Note to Readers:

We have attempted to enhance readability and continuity of thought by reproducing the Grand Jury's report verbatim and inserting pertinent County Administrator's or Personnel Director's comments where appropriate. The County Administrator's and Personnel Director's comments are in bold type, while the Grand Jury's text is in regular type.

INTRODUCTION

The Grand Jury heard many statements from a variety of sources about the desirability of working for Santa Barbara County, and community complaints regarding the County's wage and benefit structure. Many of these complaints occurred subsequent to the media coverage of the benefits paid to a retiring department head who had been on sick leave for an extended period of time. Publicity regarding the cash payments for unused sick, vacation and holiday time, leave policies, and merit payroll increases involving this particular employee led to taxpayer concern regarding the perceived excessive total compensation (wages/salary/benefits/perquisites) to County employees.

OBJECTIVES

The Grand Jury decided to examine the levels of salaries, wages, benefits, and other compensation paid to County employees, and assess their reasonableness in light of current public and private practices and standards and the process by which it is administered. Compensation to personnel is about $200 million dollars per year, or about 50% of the total County Budget. One strength of County government is the competence and loyalty of the employees who operate the County government. The Grand Jury recognizes that the total compensation should attract and retain good employees, while maintaining a cost structure that is consistent with that of the labor market in Santa Barbara County.

APPROACH

The Grand Jury interviewed several County Supervisors, the County Administrator, the Director and Deputy Director of the Personnel Department, the Auditor-Controller and several members of his staff, several members of the Civil Service Commission, representatives of employee unions, the Taxpayers Association of Santa Barbara County and the Director of the Coalition of Labor, Agriculture and Business. Many reports from the Auditor-Controller's office, the 1994-95 Proposed and Final Budgets, and various other publications listed in the References Consulted section were examined.

OBSERVATIONS

Determining County Compensation

The County of Santa Barbara has approximately 4,000 employees who work in any of over 600 job classifications. Many classifications, such as those for County Administrator, Architect, Forensic Toxicologist and Nutrition Services Chief, contain only one employee. Other classifications such as Clerk Typist, Account Clerk, Eligibility Worker, Sheriff's Deputy, and Corrections Officer may include more than 100 employees each.

Every employee belongs to a specific bargaining unit. The County recognizes about 26 such units at present. These units vary in size from large groups of several hundred to those containing about a dozen employees. Salary increases and particular benefits received by the employee depend a great deal upon which bargaining unit represents them. For example, the 1994 salary and benefit increases averaged 2% for units represented by Locals 535 and 620, 5.6% for management employees, 8% for firefighters, and 4% for the Sheriff's Department in 1994 with an additional 9.5% added over 1995 and 1996.

County Administrator and Personnel Director comment:

The Grand Jury's information on the percentage of salary increases for various groups is incorrect.

Employees represented by SEIU 620 received a 2.5% increase in December 1994, while employees represented by SEIU 535 received 2.5% in January 1995 (plus an additional 16% for juvenile institution workers). Management Employees received 2% or 2.5% in 1994 depending on their salary. Firefighters received salary and benefit increases totaling 9.5% in 1994. Employees represented by the Deputy Sheriffs Association received 2% in 1994, and will receive 4.5% - 5.5% in 1995 and 2%-5% in 1996 to bring them more in line with other local law enforcement agencies. (Even with these adjustments, Deputy Sheriffs will still be paid less than police officers in the cities of Santa Maria and Santa Barbara.)

Most bargaining units send representatives to meet with the County's labor negotiations team, which usually includes a representative from the Personnel Department and may include departmental representatives, labor attorneys, County Administrative staff, and a representative of the Auditor-Controller's Office. During these negotiations, only the Personnel Department and County Administrative staff representatives confer with the Board of Supervisors in closed sessions.

County Administrator and Personnel Director comment:

In addition to the Personnel and County Administrator staff, the County Counsel and his staff are present in closed session as well as the County's labor attorney. Various department heads and their staff may also attend the closed sessions when matters relating to employees in their departments are being discussed. The Treasurer-Tax Collector has attended sessions relating to retirement matters as the need arises.

When agreement upon salary, benefits and other issues is reached, a Memorandum of Understanding (MOU) is signed outlining the specifics of the agreement. The Board of Supervisors subsequently issue a Salary Resolution affirming this in open session. These differing MOUs involve a number of benefits customized for each bargaining unit, most of which appear in the County's payroll codes. There were 119 of these codes in 1987, and 158 in 1995, which must be added to the County's 103 payroll deduction categories when calculating the entire county payroll. Many of these benefit codes apply to a very small number of employees, but must nonetheless be calculated every pay period.

County Administrator and Personnel Director comment:

In addition to the adoption of salary resolutions publicly as referenced by the Grand Jury, the MOUs are all acted upon by the Board of Supervisors in open session.

Representatives of the County's major bargaining units expressed mistrust of the County's bargaining process, and generally did not believe that "good faith" was exercised. In particular, they did not accept County data on financial problems, and felt that those in charge of the County's bargaining process were very resistant to their input. A recent example of this concerned the County's problems with obtaining the cheapest possible rates for employee medical insurance. Apparently, employee groups were able to get a quotation of lower rates than the designated County staff members for their groups from the same company. These same representatives also stated that they had not been consulted on the possibility of simplifying benefit categories and other issues which might simplify the County's payroll process.

County Administrator and Personnel Director comment:

The Grand Jury does not say which representatives of County employee organizations were interviewed so it is difficult to respond without specifics. The Grand Jury could have obtained a more complete picture of the County's working relationships with its employee groups if they had spoken to all the employee representatives many of whom have informed us they were not consulted by the Grand Jury. Labor negotiations by their nature can be confrontational because the parties have different interests which they must dutifully represent. In the past five years, as the County has proposed and negotiated over 20 reductions in employee benefits (such as a new retirement tier with lower benefits, the possibility of mandatory furlough and caps in County contributions for health insurance) interaction between the County and employee groups has occasionally been strained. However, we strive to maintain relationships founded on professionalism and respect.

Regarding the issues of health insurance and payroll simplification, the Grand Jury may have misunderstood the information given to them. The County's efforts to obtain a 26% reduction in health plan rates were discussed and known to all employee organizations through their involvement with the County's Joint Labor Management Health Oversight Committee which was intimately involved in the bid evaluation process. Minutes of these meetings reflect active participation by almost all of the employee groups.

Beginning early in 1994, the County has discussed with each employee organization the Auditor-Controller's desire to simplify the payroll system. All employee organizations have agreed to reopen negotiations on the issue of payroll simplification at the County's request.

Compensation Surveys

County Code Section 27-24(d) states that it is the duty of the Personnel Department to obtain annual compensation comparisons. However, it appears that this is not done on a regular basis. Many MOUs presently require that annual salary comparisons be made with six contiguous coastal California counties, excluding Los Angeles. This "Six County Survey" includes San Diego, Orange, Ventura, San Luis Obispo, Santa Cruz and Monterey. For management or highly technical personnel, a wider comparative market may be used.

County Administrator and Personnel Director comment:

Only two of the MOUs have any reference to conducting salary surveys and none require that surveys be done. They do state that if the County does survey other public jurisdictions, which jurisdictions will be surveyed. Only one MOU (Deputy DA) specifies the six county survey referred to by the Grand Jury.

Other counties also use this "Six County Survey", and Santa Barbara County participates in the surveys. This appears to create a ratchet effect which can amount to "fiscal inbreeding", and is perceived by some taxpayers as a vicious cycle. The Grand Jury of San Luis Obispo County released a report on April 18, 1995, which was critical of their county's use of the Prevailing Wage Ordinance as passed by the voters in 1972. They state:

"When a number of organizations are compared, an ever increasing wage structure results because a wage increase in one organization triggers an increase in the average."

