The Town has employed or engaged interim employees during the past few months (Parks & Rec, Town Manager).
When doing so, residents are told with great excitement that by using interim employees we save on benefits and retirement costs. This has come in the form of "we're saving on CalPERS" or "we're not paying CalPERS" or "we don't have to pay for benefits".
Let's take a look at that.
Suppose, for a moment, that you go to Moraga Produce and buy a banana. Do you proudly announce that by paying 39 cents for the banana, you didn't have to pay the farmer, trucker, distributor or any of Moraga Produce's overhead or operating or employee costs? Or do you think the 39 cents includes all of those costs? Right.
In the context of these employee agreements:
The engagement of the City of Walnut Creek employee to serve as Interim Parks & Rec director was at a cost of $103.15 per hour, or the equivalent of $214,552 annually. According to the City of Walnut Creek, that employee's base pay (without any benefits) is $72.97 per hour, or the equivalent of $151,775 annually. The difference: The cost of what Moraga is paying for his benefits and CalPERS retirement contributions. Indeed, Walnut Creek reports his total pay and benefits at $215,829...essentially the same as what Moraga paid him.
Moraga paid the fully-burdened rate,
which includes base pay and all benefits.
Moraga isn't paying benefits or CalPERS directly, but instead is paying Walnut Creek for the cost of both.
The Town is, in fact, paying for benefits
and "saves" nothing.
Similarly so for the recent appointment of the Interim Town Manager at a rate of $128.96 per hour ($268,237 annualized). This amount was determined by taking the retiring Town Manager's fully burdened compensation (that is, with benefits) and converting it to an hourly rate.
As with the Interim Parks & Rec Director/Walnut Creek example, although we aren't paying directly for the Interim Town Manager's benefits such as medical, insurance, vacation or otherwise, his hourly rate includes the value of these benefits to the same extent they were directly paid for the retiring Town Manager.
Town Hall should not pretend we are saving on benefits and retirement costs; they are embedded in the hourly rates we pay. To do otherwise is intellectually dishonest.
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