This is not your average piggy bank

Posted August 15, 2012

With the startling comparison of employee costs of the annual Guelph budget pegged at 89 per cent compared to that of the City of Waterloo at 56.6 per cent, guelphspeaks has dug into the numbers.

Studying the reserves report presented to the Finance and Enterprise Services committee, more than $11,736,232 has been set aside for employment compensation reserves. That’s equivalent to $23,102 for each 1,508 full-time employee.

Now keep in mind this money is set aside for future costs of employee benefits. Ordinarily, that is a prudent move.

But digging deeper what constitutes these future liabilities?

Number one is sick leave with a reserve of $10,445,856.  That figure includes $3,530,693 for the firemen; $3,297,414 for police services; $894,104 for the librarians and $$2,203,645 for members of CUPE 241. The other reserve is for “employee salary gapping” totaling $1,290,376.

The practice of allowing employees to accumulate unused sick leave for a bonus payment upon retirement is unfair to taxpayers, most of who do not enjoy this benefit.

Let me get this straight. Suppose employee A, in the last five years of his time in Guelph earning $75,000 per year, retires after 25 years. During that time his total sick leave benefit accumulated to 450 days (18 days a year).  But during his work life, he was sick sometimes so for our comparison, he ended his career with the city with a sick leave benefit of 275 days.

Doing the math, employee A worked 260 days a year at a rate of $300 a day. This includes three to four weeks paid vacation.

His sick leave benefit when he retired was: Salary – $75,000; Divided by annual days worked =$300; Multiplied by 275 days of accumulated sick days = $82,500. This is a taxpayer-funded bonus for not taking the sick days off over the lifetime on the job

Why are taxpayers paying twice for work performed by employee A?

The same applies to vacation time not taken and accumulated. The city has a reserve set aside for this perk to be paid when an employee terminates.

But wait! Employee A was paid for every day he reported for work. Is this not double dipping – being paid twice for coming to work?

It has been a long-term goal of the municipal unions to achieve this. Unfortunately in Guelph, all employees, including hydro enjoy this benefit. Look at it this way: Why should taxpayers have to guarantee this after the employee is long gone?

The recent retirement of the chief of police, Rob Davis, is an example of how accumulated unused sick leave over the years, plus unused vacation pay, resulted in a major league payment of more than $40,000. Mr. Davis will enjoy a pension of $135,313 per year indexed at 2 per cent per year for the rest of his life.

Don’t assume the worst. The former chief is a career police officer and entitled as those are the rules. The time has arrived that the right to receive accumulated unused sick leave benefit and unused vacation, has to go.

Already council has been told that the vacation accrual reserve of $5,122,596 is to be retired and the assets distributed to other employee compensation reserves.

Incidentally, that figure in the employment compensation reserve totaling $11,736,232 was not included in the above calculation.

What is baffling why there is a Workman’s Safety Insurance Board (WSIB) reserve of $2,203,520 and the city allows a sick leave benefit on top of the WSIB benefit if any. Every employer in the province contributes to the WSIB on behalf of his or her employees, but shouldn’t that be a budget operating expense?

The way this administration works is creating many reserves or cash envelopes, if you will. Just like grandma used to do.

There is more than $40,000,000 stashed in reserve funds, why does council keep coming back to increase taxes by an average of 3.5 per cent every year? User fees are also increased while the taxpayers are pinched, due to mismanagement of the city finances.

Some reserves are needed. However this council justifies its actions be using the plethora of reserves as political tools to meet their misguided end-game.

Further, how is all this money being managed? How is it invested and where? How is money withdrawn from the reserves without having to sell assets?

Some may call having reserves is prudent but it’s nothing but a nice plump piggy bank that can be raided at will to justify the means.

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4 Comments

Filed under Between the Lines

4 responses to “This is not your average piggy bank

  1. Glen N. Tolhurst

    Gerry:
    Your article begs the question as to why doesn’t the city have a contracted benefit program with a carrier for STD (short term disability) and LTD (long term disability) as most enterprises do, instead of having this open-ended costly accumulative sick leave policy? Professional management is obviously lacking.

    • Glen T. Tolhurst: I think we both know what’s going on here. On the surface this form of “cash envelopes” or segregated funds makes good politics. Instead it muddles the entire city financial picture to the point where the average taxpayer is, frankly baffled. Then the Farbridge majority in council uses these reserves to bolster the main budget when their cockamamie schemes bubble up from the inner circle of socialists currently running the show. An example is the current “Wellness” campaign costing $400,000. This social engineering stunt recently conducted a survey of 10,000 Guelph households to invoke the idea that the city should be concerned about health problems including diet. This one goes hand-in-hand with hiring an “Integrity Commissioner” whose first assignment was to investigate non-Farbridge councillors (the Fabulous Five). That exercise cost taxpayers more than $10,000. And the beat goes on!

  2. geo

    Gerry
    I know of 4 people in my extended family who have retired from various positions in the Ontario public service. Between the 4 of them they have been collecting a pension for over 100 years.
    Even if pension funds are performing well how can this be sustained?

    • Geo: Simple answer, it can’t be sustained under the present system of municipal financing being borne by the property owners.This all started with the McGuinty government opening the floodgates to public employee compensation. As creatures of the province, the municipalities had little choice and the dam burst. Guelph is in a pickle and to correct it will be an extremely difficult task for the next council. The present council predictably will do nothing to correct this problem.

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