County Administrator and Personnel Director comment:

The County does utilize a variety of "market position type" surveys including a "Six County Survey" to help it evaluate its compensation levels. They are one type of information utilized, but are not the exclusive determinant in setting salaries or salary increases as is the case in San Luis Obispo County where a voter-enacted prevailing wage ordinance requires the County to pay the average of other jurisdictions. Santa Barbara County considers a wide variety of information in determining compensation including salary information from local private employers for medical, clerical, and blue collar occupations.

We consider private and public salary information from the tri-counties and Southern California areas for medical, engineering, attorneys and other professions. We survey other public jurisdictions for occupations exclusively found in the public sector, such as law enforcement, Deputy District Attorneys, fire, probation, and court occupations. The State of California sets the minimum qualifications for many County occupations, including many department heads, which limits the applicant pool to other public agencies, and may impact the salaries (for example, Agricultural Commissioner/Sealer of Weights & Measures, Mental Health Director, Health Care Services Director, Chief Probation Officer). While the County does use the "six county survey" as a factor to be considered, we also consider local information, CPI, internal comparisons and as the Grand Jury mentions extrapolation analysis to determine salaries. Since the majority of our employees are unionized, the salary process is influenced significantly by collective bargaining as required by the Meyers-Milias-Brown Act.

The County has not ratcheted up its salaries based on the "six county survey." For example, the majority of the County's department head positions are below the average of this "six county survey" in total compensation. (Jan. 1995 County Government Executive Salary Survey Prepared by HDC & Associates) The Board of Supervisors has periodically lowered some department head salaries when they have felt it was appropriate.

The practice of surveying the other employers in the same industry is certainly not unique to government employers. "Compensation" by George Milkovich and Jerry Newman (1987) states that compensation surveys must be of a relevant labor market. "What is the Relevant Market? ...Relevant labor markets are typically defined in terms of 1) the occupation or skill required; 2) the geographic distance employees are willing to commute (or relocate); 3) employers who compete for same skills; and 4) employers who compete with the same products." (pg. 209)

The Santa Barbara County Grand Jury searched for all available compensation surveys which might relate to county personnel, including the Santa Barbara Human Resources Association Survey (in which Santa Barbara County participates) and those completed by the Bureau of Labor Statistics, United States Department of Labor. In addition, the Grand Jury contacted several large local employers (excluding the University of California and Vandenberg Air Force Base) for data on their benefit payments. Other compensation data is referenced at the end of this report.

There is a recognized difficulty in comparing the compensation of many of the County positions on an equitable basis with the private sector. However, it is possible to compare many positions accurately. Private sector firms solve the issue of positions that are difficult to compare by extrapolations or interpolations that may be made with the more unique positions utilizing standard wage and job evaluation techniques.

Wage/Salary Comparisons

The Grand Jury evaluated the 1994 Santa Barbara Human Resources Association Compensation Survey. A comparison of 22 County positions from this survey, which covered 456 non-management County employees, yielded a weighted average showing that the County's wages and salaries were almost exactly on a par with the other entities in the study. This study has a large number of County personnel involved, and most of the participating private firms were among the larger County businesses with more than 100 employees. These larger firms generally have higher average wages/salaries than the smaller firms, which employ most of the County's workers. The Grand Jury believes that this sampling suggests that most County employees are paid on the upper end of the prevailing wage scales.

The following table prepared by the Grand Jury from the cited data displays these figures:


                     WAGE AND SALARY SURVEY COMPARISON                             

    POSITION            ALL PARTICIPANTS                 COUNTY EMPLOYEES          

                    Number              Weighted  Number     Median     Weighted   
                             Median     Wages                Wage       Wages      
                             Wage                                                  

General Clerk I        98     $ 8.25    $ 808.50      1      $  8.15    $          
General Clerk II      401      $11.62   $4,659.62 152        $11.62     8.15       
Mail Clerk             35      $ 9.69                 3      $12.15     $1,766.24  
Data Prep Clerk        47      $ 9.10   $          17        $11.11     $          
Word Processor I       32      $10.71   339.15       4       $10.00     36.45      
Word Processor         55      $12.52   $           23       $12.52     $          
II                     34      $11.98   427.70       5       $17.06     188.87     
Human Resource         13      $12.58   $            3       $13.90     $          
Ass't                  20      $14.04   342.72       2       $15.91     40.00      
Computer             247       $10.51   $          36        $10.67     $          
Operator I           292       $12.23   688.60     47        $12.21     287.96     
Computer             192       $11.14   $            2       $12.21     $          
Operator II          117       $ 9.19   407.32     72        $ 9.19     85.30      
Accounting Clerk     195       $13.78   $          18        $13.43     $          
I                    101       $15.95   163.54     14        $15.59     41.70      
Accounting Clerk      14       $11.91   $           4        $11.91     $          
II                    23       $ 9.12   280.80      1        $10.10     31.82      
Payroll Clerk         95       $14.36   $2,595.97 19         $14.36     $          
Secretary I           93       $17.96              13        $16.07     384.12     
Secretary III        145       $13.16   $3,571.16   9        $13.16     $          
Secretary IV          34       $15.80               3        $17.49     573.87     
Repro Tech            17       $20.82   $2,138.88    8       $20.82     $          
Custodian/Janitor  ------    ---------                       ---------  24.42      
                   2300                 $1,071.23 ------                $          
Facil. Maint.                                           456             661.68     
Worker 2                                $2,687.10                       $          
Facil. Maint.                                                           241.74     
Worker 3                                $1,610.95                       $          
Stock Room                                                              218.26     
Worker                                  $                               $          
Accountant I                            166.74                          47.64      
Cost Accountant                         $                               $          
                                        209.76                          10.10      
Totals                                  $1,364.20                       $          
                                                                        272.84     
Average Wage                            $1,670.28                       $          
Rate                                                                    208.91     
                                        $1,908.20                       $          
County Average                                                          118.44     
As Percent of                           $                               $          
Survey                                  537.20                          52.47      
                                        $                               $          
                                        353.94                          166.56     
                                                                                   
                                        ---------                       ---------- 
                                        ----                            ---        
                                        $28,007.5                                  
                                        6                               $5,467.54  
                                                                                   
                                             $                             $       
                                        12.18                           11.99      
                                                                                   
                                                                                   
                                                                        98.46%     



Source: Prepared by the Grand Jury, data from Santa Barbara Human Resources Ass'n, Compensation Survey 1994

County Administrator and Personnel Director comment:

Contrary to the Grand Jury's statement that most of the private sector participants in the survey are large employers, 55% of the employers participating in the Santa Barbara Human Resources Association's local survey employ less than 100 employees.

The Grand Jury first states County salaries are "on a par" with the private sector but then states "County employees are paid on the upper end of the prevailing wage scales" but does not state what data this conclusion is based on. The Grand Jury's own chart above shows that for seven of the comparisons the County's pay is lower, for another seven it is the same and for eight the County's is higher. Also, the chart specifically states at the bottom that for the positions compared, the County's average wage rate is $11.99 which is less than the $12.18 rate for all participants in the survey.

Management salaries are much more difficult to analyze. Most salary/wage surveys cover readily comparable jobs such as those in clerical areas, data processing, maintenance, etc. Santa Barbara County has about 272 employees who function as managers and executives in such capacities as Department Heads, Deputy Department Heads, Assistant Department Heads, Division Heads, and other such positions. They are the highest paid County staff and many have salaries which are comparable to those of the County Schools Superintendent and the Governor of California.

County Administrator and Personnel Director comment:

70 of the 272 "managers and executives" referenced above are attorneys. Many of the highest paid County employees are not department heads and managers but are physicians and psychiatrists employed by the County.

