Sunday, November 29, 2009

Budget-tightening Ideas for Plainfield--My Thoughts

In my last blog post, I promised to share with you some of my takeaways from the different seminars I attended while at the 94th Annual League of Municipalities Convention in Atlantic City. While attending the seminar on Retirement Planning and Employee Benefits and Services, I learned that the IRS is currently cracking down on individuals receiving pension payments while still working for public entities. In some cases, the NJ Division of Pensions has sent bills for hundreds of thousands of dollars to individuals who went back to work after retiring. Every effort is being made to identify retirees who are in violation of the state's pension laws so as to recoup benefits paid. There are also ongoing discussions about preventing law enforcement officials from retiring at such a young age only to go on to lucrative second careers in the private and public sector.

The state's pension plan has over $75 billion in assets and is currently solvent. However, the Public Employees Retirement System (PERS) will see a 14.75% increase next year due to unfunded obligations. Those municipalities who opted for the deferral last year will have to begin repaying in 2012 at an interest rate of 8.25%.

When it comes to furloughs, non-civil service municipalities can do whatever they wish; however, the legal and proper way for civil service municipalities to institute furloughs is through the collective bargaining process. If an agreement on furloughs cannot be reached, municipalities can implement temporary layoffs by closing whole departments for a certain number of days, this does not require agreement from the collective bargaining units.

Fraud in government is a hidden tax that gets passed on to tax payers until it is discovered. One of the seminars focused on best practices to prevent and detect fraud and on the technology that can help municipalities in this area. It is important for the Administration, with support from the Council, to explore this technology and to put it in place as an internal control procedure.

Another seminar looked at performance measurement techniques as a way to compare municipalities. There is proposed legislation that includes a mandate to develop benchmarking standards that would be used in distributing certain state aid to municipalities on the basis of comparative data. Municipalities were encouraged to establish benchmarks and to implement a system of performance measurement. However, it is important for municipalities to work with the public when establishing benchmarks so that the established benchmarks would be suitable to them. This is something that we desperately need in Plainfield.

As for the 2010 budget process, presenters focused on the need to significantly increase local revenues and reduce expenses in view of dwindling state aid and the rising costs of municipal services. Municipalities were encouraged to establish significantly new recurring user fees, explore shared services, transfer whole departments to the county, demote employees and reduce working hours.

Maplewood implemented 12 furlough days in the summer for non public safety employees. City Manager Al Greco of Clifton reported eliminating 10 unfunded police positions, police demotions, implementing a wage freeze for non union employees, increasing the co-pay for prescription benefits so as to encourage the use of generics, a 10% cut in Mayoral and Council pay, and the give-back of days to the city by members of his police department. He reported eliminating 102 positions in the last budget year.

What is very clear to me, and should be clear to all, is that in these very tough times elected officials must be willing to make some very hard and painful decisions. This is not an easy task but it is a necessary one. It requires leadership by example and sacrifice on every level, in every department, and from top to bottom. Property owners must also be willing to do with less of the non-essential services. What are these services? The answer to this question can only be decided after input from residents.

Here in Plainfield, what must we, the Administration, the Council, and other employees be willing to do? Here are some suggestions:

1) Implement temporary layoffs by closing entire departments for one day per week, one day per month or two days per month. This should be done if there is no desire on the part of unions to contribute to the cost of health benefits or to give back days by way of furloughs. This might also be a way to prevent layoffs. This does not require consent from the collective bargaining units.

2) Since furloughs won't work for Police and Fire, they should be willing to give up some of their accumulated absences, contribute to their health benefits, and reduce their longevity percentages. These are some of the things our public safety employees should be willing to do in order to avoid layoffs within their units.

3) Health benefits for all future elected and appointed officals within the City of Plainfield should come to an end, by legislation, within the first 100 days of 2010. Plainfield's mayor, city council, and appointed commissioners all serve on a part-time basis and yet receive full benefits. This is a situation that, statewide, has been partly responsible for the huge financial hole we find ourselves in. No It must come to an end. However, elected and appointed officials in office on January 01, 2010 should be given "grandfather" rights in order to ensure support for such legislation. Additionally, elected and appointed officials receiving these health benefits should contribute 1.5% of their salary to their costs.

4) Since early retirement incentives (ERI) are illegal (I don't know how Newark was able to do it a couple years ago), the Council should pass a resolution in early 2010 requesting the state legislature to create the necessary legislation that would make ERI legal. We should solicit early support from our 22nd Legislative District elected officials (Senator Scutari, Assemblyman Jerry Green, and Assemblywoman Linda Stender). This is one sure way to reduce the cost of government.

5) I will be seeking the support of my colleagues to add money to the council's budget for the purpose of conducting a forensic audit of the city's financial operations.

