Competing with tech, Santa Clara County cities balance budgets with need for talent

Salaries and benefits at public agencies can be a contentious issue from who decides on raises to how many resources are divvied out between departments and how the public benefits from it all.

But inside the various city halls around Silicon Valley, cities are facing their own challenges when it comes to attracting and retaining talent.

Silicon Valley’s tech talent shortage gets plenty of attention as major companies like Google, Facebook and Apple grow exponentially, but cities across the South Bay are facing the same issue — and with a fraction of the budget.

“The public sector is competing with the private sector more than they ever have for employees,” said Aaron Aknin, principal and co-owner at Good City Co., a government and land use consultancy based in San Carlos. In most cases, people working for private companies are paid higher than those doing jobs with a similar amount of responsibilities at public agencies, he added.

Meanwhile, cities across Silicon Valley have barely gotten past budget-adoption season, usually leading up to the start of a July 1 fiscal year, which includes the city’s plans for raises and new hiring. Many of the cities polled and researched by San José Spotlight set aside somewhere between 70 percent and 80 percent of its general fund for salaries and benefits.

A review of the highest paid city employees in Santa Clara County shows that among Santa Clara paid out the most money for its top 10-highest compensated workers in 2018, according to the California State Controller’s Government Compensation in California website. The most current data available was for 2018.

Santa Clara is a city with just fewer than 130,000 residents and as of 2018 it had 1,955 employees. It is home to iconic theme park Great America, and Levi’s Stadium, home to the NFL team the San Francisco 49ers. It has some of the largest development proposals in Silicon Valley currently under review or beginning construction.

Santa Clara’s City Manager Deanna Santana received the highest compensation of any other public employee in the county that year, a number that includes total compensation, meaning it may not be reflective of her base salary. At $484,150 in compensation for the year, Santana received nearly $148,000 more in compensation — not accounting for benefits — than the city manager in San Jose, David Sykes, who runs a city of more than a million residents.

Aknin likens city managers to CEOs of private companies, to get a sense of responsibilities involved. Across Silicon Valley, CEOs at big companies regularly take home millions annually, while Silicon Valley tech employees see a median annual pay that often surpasses $100,000.

Santa Clara, where about 73 percent of the city’s general fund budget will go toward employee salaries and benefits in the coming year, has a unique structure necessitating a highly qualified city manager, according to city officials.

The city has several business verticals that make the top jobs in the city especially complex and competitive with other private companies, said Teresia Zadroga-Haase, the city’s human resources director.

“Santa Clara is a lot more complex of an agency than most of our neighbors or our surrounding agencies we compete with in terms of the labor market,” she said. “We have what we consider four distinct lines of business: the [Levi’s] Stadium, the [Santa Clara] Convention Center, our electric utility …  and our regular municipal services … for many other agencies, they only have the municipal services.”

Santa Clara has also historically focused on providing competitive compensation over having the most robust health and retirement benefits package, according to city spokeswoman Lenka Wright. Santana got a 50 percent bump in compensation, compared to her predecessor Jose Fuentes, when she was recruited from Sunnyvale in 2017 including nearly $4,000 for a monthly housing allowance.

On the low end of the spectrum when it comes to pay for top employees, is Monte Sereno, a town of about 4,000 that spans only 1.6 square miles in size. There, its city manager made about $196,470 in total compensation last year. Its City Council members didn’t make a dime in compensation, the data shows.

Currently, many cities are in the midst of their summer break, which is generally a few weeks to a month where councilmembers step away from weekly or monthly meetings to go on vacation and prepare for the upcoming fiscal year.

And city staff members are working on implementing the newly approved budgets, including the hiring plans. That will continue to be a challenge as cities balance their budget with the shortage of talent and competition not just from other cities, but the big tech companies, Aknin said.

“The public sector has the exact same issues as the private sector, in particular in areas like the Peninsula, San Francisco, San Mateo and Santa Clara counties where the price of housing is so expensive,” Aknin said. “Unless you have people who already live in that region, it is hard to recruit employees to this region.”

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.

Editor’s note: This story has been updated to indicate that Santana was recruited from Sunnyvale to Santa Clara in 2017, not from Oakland, where she worked prior to Sunnyvale. San José Spotlight regrets the error.