Modesto will pay $6.7 million in bonuses to employees. Here’s why and who gets the money
The Modesto City Council is expected Tuesday to approve paying employees — including its city manager and other top officials — as much as $7,500 each in premium pay for working through the COVID-19 pandemic.
The move will cost the city $6.7 million. The funds will come from the $45.9 million it received from the American Rescue Plan Act, the $1.9 trillion pandemic relief effort President Joe Biden signed into law in March 2021. The act provided financial help to families, businesses and others. It included $350 billion to cities, counties and tribal governments across the nation.
Premium pay qualifies as an eligible use of the funding, though the other Stanislaus County cities that gave their employees premium pay did so in 2021 and 2022. Cities and counties received half of their ARPA funding in 2021 and the other half in 2022.
The Treasury Department’s guidelines for premium pay state it should be prioritized for “low- and moderate-income persons” and those that “by virtue of their employment, were forced to take on additional burdens and make great personal sacrifices as a result of the COVID–19 pandemic.”
City spokesman Andrew Gonzales said Modesto is treating all of its employees equally regarding premium pay because of the difficulties and challenges they faced in working through the pandemic.
The guidelines also say the pay should not go to people who worked from home during the pandemic. Modesto Finance Director DeAnna Christensen said while some city employees worked from home they did not do that exclusively during the pandemic and also were in the office or job site.
Why the delay for Modesto employees? Did the city wait because it did not want to do anything that might risk Measure H — the 1 percent sales tax increase the city put on the November ballot? Voters approved the tax increase, which is expected to bring in $39 million annually to the general fund, reversing more than a decade of annual service reductions.
“The answer is no,” Human Resources Director Christina Alger said Friday. “We didn’t wait until the sales tax measure passed.”
Before the City Council voted in June 2022 to place the sales tax on the November 2022 ballot, City Manager Joe Lopez warned that without the additional revenue Modesto faced in future years the reduction or elimination of critical services, with the largest portion coming from public safety.
Modesto has struggled since the Great Recession of more than a dozen years ago to balance its general fund, which pays for public safety and other basics, because its revenues have not kept pace with expenses. The city has closed the gap by not filling positions, delaying maintenance and cutting services. That has meant fewer police officers, less park maintenance and more years before city trees are trimmed.
Helping to balance budget
Modesto is using $4.5 million in ARPA funding to help balance its current roughly $175 million general fund budget. And it put $8.1 million in ARPA funding in reserves in July 2022.
Alger said Modesto set aside the $8.1 million because it did not know whether it would need it to help balance its general fund. She said because Measure H has passed, the city now has the opportunity to acknowledge its employees for working through the pandemic.
She said the city has wanted to acknowledge its employees in some way but only recently had discussions with its labor groups about the premium pay, though the pay also is for employees not represented by a labor group, including the city manager and department directors. The City Council has met recently in closed session for labor discussions.
Modesto employees can receive as much as $7,500 in premium pay. Employees receive $3,000 for working April 2020 through March 2021, an additional $3,000 for working April 2021 through March 2022 and $1,500 for working April 2022 through September 2022, according to the city report.
Employees must still be with the city to receive payment, according to a letter of understanding between Modesto and its labor groups. And the premium pay is only for full-time employees.
Some 851 employees will receive $7,500, 33 will receive $4,500 and 116 will receive $1,500 based on The Bee’s calculation of information on the city report.
The report calls the payments hazard pay. The U.S. Treasury Department states: “Premium pay can be thought of as hazard pay by another name” and that it is “designed to compensate workers that, by virtue of their employment, were forced to take on additional burdens and make great personal sacrifices as a result of the COVID–19 pandemic.”
The Treasury Department’s overview of its final guidance calls these payments premium pay.
Two cities skip premium pay
Six of Stanislaus County’s eight other cities provided their employees with premium pay.
The amounts and the recipients varied among those cities. For instance, Waterford paid its full-time employees — including its city manager — $7,500 in 2021 and $7,500 in 2022 for a total of $15,000. And Patterson gave its firefighters $7,500 and its other employees $2,000 each, including its city manager and department directors.
While employees in Oakdale and Riverbank received premium pay, their city managers did not. Riverbank’s parks and recreation and public works directors as well as its assistant city manager did not receive the pay. Oakdale’s finance director, police chief and public services director also did not receive it.
Alger said Modesto cannot speak for how other cities decided how to handle premium pay.
“All (Modesto) employees who worked through the pandemic did their part to deliver essential services to the community,” she said. “We believe all employees deserve this recognition for the hard work they did.”
Christensen, the city’s finance director, said Modesto is in compliance with all of the Treasury Department’s guidance for premium pay.
When asked whether the $6.7 million Modesto has earmarked for premium pay could be better used to meet community needs, Gonzales said Modesto has invested the bulk of its ARPA funding in improving the community.
That includes $1.8 million for the city’s Camp2Home program, which helps homeless people move from the streets to employment and housing, $624,000 for its park ranger program, $500,000 each for the Awesome Spot playground, the Modesto Children’s Museum and the Graffiti USA Museum, and $1.85 million for more tree trimming and maintenance, according the city’s most recent Annual Comprehensive Financial Report.
Modesto also has allocated and-or spent $800,000 for pairing mental health clinicians with police officers on calls involving people undergoing mental health crises, $400,000 for Police Department civilian outreach specialists to work with homeless people and others in crisis and $700,000 for downtown beautification, according the report.
And the city provided $708,500 to the Modesto Downtown Partnership’s program to help locally owned small businesses through its gift card program called Relief Across Downtown.
This story was originally published March 4, 2023 at 8:00 AM.