The Governor's total cost compensation appears (with benefits and all other costs) to be over $159,000 per year which is higher than all County department heads. The Governor is also not the highest paid State employee (six state officials plus numerous University of California officials earn more than the Governor). In addition, a significant portion of the Governor's appointees receive salaries in excess of County department heads. (L.A. Times, June 12, 1995)

There is a great range in wages/salaries paid to County personnel. Many employees earn less than $25,000 per year. A review of County wages and salaries indicates that about 550 employees earn more than $50,000 per year, 153 over $70,000 per year, 16 more than $90,000 per year and 7 more than $110,000 per year in wages/salary. In addition, standard benefits range from $15,000 to $40,000 per year, and this figure does not include car allowances, "unit" (or "benefit") cash and other perquisites. This range becomes particularly important when assessing the cost of percentage increases granted to various groups, and in calculating the value of time taken and/or cashed out for Vacation, Administrative and Sick Leave as will be discussed later in this report.

County Administrator and Personnel Director comment:

562 (not 726 as indicated) employees or 16% of the County employees receive salaries over $50,000 per year. (Auditor-Controller report as of April 1995) A significant number of these are attorneys and physicians.

The range between the highest and lowest paid County employees which the Grand Jury terms "great" is in fact modest by private industry standards. It is only 6 1/6 times. A recent Santa Barbara News-Press article cites the average range in the U. S. private sector as 25 times, and the average in Japan is 10 times. The LA Times July 22, 1995 edition quotes one study that states that the average CEO of an American company in 1994 was paid 170 times higher than the average U.S. worker.

The 1994 Wall Street Journal/Mercer Company survey of private firm CEO compensation indicated that the average salary (not total compensation) for CEOs in the U.S. was $700,517, plus an average bonus of $590,000 -- dramatically higher than even the highest paid County executives. It also reports that the average CEO salary increased 11.4% and the average white collar pay increased 4.2% in 1994. County executives and managers salaries increased 2-2 1/2% in 1994.

NEWS, a publication of the Bureau of Labor Statistics of the United States Department of Labor, provided some data on straight-time wages for the nation as a whole. In the private sector, the average wage was $11.90 plus $4.80 for benefits, a total employer cost of $16.70 In state and local governments, the comparable figures were $17.00 plus $7.44, a total employer cost of $24.44.

County Administrator and Personnel Director comment:

The Grand Jury has apparently relied on raw broad salary data from the U. S. Bureau of Labor on private and public sector employee salaries. However, the Grand Jury's own source material (Ref #16) from the U. S. Department of Labor explains why such comparisons are misleading and inaccurate, stating: "Aggregate compensation costs levels in State and local governments should not be compared directly with those in private industry. Differences between the two sectors stem from a number of facts, particularly the variation in work activities and occupational structures. Manufacturing and sales, for example, make up a large part of private industry work activities, but are rarely found in state and local government. White collar occupations account for 2/3 of State and local government workforce (largely professional occupations) compared with 1/2 in private industry. Differences in compensation for private industry and State and local government are reduced as comparisons move from broad worker categories to more specific occupational groups. Occupational categories in some cases contain substantially different mix of occupations in private industry than in State and local government. Service occupations in government (including police and firefighters) had compensation levels that averaged nearly twice as much as those in private industry (where occupations such as waiters, cooks, bartenders and janitors were prevalent) (Employment Cost Indexes 1975-94 Bureau of Labor Statistics 1994), pg. 16. (emphases added) This report also states, "From June 1981 to June 1991, total compensation consistently increased more rapidly in State and local governments than in private industry. (See chart 5.) This can be explained in part by the different occupational distributions of the two sectors. For example, professional specialty and technical occupations, which experienced above-average pay gains in both the private and public sectors, are more prevalent in State and local governments. These workers accounted for over three-eighths of State and local government employment compared with only one-quarter of private industry employment. The pattern of more rapid compensation cost increases in State and local governments during 1981-91 was also related to the different industry distributions of the two sectors. For example, service activities account for nearly two-thirds of State and local government employees compared with only one-quarter of private industry employees and in both the public and private sectors pay gains in those industries were above average from June 1981 to June 1991." (Employment Cost Indexes 1975-94 Bureau of Labor Statistics. (pg. 6)

This difference in occupational groups prevalent in local government versus the private sector has been discussed by the researchers cited by the Grand Jury. Researchers J. Dale Belman and John Heywood (reference #18 in the Grand Jury report) in a study of public salaries, point out that "public sector workers have more education and experience and are more likely to be professionals and managers. ... In contrast, we found craft workers, sales works, and laborers were less common in the public sector than in the private sector." Accordingly, to these researchers when data is adjusted for this significant difference in occupation make-up of local government, employees are not paid higher than their private sector counterparts but are paid 4% less (pg. 5) Belman & Heywood "The Truth About Public Employees Underpaid or Overpaid?"

When the County compares its salaries to specific occupations in the private sector, we often find our salaries either equal or below reported averages. For example:

. The LA Daily Journal June 7, 1995 reports the average attorney salaries at $143,299 to $168,000 for partner (senior attorneys). They also report entry level attorneys' salaries at $50,000. These are higher than equivalent County attorney positions.

. The American Society of Civil Engineers 1993 Salary Survey reports salaries for different private sector industries employing civil engineers in the Southern California area. These salaries equal or exceed Santa Barbara County salaries for comparable positions.

. The Sept. 1994 edition of Medical Economics lists average salaries for M.D.'s and Psychiatrists that are comparable to Santa Barbara salaries.

Some results of the Grand Jury's inquiries are displayed on Graphs #1 and #2. Graph #1, Average Wage Comparisons--California , was prepared by the Grand Jury based on data from the Labor Market Division of the State of California's Employment Development Department, File ES 202, dated March 9, 1995. These data suggest that wages paid to state and local government employees generally exceed those paid to private personnel, and that the discrepancy between these two groups has been growing, especially since 1992.

GRAPH #1

County Administrator and Personnel Director comment:

The Grand Jury does not use actual Santa Barbara County salaries but instead relies on data for all public jurisdictions in California. The average County salary as of April 1995 (salary, not total compensation which this chart seems to be displaying) per the Auditor-Controller's report of April 1995 was $25,600, considerably below the $32,500 number used by the Grand Jury in this chart.

Attachment #1 (page 95 from the 1995 UCSB Economic Forecast) shows that at least in the Santa Barbara area local government salaries are lower than both federal and state employees. The average Santa Barbara County government salary is in fact lower than even these reported local government averages. This data illustrates that the Grand Jury, by using data on average salaries that are based on all public employees, may be overstating actual salaries paid to local government employees in general and Santa Barbara County specifically, which tend to be significantly lower than salaries of state and federal employees.

The 1995 UCSB Economic Forecast states "The average salary for all workers in all industries in Santa Barbara County increased 2.6% in 1994." (pg. 58) The majority of County employee salaries increased 2-2 1/2% in 1994 (public protection positions received higher increases). The UCSB report indicates that from 1988 to 1994, the average local government employee's salary increased 21.1% (includes cities, county, schools, etc.) but indicates the increase in sectors such as Business Services was 31%, Finance 40%, Banking 24%, Medical 26.4%, Legal 24.5% in the same period of time. This data does not seem to support this statement that the discrepancy between private and public employees is growing.

Graph #2, Santa Barbara County--Wages and Salaries, was prepared by the Grand Jury based on the 1994 Santa Barbara County Economic Outlook, Volume 11 of April, 1994 by the UCSB Economic Forecast Project, and shows a dramatic rate of change in local wages and salaries since 1986. The "Total County" figures include all County Workers-both private and government. The "Government" figure gives data for state and County employees only.

