Local Governments Miscalculate Employee Pay

This article was first published by Maureen Bader on June 10, 2013

Both the City of Cheyenne and Laramie County governments have prioritized government worker pay hikes in this year’s budget. Both governments are rationalizing prospective hikes with employee pay studies, but these studies seem to be undervaluing, or leaving out altogether, the cost of benefits.

These governments are making a major miscalculation if they downplay benefits when comparing government pay to private-sector pay. Government workers enjoy benefits that many private-sector employees can only dream about. Sham studies mean taxpayers might pay even more for government-employee benefits.  

Benefits add a significant amount to the cost of government employees. For example, salary costs at the City Attorney’s office amounted to $314,735 in 2013, but benefits added an additional $99,434 to the total personnel costs of the office. The story is similar at the County Attorney’s office, where salary costs totaled $270,100 and benefits added an additional $100,051 to the cost of personnel.

Benefits cost taxpayers big because at both the City of Cheyenne and Laramie County, employees enjoy gold-plated pension benefits and subsidized health insurance premiums.

Most full-time city and county employees belong to the Wyoming Retirement System, which provides impressive benefits for government workers enjoyed by few in the private sector. According to the Bureau of Labor Statistics, in the Mountain geographical area to which Wyoming belongs, about 84 percent of government workers have access to these generous plans, while only about 20 per cent of private-sector workers do. 

City and county employees contribute very little to their plans, leaving Wyoming taxpayers to foot the lion’s share of the tab. According to Wyoming statute, 14.12 percent of a city or county employee’s salary must be contributed to the plan. The taxpayer burden for both city- and county-employee pension plans is 7.12 percent per government worker. The employee is supposed to contribute 7 percent of which city employees currently pay only 3 percent.

But that’s not all: County employees enjoy an even sweeter deal than their city counterparts. According to Laramie County’s 2012 audited financial statement, county taxpayers fund 100 percent of the employee contribution. When the Wyoming Legislature passed the 2.79-percent increase in pension-plan contributions in 2010, county employees were to pick up half of the employee increase, according to Laramie County Clerk Debbye Lathrop. As a result county employees now pay only 1.39 percent of the total 14.12 percent contribution.

Government-employee health insurance is another expensive perk shouldered by taxpayers. The majority of city and county employee health-insurance premiums is picked up courtesy of the public. At present, city employees pay only 12.5 percent of the cost of their health insurance premiums. Lathrop says county employees pay “approximately 20 percent” of their own health insurance premium.

During a recent KGAB radio interview, Laramie County Commissioner Chair Troy Thompson magnanimously suggested that this year the county “may split the premium increase with employees.” The increase is expected to be 2.5 percent, leaving county workers to pick up a miserly 1.25 percent.

So, when government workers complain they haven’t received pay hikes over the past several years, they should be reminded that they are recipients of gold-plated benefit packages provided by Wyoming’s hard-pressed taxpayers. Consideration of public-employee pay hikes should be delayed until current actual compensation – including health and pension benefits – is presented in an honest and transparent manner.