Oakley Further Discusses Breaking Away from Sheriffs Contract, Decision Expected Within 30-Days

During the February 24 Oakley City Council Meeting, the council received an update from staff on the study to potentially move away from the Sheriff’s Office contract.

The study began last January under the direction of the City Council where they directed staff to see if it would be beneficial to break away from the Contra Costa County Sheriffs Office whom they have contracted services with since becoming a city. The goal was to see if breaking away would be a benefit to the citizens of Oakley with a greater police service at a reduced cost to taxpayers.

Last January, staff reported that the city started with 17 officers and a $2.5 million budget, as of last January, those figures have grown to 28 sworn personnel and $8.2 million.

City Manager Bryan Montgomery highlighted Tuesday under the study, the city looked to determine if there were other models to consider to maintain the service they have now and in the future improve service.

“In this fiscal year, we saw a $650k increase from the sheriff’s office which was a significant hit which came with no additional staffing,” said Montgomery. “This is one of the larger increases we have seen over the years. It’s been a 7 to 8 year punch in the nose of another $200k or $300k bill. The last time we were able to add a police officer was in 2007-2008, so it’s been a long time.”

Montgomery further highlighted that this upcoming year, there will be another $350k increase which will not come with any new staffing.

“There is a fear, the higher cost under the county model, put at great risk this very critical service,” explained Montgomery. “We are so pleased with the service received, we attract outstanding deputies for this service but the cost is very high.”

Montgomery noted that while the cost for a deputy is high for Oakley, they are some of the lowest paid in the county. He noted some of the changes under the study was providing a change to staffing and the deputies become city employees—under a “hybrid model”.

“The real issue is the overhead cost with the county, they have priced themselves out compared to what we can provide in house and its very expensive,” said Montgomery. “The retirement portion of a deputy is 100% of salary. The model we discussed in the study is from the city is 14%. If you are looking at 30-police officers from 100% of salary for retirement down to 14% and multiply that by 30, its millions of dollars.”

Montgomery did note while there are savings, there are also other impacts such as additional cost, however, the study showed there was still an overall savings. Montgomery also noted the plan was to bring existing deputies to Oakley—which was the plan from the start.

“We believe we can provide an equal or better pay structure for these deputies at less cost,” said Montgomery. “So it’s almost like a no brainer, it needs to be considered because if we can get the same quality of officer, or some to come back, at a lower cost it’s at least something we ought to talk about.”

The City discussed benefits and retirement highlighting liability and unfunded liability.

According to Paul Abelson, he added that that even when the employees/officers in a focus group within the study, the officers had a preference for the “sure thing” with retirement in terms of the defined benefit versus Defined Contribution Plans.

Montgomery further highlighted officers said “If you want to hire us, we think you need to look at the PERS Plan even though the PERS plan is not as good as the county plan that they currently have.”

“As we looked at the feedback from the focus groups where they clearly made this preference, if we want to attract the officers currently working who have done so well for us, we need to have a compensation plan that will attract them,” explained Abelson. “If they are not attracted to a defined benefit plan which is more attractive to us maybe we should look at the less expensive plan and be willing to work with that.”

Abelson stated that if the City were to opt into a CALPERS and contract for a defined benefit plan for its safety employees, all public safety employees would have to join. He also noted that if Oakley joined a certain program, Oakley could begin with a zero unfunded liability and start fresh with the current cost contributions—highlighting that Oakley would be safer than it’s ever been.

Councilman Randy Pope noted that PERS is at 7.5% and the calculations the city showed was 5% which is not apples to apples. He further highlighted that the money runs out.

“Where does PERS find the magical money when the money runs out?” asked Pope.

Abelson noted that when an account is closed out, CALPERS will put the funds in a more secure account which drops the return from 7% to 4%. He also highlighted that when people want to get out of PERS and they say it’s a “ransom payment”, he said it was not a ransom payment to close out the fund, they are simply changing their operation.

