Pension Budget Raided To Plug Deficit

Thomas Breen photoThe city plans to fill a $14 million projected deficit this fiscal year with money originally budgeted for underfunded pensions, and with an extra $2.5 million from Yale University.

City Controller Daryl Jones shared that news with the alders on the Finance Committee on Monday night at a meeting in the Aldermanic Chambers on the second floor of City Hall.

Just two weeks ago the full Board of Alders voted to approve an amended version of Mayor Harp’s $547.1 million general operating budget, preserving the mayor’s 11 percent tax increase, for the fiscal year that starts on July 1. On Monday night, the Finance Committee refocused its attention on the projected deficit for the current fiscal year ending June 30, after months of meetings, hearings and deliberations largely dedicated to next year’s budget.

Revenue Or Expenditure Issue?

According to the city budget department’s latest monthly financial report, published on May 25 and covering city finances through the end of April, the city projects a budget deficit of $14.07 million by the end of the current fiscal year, which closes at the end of the June.

The biggest drivers of the deficit on the expenditure side include overages in Fire Department salary and overtime, which add up to a projected $4.9 million in deficit for the department; overages in Police Department overtime, which, when mitigated by salary savings, add up to a projected deficit of $1.02 million for the department; and the Board of Education (BOE)’s projected deficit of $6.9 million.

During the Finance Committee hearing, Jones stressed that the city has a revenue problem, not a spending problem. He said the city did not find out until October 2017, when the state legislature finally passed its biennium budget nearly four months after the beginning of the current fiscal year, that it would be around $5 million short in expected revenue from Hartford.

That revenue loss came primarily from cuts to Payment in Lieu of Taxes (PILOT) of around $4 million for college and hospital reimbursements and around another $1 million for state property reimbursements.

State law says that, depending on available funds, the state can reimburse up to 77 cents on the dollar for property tax revenue that Connecticut cities and towns lose out on due to the local presence of tax-exempt non-profits. The state has no legal obligation to fund PILOT, though city legislators tend to fight for as high a funding as possible in order to make up for lost property tax revenue.

PILOT currently pays out closer to 41 cents on the dollar. Around 54 percent of New Haven property is owned by tax-exempt non-profits.

“It’s very important to put that in context,” Jones said about the state budget cuts to the two PILOT programs. “It’s very challenging for a city to make that revenue up in the middle of a fiscal year.”

The majority of the city’s revenue shortfall, however, comes from the mayor’s Revenue Initiative line item, which was budgeted to bring in $18.6 million this year. Starting with the August 2017 monthly financial report, published on September 28 of last year, that line item’s projected income has been $0.

The current fiscal year’s budget describes that $18.6 million Revenue Initiative line item as “premised on receiving additional State aid or revenue from other sources such as an increase in voluntary payments.” The Revenue Initiative for next year’s budget has been reduced to $6.1 million.

“The issue is a revenue issue,” he said. “Not an expenditure issue.”

He pointed out that next year’s general fund budget is only slated to increase by $8.1 million, or 1.52 percent, over last year’s final approved budget.

“I disagree,” said East Rock Alder Anna Festa. “We definitely have a spending problem in this city.”

She and Hill Alder Dave Reyes and West River Alder and Boards of Alders President Tyisha Walker-Myers zeroed in on the projected deficits in police and fire overtime as particular causes for concern.

“That’s crazy,” Reyes said about the Fire Department’s projected $2.7 million overtime deficit and projected $2.3 million salary deficit. He said he had never seen fire deficit numbers that high.

Walker-Myers and Festa stressed the importance of the police and fire chiefs coming before the Board of Alders to get approval on overtime costs that push the annual overtime line item above $1 million for each department. They said that stipulation had been included in a policy amendment in the current year’s budget, but, to date, neither the police chief nor the fire chief had come before the board to get overtime approval.

Jones said the chiefs had not appeared before the alders in previous months to discuss overtime due to scheduling snafus. He also said that all overtime allocation details are run by Quinnipiac Meadows Alder and Public Safety Committee Chair Gerald Antunes.

Balancing Bad Options

Jones told the alders that the city’s primary plan for filling this year’s projected $14 million deficit is to pull funds from a pool of money initially budgeted to be put into the city’s two underfunded pensions, the Police and Fire Fund (P&F) and the City Employees Retirement Fund (CERF).