GRAPH #2

County Administrator and Personnel Director comment:

The Grand Jury's graph, which is reported as being based on the UCSB Economic Forecast (1994) reflects a 1992 average wage of $33,000 for State and local government employees. The UCSB Economic Forecast (1994) does not list this salary figure anywhere in their report (pgs. 3241). It is therefore unclear where the Grand Jury obtained the salary number upon which they base their conclusions. The UCSB Economic Forecast (1995) contains specific salaries on local government employees from 1988 to 1994 (attachment #1). The UCSB Economic Forecast (1995) reports that the average salary for local government employees (county, city and schools) in 1992 as $27,101, $6,000 per year less than the salary figure used by the Grand Jury (UCSB Economic Forecast, pg 95). The actual average Santa Barbara County salary in 1992 was approximately $25,000. According to the 1995 UCSB Economic Forecast report, pg. 95 (Attachment 1), the County government salaries are lower than the state, federal, and all government combined.

Page 61 of the 1995 UCSB Economic Forecast report lists salaries for 30 different sectors of our local economy that range from a low of $9,300 per year in Retail Trade (Eating & Drinking) to a high of $60,585 in the Durable Manufacturing Transportation Equipment (see attachment #2) The Grand Jury has chosen to compare the County workforce, which as previously stated has a high percentage of professional, medical, engineering and legal occupations, with the average of all these 30 sectors, not with elements of the local economy that employs occupations that are the most similar to the County workforce, such as Business Services. ... "The average income of workers in Business Services was just over $32,000 per year in 1994." (pg. 50)

Benefits and Leave Accrual

A compilation of benefits received by Santa Barbara County employees is included as Exhibit A with this report. Basic benefits include retirement, FICA, Medical, Workers Compensation Insurance, Unemployment Insurance, Management Life Insurance, Management Long Term Disability and a Health Insurance Premium. All county employees receive 12 days of sick leave, 11 paid holidays, and vacation leave pro-rated for time of service. There are numerous other benefits which are given to certain bargaining units only, and the amounts of such benefits may vary from unit to unit.

County Administrator and Personnel Director comment:

All County employees (except for court employees) receive 10 holidays not 11 as stated.

While County employees accrue 12 days per year of sick leave, they do not on average use (or "receive" as the Grand Jury states) 12 days. The average sick leave used is approximately 7 days per year (per recent Auditor-Controller report). Unused sick leave is forfeited upon termination (with the exception of some employees hired before 1978 and who had balances in excess of 240 hours as of 1978).

The County is subject to collective bargaining laws (i.e., Meyers-Milias-Brown Act) which require the County to consider in good faith the bargaining demands of its employee organizations. Our operations are diverse. We operate jails and juvenile halls, medical offices and clinics, recreation areas, law offices, business offices, a bank, etc. The diversity in operations sometimes dictates that different types of compensation practices apply to some of our employee groups. For example, night shift differentials only pertain to bargaining units where the employees work nights. The majority of County benefits are the same for all employees.

Administrative Leave is a benefit available to exempt employees, defined as those management and certain professional staff who are exempt from the provisions of the Fair Labor Standards Act and generally considered to be salaried rather than hourly workers. This is a benefit rarely found among salaried workers in private industry. County exempt employees are permitted up to two days of leave (time off work) per pay period, or a possible total of fifty-two days per year. This time is generally understood to compensate for extra hours worked by these employees exceeding the standard work week. There were 11,532 hours (about 1,442 days) of such leave taken in 1993, and 10,771 hours (about 1,346 days) in 1994. One individual took 198 hours (about 25 days) of leave in 1993, and another took 219 hours (about 27 days) in 1994.

County Administrator and Personnel Director comment:

Approximately 789 of the County's 4,000 employees are exempt from payment for overtime worked and are eligible to use Administrative Leave. In citing the above usage figures the Grand Jury seems to be confusing exempt employees with management. The Grand Jury's reference here is to a January 26, 1995 Auditor-Controller's report on 272 management employees, not the 789 exempt employees. The average management employee used 34 hours of administrative leave in 1994. The average exempt employee used 25 hours of administrative leave in 1994.

We believe that exempt employees in the County are not treated much differently than exempt employees in the private sector. The confusion may be in what the term "Administrative Leave" means. While Administrative Leave is not a "term" used in the private sector, salaried employees in the private sector do in fact take hours or days off from their jobs for which they are paid and which are not considered vacation time. In fact, this is a requirement of salaried status in the private sector under the Fair Labor Standards Act. In the public sector, since even our salaried employees must, due to standards of public accountability, account for all time paid to them, the County (as well as most public employers) has them call this time off "Administrative Leave."

This Administrative Leave is in addition to whatever vacation, holiday or sick leave that the employee may have used. In fact, exempt personnel accrued an additional 7,400 hours (about 925 days) of unused vacation and holiday time in 1994, to bring the total value of their unfunded deferred leave to almost $3,000,000.

County Administrator and Personnel Director comment:

The Grand Jury again is using the term "exempt" but the figures they cite pertain only to management employees. In 1994, the average exempt employee had 210 hours of unused vacation and 34 hours of unused holidays, not significantly changed from 1993.

There was a strong correlation between Administrative Leave usage and accumulated leave balances in 1994. This suggests that many of the largest users of Administrative Leave are among the employees with the highest increase in accumulated balances. An analysis of this in the following table permits the conclusion that some employees took Administrative Leave in order to save their vacation time for future payment. The table gives some examples of this.


       EMPLOYEE               ADMINISTRATIVE              INCREASE IN         
                                LEAVE USED             LEAVE ACCRUAL PLUS     
                                                        VACATION BUY OUT      
                                Hours/Days                 Hours/Days         

           A                      219/27                     81/10            

           B                      141/18                     112/14           

           C                      112/14                    164/20.5          

           D                      127/16                    124/15.5          

           E                     100/12.5                    102/15           

           F                      117/15                     120/15           

           G                      125/16                    100/12.5          



Exempt personnel may accrue sick time and apply up to 2088 hours (about one full year) of this leave to their retirement pension calculation. Their total accrual at the end of 1994 was 176,614 hours (22,077 days). This increases the County's pension liability which increases the annual payments to the pension fund.

County Administrator and Personnel Director comment:

All employees, not just exempt employees as stated, may apply up to 2088 hours of unused sick leave toward retirement service credit.

The County's vacation allowance is 31% greater than the average of other employers in Santa Barbara County as determined by taking the average allowance for each of the first 25 years of tenure. Although most employees use all of their time off, many do not. Employees may defer and be paid for up to 80 hours of vacation pay per year. During the fourth quarter of 1994, the County paid various employees $297,723.74 for unused vacation. Approximately 300 employees

were paid from $500 to $1000 for unused vacation leave. Payroll data from the Auditor-Controller's Office shows that some employees are paid even more for this. For example:

· 27 people received over $1,000

· 35 people received over $2,000

· 7 people received over $3,000.

County Administrator and Personnel Director comment:

Vacation hours in the public sector are a general leave category that encompasses any time the employee takes off excluding sick leave and when holidays are observed. In many sectors of private industry, employees receive other time off with pay in addition to a formal vacation. The Santa Barbara Human Resources Association survey cited by the Grand Jury notes that in addition to "vacation," 24% of the survey participants give their employees a paid business shutdown of one week off. An additional 17% of the firms surveyed give personal time off in addition to the vacation days reported.

Due to the fact that the vacation cash outs had been suspended for 1992 and 1993 (except for firefighters) there was an anticipated "burst" of activity when this benefit was reactivated in 1994. The vacation cash outs have declined considerably for the 1st and 2nd quarters of 1995 which when combined equal $268,000.

There is significant magnification when leave accrual is translated into actual dollars paid. Employees are not paid for this time at their rate of pay during time of accrual, but at the rate of pay when they collect such benefit. For example, an employee making $15.00 per hour who accumulates 10 hours of leave may collect for those hours years later when he is making in excess of $30.00 per hour. At present, data from the Auditor-Controller's Office states that:

·In calendar year 1994, the Holiday accrual balance increased by $300,000 to a total of $2,163,000.

· The Vacation accrual balance for the same period increased by almost $1,000,000 to a total of $12,000,000.

