...which in this case, the middle is the city's fiscal note.
Pardon me Cranston Patch for I have sinned. On Wednesday around noon time, the Cranston Herald posts their online edition of their weekly newspaper publication. As I was scrolling through their new articles, I noticed this headline, "Firefighters Contract More Expensive Than Advertised". The byline attributed the article to Steven Stycos, who is a councilman and serves as the chairman of the finance subcommittee.
If you have attended recent city council meetings (given the size of the usual gallery, you probably haven't), you may have noticed Councilman Stycos has been questioning the accounting methods of the fiscal notes being presented by the city's Director of Finance Robert Strom in regards to union contracts. Councilman Stycos seems to think the city isn't accounting for the total cost of the contracts even though the city has been balancing its budget since Mayor Fung has been in office. In his article in the Herald, the councilman alluded to "similar errors were made in recent cost estimates of contracts negotiated with the Laborers Union and Teamsters Union." Yet, the city council retains their own auditor and I don't recall him raising any red flags regarding the cost of the contracts.
After reading the article, I decided to check the results of Councilman Stycos and Director Strom to see who is right. When I set out to do this, the only information I used is the city's fiscal note that is posted on the city web site here and the numbers in Councilman Stycos's article linked above. Director Strom's fiscal note is a summary and Councilman Stycos's article just throws facts and figures out. But as math teachers in school usually told you, you must show the work which I have attempted to do. And I welcome any critiquing/criticisms of what I did.
The complicating issue in the new firefighter contract are the raises being given in the middle of the fiscal year. I can only assume there were savings to the city in doing it this way. And in FY2016, there is a raise given at the beginning and in the middle of the year. Here is where I think both sides calculated wrong.
My spreadsheet can be found here.
First, my initial starting point for the FY2014 payroll was from the budget we just worked on. I came up with $696,977 for civilian workers and $12,499,989 for non-civilian (firefighters). I don't believe these are the numbers Director Strom used given very slight differences, but they are close enough to show if there are any major errors in calculating the final cost. Here is the schedule of increases during the four fiscal years affected by the contract:
- FY14: firefighters forgo 1% raise, civilians receive 2% raise mid-year
- FY15: all receive 1.5% raise mid-year
- FY16: all receive 1.5% raise beginning of year, 2.0% raise mid-year
- FY17: all receive 1.0% raise beginning of year.
To be honest, I have heard Councilman Stycos explain his methodology in meetings and I still do not grasp how he is calculating his figures. In his article, he states, "My analysis of the contract's cost, because I count wages hikes over 12 months...". I'm not sure which 12 months he is using. One can only go on fiscal years because that is how we budget.
In my calculation, FY2014 shows a savings of about $118,030 where the city had $122,312. This is about a $4000 difference and can be attributable to slightly different starting numbers for payroll. It is close enough to call the city correct for FY2014. In FY2015, the city showed an increase of $96,821 and I came up with $98,092. Close enough to call the city correct.
The problem lies in FY2016, where there is a double increase. In the city's fiscal note, they show a cost of $229,680. This looks to be low, but not to the extreme Councilman Stycos makes it out to be. I believe the city came up with this figure by first halving the total payroll for FY2016 and applying the 1.5% increase. This gives you a half year increase of $98,819. My spreadsheet agrees with this. I think the problem lies on getting the 2nd half increase. I did a previous spreadsheet using annual totals. To get the 2nd half increase on the old one, I took the starting payroll for FY2015 ($13,177,027) and added the $98,819 to it, divided it by 2 and multiplied that figure by 2%. It showed a 2nd half increase of $132,758. When added with the first half increase, I showed a total FY2016 increase of $231,586, which is pretty close to the city's $229,680. Again, this was on my old spreadsheet. When I used weekly figures on the new spreadsheet, I showed an increase of $331,402. Somehow, I think the compounding of the 1st half increase was lost using annual figures.
Finally, our figures jibe again in FY2017. So, the city shows a total payroll increase of $338,913 over the life of the contract while my spreadsheet shows an increase of $446,548 (again, the culprit is FY2016). Councilman Stycos claims "the Fung administration's error understates the cost of the contract's wage increases by $330,613 a year). I'm sorry but there is not a $1 million error in calculating salary costs.
Councilman Stycos also alludes to another error regarding the savings from the firefighters contributing to their retirement health insurance (OPEB). The city has calculated that firefighters will be contributing $58,800 per year to their health insurance retirement fund. After four years, there should be $235,200 more sitting in their insurance fund. This is $235,200 the city did not have to contribute to their health retirement fund, which results in a...wait for it...$235,200 savings for the city. This is a $58,800 annual savings the city is realizing, which should be counted as such on the city's fiscal note.
It is my hope that my spreadsheet is correct and this part of the argument can be put to bed. I believe there are other savings in the contract that could have been attained, starting with eliminating the 9/11 holiday which would save the city $161,000 annually.