Jones said that towards the beginning of the fiscal year, back in July or August, the budget department put aside $16 million from the budgeted $61 million pension line item to keep on hand in case the city were to experience any cash flow issues due to the delayed passage of the state budget.

The city still has that $16 million on hand, Jones said, and plans to tap into it to cover whatever remains of the projected deficit come June 30. He said the city has also issued strict suppression control measures, limiting new hires and overtime approval to public safety departments only.

The current fiscal year’s budget allocated $34.6 million to P&F, $21.6 million to CERF, and $4.7 million to FICA and Medicare. According to the April monthly financial report, the city has thus far this year paid out 71 percent of its budgeted pension contributions: $24.8 million into P&F, $15.2 million into CERF, and $3.3 million into FICA and Medicare.

The budget that the alders approved two weeks ago flat-funds the pension line item at $61 million next fiscal year.

Jones said the annual budgeted contributions to P&F and CERF correspond to “annual recommended contributions” (ARCs), which are set by actuaries hired by the city to review its public pensions and which work towards fully funding the city’s pensions over the course of two decades.

P&F and CERF represent around $900 million in combined liabilities, according to the city’s independent Financial Review and Audit Commission (FRAC). As of 2016, P&F was funded at around 40 percent; CERF was funded at just above 30 percent.

Westville Alder and Finance Committee Co-Chair Adam Marchand asked about the potential negative consequences of taking up to $16 million out of the city’s budgeted pension contributions.

“They’re far less than if we don’t balance the general fund,” Jones replied. He said the most likely consequences are that the two city pensions’ funding ratios will get worse because of the corresponding increase to their unfunded liabilities. He said actuaries will likely recommend that the city increase its annual pension contributions above the current budgeted amount to make up for this year’s pension budget deficit. He said the city can spread out, or amortize, that increase over the course of 20 years, so that the pain of having to pay more into the pension fund will not be felt all at once.

“There’s more of a likelihood of being downgraded [by a credit ratings agency] if you don’t balance your general fund,” he said. A downgrading from a credit agency like Standard and Poor or Fitch would almost certainly result in New Haven paying higher interest rates whenever it goes out to borrow money.

Marchand asked if the alders should look into increasing its budgeted pension contributions for next year based on the likely pension deficit for this year. Jones said he would recommend keeping the current $61 million budgeted pension line item the same.

The budget that the alders passed two weeks ago also includes a policy amendment that calls for the creation of a pension task force to investigate the challenges and best routes forward for adequately funding the city’s two public pensions.

One of the most contentious proposals from the mayor’s original budget recommended borrowing $250 million to shore up the city’s pensions. The Finance Committee ultimately tabled that proposal, keeping it within committee for future consideration.

FRAC Chair Mohit Agrawal told the Independent that pulling $16 million from the pension budget would certainly result in higher ARC payments, and increases the overall riskiness of the city’s financial situation.

“But we need to close the books” on the current fiscal year, he said. “And money needs to be found. The city’s in a hard place.”

He said the city faces a conflict between short term and long term obligations. In the short term, it must find money to balance the general budget. In the long term, it must adequately fund its pensions, which represent nearly half of the city’s $2 billion in total liabilities.

He said FRAC still estimates that next year’s budget is at least $27 million out of balance, and that the city faces structural deficits that will not be remedied by finding pulling money from this year’s pension budget.

“We wouldn’t be surprised if the city finds itself in the same place next year,” he said.

Jones and Agrawal both said this is the first year in Mayor Harp’s five-year tenure that the administration will not be fully funding its ARC payments for the city’s pensions. Agrawal said that fact underscores the seriousness of this year’s budget troubles.

More Money From Yale

Jones also told the alders that in early April Yale University committed to increase its annual voluntary contribution to the city by $2.5 million.

He said Yale currently gives the city around $8.6 million each year. That contribution will increase to just over $11 million in total, he said. That increase will be applied to the current fiscal year’s budget, he said, and will be put towards reducing the projected $14 million deficit.

