A very poorly negotiated, bum deal for Escondido, a very good deal for Maryland based LS&S.

The decision was to be expected, even Councilman Mike Morasco’s change to a yes vote, but I was still left profoundly sad. Not the despair I felt when enough Americans were fooled into voting for the complete AH Trump to elect him, just very down after Wednesday’s Escondido City Council meeting when outsourcing the operation of the Escondido Library was approved.

The tension on the council was obvious during the discussion of the budget adjustment for fiscal year 20167/17 (item 5). Councilwoman Olga Diaz, noting the transfer of $145K “to cover the Reidy Creek Golf Course operating loss” from the $3.3 million budget surplus. I wrote about this course: https://ablueviewescondido.com/2016/04/05/beware-of-developersbearinggifts-of-golfcourses/ . She pointed out that the course lost equivalent amounts every year, and that maybe it was time to consider another use for the area, maybe a park like Kit Carson. City Manager Jeff Epp responded that the city staff was already looking into other options for the course. Morasco said that the flooding of the last winter had definitely affected the profitability of the course. Abed said that they would have to look at every possibility to save money, but they needed to serve all the residents, and couldn’t just target one area. (Well, except for libraries—that’s OK to target, judging from Abed’s actions, not his words.)

City Attorney Michael McGuinness began the discussion about the library outsourcing by giving a brief history of the brief history of this affair (since June of this year.) He avowed that the Library Board of Trustees would still be in charge—busier than they’ve ever been. (Do they get a raise?) He admitted that there were no employment guarantees, but that LS&S had agreed to hire the current employees at their current rates—but, of course, not the same benefits. He had talked to the state about any possibility of employees of the library still being eligible for CalPERS. He had been assured that they would not be, but, just in case, there was a clause in the contract that terminated the agreement if, for some reason, the state deemed that they were still city workers eligible for CalPERS benefits. He then said that LS&S would be required to have measurable performance levels that improved upon the levels of 2016/17.

Diaz had some questions. Why was there a limitation of liability cap of $500,000 “for all claims arising from or related to this Agreement…” She had never seen such a cap before. Epp replied that it was to limit how much the city had to pay if the contract was breached and terminated. Well, for that matter, it limits what LS&S would have to pay the city for damages, should it, by its negligence, result in a loss to the city.

Diaz felt that the lack of clarity in the contract did not make it clear what the definition of “additional work” that LS&S would charge extra for, was. She objected to their ability to subcontract services—outsourcing the outsourcing. Well, that was probably only for things like janitorial services, McGuiness tried to assure her.

She noted that it was not at all clear what the contract meant when it said customer complaints could be referred to the “CITY’—was that the library board of trustees, the city staff, or the city council? Well, Epp replied, that would depend on what sort of complaint it was. (Meaning, he really didn’t have a good answer for Diaz’s question.)

Diaz also objected to the LS&S staff having city email accounts, since they were no longer a part of the city staff. She wondered why the city had to pay for IT services. She especially found it objectionable that there was a $137K cap on the annual amount LS&S would pay for utilities for the library. Utility cost were not something the city could control, and certainly none of the city’s other contracts had such a cap.

She objected to the automatic annual 3% increase in payment to LS&S. Why was there a volunteer coordinator position listed, when the contract specifically budgeted without the use of volunteers?  LS&S would have the legal ability to lower staff salaries. And, even though the contract required the library open for 60 hours a week, there was no guarantee that it would be open seven days a week.

Diaz ended with her observation that taking more time to study and refine this contract would not hurt anyone.

There were over two dozen public speakers against the proposal, and one for it. LS&S didn’t bother to make a presentation to the council—guess they knew they had the contract in the bag.

Elizabeth White pointed out that LS&S’s profit was as much as 33%, yet the amount budgeted for service (not including salaries) was not going to be increased, how on earth could the council think that the quality of service would not decline?

Laura Hunter noted that Jackson County was very unhappy with the service from LS&S, adding that the Escondido’s contract did not have a termination without cause clause as other cities’ contracts with LS&S included.

One speaker had gone to LS&S website to look at the job vacancies advertised and found that they were, for the most part, minimum wage jobs requiring only a High School diploma. The only job advertised for higher pay was for a high-powered sales job—so LS&S can con other cities into signing up.

Chris Nava was disappointed and outraged that the city’s published information had been so one-sided. There had been no inclusion of the Escondido’s Interim Director of Library and community Services, Cynthia Smith’s very well-researched, and very negative report on LS&S. LS&S was known for staffing their libraries with non-degreed staff.

Roy Garrett presented his analysis of the library budget, which indicated that the “savings” would be much less than $400,000 per year—less than $100,000.

Speakers pointed out that the petition against the library outsourcing had some 4,000 signatures, including people from all political parties. One speaker wondered why the city had approved spending $250K on fish for Dixon lake at their last meeting if the city was so desperate for money.