“This is magic money,” said Pope. “It’s either magic money or a pyramid scheme. The current workers are paying for yesterday’s employees which is why there is a ransom to get out to pay for the rest of the employees because the money runs out.”

Abelson stated he disagreed with Popes assumption.

“I am a PERS member, I am hoping they stay solvent long enough so I can enjoy my retirement because I don’t see how those numbers work,” said Pope. “I don’t want the city to risk our taxpayer dollars when we can provide a plan with more security to the employee who has ownership of the money and a 100% survivor benefit. If I was a spouse, I’d prefer 100% versus 50% but eventually the money runs out and taxpayers are on the hook for it.”

Abelson stated for the second time he disagreed but noted Pope made a statement and not a question.

Montgomery noted that PERS has made a lot of changes over the last few years to its pensions and the fears Councilman Popes has brought up have been addressed, but noted there still are risks.

“One issue is this relates more to recruitment than actual costs. The Defined Benefit plan is actually much cheaper to the city which is important,” said Montgomery. “But what is more important is whom are we attracting which is the more critical issue.”

He highlighted that under a Defined Contribution Plan you likely get those in the late 40’s or early 50’s or very young not yet thinking about retirement—there is a risk in the census in the department because the City would want all ages.

Montgomery noted that Councilman Pope argued the most extreme case while maybe Mr. Abelson argued an optimistic case, it’s probably somewhere in between with regard to the risk of a Defined Benefit Plan.

Montgomery also noted the limbo for officers who work in Oakley but employer is the county and how some may want to test for promotion but they are waiting on Oakley to make a decision. He noted the sooner Oakley could make a decision on whether to stop the study and make a decision the sooner Oakley could begin saving money.

“My recommendation is that sometime in March you give us that okay we have enough info or we need more info. We are even hesitant to sit down with the staff to talk about hard numbers because it puts them in difficult situation,” explained Montgomery. “At some time it’s going to have to be that very difficult decision. Thumbs up or thumbs down. My recommendation is that that be made in the next 30-days.”

Mayor Doug Hardcastle stated he wanted more police on the street.

“We can’t keep paying a higher price and not getting more police. They are going to price us out and might end up taking away a cop to afford them,” said Hardcastle.

Councilman Pope agreed.

“Seeing the way the county numbers are going, there may be a time in the near future where we are making that difficult decision that instead of adding officers, we are decreasing it. We can bring it in to give us control. Which is another argument against PERS is we lose control when we sign a contract,” said Pope. “At some point we could decide to opt into PERS, but you can’t opt out without paying the ransom. I wouldn’t want to make a decision until we have our public meetings.”

Pope suggested that at their next meeting, they give a thumbs up or thumbs down.

Here is a look at the FAQ that went out to the public:

Q: Who currently provides police services in Oakley?

A: While some non-sworn staff members are City employees and the vehicles and equipment are owned by the City, the sworn police officers serving Oakley are actually County employees. The City has contracted with the County for these staffing services since its Incorporation.

Q: What is the Police Services Study and why is it being conducted?

A: With the clear acknowledgement of how critical police services are to the community (really the highest priority of City operations), the City Council asked staff to conduct an analysis to determine whether, over the long-term, service levels can be better maintained financially by establishing a mostly “in-house” Police Department or by remaining with the County contract.

While the services provided by the County have been outstanding, the costs of these services have increased dramatically over the last several years. In fact, this current fiscal year alone the County has increased costs by $650,000–just to maintain the existing service levels (i.e. these funds weren’t to hire additional staff); it is estimated that another $350,000 in costs will be added this coming fiscal year, but again with no additional staffing. These ever-increasing costs could threaten Oakley’s ability to maintain, let alone improve, police services over time.

Q: What changes are being considered as a result of the Study and why?

A: The potential change would be to establish a City Police Department where the police officers are City employees; however, there are other components of the police services function that could continue to be contracted out, such as dispatch, forensics, information systems, records, evidence/property storage, etc. This combination of City staffing and other contracted services is what we are calling the City “hybrid” model.

