A public hearing at the Feb. 3 City Council meeting featured Public Works employees in their orange jackets and a discussion on whether more of their work could be “outsourced.”
About 30 Public Works employees sat on the east side of the Chamber as a department administrator explained that outsourcing some services could in fact raise costs and reduce reliability.
Skyler Lipski, director of operations and maintenance for the Public Works department, noted that approximately 30 percent of the department’s services are already outsourced.
The discussion was agendized after Councilmember Tom van Overbeek raised concern last November over the City’s pension liability. At the time, the motion to discuss outsourcing passed on a 4–3 vote, with councilmembers Addison Winslow, Katie Hawley and Bryce Goldstein opposed.
In comments today to ChicoSol, van Overbeek noted that the City must help cover the $181-million unfunded pension liability “that is basically a shortfall on CalPERS’ part.”
“The City has to make a payment every year against it,” van Overbeek said, noting that last year it was “a lot.”
“And that’s money we don’t have for roads and to hire policemen and to do everything else we have to do.”
City staff: There are “trade-offs” with outsourcing
“Contracting is not hands off,” Lipski reminded the Council. “[It] still requires a significant amount of City oversight, coordination, follow-up. The biggest trade-off is that we typically give up some control over scheduling, prioritization, cost estimations.”
Lipski said the department has found that for certain functions, internal labor provides better cost control — particularly for time-sensitive work, safety-related issues and infrastructure that relies heavily on institutional knowledge.
“In those cases, outsourcing can actually increase costs or reduce service reliability,” he said.
Brendan Ottoboni, director of Public Works-Engineering for the City, indicated that careful consideration has gone into the decisions to contract with private firms.
“We are very strategic and intentional with how we go about delivering services,” Ottoboni said, “having in-house services, but also contracting out where needed.”
Brandon Slater, on behalf of the Chico Chamber of Commerce, spoke in support of reducing city employee pension costs.
“We, as a Chamber, are encouraged that you are looking at this and bringing to light the unfunded pension liabilities,” Slater said. “It is a very real thing. It’s kind of the elephant in the room that nobody wants to talk about.”
Van Overbeek later addressed Public Works employees and explained why he initiated the discussion.
“We have a commitment to you and the fire people and police and the other City employees,” van Overbeek said. “So when you come to retirement, when you get to retirement time, you get a pension, right? And in order for us to be able to honor that obligation, we need to be very careful not to over commit.”
“None of us want to lose our jobs”
Jason Anderson, a Public Works employee, spoke during the public comment session, calling for the City to spend more money on operations and maintenance employee salaries and benefits.
“None of us want to lose our jobs,” Anderson said. “We also want to make sure that we are able to provide an excellent service model to citizens in Chico.”
The Public Works employees in the Chamber applauded in support.
Councilmember Goldstein referenced the Council’s decision to increase fire staffing during last year’s budget hearings, calling it “a rushed decision.”
“I don’t see any reason why we should go beyond our normal — trusting staff and city manager to determine what can be outsourced, what benefits our city to keep in house,” Goldstein said.
“I’m in strong support of keeping as many jobs as possible within the City of Chico,” she added, “because I support keeping our dollars with the City, supporting our unique jobs, and making sure that we retain institutional knowledge and get the best quality of service.”
Councilmember Hawley had raised concerns about department favoritism at a previous meeting and reiterated the importance of equity among departments.
Ahead of the Feb. 3 meeting, in a social media post, Councilmember Winslow criticized the vote to consider further outsourcing.
“The City already outsources a lot, and, as staff explained, we routinely consider if bringing services in-house or outsourcing is more cost-effective,” Winslow wrote. “If there are cost savings in outsourcing over the long run, it’s probably because the workers aren’t getting health care.”
Council: The balance is right
Mayor Kasey Reynolds said everybody learned something that they didn’t know before from the discussion, and the amount of work that is outsourced appears to be appropriate.
“I’m glad that we’re at what sounds like to be about 70/30 right now, and that seems to be a fair balance,” Reynolds said.
Van Overbeek told ChicoSol that there are a number of reasons for the CalPERS shortfall, including that it “does a lousy job of investing.”
He said the City is paying pension costs for about 1,000 people. “And then there are people who are retiring, you know, every week.”
“What I asked Public Works people to do was to review what jobs they currently did with in-house employees, what jobs they did with contractors, and that’s what they did,” van Overbeek said.
“And we looked at it and said, ‘OK, this sounds right, and let’s leave it alone.’ It’s to see if we think that the Public Works people have the right balance, and we think they do. Through the next budget cycle, I don’t think it’s going to change.
“This whole thing about how we’re trying to take people’s jobs away is just political nonsense,” van Overbeek added.
The Council took no action on the matter.
Yucheng Tang is a California Local News fellow reporting for ChicoSol.