highlighted the issue on a local level, noting that the Buellton city manager, who recently resigned, was being paid $145,800 a year and the “new” Santa Ynez Valley Union High School District superintendent inked a three-year contract, with compensation of $160,000 for the first year.

I assume these numbers do not include “employee benefits,” such as health care, vacation or sick days, etc.

My question is: Why are these employees receiving such high compensation in such a small community?

The Bureau of Labor Statistics reported that, in December 2012, private industry employers spent an average of $28.89 per hour worked for total employee compensation. “Wages and salaries ... accounted for 70.3 percent of these costs, while benefits ... accounted for ... 29.7 percent. In December 2012, total compensation costs for state and local government workers averaged $41.94 per hour worked.”

In the case of the Buellton city manager, the city has fewer than 5,000 residents (4,828 in the 2010 census), while the total population of Santa Ynez Valley is approximately 22,000, and the enrollment at the local four-year high school is only about 1,150 students.

Following are some additional compensation comparisons with a variety of other types of jobs:

» Food service worker — $8.40 to $11.216/hour, $16,800 to $22,432/year

» Park ranger — $3,292 to $3,776/month, $66,840 to $75,520/year

» Psychiatric technician — $22.58 to $27.56/hour, $39,504 to $55,120/year

» General manager, Embassy Suites hotel — $85,000/year

» Chief of police, Allan Hancock College — $77,183 to $92,114/year

» Chief of emergency management (Santa Barbara County) — $89,746 to $120,000/year

Factoring in an additional 30 percent for employee benefits, annual compensation for the foregoing jobs ranges from a low of $21,840 to a high of $156,000.

Including estimated benefits, total compensation for the Buellton city manager would currently be about $189,500 and it would be approximately $208,000 for the superintendent of the school district.

It’s worth noting that the only source of the compensation and benefits that government workers receive comes from taxpayers, while those of employees in the private sector are paid by their employers, who must provide them out of the income that their businesses earn.

Returning to my earlier question — why are these employees receiving such high compensation in such a small community? — I’m not sure why the members of various boards and city councils often seem willing to pay what appears to be excessive compensation to the people they hire to manage their organizations, but it strikes me that it happens all too often.

Part of the problem appears to be the relatively closed marketplace for government jobs. With the considerable benefits packages that are usually included, it’s hard to understand why the total compensation of so many of the leadership jobs in government is so high.

But then, if you think about it, part of the reason is that cities and counties generally only hire people who are already working in government. This results in a sort of closed “musical chairs” marketplace, in which government entities often hire employees from one another.

— Harris Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital. Click here to read previous columns. The opinions expressed are his own.

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