The Study has found that, due to what are essentially staffing overhead costs charged by the County, the City could save money by bringing the staffing component “in-house.” While a portion of these savings would need to be used to offset some increased costs associated with supporting the in-house/hybrid operations, a portion could be used to better maintain and eventually improve police services. Most importantly, a key determination of the Study is that the ability to add police officers over time is greatly improved under the City hybrid model.

Q: Would the Sheriff’s Office deputies currently serving in Oakley be given an opportunity to work with the City should the City break away from the County contract?

A: Yes, we believe that many of these deputies currently serving, as well as many of those that have previously served in Oakley, will want to become part of the in-house Police Department. The goal is to provide a compensation and benefits package that will retain and attract these quality officers.

Q: What would the compensation and benefits package be if the City hired its own police officers?

A: To help prepare a draft package, the City hired an experienced set of consultants that surveyed other cities and also met with some of the existing staff in focus group settings. The cost estimates that have been prepared include the common and customary pay differentials along with competitive salaries and benefits. Some adjustments to the overall package are still likely and the package wouldn’t be finalized until the required meet and confer activities take place with staff and final agreements with other service providers are reached

Q: What changes would residents see if the City went with the hybrid model?

A: The residents would not really notice any change at all and the goal would be that the transition be as seamless as possible. Over time, we believe the City will be able to hire the additional officers needed to maintain or improve the police services provided to Oakley residents.

Q: What would be the consequences of not changing the way police services are delivered?

A: The fear is that with the rising costs under the current County contract model, the City would not be able to afford the additional police officers that will be needed to maintain or improve the services level in Oakley

Q: What are the estimated cost savings if the City left the County contract?

A: Current and conservative estimates are that the City would save about $600,000 per year under the City hybrid model. Initial transition costs are estimated to be about $600,000, so it would be just one year to recover these one-time transition costs. Thereafter, the City Council could determine to utilize these savings to hire additional officers and/or provide other important community services.

Q: Would any additional taxes or fees be charged if the City left the County contract?

A: As stated above, the City hybrid model is expected to cost significantly less than the County model, so no additional taxes or fees are proposed. In fact, making the transition could very well avoid the need for additional taxes to pay for the additional police officers that will be needed over time. (Many cities have asked voters to increase sales tax or add a parcel tax for police services. This has not been contemplated and one reason for a transition would be to help avoid the need for additional taxes).

There are police assessments currently charged to new development, and they have increased over the years, as they are indexed to the changes in County costs; future increases to those assessments are expected to be much smaller under the City hybrid model

Q: What would the staffing levels be under the City hybrid model?

A: While adjustments could be made to specific titles and functions, the proposed organizational chart adds one additional police officer overall and one additional Police Services Assistant. The Department structure also includes two Lieutenant positions that currently do not exist in the County structure, and some non-sworn staff to help with administration and records. The proposed organizational chart can be viewed on the City’s website at www.oakleyinfo.com There are impacts to other City departments (primarily Human Resources, Finance and Legal) with the City hybrid model and those estimated costs have been included in the analysis

Q: Does the City have adequate office space to handle increases in staffing?

A: Yes, there is expansion space within City Hall for the Police Department

Q: What about helicopter and other police-related services that the County currently provides to Oakley?

A: They would all continue, without change. The Air Command Unit (helicopter) and Marine Patrol are two examples of services the County provides at no direct cost to all law enforcement agencies in the County (all residents in the County pay taxes to the County to help cover these costs). There are other mutual aid services that are provided at no-cost, and of course, other services that the City currently participates in for a fee.

Q: Why consider the transition now and is time of the essence?

A: The Study has been ongoing now for over a year and there has not been any rush; however, the estimated cost savings are significant enough that further delays would only cost the City more money and potentially delay the time within which the City can add officers to match the City’s growth. If the decision were made to leave the County contract, it is estimated that the transition time would be 12-14 months.

Source:
http://www.ci.oakley.ca.us/UserFiles/file/City%20Managers%20Office/2015/POLICE%20SERVICES%20STUDYfaqsFeb17.pdf