Jones said that Yale, as it has done for the past decade, will submit the majority of its contribution to the city in August. Yale then pays another couple million dollars each year later in the fall to cover its use of city fire services.

The August money, however, is always backdated to help close deficits in the previous fiscal year’s budget.

“This is about as bad as it’s ever been,” said budget watchdog Gary Doyens during the public testimony section of the hearing. “That practice [of backdating Yale’s contributions] should stop if you’re going to get a real budget and understand a real deficit and adjudicate your expenses to your revenues. … Quit taking money and backdating it just because your auditor says you can.”

Jones said that process of backdating Yale money has been approved by the city’s auditors, RMS, and has been done for over a decade ever since the city first started receiving voluntary contributions from the university.

He said the city’s auditors ensure that all of the city’s financial practices follow Governmental Accounting Standards Board (GASB) standards. He said for the past four years the city has won the Government Finance Officers Association (GFOA) award for transparent financial reporting.

$10M In Debt Savings?

The Finance Committee also moved approval of the city’s request to transfer $10 million from the debt service line items and use that money towards reducing various departments’ deficits. Jones said that transfer was possible because of upwards of $20 million in savings that the city achieved in bond refinancing in August 2017.

FRAC’s Agrawal said the city should not identify that money as revenue, as the city should never expect to achieve savings from its debt.

“The city should not expect to get a free $10 million loan from Wall Street,” he said.

The Finance Committee recommended approval for Jones’ proposal to transfer $10 million from Debt Service to the following locations: $2.9 million for police overtime, $2.8 million for fire overtime, $2.9 million for fire salary, $450,000 for Youth Services, $250,000 for Public Safety Communications overtime, and $700,000 for other employee benefits and workers’ compensation.

Jones said this transfer will not reduce the projected $14 million for this fiscal year, as it has already been factored into the monthly financial report.

Click here for a complete list of city monthly financial reports. Click here to learn more about FRAC, which will hold its next meeting on Tuesday, June 12, at 5 p.m. in Meeting Room 3 on the second floor of City Hall.

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posted by: AverageTaxpayer on June 12, 2018  8:12am

Where will the City be financially next summer? Three years from now? Five years? Ten years?

Do we have the leadership in place to get us throw this fiscal mess? Is the plan simply to continue hiking property taxes up to and beyond 50 mills?

What is John DeStefano up to these days? Any chance we can bring him back?

posted by: observer1 on June 12, 2018  9:00am

This is like me telling asking my wife to pay the electric bill with the visa credit card that we do not have the money to pay off. It is a dumb, cowardly fiscal policy which can’t help but explode sometime in the near future. The city has a revenue problem because it wants to spend money, but does not want to raise the necessary tax money required to support the level of spending in the budget. the city needs to either raise taxes or lower the expenses creating the demand for revenue. A sane rational person with a high school education that knows how to add and subtract can figure this out. You don’t need to be a Yale grad. The entire upper echelon of management in this city is lacking the spine to tell the mayor this process is not sustainable. I am hearing that she is eyeing the Lt Governor job, so she is not going to be left holding the bag on this deal. She will not be capable of running for dog catcher after the effects of this fiscal flimflam become obvious. If you sign labor agreements that are written in such a fashion as to guarantee that overtime is required to man a shift, you will get overtime that has to be paid. Add to that loose enforcement of sick time, vacation time and personal time, and fuse has been lit to the overtime bomb. Will some person or group of persons in this city start acting like grownups please? Do not budget to spend money you do not have, and there will be no deficit. One well run town around New Haven (North Haven for example) seems to be able to do that. There are also many more political subdivisions in CT that can manage to stay within budget.  Good management is what we are lacking and is what they have. Call it a mayor, First Selectman, Board of Finance or whatever. They also have two party government which works.

posted by: Noteworthy on June 12, 2018  9:05am

The Failure of Leadership Notes:

1. The truth of the $30 million tax hike is this: The deficit is already $30 million. That’s why there was a transfer of $10 million from the bogus “savings” from refinancing city bonds and stealing the $16 million from the pension budget.

2. The lie has been that this city budget was ever balanced. It’s been in the red since the beginning of the fiscal year July 2017.

