San Luis Obispo has about the same number of employees today as 10 years ago but is paying double for their salary and benefit costs.
Staffing costs increased by 102 percent in the past decade — mainly fueled by the rising cost of pensions, according to a study being presented to the City Council today.
Salary increases and growing health insurance payments have also amplified costs.
Employee costs now account for 79 percent of the city’s general fund. In 2000-01, that total stood at 71 percent.
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City Manager Katie Lichtig said no clear industry benchmark exists for the ratio of staffing costs to the general fund, but that there must be a balancing point between the costs of services and being able to retain and attract employees.
“What we have found is that it is not possible to do that balancing act with that number being where it is today,” Lichtig said.
In 2000-01, there were 349 temporary and full-time employees at a cost of $19.9 million from the city’s $31.7 million general fund.
In 2009-10, there were 357 temporary and full-time employees at a cost of $40.3 million from the city’s $52.6 million general fund.
Those numbers do not include city staff paid for from San Luis Obispo’s five enterprise funds, including water, sewer, parking, transit and golf.
The city has said that it faces a predicted shortfall of $3 million in its roughly $54 million annual general fund for the fiscal year 2011-12. That shortfall is expected to grow to $3.4 million in 2013-14 and is projected to be $2.7 million annually for each of the next five years.
However, new budget estimates to be released today will show that the shortfall is expected to grow to more than $4 million in the upcoming fiscal year, according to city staff.
Reducing staff and cutting pay and benefits for employees was one of the key recommendations made in November by the 32-member Financial Sustainability Task Force convened by Lichtig to advise her on the city’s finances.
Short-term ways of reducing staffing costs include unpaid furloughs, holiday closures and requiring employees to pay a larger portion of their retirement and health care costs.
Longer-term solutions include creating a two-tiered pension plan for new employees, and staff layoffs.
Creating a two-tiered pension program would save the city more than $100,000 by the third year after its implementation, and up to $500,000 annually within 10 years, according to the staff report.
Since 2009, 17.2 positions have been eliminated to save $1.4 million. More positions are expected to be cut in the upcoming two-year budget cycle.
The City Council will need to eliminate more than $4 million from the upcoming two-year budget to balance it. The council will hold a budget workshop April 12 to determine how those cuts will be made.
Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.