Employee Compensation

How does the City determine how much employees should be paid?

In most cases, the City is required by State law to meet and confer with its employee organizations regarding wages and benefits. The City negotiates labor agreements with its employee organizations, and the City Council establishes parameters based on such factors as changes in the cost of living, salary comparisons with other cities and available funding.

In its analysis, the City Council examines all components of compensation, including salary, "salary equivalent" compensation (including deferred compensation and the sharing of pension costs) and benefits. No adjustments are made without examining all of these factors. The City's goal is to be competitive and fair in compensation while keeping costs at a reasonable level.

Can salary information alone from other cities be accurately compared as like compensation?

No. When you see salary information posted or published comparing various cities' compensation, the data does not generally include other factors, such as the cost of benefits provided to employees, or whether those costs are paid by the employer or employee. Also, it may not reflect unusual situations like retroactive or one-time payments. An example is that some employees receive vacation cash-outs when they do not use all of their vacation in a year. Another variable is the number of pay periods in a calendar year. For example, in calendar year 2020, the City of Mountain View will have one additional pay period compared to other years. This was needed to synchronize biweekly pay periods with the calendar year (similar to the addition of a day during a leap year). Comparing Mountain View's 2020 annual salary information would not be accurate with cities that did not have the additional pay period.

Can the public find out when there are increases in employee compensation?

Yes. Compensation changes are placed on the agenda of open City Council meetings and clearly identified. Current compensation information is available on the City’s public website.

How much of the City's budget pays for employee compensation?

Approximately 80 percent of the City's General Operating Fund and 44 percent of all the City's funds are utilized towards personnel costs (excluding one-time funds). The fundamental functions provided to the community are service-based. A majority of the costs associated with providing services is through people who perform essential functions.

What retirement system covers City employees?

City employees participate in the California Public Employees Retirement System (CalPERS). Employees in CalPERS are not covered by Social Security. Employees contribute 1.45 percent of their salary to Medicare, and the City pays a matching 1.45 percent to Medicare. Employees contribute an additional 0.9 percent to Medicare on wages over $200,000.

How much does an employee earn when they retire?

Retirement compensation is based on the retirement plan formulas as specified in a contract between the City of Mountain View and CalPERS.

The California Public Employees' Pension Reform Act (AB 340) or "PEPRA" was signed by Governor Brown on September 12, 2012 and became effective on January 1, 2013. Under PEPRA, "new" members hired on or after January 1, 2013 have different retirement benefits than “classic” members (members in the CalPERS system prior to January 1, 2013). A “new” employee/member includes an individual who becomes a member of CalPERS for the first time on or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject to reciprocity with another public retirement system. Generally, the formulas for “new” CalPERS members will result in lower pension costs over the long term. Benefit factors include the number of years an employee has worked as a member in the CalPERS system and the amount of the highest year(s) of eligible final compensation.

When a City employee retires, do they receive a percentage of their entire earnings?

No. Certain earnings, like overtime and leave payoffs, are not factored into employees' pensions. CalPERS regulates the types of final compensation that is calculated for retirement purposes. CalPERS has rules in place to ensure salaries are not "spiked" to reflect a higher than allowable compensation.

Who pays for employee retirement plans?

CalPERS pension costs are a shared responsibility between the employee and the employer. First, there is an employee member contribution. The rate varies from group to group depending on the retirement plan and prior CalPERS membership. Second, there is the employer contribution, whereby the employer pays a rate which varies from year to year. In Mountain View, employees also pay a "cost-share" portion of the employer rate in addition to the employee rate. This practice in Mountain View is greater than what is customary in most other public agencies. The cost-share amount is a negotiated amount to help pay for the cost of retirement benefits. It is also a way that employees have helped balance the City's budget during the recent recession.

The CalPERS pension fund's investment earnings fund the largest portion of pension costs. However, investment earnings vary, and these variations drive the annual changes to the employer contribution rate. As of June 2019, CalPERS reports that of every dollar paid to a CalPERS pensioner, $0.13 came from members, $0.29 from employers, and $0.58 from investment earnings (based on CalPERS income over the last 20 years).

Who pays for employee health benefits plans?

In Mountain View, health benefits costs are a shared responsibility between the employee and the City. The City pays for a portion of the premiums and the employees pay for their contribution out of their salary.