Part Two of Pat Fung’s analysis of the high costs of city operations and how to fix it

Posted August 31, 2016

By Pat Fung CPA, Ca

Pat Fung is a resident of Guelph who has analyzed data produced by the city and its management consultants, BMA of Hamilton. Part One offered detailed charts that compared costs in certain areas and certain management positions paid to Guelph staffers to those in the same or similar jobs in other cities. The information not only reveals the discrepancies of employment, but Mr. Fung provides solutions to reduce operational costs.

Part One may be found in the guelphspeaks.ca archives for those who missed it.

Sent to all members of City Council August 18, 2016

Fire (Chart B, line 2)

1. According to the 2015 Sunshine List, Guelph’s Fire department has 8 Platoon Chiefs in Training all making around $125,000 per year. No other municipality in Ontario has this position.
2. Guelph also has an “Assistant Chief Fire Prevention Officer” at the same pay grade, but few other cities have this position.

Eliminating these positions will save $1,125,000. Cutting administrative staff should have no impact on fire services. Are there other positions in the fire department that perform administrative tasks that if not done do not affect service? If so, the tasks and the personnel should be eliminated.

Waste Collection (Chart B, line 3) and Chart C 2^nd from last line

How many personnel in this department do administrative tasks rather than direct waste collection work? Administrative tasks not directly providing service should be drastically eliminated, thus eliminating the need for some administrative personnel and reduce costs. I have spoken to the Waste Collection management on two separate occasions about changing the waste pick up schedule to follow the Vancouver model wherein no overtime is paid on the weeks where a public holiday occurs. This is simply done by postponing pickups permanently for 1 day until the next public holiday. (e.g. if your regular day is Monday and there is a holiday that Monday you permanently move to Tuesday until the next holiday then you move to Wednesday etc.) I was told the City spends over $60,000 in overtime because of the way it currently picks up waste when there is a public holiday. There are no publically available numbers to determine why costs in Guelph are higher on a per tonne or per person basis. You will have to question this department yourselves and dig into the numbers and flush out the reasons and act accordingly.

Roads (Chart B, line 4) and Chart C last line

Given what we spend ($27,617 per km vs Ontario average of $11,847 per km), why are Guelph’s roads not in better shape/condition? As a Council you will have to delve into the numbers and flush out the reasons why our road costs are so high compared to other Ontario municipalities and act accordingly.  Is road work done by outside contractors? If so, are rates paid in line with other cities? How many personnel do administrative tasks versus direct road work? Elimination of administrative tasks and personnel will reduce the costs for roads.

Parks (Chart B, line 5)

The 2016 budget request included a request for a trail technician and other new personnel totaling over $500,000. We are already higher than the Ontario average for parks spending, so any new additions made in 2015 and 2016 should be eliminated.  Also, how many personnel in this department do administrative tasks versus direct parks related work? Elimination of administrative tasks and personnel will reduce the costs for parks.

Library (Chart B, line 6)

For a city our size, why do we have two high priced administrative positions that are paid over $100,000 per year? What other administrative positions are in the library spending that do not directly provide library services? Elimination of administrative tasks and personnel will reduce costs for library.

FINAL COMMENTS

Clearly, Guelph has financial challenges and it’s time for the Mayor and City Council to deal with them. Bob Moore made this point well in his July 28, 2016 Mercury-Tribune editorial http://www.guelphmercury.com/opinion-story/6787414-when-will-we-hear-the-outrage-from-city-council-/

I have demonstrated in this letter that there are numerous opportunities to address our financial challenges through reductions in operating expenses, especially through personnel reductions. The CAO has expressed concerns that we would be “robbing Peter to pay Paul”. (See first link below). In my opinion, we have too many Peters, so having fewer of them is a great way to help fund Paul.

That said, how does the City justify not having a CFO until next year? The recently appointed CFO will be on maternity leave until 2017. This is not wise under the current circumstances surrounding the 2017 budget and should be reconsidered.

Similarly, why aren’t the CAO and the DCAO of Corporate Services on the same page when it comes to the City’s finances? In the July 15, 2016 Mercury-Tribune article, CAO Thomson said:

“City Hall currently doesn’t have enough money to build all of the projects in the city’s nine year capital forecast, let alone to begin to address our infrastructure backlog.” http://m.guelphmercury.com/news-story/6769276-special-tax-levy-on-council-s-radar

However, on the city website announcing the new CFO, DCAO Amorosi said:

“I have great confidence that she will provide strong leadership and continue to strengthen the City’s solid financial foundation.”

http://guelph.ca/2016/07/guelph-hires-chief-financial-officer/

Why does the CAO say we don’t have enough money, yet the DCAO says the City has a solid financial foundation? They both can’t be correct.

Finally, why shouldn’t we look at reductions in services in addition to reductions in administrative operating expenses? In the July 15, 2016 Mercury-Tribune article, CAO Thomson said that reductions in services are not being considered:

“One option that staff won’t present to council this fall as a solution to its capital funding woes is…drastic cutting of services because staff don’t believe this would provide enough money for capital needs.”

This statement by the CAO shows a clear disregard for what the Mayor asked for earlier in the year at a Corporate Services Committee meeting. The Mayor specifically asked for funding alternatives other than a tax increase. The DCAO agreed to provide a list by the summer. Why is the Office of the CAO being insubordinate? Isn’t it the job of the Office of the CAO to carry out Council’s wishes? It seems in this City that the Office of the CAO dictates to Council, not the other way around.

Does staff believe that reductions in services won’t provide enough money for capital needs or are they just protecting their jobs? After all, it’s much easier for staff and management to recommend tax increases rather than to face their colleagues and subordinates and tell them they are being terminated or their salaries are being reduced. Why is it every time Guelph is looking for funds, its first response is to add fees or increase taxes?   There is always this veiled threat that services will be reduced if expenses are cut. In the business world, expense reductions happen all the time. Why is Guelph the exception?

As I said in a letter published in the Mercury-Tribune in response to Councillor Salisbury’s Feb 23, 2016 letter to the editor stating that “the City is not at fault for the infrastructure gap”, we should get a new management group if we can’t achieve a 6% reduction in expenditures in this City.

As I stated earlier, it is time for Guelph to reduce its operating expenses by $20 million and freeze taxes and fees at current levels to fund the capital/infrastructure gap. We cannot afford to continue to increase spending on operating costs on top of spending for capital and infrastructure.

If you would like to have a discussion on anything in this letter, I am open to it. Thank you for your time and I look forward to hearing from you.

Regards,

Pat Fung, B. Comm., CPA, CA

Ward 6

This analysis report was sent to members of city council, August 18, 2016

Part Two concludes Mr. Fung’s analysis. While there has been some verbal discussions between Mr. Fung and some members of council, there has only been one response from a member of the majority Bloc of Seven. That response was framed in the form of questions. Time will tell if this council will seriously consider the data and work together to lower operating costs and eliminate wasteful spending.

Part One may be found in the GuelphSpeaks archives for those who missed it.

Your comments, as always, are welcome. The public response to this data has been outstanding and totally in support of Mr. Fung’s efforts. GuelphSpeaks suggests that citizens who want to see operating costs reduced, should email or write their their responses to their council representatives.

In future posts, GuelphSpeaks will follow up on this study and will comment appropriately.