3. Jones said the OMB has been managing the deficit and just last weekend, three weeks before the fiscal year ends - an email went out to mitigate expenses. Of course, that didn’t apply to the mayor’s $37K China trip. How do you spend that kind of money? Fly First Class?

4. OMB failed to actually mitigate the deficit. The mayor and her top department heads failed - and have hid this deficit, and hid from it. The biggest offenders - the police, fire, health and education all of which overspent their budgets by millions and millions of dollars. None of the department heads showed face at the hearing. Not one.

5. If you can’t manage a financial problem - you at the OMB, should be fired. If you can’t manage your department budget within your spending limits, you should be fired. There are zero extraordinary circumstances which mitigate this gross malfeasance in office, in the top leadership positions of this city.

6. With all due respect to the mumbling presentation of Mr. Jones - it is patently ignorant to claim this city has a revenue problem, not a spending problem. It is insulting to pretend this financial crisis has been managed when departments have been allowed to run wild all the way to the end of the fiscal year.

7. Taking Yale’s money in August - and retroactively applying it to the expenses of the previous years started by DeStefano’s gross spending. It continues now and while approved by auditors, it’s a misleading way to balance a budget.

8. Jones also says he wins awards for budget transparency: Obviously, the standards must be low. This is BS

posted by: LookOut on June 12, 2018  9:19am

so the 11% increase may not even get us back to even?  Its great that Yale kicked in another $2.5 million but how many times will we be able to beg for money like this?

posted by: THREEFIFTHS on June 12, 2018  9:33am

Pension Budget Raided To Plug $14M City Deficit

I told all of you that the cites are Looting the pension Funds.In Fact This is Not a Raided.It is a Robbery.

THE GREAT PENSION ROBBERY States and cities are plundering employee pension funds to ease their budget crises. Taxpayers may be stuck if the plans can’t meet their future obligations.

America’s public employee pension funds have an embarrassment of riches. And like a lot of wealthy folks, they are becoming the victims of holdup artists. With ever more states and cities facing nasty budget deficits, the politicians who run them are trying to grab some of the $878 billion set aside to pay for the retirement of teachers, firefighters, police, sanitation workers, and other public employees. The pilfering of the golden nest eggs is alarmingly widespread. In the past two years more than a third of the states have cut or delayed contributions to their pension funds, seized money outright from pension accounts, or begun to debate similar measures. This is no time to be confiscating pension assets. While contributions have fallen slightly over the past three years, payouts to pensioners have been rising sharply (see chart). As a result, cash flow—the difference between annual contributions and benefits paid over the year—has narrowed for the public funds,

http://archive.fortune.com/magazines/fortune/fortune_archive/1992/01/13/75954/index.htm

Again use the New York City and Pension Model and you will not have this problem.

posted by: heightster77 on June 12, 2018  9:36am

Is this guy Jones any where near being qualified in his position. How does the police and fire need overtime when in all reality they are over staffed for a city the size of a bankrupt new haven. “Scheduling snafu” give me a break. There is not one ounce of accountability in this city.

posted by: mmrmike1 on June 12, 2018  9:45am

Hello Daryl Jones, if you spend more than you take in, you have a spending problem,plain and simple. Let’s stop creating new positions and giving 5% raises when the revenue is not there.

posted by: BevHills730 on June 12, 2018  9:53am

Lookout New Haven is not begging Yale for money.  New Haven gives massive annual subsidies to Yale in the form of tax exemptions.  The increase in Yale’s payment this year doesn’t even cover the cut in state PILOT payments.

posted by: quercifolia on June 12, 2018  9:54am

well, well, well. looks like we have another 11% tax increase on deck for next year. nice. what a team. what a mayor. great work alders, you guys did it. and Jones, fantastic job on deferring the blame elsewhere. so glad to live in a city of run by children with no financial understanding of how the world works or even common sense.

posted by: Atticus Shrugged on June 12, 2018  10:22am

By demarcating this solely as a revenue problem and not a spending problem Mr. Jones misses an opportunity to drive the narrative.  We do have a spending problem (pension spending, overtime, Board of Ed spending - why the BOE is trying to close two schools).  We do have a revenue problem, as a significant portion of the real estate is not taxable.  There are things that can and should be done with respect to both.  First, stop giving non-profits a complete pass.  With respect to all but Yale, pass a state law that taxes non-profits at 50% of the current assessment.  The state can then reimburse 50% of the difference.  With respect to Yale, the state could then afford the 75 cents on the dollar.  No more “revenue” issues to speak of. 

