Blast from the Past: This is not your average piggy bank

First posted August 15, 2012

Posted June 17, 2014

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 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 of the 1,508 full-time employee. That number of full-time equivalent employees reached 2,063 by the end of fiscal year 2013.

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

But digging a little 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.

Remember, these figures reflect the Financial Information Report filed with the provincial government for 2011.

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

Let us get this straight. Suppose employee “A”, in the last five years of his time working for the City of Guelph was earning $75,000 per year. He 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 acumulated sick leave benefit of 275 days.

For example, doing the math, employee “A” worked 260 days a year at a rate of $300 a day. This included three to four weeks paid vacation.

His sick leave benefit when he retired was: Salary on retirement – $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 during a 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 public sector 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 these benefits?

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 bonus payment of more than $40,000. Mr. Davis will enjoy a pension of $135,313 per year indexed at two per cent per year for the rest of his life.

Don’t assume the worst. He is a career police officer and entitled, as those are the rules. The time has arrived that the right to accumulate unused sick pay and vacation time has to go. If you don’t use it, you lose it.

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. It has never been revealed how that money was redistributed or why? Incidentally, the $11,736,232 in the employment compensation reserve was not included in the above decision.

Another baffling fact is 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 any WSIB benefit? 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 instead of a reserve?

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

As of this date, there is more than $40,000,000 stashed in reserve funds. So 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 by 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 cluster of nice plump piggy banks that can be raided at will to justify the means.

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