· As of December 31, 1994, the total of this unfunded liability is approximately $14,000,000, and is apparently rising at a very significant rate.

County Administrator and Personnel Director comment:

The holiday leave balances grew due to 1) accruals by employees who are required to work on holidays (such as Park Rangers or Correction Officers); 2) floating holidays not being used; and 3) holidays that fall on employees days off. The County has taken steps in the last year to control the holiday balance accumulation: The County has required the floating holiday be used in the year it is earned or it will be lost, and has required employees whose holidays fall on their day off due to alternative schedule to take the holiday time off in the same pay period. In addition, the departments now may cash out 40 hours of an employee's holiday accumulation.

In addition, concern was expressed by some County officials that the County's practice of computing certain other benefits for exempt employees on an hourly basis has created the potential for future litigation under the Fair Labor Standards Act.

County Administrator and Personnel Director comment:

The County Counsel's office has previously reviewed the County's practices in the area referenced by the Grand Jury and has advised that all FLSA requirements are being met.

Other Benefits and Perquisites

The County offers other numerous benefits which are utilized by various employee units. These include alternative work schedules, a voluntary furlough program, various educational allowances, car allowances, bi-lingual pay (even when this is a job qualification) and alternative transportation compensation.

Alternative work schedules allow employees to work more hours for fewer days, and take time off. This includes the 9/80, 4/10, and 3/4 systems, which involve working 80 hours during the standard two week pay period in fewer than ten working days. These programs are popular with employees, and are intended to accomplish the same amount of work at no additional cost to the County. Testimony was received that this has created staffing problems, additional overtime, and suspicions that employees do not put in a full forty hours per week.

County Administrator and Personnel Director comment:

Some County employees work alternative work schedules. Departments currently have the ability to discontinue the use of alternative work schedules if they believe they are not cost effective or create problems. Some departments have implemented alternative schedules to save money or improve organizational efficiency, for example, staffing Sheriff's operations. The County does not want departments to use schedules that are more costly. We strongly urge that the Grand Jury advise our offices of the specific departments that were the focus of the testimony cited by the Grand Jury so that we can take appropriate action.

The combination of these alternate work schedules with the generous County leave allowances suggests that an average employee working on the 9/80 system with ten years of County service might be absent from his/her job as follows:

· 22 days for alternative work schedule time

· 12 days for sick leave

· 11 holidays

· 19 days of vacation

TOTAL: 64 days, or about 3 months not at work every year

This total does not include Administrative Leave for an exempt employee, and an employee working on the 4/10 or 3/4 schedule would have up to 26 days additional time off. These are legitimate benefits as negotiated with the County Board of Supervisors and formalized in Memoranda of Understanding.

County Administrator and Personnel Director comment:

All employees (except Fire) whether they are on a 4/10, 9/80, 12 hour shifts or on the traditional 5/40 work 2,080 hours per year; the same amount of hours per year and have the same amount of paid time off per year. The fact that one employee works 40 hour in 5 days and another works 40 hours in 4 days does not change the fact that the County received 40 hours of work from both. Therefore, we would dispute the 22 days off cited by the Grand Jury for the hypothetical employee. Also, the average employee is off work due to sickness 7 days, not the full 12 as shown above. Lastly, employees receive 10 holidays, not 11.

Administrative Leave is a discretionary tool of executive management to reward extraordinary effort. The Grand Jury implies that employees can and do take administrative leave equal to 26 days off per year. As we previously pointed out, the average use per exempt employee is 25 hours in 1994.

The County has a "Voluntary Furlough" program wherein employees, upon approval by their superiors, may take almost unlimited time off without pay. However, all benefits, including retirement and vacation accruals, are continued. Testimony was received that many people use this for extended vacations and also for trial periods at a job with a new employer before making a final decision on whether or not to leave County employment.

County Administrator and Personnel Director comment:

The Grand Jury is requested to supply us with specific evidence of this type of abuse so that it can be investigated. Since department heads have complete authority to not approve requests for Voluntary Furlough the department heads can and do monitor its use. On July 2, 1995 the County suspended the use of Voluntary Furlough because, contrary to the image presented in the Grand Jury report, the program was not heavily used by employees.

The County participates in a "Transportation Demand Management" Program, designed to encourage the use of ride-sharing and alternative forms of transportation in order to minimize impact on freeways and surface streets. At present, participating employees receive an incentive of two extra days of vacation for participation in this program. Testimony was received that the County was advised to reward employees with a flat amount of cash for each pay period of participation. This idea was discarded, and the payment by vacation option chosen. Due to the large discrepancy in employee salaries, this costs the county more than the flat amount payment.

County Administrator and Personnel Director comment:

The County TDM program originally did provide cash to participating employees. This cost the County $500,000 per year. Approximately 3 years ago, the County discontinued cash payment replacing it with two days of vacation per year. The County's evaluation was that this was a less costly method than the cash payments.

The Grand Jury made note of certain benefits which apply only to particular bargaining units.

Some of these are:

· An automobile allowance of $46 to $206 bi-weekly to certain management employees. This is a vanishing perquisite in the private sector.

County Administrator and Personnel Director comment:

The Santa Barbara Human Resources Association 1994 Benefits Survey of 65 employers indicates that 74% of the firms either provide a car or car allowance to their executives. 22% provide a car or car allowance to their management employees (which the County does not).

· A mileage payment of $0.30 per mile is provided in addition to the automobile allowance. This mileage rate is calculated to cover the cost of automobile ownership as well as the operating costs, and is clearly a partial double payment.

·Uniform allowances intended to defray the cost of uniforms required on the job are paid to some employees. However, different amounts are paid to employees in different bargaining groups even though the uniforms are identical.

County Administrator and Personnel Director comment:

The County pays different uniform allowances because they are based on actual costs of cleaning and replacement. Deputy Sheriff uniforms (which include bullet proof vests) are considerably higher in costs than the cost of uniforms for cooks, food service workers, park rangers, or utility workers.

Executives, management personnel, and members of three employee associations receive from $50 to $73 bi-weekly for the employee's share of their retirement costs.

County Administrator and Personnel Director comment:

The County contribution towards the employee's share referenced by the Grand Jury is a small part of the employee's obligation. Public employee pension plans unlike private plans require significant (up to 10% of salary) contribution on the part of the employee. This is in addition to employer costs.

The County contribution to employee retirement is significantly lower than many other public jurisdictions (such as the majority of the cities in Santa Barbara County) that pay all of the employee's retirement costs for all of their employees.

The County pays most employees another benefit commonly called "unit" or "benefit cash," which varies from $40.80 to $188.00 bi-weekly. This is a cash payment to pay for benefits (such as dependent health insurance) or given directly to the employee. The total amount is considered income to the employee, and adds to eventual retirement benefits. The Grand Jury was unable to determine why the County handles this as a "unit" or "benefit cash" perquisite with potential retirement impact, and not simply as a direct County paid benefit.

County Administrator and Personnel Director comment:

The County pays all, not most employees a "Benefit cash" allowance. The Grand Jury never asked why the County provides unit cash as opposed to a direct County paid benefit. The County gives employees the freedom of a Flexible Spending Plan (Internal Revenue Service Code 125) to purchase benefits they require. Employees may "customize" their benefit package to meet their family needs. The Santa Barbara Human Resources Association indicates that 53% of local firms provide a Flexible Spending Plan similar to the County.

The Grand Jury's survey of local firms yielded the following results:

· The County's benefits (excluding Administrative Leave, and the buy-back and accrual policies) were at the upper edge of the range for larger companies.

· The County's benefits were far in excess of those offered by the smaller private firms (fewer than 100 staff) who employ 72% of the private sector workers in Santa Barbara County.

·Certain benefits such as Administrative Leave, and the buy-back and leave accrual policies, were considerably in excess of those offered by both large and small employers.