Yes, that would drive many not-for-profits out of business but the other choice is subsidizing companies that are not competitive in a time when the state can’t afford to do so.  And yes, that should include churches.  Second, plan to cut spending.  Do we need a fire station in East Shore when we can partner with East Haven to cover the area?  Can we fill rank and file fire fighter and police officer jobs to cut overtime?  And would that save money when considering costs of insurance?

As for bringing back DeStefano, one must remember the pension liability was funded fully the last four years.  That means the deficit grew from somewhere.  DeStefano was mayor for 20 years…  Just saying, he may not be your guy for sound fiscal practice.

posted by: 1644 on June 12, 2018  10:24am

“It’s very challenging for a city to make that revenue up in the middle of a fiscal year.”  Except, as Noteworthy said, the budget was never balanced.  Harp & Jones took the absurd position that (a) all Malloy’s initial proposed state aid increases (including about $15 million more in ECS) would be passed by the legislature, and (b) the legislature would not accept the passing of teacher retirement benefits to towns, and (c) suburban legislators would vote Malloy’s massive reductions in aid to their towns.  This fantasy allowed Harp to justify her illegal raise, her China junket, etc.  In contrast, Branford budgeted for a worst case scenario, i.e., zeroing out of state aid and the imposition of $1.3 million in TRB, imposing a mill rate increase of over 5% and pulling from reserve funds to balance its budget.  So, while New Haven has an 11% mill rate increase while still not meeting its obligations, Branford is paying cash for a fire station and school renovations it expected to bond for and shored up its police pension fund with an extra $1 million contribution.

posted by: 1644 on June 12, 2018  10:38am

Are we sure that $20 million in “debt savings” isn’t a one-time premium paid because the city issued debt with an above market coupon rate?

AT:  the city will be in worse financial shape every year for the next five years because it continues to cook the books, overestimating and misapplying revenue, baking deficits into each budget.  City employees should expect pension cuts in bankruptcy in ten years.

posted by: Howdwegethere on June 12, 2018  11:31am

Where is the most vocal union leadership of the public safety unions? The chickens have come home to roost. The bait and switch regarding FD overtime in particular where they highest paid personnel got first dibs on OT has already impacted the costs associated with pensions.

Alston said within the last year that he wanted to change FD pensions but has done nothing.

825 leadership as well as 530 leadership have remained silent on the issue. What a time to be quiet as a church mouse. Maybe a job has been promised down the line!

posted by: Noteworthy on June 12, 2018  11:33am

1644 - That is exactly what the city did. It refinanced existing bond debt, claims it got a better rate but was also given a premium in return. So we are already paying interest on the interest on city debt which Jones intentionally under-estimated at “$400 - $500 million.”

There is no other way for the city to bank that much in debt service payments without the premiums and the delay of interest payments on those bonds. Jones testified the city has never missed “payments.” True - but it is paying more and got bond payment schedules that allowed them to decrease payments in the past and now.

The dishonesty of this budget, the two-stepping dance and the cowardly absence of the budget bloat offenders - Chiefs Campbell, Alston, Youth Services Jason Bartlett, Health and some wanker from the the NHPS - take your pick -  never solved their nearly $7 million deficit and have collectively with Mayor Harp’s help, stuck taxpayers with another $30 million in spending.

posted by: Concerned4NewHaven on June 12, 2018  11:54am

New Haven should sell their parking garages and/or airport to private equity management, raising cash to pay down debt and fund future pension and health benefits.  It’s been done by many cities around the world.

posted by: TheMadcap on June 12, 2018  12:25pm

Tweed loses money and its unlikely anyone would purchase it without the runway being expanded at public cost. Selling the parking garages is as short sighted as all the deals that were made to sell parking meters, as well as raiding the pension budget. You gain a quick infusion of cash and lose much greater future revenues.

posted by: FacChec on June 12, 2018  12:38pm

How fiscally conservative and noble Board president Tyisha Walker-Myers, BOF chair Evette Hamilton and Co-Chair Adam Marchand, Alder Festa and Reyes must sound to the unadvised unaware taxpayers by proclaiming the propositions by Jones are “crazy” and unadvised. At the same time this crew talks out of the other side of their mouths unanimously approving the entire package of manipulated deficit spending in order to balance the fau-faux current year budget.  The Alders failed to listen to citizen complaints and failed to recognize the FRAC, who is enabled by Charter to advise the Mayor and Alders on its spending and debt projections.
This whole crew has to go.

