Were the transit worker’s settlement costs a miscalculation or misrepresentation?

The following analysis of the Amalgamated Transit Union settlement with Guelph Transit, has been prepared by a contributor to GrassRoots Guelph possessing a background in financial analysis.

Posted September 12, 2014

A recent look at the report on the cost of the Guelph Transit contract renewal found that it is apparent that the numbers looked a little odd.

Using a spreadsheet and looking at the calculations in a more detail, the city is substantially under-reporting the “city’s annual cost of the transit operations increase”.

It has been reported that the total of the “city’s annual cost increase” will be 6.49%, versus the real figure of 8.83%.

The calculation is simple, just look at the cost of the wages for a driver for a quarter before the contract report; and the quarter at the end of the reported four-year period. The basic fallacy in their report
is that they reduced the mid-year increase by one half. This is okay for the first year but it fails to take into account that that increase carries over as an increase for the following and succeeding years.

A smaller error is that the annual increases were just added up, whereas financially, one needs to treat them like compound interest. Yes, you can play a bit of a game with the numbers by annualizing and extrapolating the January 2013 rate and come up with slightly lower figure of 8.57% but it is NOT 6.49%.

So 8.83% versus 6.49% may not seem like all that much, but it is 36% higher!

If the calculations are off that much, it would explain the city’s poor financial position. It could be that the person doing the calculations just failed to recognize the error, although that brings into question the
competence of our financial department since it’s a pretty simple calculation.

Another possibility is that it was done intentionally to paint a rosier pre-election picture. The latter seems to me to be more likely because the calculation is trivial and it was changed on the city website some time on August 6 or 7 (to paint an even rosier and less correct picture).

It’s situations like this that gives citizens great concern about how our city is being managed. It makes most residents really wish that the Ontario Minister of Municipal Affairs and Housing had taken some ownership and conducted the forensic audit as requested by a citizen’s petition prepared in 2013 by GrassRoots Guelph.

It’s not all that important to most people whether the cost increase is 6.49% or 8.83% but it is very important that the city is able to and report its business factually to the strakeholders.

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3 Comments

Filed under Between the Lines

3 responses to “Were the transit worker’s settlement costs a miscalculation or misrepresentation?

  1. Milton Burns

    What do you expect when Mayor Farbridge has a PHD degee in Biology and CAO Pappert has a BA in Fine Arts.Neither have private sector experience.

  2. Walter Clark

    Chances are Finance never got to see the numbers until HR had finalized the deal. Be careful who you accuse of making the mistake.

    • Walter Clark: I am not accusing anyone. The figures the city distributed were in error. Typical of the Farbridge administration’s communication polices to leave out the important details in their communiques, again it proves the desire to bend the truth to suit their agenda.
      What we are witnessing is akin to Napoleon’s retreat from Moscow. They can’t stand the truth and the people are understanding that in the last eight years they have been lied to (by omission), seeing most of the elected officials betray the public trust and distort the financial status of the municipality. Under no circumstances do I blame the staff except their leadership that has been thoroughly politicized by the Farbridge term in office.

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