6) I will be seeking support from my colleagues for a resolution to return Route 28, a state highway, back to the state so as to relieve Plainfield's taxpayers of the burden of maintaining this state highway.

7) Finally, it is time to do away with longevity in all union contracts. There is no longer a need to offer longevity as an incentive to attract and retain employees. The time to end longevity has come.

These are some of the ideas that I will champion during the budget deliberation process and in the coming year. I encourage your thoughtful feedback.

Regards,

Adrian

8 comments:

active citizen said...

Thank you Councilor Mapp for your thoughful and sensible ideas for solving our budget crisis. I wish our administration would put as much thought into what they do.

Anonymous said...

I am glad to see your attendance at the Annual League of Municipalities meeting has produced an action plan to help address the fiscal challenges facing Plainfield. I am also glad to see we have a councilman who serious about change and not a caretaker Councilman. Good luck with your initiatives, you have my support!

Tripp said...

Sorry to say, but most of what you have outlined will increase costs not reduce them.

There are good reasons not to share services. I have found that sharing services almost always increases costs. One reason is that no one studies customer demand before entering such agreements, we have found that failure demand (demand caused by a failure to do something or do something right for a customer) represents any where from 25 to 75% of all demand to hospitals. So before sharing services we should look at customer demand.

Also, the design of the work is poorly done in most cases. This is a huge opportunity for improvement. Too many front/back office designs with entrapping technology. Most of this can be designed out of hospitals resulting in better service and lower costs.

Once these are looked at then we can have a conversation about sharing services.

Please Read:

http://blog.newsystemsthinking.com/blog/shared-services-strategy/0/0/dos-and-donts-of-a-shared-services-strategy

http://blog.newsystemsthinking.com/blog/bryce-harrison/0/0/economies-of-flow-defined-for-service

Tripp Babbitt
www.newsystemsthinking.com
www.thesystemsthinkingreview.com (govt help)

Anonymous said...

In order for this City to continue,your suggestions must be taken seriously. There is a definite need to become financially sound.

In addition to furloughs, etc, there should be serious desk audits to determine what each employee is producing per their position. This to eliminate "make work" positions.

Anonymous said...

In addition to your ideas I would suggest finding out how many employees we tax paying citizens are employing that live in Plainfield. Standing outside waiting for the last Council Meeting to begin I struck a conversation with an employee informing me that he doesn't live in Plainfield. So it makes me wonder just how many more are we paying that actually do not live in Plainfield. I heard one employee come to the microphone and say when she applied there was a residency requirment. I'm sure that everyone pay their taxes to the municipality they live in, so I feel they should work where they live (Piscataway, Westfield, Rahway, Hillsboro, Somerset, South Plainfield) just to name a few. Please look into this and keep the Plainfield employees.

Anonymous said...

The state should eliminate all aid to towns and cities. Each town should be forced to determine their income and costs, based on that which takes place within their own borders. This drastic action would finally force towns to work together on shared services. As an example I have seen the Plainfield Police mobil commonad center on South Ave frequently over the last few weeks. That vehicle must cost an enormous amount of money. Is it really needed in a town of our size? Could not the county provide this service when needed? Could not this vehicle be a shared service with many other towns in the area?
Our school budget is out of control and if not for the additional money received from the State our local taxes would triple. I wonder if all State monies were eliminated for the schools how many people in non teaching positions would still be employed.
The PMUA is a mess, with no idea how to effectively control their costs. Perhaps the town, through the Mayor, should simply tell the PMUA that the City is cutting its annual payment by 50% and at the same time limit the PMUA to 4% annual increases. I wonder how many non-direct labor staff would be let go.
The Governor elect has talked about declaring 'a state of emergency' to use special powers to make drastic decisions. Perhaps something similar should be done at the local level here in Plainfield to force rational solutions to the fiscal time bomb we are facing.

Anonymous said...

To Anonymous..Nov 30 @ 5:26 PM

It is happening according to today's news. The State is going to hold the $21M in aid payments to municipalities! Things are really going to get interesting from here on.

Ari said...

I respect and like your suggestions, but I have one additional comment. Another way to cut costs is to look carefully at what public officials and employees spend and/or are reimbursed for. For example, PMUA commissioners and executives are regularly reimbursed for "business lunches", travel expenses, and other non-essentials. Some people balk at the idea of cutting these expenditures because they seem small when compared to other waste. However, anyone who has ever filled a jar with coins knows that it quickly adds up. It is important to note that these lunches are not a couple of dollars either. You often see $300-$400 lunches. I am not sure that the PMUA is the only culprit. They are just the ones under the microscope of late. Put all of the city agencies and departments under that same microscope and eliminate these expenditures. We all look forward to working together to make sure our money is well spent!