The City and BOA think the public is unaware of the constant bombardment by the finance dept. with conflicting statistics regarding the current approved budget and the current year monthly reports.

“Jones said that towards the beginning of the fiscal year, back in July or August, the budget department put aside $16 million from the budgeted $61 million pension line item to keep on hand in case the city was to experience any cash flow issues due to the delayed passage of the state budget.”
This statement of pension budgeting is straight -up BS. If Jones had a 2nd backdoor solution to this year’s $250M pension bond proposal, why did he not offer this information during the dept. budget hearings. Using the tired ole Gig, blame the state

The most disgusting action by the BOF and the BOA is their approval of the Mayors $547M GF budget, with its built in deficit increases re-funding the very depts. that created theses deficits belatedly, before them today. Just plain stupid!!!

posted by: robn on June 12, 2018  12:39pm

So many stupid decisions

Try this one…cut spending.

BOA members should expect torches and pitchforks; I’ll be bringing mine.

posted by: hartman on June 12, 2018  1:28pm

We need an ideas forum. Once a week, residents (or not) are invited to participate in a meeting at which they may propose ideas on how to save money, curb spending and better plan for the future. No bitching and moaning - just ideas. No finger pointing - purely solution driven. It took me almost two years of complaining to get the lights turned off at the baseball field on Sherman Parkway at night when it was not being used. The electrical waste alone was a teacher’s salary according to the DPW. Want to save a half-mill a year on cop’s and firefighter’s uniforms (and make them happier), call me. Care to add a couple of million to the city coffers? I have another idea.

All of our ideas may not work - but some will and it won’t cost a single penny to hear to them. Who’s listening?

posted by: Druidlady on June 12, 2018  2:12pm

Guess what, everyone?  The Board of Aldermen approves all the union contracts…including fire, police, etc.  If they don’t like all the money that is being spent on overtime they MUST change the contracts!  Where are your objections and changes when those contracts come up for approval? 

Perhaps it’s time to sweep out the BOA!

posted by: ClassActionToo on June 12, 2018  3:24pm

Fire department personnel and Police department personnel are strong and necessary pieces of any city’s structure - but all this overtime, really? Teachers are a strong and necessary piece of any city’s structure - but no overtime, never, ever. I worked as a teacher and as a school administrator for 35 years. The overwhelming majority of my colleagues worked hard all through their school day and then spent 2,3 or more hours every day after school preparing for the next work day. Having said that, IMHO, there should be no overtime for any city personnel. The job is the job. You get your salary/pensions and advanced through the ranks, which in New Haven is actually pretty decent for all three of the aforementioned professions. Seriously, keep a lid on the overtime. And yes, it isn’t a revenue problem, it most certainly is a spending problem! Live within your means. Move on from Harp and elect an individual who understands how to plan a city budget.

posted by: 1644 on June 12, 2018  4:09pm

Madcap:  Your comment on Guilford having less commercial (and industrial) property than Branford is precisely my point. Per capita income has less impact than how a community decides to develop its land.  Branford (and Milford and North Haven) have chosen to favor development which generates more in taxes than it uses in services.  New Haven, on the other hand, has often rejected or obstructed such development (Duncan Hotel, English Station, Amazon warehouse) and actually required new development of fallow land such as the are around St Anthony’s Church/Doctor’s Building to have “affordable” components, a requirement that lessens the market value of the property and fails to maximize tax revenue. Hamden is a disaster for many reasons, not least failure to fund its pensions and OPEB just as the state failed to do so.  Forty years ago it was actually pretty upscale, but, unlike Milford, it failed to renew its “Magic Mile” and allowed a great deal of low-end development, i.e., development which used more in services than it produced in revenue.  Quinnipiac has also been less generous to Hamden than Yale has to New Haven, even as Hamden has encouraged QU to house its students in on-campus, tax-exempt housing rather than privately-owned, taxable rental housing.

posted by: THREEFIFTHS on June 12, 2018  4:31pm

For those who do not understand why pay Overtime.Cities and states are finding it is cheap to pay overtime.Then hire someone full time.