County Administrator and Personnel Director comment:

According to the UCSB Economic Forecast Report (1995) 61.7% of the Santa Barbara firms employ under 100 employees, not 72% (page 53).

Without any information on the Grand Jury's survey, it is impossible to know upon what the Grand Jury is basing its conclusions. For example, did they consider benefits that some local private firms provide to their employees that the County does not such as (according to SBHR Assn. 1994 Survey):

. 74% of the firms surveyed provide an employer paid life insurance to all their employees. The County does not.

. 11% of the firms surveyed provide stock option plans to some or all of their employees. The County does not.

. 21% of the firms surveyed provide Deferred Profit Sharing compensation to some or all their employees. The County does not.

. 27% of the firms surveyed loan money to their employees. The County does not.

. 56% of the firms surveyed provide an employer paid Long Term Disability Plan for all of its employees plus 10% have plans where cost is shared). The County only provides this benefit to unrepresented employees, managers and Deputy DA's .

. 53% of the firms surveyed match employee contribution to 401K or 457 plans. The County provides no match.

. 74% of the firms surveyed provide free coffee or other benefits to employees. The County does not.

. 43% give employees year-end gifts or bonuses. The County does not.

. 17% have bonus programs for attendance. The County does not.

. 14% pay health club dues for some or all their employees. The County does not.

. 19% of firms surveyed cash out unused sick leave for exempt employees. The County does not (with the exception noted above).

The Grand Jury states the County benefits were "far in excess" of those offered by small firms yet provides no data to support that statement.

Job Security

The unemployment rate for Santa Barbara County has averaged 7.45% per year for the last three years. A review of national data indicates that from 1975 to 1993 the unemployment rate for private industry has averaged 3.5% higher than that of government employees.

Most County employees are covered by the Civil Service System, which creates a layer of job security which is generally not available to employees in the private sector. Involuntary terminations from County employment have totaled about 1% of the total work force per year

over the last three years. There is also a strong perception in the public's mind that government employees enjoy virtually total job security once they pass their probationary period.

County Compensation Planning

Members of the Grand Jury attended a meeting of the Santa Barbara County Board of Supervisors on February 7, 1995. During this meeting the Auditor-Controller presented written documents stating:

"We notice that the County has no comprehensive planning process for salary and benefit changes on an annual or on a long range basis."

"...we recommend that the Board direct the County Administrator's Office to develop a strategic plan regarding employee relations, compensation, and benefits."

During this public session, several Supervisors and the County Administrator commented that they did not need or want comprehensive planning in these areas.

County Administrator comment:

The County Administrator's comments were that the County does do multi-year planning for compensation and labor relations but that a formal plan that tells future Boards of Supervisors what they can or cannot do is not appropriate. Also plans that restrict collective bargaining are illegal and in bad faith. For the reader's information, attachment 3 is the County Administrator's written response to the matter that was being considered by the Board of Supervisors in February 1995.

When wages, salaries and/or benefits are proposed to the Board of Supervisors, they are often covered under the term "No Fiscal Impact". This term suggests to most people that no actual cost is involved when, in fact, it simply means that the action does not impact the budget. Rarely does the actual dollar cost and projected duration of such cost appear in public documents.

County Administrator and Personnel Director comment:

The Personnel Department reviewed two years of compensation-related Board letters and could not find any use of the term "No Fiscal Impact" except for class title changes where no salary change was involved. The Personnel Director called the Grand Jury and asked for examples of what the Grand Jury was referring to but none could be provided.

The Grand Jury also notes that the Board of Supervisors approved new wage/salary and benefit packages in November of 1994. By January of 1995, the County Administrator initiated discussions with the Board regarding a several-million dollar County shortfall.

County Administrator and Personnel Director comment:

The Grand Jury's statements make it sound like either the November 1994 decisions caused the 1995 budget shortfall and/or the County makes decisions without any consideration to future consequences. In fact, the County does have a structural budget problem caused by the State of California. The question before the Board of Supervisors in the fall of 1994 was this: Do we try to retain current staffing levels and provide no salary adjustments or do we provide a modest salary adjustment with the understanding that we may have fewer employees. The Board of Supervisors followed our recommendation and adopted the latter approach.

DISCUSSION AND CONCLUSIONS

The Grand Jury had considerable contact with many County employees during the year and found that most are competent and concerned workers who pay taxes and contribute to the economy of Santa Barbara County. These employees deserve reasonable and adequate compensation for their work. However, other taxpaying residents of Santa Barbara County are well aware of the economic troubles which have involved the nation in general and California in particular during the last several years. It is difficult for private sector employees, most of whom have not had raises in several years and many of whom have actually seen their income decrease, to accept the need for continuing compensation increases and generous benefit packages for some public employees.

County Administrator and Personnel Director comment:

The UCSB Economic Forecast (1995) indicates that the average Santa Barbara worker's salary increased by 2.6% in 1994 (pg. 58). Data from the UCSB Economic Forecast (1995) also indicates that for the period 1988 to 1995 average private and public salaries in Santa Barbara increased at about the same percentage (without adjusting for occupational differences). When compared to the private industry sectors which contain similar workers, local government increases lag behind such sectors as Business Services (pg. 61).

The comparison of wages paid to public and private employees is not simple, but may be done both by direct comparison and by using methods of interpolation and extrapolation using standard wage and job evaluation techniques. Many private industries measure their success by profits earned and demand for their products and/or services. The size of their work force is dependent upon these factors. Government entities are not, by their nature, able to use these measures to evaluate employee value.

One concern of the Grand Jury is that the very employees who recommend compensation adjustments to the Board of Supervisors also profit from such adjustments. These changes are made in private sessions with the Board of Supervisors, unlike the public hearings which are given to other compensation adjustments. For any changes, the total dollar amount involved in such adjustments is rarely provided to the public.

County Administrator and Personnel Director comment:

No compensation changes are made by the County in closed session. All compensation changes are made in public including those that affect the staff who meet with the Board in closed session. These individuals have received the same COLA adjustments as other management and executive staff except for the County Administrator who has declined COLA adjustments since his employment in February 1992.

The Grand Jury is also in error when it states that "the dollar amount of such adjustments is rarely provided to the public." The estimated dollar costs of all MOUs and Board resolutions including increased retirement costs are included in the agenda item presented to the Board of Supervisors and available in the "public bucket" of the Clerk of the Board's Office prior to the Board meeting.

Grand Jury's examination of wage/salary/benefit data suggests that in many cases public sector employees earn at least as much in wages and salaries, and considerably more in benefits

than private workers. Those choosing careers in government, especially at the management levels, should not expect to earn more than the higher risk private sector employees. In an era of diminishing fiscal resources available to all levels of government, the continued payment of generous wage/salary/benefit packages and the growth in these packages is unacceptable. It may be necessary for governments to reassess the value of these compensation packages.

County Administrator and Personnel Director comment:

The U.S. Bureau of Labor report used by the Grand Jury has a chart (see attachment #4) which shows the percentage of employer costs for benefits in private industry and government. That chart shows relatively little difference between benefit costs in government at 30.5% and in the private sector at 28.9%. This seems contrary to the Grand Jury statement that benefits are "considerably more in government."

Two recent survey comparisons of salaries between the private sector and county governments provide useful information.

A 1992 study of total compensation for Ventura County by the Skopos Consulting Group found that Ventura County department heads were earning 25-45% below the average of their private sector counterparts.

A 1994 study by the Arthur Anderson Accounting Firm studied Orange County employees as compared to private businesses in Orange County. The findings from this report include:

General Compensation

". 50% of the private employers provide lump-sum payments in addition to base salary for exempt employees.

. Private employees have lower starting salaries (range minimum) and have higher earning potentials than public employees.

. Private employers utilize pay ranges with 50 percent or higher range spreads (difference between minimum and maximum); public employers typically utilize a 20 to 30 percent range spread.

