Monday, September 26, 2011

Manage the City as a Business, not a Black Hole

Comment Up
By: Anonymous Guest Blogger

No one is claiming that the city should default on its pension obligations. To suggest that is ludicrous, yet that doesn't preclude the fact that the CM is doing little to make effective changes. She is very quick to suggest that government employees have benefits that private sector personnel don't receive--take for example the overtime issue which is purported to save $157,800 annually on the IBEW contract. The stated savings will cost many times that number if the linemen want to retaliate. Stanton can make all the claims she likes but she will never know what is about to hit her. Good luck recruiting any new linemen or retaining any apprentices.

LW has a very negative reputation as it is, and this will only exacerbate the stigma associated with LW. Stanton doesn't have a utility background and it shows.

Back to the pension issue--it is always stated that it is the "unfunded liabilities" that is the source of the city's problems. That may well be, yet the biggest source of that is the DROP plan, in addition to the pension being a defined benefit rather than a defined contribution, such as the contract employees receive at a 10% per year. That in itself is over the top. Stanton needs to identify how many private sector employees receive a 10% defined contribution stipend. She has no issue calling out the union employees all the while taking very good care of herself.

Under the current contractual language the issue of unfunded liabilities remains, not only for the IBEW, but also the police and fire contracts. This is not much different than the early out they offered a few years back when Wendy Newmeyer, the former CM, and others were offered an opportunity to "retire" early. That cost the city in excess of 1 million a year. You, don't hear much about that one do you.

Isn't it ironic how the current CM is so concerned about the law. She didn't seem to be concerned about the law when she changed the health issuance for the employees without any negotiation-- how did that work out for her? Her inability to make effective changes to the pension plans will continue to cost the taxpayers big dollars over time. It is easy to bury your head in the sand when all you need to do is assess the taxpayers to cover the shortfalls. This will be an ongoing problem year after year until the plans have serious changes made, just as the private sector has mandated. It is being done in the union sector also. It takes strong leadership and direction to accomplish the changes. It is being done more often than not, a far better direction than ignoring the problem.

What Susan Stanton is doing is blaming everyone and taking her eye off the ball, just another example of her dictatorship mantra and poor direction for the organization. She is taking LW down the wrong path and missing the real issue that will fix the city for the long term. She is way too short sighted to make any effective changes.

A great question to ask Stanton is what it cost the city per year for the DROP plan alone and why she didn't negotiate it out of the IBEW contract. If your bills get too expensive, then the organization should look for opportunities to reduce those bills, not just increase revenues (taxes) to placate the employees. Manage the city as a business, not a black hole. It isn't improving. It appears to be getting worse and even the employees are suggesting that is so. The beach project is an example of the continued dysfunctional culture that starts with leadership.

Editor's Note #1: The author of the above blog is an industry expert who works in Utilities.

Editor Note #2: In speaking to pension plans, Susan Stanton says,
In Lake Worth, there is no limit on the “Deferral.” In Lake Worth, its unlimited. It's what my past CM’s have recommended and or have not suggested was wrong. But, compared to the 10% the city places in my retirement account, it is less then the 40% of compensation they put into the former CM and Administrative Service Director. Change is coming …slowly …but surely.


Anonymous said...

All I know is that pension costs are ridiculous.

Anonymous said...

Well obviously not if she is giving us all a tax for this pension which you say is just an excuse to get some money. unions. What can we do about them. Get rid of them? Can we? No. everyone should get bummed out on this.

Anonymous said...

The current employees are promised a great defined benefit pension, and legally the City cannot take that away. But the City could stop the DROP program. And for all new hires, put them in a defined contribution plan. Freeze the existing plan and start up a defined contribution plan. Other cities and towns are doing just that. The cost to the City in the new plan would be percentage of the employees salary, so the pension costs are known and under control.

To me this seems like a no-brainer. I'm sure I'm missing something, and I'm sure unions would fight, but if the current employees are not hurt financially and their pension doesn't change, how hard would they fight?

It would take several years, maybe decades, but eventually all pensions would be under control and no different than pensions in the private sector.

Anonymous said...

Herein lies the foundation of the problem, nobody cares what individuals that were in the CM position before did or didn’t do, Stanton accepted the position, it’s her ship to steer, show some leadership and provide the change needed. If she didn’t like the package she was offered than why did she accept the job, maybe because 300 other localities turned her down. Is she willing to place every employee on a 10% defined contribution plan, if nothing else all new hires, must think that is being underpaid so she should have no objection to the proposal. Why hasn’t she made the change to the pension plan for new hires, at least it would indicate a desire to correct the unfunded liabilities, or is it easier to just assess and tax her way out of the problem, most know the answer to that question. Much easier to tax and spend than do the heavy lifting and fix the past problems. It is obvious that the change is slow, not seeing the surely part.

Anonymous said...

This is what I’ve been saying, what is Stanton’s issue with fixing the issue, the IBEW contract was just renegotiated, so why no change. Had a great opportunity, missed out under his financial urgency claim, makes one wonder if there really is one or is it created?

City officials around the region have recently moved to reduce future benefits, invoking a once rarely used state statute called “financial urgency” that allows city officials to reopen union contracts during troubled times.

Pembroke Pines declared financial urgency in 2009, and after tense negotiations, closed the general employees’ pension plan for new hires and froze it for existing staff. The city created a 401(k)-type plan in its place. Those who didn’t retire at that time lost their cost-of-living increases and took pay cuts of 4 percent, saving the city about $7 million for 2011 and much more in the future.