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The San Miguel CSD proposes a wage freeze after employees petition to unionize

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San Miguel Community Services District General Manager Rene Salas says he wasn’t retaliating; it’s just a case of bad timing.

And bad timing it was—depending on your perspective.

MISSION IMPOSSIBLE :  The San Miguel Community Services district recently declared a fiscal emergency. According to General Manager Rene Salas, the district needs to refill its budget reserves, but others believe the move was retaliation against employees who approached a local union. - FILE PHOTO BY STEVE E. MILLER
  • FILE PHOTO BY STEVE E. MILLER
  • MISSION IMPOSSIBLE : The San Miguel Community Services district recently declared a fiscal emergency. According to General Manager Rene Salas, the district needs to refill its budget reserves, but others believe the move was retaliation against employees who approached a local union.

For Salas and the district’s Board of Directors, the CSD is in a financial hotspot. Things are so bad for the small district, which serves a community of about 1,500 people, that it’s declared a state of fiscal emergency.

For employees, the timing of that emergency seems suspicious at best, convenient for management at worst. Because less than a month after those employees petitioned a local union, they’re now looking at a future that guarantees at least three years of frozen wages and potential layoffs.

Despite the suspicions, Salas said his decision to freeze employee wages had nothing to do with those same employees seeking union representation.

“Unfortunately … it happened during this process of going to the union, but it’s just part of the process of being fiscally responsible,” he said.

On Feb. 9, the district was informed its employees had petitioned the San Luis Obispo County Employees’ Association (SLOCEA), which is the largest union for county employees and represents other agencies, such as the Los Osos Community Services District. Exactly two weeks later, Salas asked the district’s Board of Directors to nullify an earlier pay increase approved in December 2011.

In another move that surprised and confused many employees, Salas organized a special meeting and asked the board to declare a fiscal emergency, which they did on a 3-2 vote March 13. Doing so allowed Salas to freeze salaries for the three full-time district employees (including himself) and gave him permission to begin reviewing other cost-saving options, such as scaling back employee retirement plans, cutting wages by 10 percent, and perhaps laying some people off.

The fiscal emergency was declared before the SLOCEA petition was allowed to go before the Board of Directors for approval at its next scheduled meeting on March 22. According to Salas, the emergency declaration was necessary because the district has lost revenue and backfilled its budget by dipping into reserves. Out of an operating budget of about $1.1 million, the district has a reserve fund of about $135,000, roughly 12 percent of the budget. Salas says he wants to build up the reserve by saving roughly 15 percent—or $165,000— annually.

In fact, many firefighters and residents protested the March 13 decision, saying it wouldn’t save the district a significant amount of money and decrying it as retaliation against the employees.

SLOCEA General Manager Kimm Daniels told New Times she expects the Board of Directors will approve the petition for union representation, given that 100 percent of the employees have signed on. Asked if the declaration of a fiscal emergency will undercut employees’ ability to negotiate, she said SLOCEA has “effectively represented” county employees despite fiscal problems.

“We understand budgetary constraints, but we also understand fairness to the employees,” Daniels said.

The San Miguel CSD hasn’t been without its share of other problems. Former district employee Melissa Myers pleaded no contest to two counts of felony embezzlement on Aug. 15, 2005. She was ordered to serve 225 days in jail, placed on felony probation, and forced to pay restitution for pilfering $43,700. In fact, the district receives between $100 and $300 per month from Myers, according to an April 2011 district staff report.

More recently, former employee Lori Colombo was charged with six felony counts of embezzlement by a public officer, grand theft, and making false entries in records. She’s pleaded not guilty to all counts. According to the District Attorney’s Office, Colombo is accused of taking about $40,000 from district funds through a combination of cash deposits, unauthorized and unearned paid time off, and unauthorized insurance premium payments. She’s scheduled to appear in court March 28.

Salas assumed the general manager position on June 29, 2011, stepping in behind the district’s previous general manager, the late Mike Ellison.

Salas was laid off about two months earlier from his previous position as the public works director for the city of La Puente in Southern California. (A staffer at the city Public Works Department told New Times Salas left on good terms, but his position was eliminated for budget purposes.) In San Miguel, he makes $85,000 per year, according to his employment contract.

Salas inherited a district that was bleeding money and dipping into its reserves to backfill lost tax revenue largely due to foreclosures in the town, he said. In mid 2006, the district had about $1.5 million in reserves, but at present it has about $135,000.

Part of that initial reserve was lost when the district’s Board of Directors opted to stall a planned increase of its water rates. Some of the reserve was also put into buying two trucks for the district’s fire department, totaling more than $500,000.

According to the district’s mid-year budget review, the district managed to cut some costs—such as computer supplies and property and liability insurance—which saved a combined $9,000. But other expenses, like professional accounting services, increased $10,000.

The district spent $13,760 on professional legal services in February, according to its most recent financial report.

News Editor Colin Rigley can be reached at crigley@newtimesslo.com.

*This article has been updated from its original version. San Luis Obipso County has a 4 percent contingency, but also maintains a reserve. In total, the county's contingency and reserve account for 20.8 percent of its budget, according to the Administrative Office.

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