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Quan's Budget Is Unsustainable

The mayor's proposal would steer an additional $24.1 million to the Oakland Police Department in the next two years, while failing to address high police officer costs.

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As violent crime has shot up in Oakland, Mayor Jean Quan has been under intense pressure to beef up the size of the city's police force. Critics, pundits, and some residents have repeatedly pounded her over the fact that OPD has roughly 160 fewer cops today (about 640) than it did three years ago (800). Although the loss of police officers was due mostly to macro economic factors beyond Quan's control — namely, a dramatic drop in city tax revenues caused by the Great Recession — the mayor responded to critics last week by proposing a budget that would steer an additional $24.1 million from the city's general fund to OPD in the next two years.

The 14.3 percent boost in police spending would increase the size of the force to about 700 officers by 2015. However, a closer look at her budget reveals that it appears to be unsustainable and leaves little money for other city services because the mayor has yet to adequately control police personnel costs.

In all, the mayor is proposing to increase total spending from the city's general fund from a budgeted $408.9 million in fiscal year 2012-13, which ends June 30, to $457.4 million in 2014-15. Quan and City Administrator Deanna Santana project that the city will be able to afford these increased costs because they estimate that tax revenues will jump by about $48.5 million annually by 2014-15 as the economy continues to recover. They're proposing to spend about half the new tax funds on police. The other big spending increase in their budget is for the Fire Department; it would receive $14.7 million more in 2014-15 than this year.

In other words, Quan and Santana are proposing to direct about 80 percent of the city's projected new tax revenues in the next two years to police and fire. Currently, those two departments soak up about 64.5 percent of the city's general fund budget (41.2 percent for police and 23.3 percent for fire). Quan and Santana are proposing to pump that figure up to 66.2 percent in 2014-15.

At OPD, much of the new funds would be spent on costs related to recruiting and training cadets. The mayor's budget calls for four police academies in the next two years at a cost of at least $3.3 million each. The academies are projected to produce 160 new officers for the city, but the size of the force would not increase that much because OPD projects it will lose about 96 officers over the same period to retirement and transfers. In other words, it costs a lot of money to maintain the size of the force, or even boost it somewhat, because of the expenditures on recruiting and training.

The new cops also would increase the already-high salary, benefits, and retirement costs for the city. In addition, under the current union contract, police officers are scheduled to receive a 2 percent pay bump on July 1, 2014 and another 2 percent raise six months later. In the 2014-15 fiscal year, Quan's budget projects that it will cost the city about $185,000 on average a year for each police department employee in terms of salaries, benefits, retirement, and other expenses.

That's an extraordinarily high figure compared to other police departments in comparable cities nationwide, as the Express has previously reported. Oakland's unsustainably high costs are due primarily to sweetheart contracts awarded to the police union over the past twenty years, particularly during the late 1990s and the early part of the last decade. "Jerry [Brown] and Ignacio [De La Fuente] gave away the shop and we're still paying for it," Quan said in an interview last week, referring to the former mayor and city council president, the latter of whom had negotiated the police contracts. It should be noted, however, that Quan also voted for the expensive deals after she became a councilmember in 2003.

In 2011, Quan's administration successfully negotiated a pay cut for police trainees (15 percent) and rookie cops (10 percent). And while the new pay rates will help the city's bottom line, they didn't go far enough. However, Quan noted that the police union's current contract does not expire until July 1, 2015. There's also no legal requirement for the police union to reopen its contract now and renegotiate it.

But Quan should be publicly pressuring the union to do so — as should her critics. As we've noted, the reason Oakland has fewer police officers than it needs is not because it spends too little on police, it's because Oakland police officers cost too much. And the only way to really change that is at the bargaining table.

The financial pressures on Oakland are also mounting. The city has more than $1 billion in outstanding debt and unfunded pension liabilities. In addition, its annual retirement costs are about to go up substantially. Last week, CalPERS, the state's public-employee pension plan, announced that it's implementing an accounting change designed to put the retirement system on better financial footing. Essentially, the change calls for cities, counties, and other public agencies to pay much more each year to CalPERS.

And that's on top of the increased benefits and pension costs that Quan and Santana were already projecting. According to their budget, they estimated that the city's pension costs would increase by $18 million (26.7 percent) by 2014-15, while benefit costs would go up by $16 million (17.5 percent) in the same time period. The mayor also is expecting to have to give back some of the financial concessions made by public-employee unions during the recession, including unpaid furlough days.

In short, Oakland's financial problems run deep, and the mayor's budget doesn't fully address them, particularly when it comes to police.

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