Silicon Valley water district maintains hiring freeze

Silicon Valley’s main water supplier will maintain a hiring freeze in order to offset hundreds of millions of dollars in a budget shortfall.

Valley Water officials instituted a hiring freeze in February for 72 job vacancies amid a $222 million budget deficit for the fiscal year ending in June. The skyrocketing price tags for projects like the Anderson Dam and Pacheco Reservoir expansion — and the rising cost of cleaning waterways polluted by homeless residents — have caused a ballooning shortfall expected to increase to $300 million in 2024-25. That will grow to $350 million the following fiscal year, according to a March Valley Water presentation. Fifty positions are currently frozen and will remain so through fiscal year 2025-26.

The freezes have translated into about $1 million a month in savings, or roughly $9 million so far, according to Budget Manager Enrique De Anda. Managers have adapted by shifting tasks and reassigning employees, but the agency will likely hike water rates due to the cost increases for its capital projects.

“It will be a challenging year for the water utility,” De Anda said at a Nov. 26 board meeting. The rate increases will be discussed in the next few months.

Starting fiscal year 2026-27, Valley Water will release 10 frozen positions every year, and by fiscal year 2030-2031, the agency expects to lift the hiring freeze. Officials anticipate roughly $51 million in overall savings from the hiring freezes. Valley Water has about 900 employees.

The freeze will allow for critical positions to be filled so priority projects are not delayed. The agency does not anticipate any significant long-term impacts from the hiring freeze, Valley Water spokesperson Matt Keller said.

“Like everyone, Valley Water is facing financial challenges due to significant cost increases driven by high inflation,” Keller told San José Spotlight. “Compounding that is the fact that Valley Water is facing substantial water rate increases over the next several years as we pay for the repair and replacement of our aging water supply infrastructure and invest in new infrastructure to address the impacts of climate change. Those water rate increases impact every resident and business in Santa Clara County. That’s why Valley Water is taking every action we can to reduce costs, including implementing a hiring freeze, delaying major projects and consolidating office space to avoid costly leases.”

Director Jim Beall said the best way to save money is to reduce water use on an individual and business level.

“Conservation is the most cost-effective thing to keep rates down,” Beall told San José Spotlight. “That would save the taxpayers a lot of money in their own budgets, but also save the water district a lot of money because we don’t have to build as many facilities and projects to meet the water demand.”

Beall said another move that will help cut costs is Valley Water’s decision to ban people from encamping along 333 miles of waterways where the agency has land rights.

“It would be much better if people found places to live that weren’t in the creeks,” Beall said. “There’s much damage to the creeks when people are living there and destroying the environment in the creeks. So we have to repair all that and that costs a lot of money.”

Over the last three years, Valley Water has spent $8 million cleaning homeless camps and $4.8 million relocating people living along Coyote Creek. In that period, workers removed nearly 6 million pounds of trash and debris.

At the board meeting, Director Rebecca Eisenberg objected to the hiring freezes and said it puts strain on other workers to pick up the slack.

“It punishes current staff, making them stretch their hours to make up for the work that’s not being done,” Eisenberg said.

Eisenberg questioned why the agency hadn’t considered freezing the salaries of those at the top. She requested to see how much money the agency would save if it froze salaries of people making above $300,000 a year.

“Why not have a raise freeze on the highest paid?” she said.
In 2023, 35 Valley Water employees made more than $300,000 a year, according to Transparent California, with CEO Rick Callender making more than $582,000, including benefits.

Beall, a former state senator, told San José Spotlight his time in the public sector showed him salary freezes are mostly a last resort. He would want to see the numbers first before the agency made any decisions.

Contact Joyce Chu at [email protected] or @joyce_speaks on X, formerly known as Twitter.