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Santa Monica Council Adopts "Compensation Philosophy" to Help Address Rising Employee Costs


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July 27, 2018 -- The City Council on Tuesday put in place the first of 13 recommendations from an outside study of public employee costs when it adopted a "Compensation Philosophy."

Recommended by the accounting firm Moss Adams LLP, the two-page document establishes the factors that will be weighed to guide future compensation polices and decisions.

The recommendation was part of a study that found that 60 percent of City employees -- particularly in management -- were compensated well above those in peer cities ("Outside Audit of Employee Pay at Santa Monica City Hall Heads to Council," May 7, 2018).

The Compensation Philosophy, said Mayor Ted Winterer, "ties our commitment to competitive compensation to peer cities and to delivering the highest standards of service to the community.

"The expeditious and unanimous adoption of the philosophy fortifies Council's commitment to proactive and transparent fiscal management,”Winterer said in his statement issued after the vote.

A draft form of the compensation philosophy -- which calls for evaluation every five years -- was distributed among the City’s eleven labor unions.

The document approved by the Council is "intentionally broad" and is "designed to capture the philosophy of the City as an 'employer of choice' in the 21st Century," staff said.

According to the document, the City will "strive to administer pay and benefits in a way that is fair and transparent to all" ("Santa Monica Council to Take Up "Compensation Philosophy," July 19, 2018).

The City will publicly disclose "the components of workforce compensation" and give the public "adequate advance notice of material policy changes," according to the document.

Other public entities with compensation philosophies include San Luis Obispo and the County of Sonoma.

City officials called the Moss Adams study "the most comprehensive ever undertaken by a Southern California city."

The consultants interviewed staff and labor unions and reviewed data from eleven peer cities, including Anaheim, Beverly Hills, Torrance and Pasadena.

It also looked at private sector cash compensation data from the Economic Research Institute.

The audit found that Santa Monica has higher costs but also higher workloads than peer cities, although productivity is only “comparable to peers,” the auditors said.

The study comes as the City faces a looming $461 million bill for unfunded pensions ("Pension Costs to Climb Almost 75 Percent at Santa Monica City Hall, Think Tank Estimates," January 29, 2018).


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