The District has designed its compensation to attract and retain high-performing, highly qualified employees while protecting the financial interests of the District and its ratepayers.
The people of DSRSD plan, design, build, operate, maintain, and secure the community’s water and wastewater systems—vital public assets valued at more than $300 million. Their skills and motivation directly affect multiple generations of DSRSD customers and the quality of life in our community. Like other public utilities, the District is staffed 24 hours a day, seven days a week to protect public health and safety and the environment.
The District is operating with fewer people in 2012 than in 2005 (108.75 full-time equivalent positions now vs. 114 in 2005), even though it is serving 34 percent more customers. During the recession, the District reduced staffing by 17.5 percent in two years.
District employees often work on cross-functional teams to save the cost of hiring contractors for special projects. Here a Construction Inspector II (in the backhoe), who is skilled in operating heavy equipment, and a Water/Wastewater Systems Operator IV, who is a pipeline expert, prepare to cap off an unneeded pipeline valve in the Dedicated Land Disposal Site.
In accordance with State law the District sets wages and benefits for most of its workforce after negotiating and reaching agreement on multi-year Memorandums of Understanding (MOU) with its four bargaining units:
Current agreements, negotiated in the fall of 2011, continue through December 2016.
The District’s general manager and four senior managers are not represented by a bargaining unit. The general manager and senior managers are at-will employees who have employment contracts approved by the Board of Directors. These executives receive the same health and welfare benefits as other District employees. The Board sets salaries for all positions by resolution.
Compensation Based on Bay Area Benchmarks
Like many public and private sector employers, the District uses data from compensation surveys to set fair and competitive salaries. Under current labor agreements, District compensation (including employer contributions to retirement plans) is set at the 60th percentile of the median for similar positions. Senior and general manager compensation is set at the median for similar positions at comparable agencies. The District conducts surveys every three to five years, analyzing specific job classifications at nine comparable public agencies in the Bay Area.1
Retaining skilled employees saves the cost of recruiting and training new staff. On average, it costs 15 percent of an employee's base salary to fill a position and another 13 percent to train a new employee. Currently, average tenure for District employees is 9.1 years.
By District policy, a new employee starts at the minimum (A-step) salary of the job classification. The general manager must approve exceptions. An employee can earn merit “step” increases of five percent until reaching the highest salary (E-step) for the position. Step increases are not automatic; they are based on merit as established by record of the employee’s job performance and require recommendation of the department head and approval by the general manager. Baseline salaries are adjusted for cost-of-living increases yearly by the percent increase in the Consumer Price Index (All Urban Wage Earners, San Francisco-Oakland-San Jose, CA Area).
1 Cities of Pleasanton and Livermore; Alameda County Water District, Central Contra Costa Sanitary District, Contra Costa Water District, Delta Diablo Sanitation District, East Bay Municipal Utility District, Oro Loma Sanitary District, Union Sanitary District
District and Employees Share Cost Of Medical Benefits
Current labor agreements cap the amount that the District contributes toward medical plan premiums and employees pay the difference. The District’s annual maximum contribution is based on the cost of a baseline plan plus 60 percent of premium increases since 2007. The District contracts with California Public Employees Retirement System (CalPERS) for medical insurance. Employees choose from a variety of plans with Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO).
The District further reduces benefits costs through its Share the Savings program. Eligible employees who are covered by a family member’s non-PERS medical plan can waive the District’s coverage in exchange for a cash payment that is less than what the District would pay in premiums. In 2012, 25 percent of employees are participating, saving the District an estimated $183,276.
Like most large employers, the District also provides an employee assistance program and insurance for workers compensation, dental and vision care, disability, accidental death and dismemberment, and basic term life. Negotiations with benefits providers reduced the cost of these programs by $30,000 in FY 2010 and an additional $5,000 in FY 2011.
To reduce operating expenses, the District has suspended or reduced ancillary benefits for the past three years, including computer purchase loans, education loans, educational assistance, and monetary awards for safety suggestions and employee recognition.
Employees Share Cost of Retirement Benefits
CalPERS provides the District’s retirement plan. Each employee contributes 10 percent of annual base salary towards the retirement benefit—the employee’s eight percent share, as specified by CalPERS, plus two percent of the District’s cost. The District’s employer contribution for FY 2011 was approximately 17 percent of base salaries. The contribution rate will decrease in 2012 because the District has paid off a debt to CalPERS, incurred when the District’s account was pooled with other small employers. The early payoff will decrease personnel costs by a minimum of $489,400 each year for 10 years. An annual valuation report of the District’s retirement plan is available from CalPERS. (The most recent valuation report was prepared in October, 2011, prior to the debt payoff, so it does not reflect the District’s reduced contribution rate.)
CalPERS uses three factors to calculate employees’ monthly retirement benefit: years of service (at least five), a benefit factor (2.7 percent at age 55), and final compensation (highest average full-time monthly pay rate for a one-year period). Spiking—the practice of counting unused vacation and other benefits to inflate an employee’s final compensation and thereby increase retirement payments—is not allowed. Employees may use accrued unused sick time toward service credit, according to the District’s current contract with CalPERS. Employees may not "cash out" sick leave upon retirement.
DSRSD has taken steps to control retiree health care costs through a vesting program that began in 2004. Under that program, a retiree only receives a full District contribution for a medical plan after earning 20 years of PERS service credit. Vested retirees with 10 or more years of PERS service, but less than 20 years, would receive a percentage of the full contribution for a medical plan (50 to 95 percent).
Limited Matching for Deferred Compensation
Employees may contribute a portion of their salaries to a tax-deferred 457 plan (similar to a 401K plan). The District offers limited matching for most employees, based on the terms of negotiated labor contracts. In FY 2012, deferred compensation matches will cost the District an estimated three percent of base salaries.
Incentive Program Discontinued
Like many business and government employers, the District has used incentive-based compensation to encourage superior performance. The program ended in 2011. Over the life of the program, 86 percent of funds from budgetary surpluses were used to maintain or reduce customer rates and 14 percent to reward employees for superior performance.