. Most employees in private employers will be at a salary below the range maximum; most public employees are at the range maximum.

. Only 25 percent of private employers surveyed have employees represented by a union; within these employers, represented employees are typically less than 20 percent of the work force (80 percent are non-represented). Most public agencies have employees who are represented by a union.

. The private employers surveyed increased their pay plans an average of 5 percent in 1990 declining to an anticipated 3.5 percent in 1994. While no data is available for public agencies, this trend appears to be consistent with public sector pay trends as well as trends identified by the American Compensation Association in its annual survey of wage trends.

Benefits

. Benefits represent an average of 30 percent of payroll for all survey employers.

. The average cost of health insurance for the employer and employee is consistent among private and public employers analyzed in this Survey.

. The cost of employer paid retirement is consistent between public and private employers when the cost of Social Security and employer pick-up of employee contributions are analyzed.

. While maximum vacation accruals for public and private employers are essentially the same, public employees typically receive vacation at a more accelerated rate (an average of 2 days more).

. The average sick leave allocation in public agencies is 8 days while private employers provide an average of 9 days; private employers provide an average of 10 holidays per year while public agencies provide an average of 11 holidays.

Base Salary

. Clerical and secretarial jobs in the public sector tend to be slightly above private salaries when full earning potential is analyzed; these jobs are above the private sector when actual salary levels are compared.

. Labor and trades jobs in the public sector are consistent with private sector range maximums and slightly higher than private employers when actual salary levels are compared.

. Salaries for professional and technical jobs in the public sector are mixed in comparison to the private sector with some jobs being significantly lower in the public sector and others being slightly higher.

. Salaries for management jobs in the public sector are consistently lower when compared to all private range maximums and about the same when compared to actual pay levels. When only medium sized employers are compared, public sector salaries are lower than private maximum salaries and slightly higher than actual salaries.

. Executive management employees in the private sector will more likely receive additional compensation in the form of bonuses or stock ownership (this Report only presents base salary data). This is significantly different than public agencies. Orange County League of Cities Report 1994 Executive Summary.

FINDINGS AND RECOMMENDATIONS

FINDING #1: A comparison of local wage scales and trends between governmental wages and the general work force on both a statewide and County-wide basis suggest that the current County wage scale (exclusive of benefits) is in the upper end of the local range. The rate of increase is greater than that of the general work force.

RECOMMENDATION #1: The Board of Supervisors should obtain a professional evaluation of current wage and salary levels for County employees, adjusted for fringe benefits and established job security variances, to determine whether the present compensation package is appropriate to attract and maintain a qualified work force while not burdening taxpayers with excessive employee cost .

County Administrator response:

We would welcome an outside review of County salaries and benefits by a qualified firm or individual. The cost of such a study would depend on the scope of work. A limited study of 30 benchmark classes would likely cost between $10,000-$20,000. A study of a majority of County classes would be higher. The Board would need to evaluate the expenditure and its benefits in light of other needed County expenditures. It is not clear that such a study would find County salaries and benefits inappropriate. Without more evidence that a problem exists, such an expenditure may be of a low priority.

The Grand Jury does not define what are "established job security variances." The Personnel Department has reviewed several books and articles on compensation and has been unable to find this term or any similar technique used in compensation management in either private or public sector. In the brief time available, we contacted two private sector compensation experts and inquired about the use of "established job security variances." Neither of them was aware of any such theory in use in compensation management.

FINDING #2: Salary comparisons between various counties, such as the "Six County Survey", have a self-perpetuating ratchet effect that unduly increases compensation levels. Many positions in County government can be compared to those in the private sector.

RECOMMENDATION #2a: The Board of Supervisors should direct that the annual primary compensation comparison for County positions be made with the private sector whenever possible. This comparison should include all fringe benefits and a job security factor which may be significant enough to merit different wage scales for similar positions in the public/private sector.

County Administrator and Personnel Director comment:

We commented earlier on the alleged ratcheting up of salaries via the "Six County Survey."

We agree that periodic surveys of compensation of Santa Barbara County private employers would be very helpful. The costs of annual surveys ($10,000 and up depending on scope if an outside consultant is used) may be prohibitive and unnecessary. The County currently utilizes the Santa Barbara Human Resource Association survey which includes 65 private and public employers. Efforts to survey higher level executives and management and professional occupations to local employees have not been successful due to the reluctance of private firms to share information with a public agency. Orange County also encountered this same difficulty and has only been successful by hiring an outside consulting firm to obtain and keep private such information. County staff will further explore and evaluate the cost of conducting such periodic surveys. We will contact other local government employers to see if a consortium approach might be more cost effective.

Lastly, the County is subject to California collective bargaining laws and any changes in compensation or benefits would be subject to meeting and conferring with the County's employee unions before they could be implemented.

RECOMMENDATION #2b: For jobs not directly comparable with the private sector, the Board of Supervisors should direct the Personnel Department to select and use standard job evaluation techniques in order to assess reasonable compensation packages. This would achieve a more reasonable internal equity among County employees.

County Administrator and Personnel Director comment:

The County Personnel Department does use internal evaluation and various job evaluation techniques to determine compensation for occupations where labor market information is not readily available or of limited use. The County Administrator and Personnel Director disagree with the Grand Jury's opinion that surveys of other public jurisdictions should not be used for occupations that only occur in the public sector such as Firefighters, Corrections Officers, Deputy Sheriffs, Courts, Probation, etc.

We further believe that it is appropriate to survey other public employers regarding department head positions, particularly those department heads where the State of California sets the minimum qualifications for employment and where the only "relevant labor market" is other public agencies.

FINDING #3: Leave allowances and unused leave accruals appear to be excessive by private industry standards. This creates staffing problems, increases in unfunded County liability, and possible abuses by exempt employees.

RECOMMENDATION #3a: The Board of Supervisors, County Administrator and Personnel Director should immediately examine County leave policies with the intent and purpose of decreasing the yearly allowance and limiting future accruals. These changes could be implemented as the MOUs expire and/or as new employees are hired.

County Administrator and Personnel Director comment:

We agree that the County should examine its leave policies. The County department heads have been asked to assist in this effort as it relates to Administrative Leave. The Santa Barbara Executive Association has formed a committee to review Administrative Leave policy and usage. Action to modify Holiday Leave has already started and will be further evaluated. Of course, as M.O.U.'s expire the County will continue to re-examine such matters as leave policies and accrual issues.

RECOMMENDATION #3b: The Board of Supervisors and Personnel Director should revise the Administrative Leave policy for exempt employees to eliminate use of such leave except in extraordinary or emergency situations. The County Administrator shall monitor such leave for Department Head level employees.

County Administrator and Personnel Director comment:

Our comment to recommendation #3a applies to this recommendation as well. Also, we believe it would be ill-advised to commit to eliminate Administrative Leave before evaluating it further. Unless handled carefully, elimination of Administrative Leave could jeopardize the FLSA exempt status of over 700 employees, resulting in potential costs of paying overtime to these employees. Any change in Administrative Leave for exempt employees covered by collective bargaining contracts would be subject to meet and confer requirements.

County Administrator comment:

The County Administrator agrees that he should be aware of the use of Administrative Leave by departments heads. Annual reports will be prepared for and evaluated by the County Administrator regarding department head use. Also, clearly written policies will be developed regarding Administrative Leave so its use by eligible employees is more consistent.

RECOMMENDATION #3c: The Board of Supervisors, County Administrator and Auditor-Controller must institute procedures to reimburse prior yearly leave accrual at the wage/salary rate at which it was earned, rather than the wage/salary rate at the time of settlement.

County Administrator and Personnel Director comment:

Staff needs to further evaluate such a change. We have no objection to this concept but before making any commitments to any such major change the pros and cons, and costs would need to be evaluated. One of the issues to be considered would be the additional complexity this would add to the payroll system. This evaluation will be done in the next year. Again, any change would be subject to meet and confer requirements for those employees covered by collective bargaining agreements.

