The city’s independent budget analyst, Andrea Tevlin, has released a review of the city’s fringe benefit costs, a topic that has gained attention in light of Councilman Carl DeMaio’s recent apples-to-oranges comparison of the city’s fringe benefit rate to that calculated by the federal government.
The report attempts a better comparison and finds that the city’s benefits still outpace the national numbers from the Bureau of Labor Statistics. If fringe benefits are measured as a percentage of salaries, as the city does, the city’s rate is 52.5 percent compared to 33.4 percent for all state and local governments. Measured as a percentage of total compensation, as the federal government does, the city’s rate is 34.4 percent, compared to 25 percent nationwide.
Tevlin’s office recategorized some of the expenses to account for the differing methods used to create the city and national measurements. For example, the national numbers for paid leave and overtime were reclassified as salary instead of benefits to correspond with the city’s figures.
The IBA report notes that there’s no standard definition of fringe benefits and includes a line-item analysis to better compare San Diego’s benefits with other cities and counties. That found that San Diego’s 52.5 percent rate was slightly lower than the county’s rate, but higher than Los Angeles and Denver. Included in those fringe benefits expenses are pension obligation bond payments, which San Diego County and Los Angeles pay, but the city of San Diego doesn’t.
The report shows that city’s fringe benefit expenses have skyrocketed, more than doubling since 2001. It says recent efforts to sink more money into the pension system, retiree healthcare and the workers compensation fund may have “contributed to an escalating fringe benefits rate.”
From the report:
Lower rates in previous years may appear more reasonable but reflect a period in time when the City did not fully fund its benefit obligations. Since 2001, budgeted fringe benefit expenditures have more than doubled, increasing an average of 18% each year for the last eight years.
Tevlin’s report states that because of the difficulties and complexities involved in calculating fringe benefit rates, “comparing the City’s fringe rates with other jurisdictions is not a useful endeavor.” But she adds that some comparative analyses would be useful, pointing to 2006 reviews of public safety salaries and benefits, in which consultants found that San Diego police officers’ take-home pay lagged behind those of other cities.
Tevlin says city officials may want to consider funding a similar study to better compare worker salaries and benefits with those of the city’s competitors.