Top city managers in San Luis Obispo have taken pay cuts ahead of major union negotiations in the hope of persuading workers to do the same.
San Luis Obispo’s top managers have agreed to forgo any salary increases for two years and to reduce their compensation by about 8 percent. That will save the city an estimated $807,000 annually.
The move comes at a critical time as the city works to negotiate about $3.1 million in employee compensation cuts — or 6.8 percent per employee. The proposed savings from management covers about 26 percent of the $3.1 million the city is trying to save.
In June, the City Council adopted a two-year spending plan that cut $4.4 million in the first year from the city’s $99 million budget. The cuts eliminated some employee positions and reduced city services.
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The City Council will be asked to approve the latest compensation changes Tuesday.
There are 73 management employees, including City Manager Katie Lichtig, City Attorney Christine Dietrick, nine department heads and all other unrepresented supervisors and managers.
Lichtig also agreed to permanently eliminate a $450 monthly car allowance included in her contract. Lichtig, whose base salary starts at $221,500, first waived the car allowance in 2011. The latest proposal is to eliminate it completely.
“The management team felt it was important to lead the way on this issue to pave the way for financial sustainability,” Lichtig said.
Negotiations with the city’s unions have been ongoing since September. All union contracts except for police management expire at year’s end.
Lichtig said Tuesday that she does not expect formalized agreements to be reached by then but that “progress is being maintained.”
Under the new agreement, in January management employees will begin paying the employee portion of their retirement contribution to the state retirement program — something that has traditionally been paid by the city. That contribution is 8 percent for nonsafety employees and 9 percent for police and firefighters.
In the long term, the city would gain an additional savings as employees retire because they would be retiring at a somewhat lower cost.
The city will no longer report all employer-paid contributions to CalPERS as additional compensation.
In addition to not seeking a salary increase through December 2013, management also agreed to forgo an increase in the amount the city contributes to employee health insurance policies despite an expected cost increase, according to a staff report.
The ability for department heads to cash out unused administrative leave was also eliminated, at a savings of about $40,000 annually. That option was suspended in 2011. The proposed two-year contract would eliminate it completely.
Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.