Posted August 7, 2013
Recapping Part One, we learned how the costs of staff compensation including pensions, has soared in the past four years of the Farbridge administration. If you missed Part One, the first part can be found in the guelphspeaks archives dated August 6, 2013.
Let’s continue the Q and A between Fair Pensions for All’s Bill Tufts and Guelph’s representative, Sue Ricketts.
BILL: Last year Sue, during the city budget discussions, you brought up the staff compensations’ issues that have grown exponentially in the past four years. The city accused you and our organization of disseminating incorrect information. What’s up with that?
SUE: The city finally developed a compensation report for the first time in several years. Rather than having a frank discussion of the situation, the report was merely a defense of a broken system of which staff is the beneficiary.
BILL: What did the city staff have to say about that?
SUE: The first thing they objected to was our use of the Provincial FIR database that provided historical financial date on the city. They stated that the FIR does not have “the rigour in the collection of data to permit an apples to apples comparison.” Further, staff said that our methodology was leading to misunderstanding in the community. It should be noted they are the ones who submit the numbers to the FIR database.
BILL: Did we not cross-reference the FIR data with the city’s own financial statements, Sue? There was significant enough correlation in the numbers to provide meaningful analysis to councillors and taxpayers.
SUE: One of the staff excuses for the skyrocketing compensation was the contract for land ambulance services entered in 2009. Despite this, compensation costs rose 18.6 per cent in four years, from $137.9 million to $163.6 million in 2012. The Canada Price Index (CPI) increased by 6.2 per cent in the four-year period. The city’s compensation costs were rising at three times the CPI inflation rate. I fail to see how those figures are misleading to the community, as alleged by staff.
BILL: There appears to be a dispute over how big the city’s operating budget is relative to total operating costs.
SUE: Our view is money collected for school boards through property taxes and passed through to the boards should not be considered money that is available to the city for operating expenses. Also city debt servicing interest payments were included by cities as operating costs. These payments are not negotiable and not available to spend on discretionary items by the city. Regardless, staff compensation is 65 per cent of total funds available to the current council.
BILL: Looking at the labour collective agreements with which the City of Guelph partners, there appears to be moderate increases. For example Fire Association was up 2.57 per cent, transit up 1.67 per cent and CUPE locals up 2.03 per cent. What’s your take?
SUE: Yes, those figures are as the city sees compensation when reporting. The real problem lies with the true total compensation that includes many components. Such as, premium payments including overtime, shift premiums, merit pay and increases as an employee moves through the experience grids that increase his or her pay. This is portrayed in the Guelph Police Services grid system where a constable in training starts at around $42,000 a year and will earn a base salary of $80,624 in four years. Then there are “retention” bonuses to increase annual pay that reaches 3 per cent after eight years on the job, then 6 per cent after 17 years and 9 per cent after 23 years. All these bonuses are pensionable. Then add in benefits such as health and vacation, defined pensions and job security provisions contained in most collective agreements and the total compensation grows.
BILL: Is there any solution to slowing down this huge growing liability?
SUE: Two things. City council should ask for a back-up report that accurately reflects the total compensation details of all employees of the city. Then, council should set a hard cap of about 2 per cent on compensation increases. Over time this can be adjusted to accommodate inflation. The total compensation packages contain growth, benefits and premium pay opportunities to amply compensate employees.