Labor & management: teaming up to solve budget challenges.

• Author: Goldstone, Jay M.

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The Great Recession has created a unique set of issues for each of our communities, but we've all had to balance the negative impact this has had on our budgets with our ability to meet community expectations. The depth of this recession has been unprecedented in recent history;, with revenues declining and benefit-related costs escalating so dramatically at the same time. And while we may be seeing a little light at the end of the recession tunnel, no one is predicting the kind of rapid turnaround we have seen during previous economic cycles. If this is the new reality for the foreseeable future, the question we are all asking ourselves is how do we balance our budgets and still meet our core missions? One way is by turning to the jurisdiction's workforce for concessions.

BACKGROUND: SAN DIEGO

The economic struggles this recession brought to San Diego, California, were nothing new to the city, which was already living beyond its means. Like many public agencies, in the late 1990s and early 2000s, San Diego was increasing wages and pension benefits as it attempted to compete with the private sector for talented employees. But unlike most other public agencies, San Diego's approach was to significantly underfund its pension system so it could provide services and programs the city couldn't afford without asking the community to pay more taxes. A number of articles have been written about how this combination of delivering services without having a means to pay for them finally caught up with the city.

Beginning with the fiscal 2007 budget, San Diego began a long process to "right-size" its budget. Over the next few years, the city made its pension payments in full and rebuilt its reserve balances, and most of the organization went through business process reengineering to determine more cost-efficient ways of delivering services. San Diego reexamined its core versus non-core services, eliminated several programs, reduced others, asked employees to take on more responsibilities with fewer resources, and raised selective fees. By fiscal 2010, the city was a trimmer organization, with approximately 875 fewer positions--nearly 8 percent of the total workforce; 12.5 percent, if you look at just the general fund workforce. The city also stopped increasing salaries, eliminated certain benefits for employees hired after July 1, 2005, and established a second tier pension plan for most employees hired after July 1, 2009. Fortunately for San Diego, much of this was done while the local economy was still strong. City officials explored every option for...