Breaking the mood a bit, Lara Hardin sang a song about the loss of the East Valley Pkwy. Branch.

Vanessa Valenzuela noted that the council had been sitting on the pension problem for six years, asking if they weren’t a little ashamed for not tackling the problem sooner. The ten-year term of the contract was unacceptable, as a Trump supporter had agreed, when he signed the petition against the outsourcing.

Abed began the Council’s discussion by stating that it was an emotional issue for “all of us.” Abed’s body language indicated his main emotion was irritation that it was taking so long.

Olga questioned the 5% fee that LS&S charged for procuring books for the library. Wasn’t buying books one of the main services they were offering? Why should the city be charged twice for the service? Abed insisted that because LS&S bought in bulk, they would save much more than the 5% they charged.

Morasco was concerned about the ten-year term. Well, McGuinness, explained, if they had limited the term to five-years, then there would be a 4% annual increase in LS&S’s charges rather than a 3% increase. That seemed to satisfy Morasco, but I was sitting in the audience holding up a sign that said “Poor Negotiation”. And was it ever. I doesn’t make any sense. If they can make 3% work for ten years, they can make it work for five years. McGuiness and company, probably with the Mayor’s blessing, bent over backwards for any terms LS&S demanded. Morasco also complained about the cap on utility costs for LS&S, and he too did not think the library staff, that would be solely under LS&S management should have access to the city’s email system.

Councilman Ed Gallo said that he had met with McGuinness, and had been very satisfied by the terms of the contract. The only thing that would change would be who the employees worked for, and that the Library Board of Trustee would still be in charge, and would have more work than ever. Gallo trusted the city’s finance department, and believed that there would indeed be a savings of $400K per year, plus more, since there would be no new library employees that would add to the city’s debt to CalPERS. There could never be such a thing as a perfect contract he insisted. He went into one of his stories, something about how when he first started out in real estate the offer to purchase a property was only one page long—now it was about twenty pages. Ignoring the fact that the complaints about the contract weren’t about its completeness, but lack of protections for the city.

Councilman John Masson said he had a passion for the library, but leaders had to get out in front and provide accountability. He felt confident that in a year from now everyone would be happy with the new situation. He read several clauses from the contract about how LS&S would work with the Board of Trustees, etc., ignoring the vagueness of what the “strategic plan” would encompass or ensure.

Diaz repeated Hunter’s objection to there being no termination without cause clause in the contract. She repeated her story of the one time she was inspired in all her years on the council when Masson proposed a new, better library in Grape Day Park. She told Masson that the city already had all the things he read about in the contract to be provided by LS&S. She did not think she could support a bond issue for a new library, because LS&S would probably use it to convince more communities to outsource and degrade libraries. She pointed out that the city was not the private sector, and could not be run as such. The council was breaking the trust the public had placed on them to provide services. She thanked the hundreds of people who had worked so hard to prevent the outsourcing, especially thanking Roy Garrett for pointing out the role that the library board of trustees was to play under California law. The contract was not ready, it had too many grey areas, too many things wrong with it. The council had not even given the library board of trustees the courtesy of looking into joining the San Diego County Library system, as the board had requested. She reminded her colleagues, that the actuary that had presented his analysis to the council about the CalPERS debt, told them the best thing to do was to pay more than they were required—just like paying off a credit card—and the council had not done that yet. She chided LS&S for doctoring photos taken in the library of empty shelves—by removing the signs on the shelves explaining the library was preparing a new selection. She warned that the quality of employees was bound to be lowered.

Abed thanked the members of the public for coming and participating, insisting he shared the same passion about the library. Using the 2017 Grand Jury report as an excuse to outsource—actually the Grand Jury repost basically concluded that Escondido needed a new library. (Of course, closing the East Valley Pkwy Branch in 2011 didn’t help.) http://www.sandiegocounty.gov/content/dam/sdc/grandjury/reports/2016-2017/EscondidoLibraryReport.pdf

Abed defended the $250K fish expense by saying that lots of people liked to fish, the city had to try to cater to all of its citizens, and besides that money was not from the general fund.

Abed then repeated his misrepresentation that 80 out of 83 governmental bodies had renewed their contracts with LS&S. LS&S only has about 20 such contracts, many, like the contract with Riverside County include many branches which is where the higher number comes from. One of those contracts is with Jackson County Oregon, with 15 branches, and they are far from satisfied with LS&S. So it’s more like 65 happy campers out of 80.

There was some back and forth between the Council and the representative of LS&S, and evidently the city email would not be an issue, however the removal of the cap on utility fees would be something they would have to take back to their board.

Masson moved that the contract be approved with the proviso that McGuinness would try to negotiate on the utility issue. (What a whimpy motion—like Masson was afraid LS&S would not take the deal without this utility cap) His motion passed four to one, with Diaz voting no.

 

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