RECOMMENDATION #3d: The Board of Supervisors, County Administrator and Personnel Director should take all steps necessary to ensure that leave accrual policies do not add time to an employee's pension benefit calculations.

County Administrator and Personnel Director comment:

Currently, vacation, overtime and holiday leave accruals paid at the time of separation or retirement are not included in the compensation upon which retirement benefits are calculated. Therefore, any further action in response to the Grand Jury would seem to be unnecessary. The only leave accrual that effects retirement is unused sick leave. Only employees who retire get service year credit for any unused sick leave up to 2088 hours of sick time. The County Administrator and Personnel Director will request that the Retirement Administrator provide specific information on the costs of this benefit in the County's retirement rates and we will share this information with the Board of Supervisors. Any change in retirement benefits for employees covered by collective bargaining contracts would be subject to meet and confer requirements before any changes could be made.

FINDING #4: It is recognized that every Memorandum of Understanding is a binding document which outlines compensation packages for employee groups. However, sick leave and vacation accrual policies in these Memoranda are excessive by comparison to the private sector.

RECOMMENDATION #4a: County Sick Leave accrual must be considered as protection against actual future illness, and the Board of Supervisors should not allow accrual for potential pension calculation credit and/or leave payment.

County Administrator and Personnel Director comment:

The Grand Jury report did not discuss the basis of their conclusion that the County sick leave benefits are excessive. Payment of unused sick leave was eliminated in 1978 (except for employees with balances in excess of 240 hours in 1978). The issue of unused sick leave being credited for retirement service credit is addressed and responded to in recommendation #3d.

RECOMMENDATION #4b: County Vacation Leave should be used for the purposes of providing the employee with physical rest, mental relaxation, and private time. The Board of Supervisors should direct that up to 80 hours of vacation not taken during a during a calendar year (based upon the employee's anniversary date) must be used within the following calendar year, or lost.

County Administrator and Personnel Director comment:

The recommendation of the Grand Jury that County employees be required to use 80 hours of vacation or lose it may have legal difficulties and we will be seeking County Counsel's guidance in these regards. In 1994, only 23% of employees used less than 80 hours of vacation. Half of this 23% seem to be employees who had been employed less than one year and they are not eligible for vacation. The County will explore what methods could be used to deal with the 10-12% of the County's workforce that does not take at least 80 hours per year. Any change in benefits are subject to meet and confer requirements for employees covered by collective bargaining agreements. Any change in benefits are subject to meet and confer requirements for employees covered by collective bargaining agreements.

FINDING #5: The Grand Jury notes that many County benefits and perquisites given to employees appear to be unusual and excessive when compared to those in the private sector.

RECOMMENDATION #5: The Board of Supervisors should examine the following benefits and perquisites, among others, for the purposes of simplification and/or elimination as the appropriate MOUs expire:

1. "Benefit Allowance"

2. Voluntary Furlough with benefit accumulation

3. Bilingual allowance when this is an initial job requirement

4. County payments towards the employee's share of retirement for highly paid management employees.

County Administrator and Personnel Director comment:

We agree that all employee pay practices should be periodically reviewed and they will be prior to entering into new MOUs. It would be ill-advised to commit to elimination of any of the pay practices listed before considering the financial and operational consequences of their elimination. Specifically:

1. Benefit Allowance. County staff will evaluate the cafeteria benefit program in the next year. This program gives considerable benefit and flexibility to County employees which would be lost if this is eliminated. The Grand Jury did not indicate its objection to this common benefit.

2. Voluntary Furlough. The County has currently suspended this program. The County will review its use before it is renewed.

3. Bilingual allowance. The Grand Jury report does not discuss this in its report so we are not clear as to the Grand Jury's objection. The County bilingual allowance is paid to employees who are required by their work assignment to speak Spanish on a regular basis. Departments use bilingual employees to provide services to Spanish speaking clients and the public. Its elimination would likely have significant effects on certain departments who service the Spanish-speaking County population.

4. The County contributes towards the costs of some of its employee's share of retirement costs. The County's practice is modest compared to many other public jurisdictions which pay 100% of the employees contribution for all of their employees. The County's cost of converting this benefit to salary would be approximately $300,000 per year. The Grand Jury does not indicate the nature of its objection to this practice (i.e., the payment itself or that only some bargaining units have negotiated for it.).

Lastly, any changes in benefits are subject to meet and confer requirements for employees covered by collective bargaining agreements.

FINDING #6: The Board of Supervisors and County Administrator have shown little interest in establishing a long-range plan for County compensation.

RECOMMENDATION #6: The Board of Supervisors should direct the County Administrator and Personnel Director to develop a long-range (3 to 5 year) plan for compensation based upon a County long-range financial projection. This plan will take into consideration the best projections available of variations in revenues, expenses and internal equity and form a framework for orderly and equitable negotiations with the various bargaining units.

County Administrator and Personnel Director comment:

We believe the Grand Jury has misunderstood the County Administrator's and the Board Members' comments. The County does do informal long range planning for labor relations. Examples of this long range planning are cited in the County Administrator's February 22, 1995 memo to the Board of Supervisors (attachment #3). We do not have a formal plan that says employees will receive a certain salary or group of benefits in 3 or 5 years. We believe such a plan would subject the County to a claim of bad faith bargaining and may violate the Meyers-Milias-Brown Act which requires the County to consider in good faith the proposals of employee organizations. Additionally, no Board of Supervisors can commit a future Board of Supervisor to a set plan of compensation for employees. The County as part of its multi-year financial projections has include estimates for potential increases in employee compensation.

FINDING #7: The use of the term "No Fiscal Impact" when dealing with County compensation changes is misleading and serves to obscure the real costs of such changes.

RECOMMENDATION #7: The County Administrator and Personnel Director should abandon the use of the term "No Fiscal Impact" when discussing compensation changes. Reasonable estimates of the number of employees involved, projection of dollar costs and source of the funds involved should be provided to the Board of Supervisors and the public for such changes.

County Administrator and Personnel Director comment:

The Personnel Director has reviewed all Board letters for the past two years on compensation and could not find the phrase "No Fiscal Impact" used except for classification title changes which indeed have no financial consequence. We agree that the term "No Fiscal Impact" is inappropriate if in fact a fiscal impact has been determined to exist. Staff, to the best of its abilities and with the resources available, estimate the fiscal impact of any compensation or benefit change as well as the increase in county retirement costs associated with that change. In recent Board letters we have added to this, the number of employees involved and the budget units affected. We believe we are doing what the Grand Jury is recommending.

FINDING #8: The Santa Barbara County payroll presently contains 158 benefit codes and 103 deduction categories. The sheer number of these codes and categories creates unnecessary complexity in the bi-weekly payroll production, and this complexity has increased by an average of 5 new benefit categories per year since 1987.

RECOMMENDATION #8: The Board of Supervisors should direct the County Administrator and Personnel Director to work with the Auditor-Controller to simplify the present payroll system and prevent a proliferation of benefit categories in future Memoranda of Understanding.

County Administrator comment:

The Board gave this direction on February 28, 1995 (Agenda item #5). Even before that, language was added to the MOUs of all employee organizations that allow the County to reopen discussion on proposals for payroll simplification during the contract term. The County Administrator, Auditor-Controller and Personnel Director and their staffs have met on the subject at least twice since the Board's action. They are currently reviewing the payroll codes used in Fire classifications to determine what codes can be eliminated.

AFFECTED AGENCIES (California Penal Code Section 933c requires that comments to Findings and Recommendations be made in writing within 60 by all affected agencies except governing bodies, which are allowed 90 days.)

1. Santa Barbara County Board of Supervisors

2. Santa Barbara County Administrator

3. Santa Barbara County Auditor-Controller

4. Santa Barbara County Personnel Director