Of Course Oakland Can't Afford These Cops

This month, Oakland laid off 80 police officers, just over 10 percent of its total force, in order to balance the city's budget. As a result, the city's police chief says cops will no longer respond to 44 categories of crimes, including grand theft. The city's elected officials regret the change but say they simply cannot afford to maintain current staffing levels. Whether that's true depends upon your definition of "afford."

At current levels of compensation, yes, Oakland cannot afford to maintain a police department with 776 employees. That's because total compensation for an OPD employee averages an astounding $162,000 per year. But at a more reasonable level of pay and benefits, Oakland could afford to maintain its force, or even grow it.

Oakland police officers' compensation is generous along every dimension. As touted on the department's own recruiting website, cadets start out at a salary of $64,656 plus benefits. (For comparison, the NYPD pays police academy attendees a starting salary of $44,744). Once an OPD officer finishes training, he or she is entitled to a starting base salary, before overtime and benefits, ranging from $71,841 to $90,459. And the payscale continues upward from there.

Oakland police receive a generous health plan with the premium paid entirely by the city, for single or family coverage. For family coverage, this benefit was worth $15,859 as of 2009, compared to a California private sector mean of $9,159. The city also makes the entire pension contribution on behalf of police officers -- 9% of their salary and overtime pay.

The Oakland police recruiting website boasts that this is the most generous benefit package for police officers among California's ten largest cities. And indeed, Oakland police pay even makes San Francisco look fiscally responsible -- total compensation for SFPD employees averages just $145,000. If Oakland just matched San Francisco's compensation levels, it could stay within its proposed budget and hire additional officers, instead of cutting jobs.

Unfortunately, Oakland officials have been previously unwilling -- and are now unable -- to rein in those compensation costs. The police union points to a contract signed two years ago and notes that it is entitled to its generous wage and benefit package.

Threatened with layoffs, the union offered that officers would (gradually) assume the responsibility to make retirement contributions in exchange for a three-year no-layoff promise. But the city only offered a one-year pledge, saying that it couldn't necessarily afford current staffing levels (plus rising health costs) for three years. The union declined this offer, leading the city to lay off officers, but employee compensation will remain in place.

What's going on in Oakland is an example of a phenomenon being seen across the country: states and cities choosing between providing services to the public or maintaining luxury compensation for public employees. More often than not, public employee unions have been winning this fight, forcing service cutbacks. (Unions often prefer staffing cuts to wage cuts, because they are achieved partly through attrition and otherwise through layoffs of relatively junior workers with less influence in the union.)

Some commentators on the Left (such as Alan Blinder in yesterday's Wall Street Journal) have advocated for more aid to states on the grounds that layoffs are de-stimulative. They're absolutely right: layoffs are bad because they raise unemployment and degrade service quality. They are usually the worst way for localities to save money.

The trouble is that localities have been boxed in by unwise contracts and rigid labor laws. Where budgets are tight, they should be cutting or freezing pay, outsourcing services, or imposing furlough days. These actions are far less disruptive to the economy and do not increase unemployment -- indeed, they could even make room in budgets for cities to hire more workers. But usually, they require permission from unions that have been saying "no."

This isn't to say another round of aid is necessarily a bad idea -- boom-and-bust budgeting isn't good for anyone -- but it should be tied to requirements that localities pursue non-layoff cost saving avenues that are currently blocked.

My colleague Nicole Gelinas advanced such a proposal in Investor's Business Daily last week, which would tie near-term local aid to permanent reforms that control costs. Ideally, such a proposal should garner bipartisan support, as it is consistent with the notion on the Left that we need deficit spending now and fiscal adjustment later.

Many options are available. States should consider abolishing collective bargaining in the public sector, which essentially allows unions to sit on both sides of the negotiating table. They should phase out defined-benefit pension systems, which hide costs and are placing an increasing burden on local budgets. They should cap the value of employee health benefits at a ratio to average private sector benefits -- no more "Cadillac" health plans. They should liberalize civil service protections that lead to an inefficient workforce, as proposed by New Jersey Governor Chris Christie. And, where appropriate, they should freeze or cut employee wages that are higher than necessary to attract qualified talent.

Not only would these reforms make local governments more efficient, they would also make them more progressive. Indeed, the alliance between "progressive" interests and public employee unions has grown more and more puzzling -- what's progressive about cutting services to low-income people so that public employees can lead affluent lifestyles?

In Oakland's case, police staffing will be cut in one of California's most crime-ridden cities. In New York and Washington DC, transit agencies have been forced to raise transit fares and cut bus and rail service, as they struggle to cope with pay increases awarded to transit workers in arbitration. In New Jersey, most teachers will get 4 percent raises this year while localities decide whether to raise property taxes or cut positions.

Public workers now typically make more money than the citizens they serve. The median family income in Oakland is $47,000, far below the starting salary for an OPD cadet. In New York City, transit workers are earning an average of $94,000 in total compensation, even as the MTA cuts dozens of bus lines that primarily serve lower-income New Yorkers. These bizarre priorities can't be justified as a stimulus measure, and point to an employee compensation system that is broken.

The federal government is in a position to provide a helping hand to strained localities. But it must combine that help with a demand for reforms that make local government more sustainable and efficient -- so that no city has to say it can't afford a large enough police force because it has to pay each officer $162,000 per year.