Cheaper To Pay Overtime Or Hire More Employees? Safety-Service ...

MARYLAND — Despite racking up thousands of dollars in overtime costs, public safety leaders across Washington County say they don’t believe hiring more employees to work at a lower hourly rate is the answer to saving money.
Hagerstown Fire Chief Steve Lohr said his department budgeted $250,000 to pay overtime expenses in fiscal year 2017 — and spent nearly every penny of it.He said spending that amount was fairly small, compared to paying new employees a full-time salary, and taking on the costs of benefits and buying more equipment.“Overtime is always cheaper than a full-time position,” Lohr said.The Hagerstown Fire Department is required to have 15 firefighters on duty at all times, and overtime costs can mount when personnel respond to a call toward the end of their shift and have to stay over.Lohr suggested people who favor hiring new firefighters also have to consider the cost of equipping them.He said it costs upwards of $10,000 to buy a firefighter turnout gear, an air pack and other necessities.At the moment, the fire department is short one deputy fire chief, one training captain and three firefighters

Why not hire more cops?
t is cheaper to pay overtime than it is to hire and train more officers, said Ken Mokrzycki, director of administration.
A starting salary of a first-year police officer is $38,258, according to pay records. Health insurance costs alone add an additional $14,000 a year per officer, he said.When existing officers, who are already receiving health insurance and other benefits, are used to cover more than their usual shift instead of hiring new officers, there is that immediate savings, he said.

posted by: 1644 on June 12, 2018  6:26pm

Did Jones say ARC stood for annual required contribution?  Or did Breen just make it up?  ARC stands for actuarially required contribution.  https://www.civicfed.org/sites/default/files/civicfed_241.pdf
If Jones doesn’t know the lingo of his profession, it’s really scary.

posted by: naturaleza on June 12, 2018  6:33pm

Turn our reality into a HBR Case Study and give it to the Yale School of Management students, tell them to “make it work” and give them a year.  It’s authentic learning and it might steer us in the right direction.

posted by: Dennis Serf on June 12, 2018  10:18pm

Property Tax Increase Brainstorming Meeting:

At the community room of the Whalley/Edgewood/Beaver Hills (WEB) community management team at 332 Whalley Avenue on Wednesday, June 27th 6:30pm. There’s free parking available and you can access the community room through the second door on the parking lot side. Nadine is taking the lead on setting up the meeting. You may reach her at .(JavaScript must be enabled to view this email address)

posted by: Morgan Barth on June 13, 2018  12:16am

Holy Moly!

The mayor’s office and B of A waited until mid-June to close a $14M deficit for a fiscal year that ends in 2 weeks?  WTF!  Even by our collectively low standards this is really terrible mismanagement.  It’s been clear all year that there was no additional funding coming from the state - this isn’t new information.

How do we cut police and fire o/t…and the answer can’t be just hire more people.  What are the efficient best practices that smarter cities are using?

posted by: Christopher Schaefer on June 13, 2018  5:26am

So New Haven has adopted the CT State govt’s modus operandi: “Connecticut has the most underfunded pension system in the nation, amassing more than $127.7 billion in liabilities…Politicians, union representatives, and fund managers all share a perverse incentive in underestimating the pension liability…which now comprise over 50 percent of the state budget, crowding out other state services or forcing tax increases to continue funding those services…Connecticut is one of only four states in the nation to set retirement benefits through collective bargaining rather than in statute…” https://www.alec.org/app/uploads/2017/12/2017-Unaccountable-and-Unaffordable-FINAL_DEC_WEB.pdf 
Corporate pensions are doing just as poorly
—which is why the private sector shifted to 401k-type plans decades ago: https://www.bloomberg.com/graphics/2017-corporate-pensions/
>>The time is long overdue for politicians and govt officials to stop deceiving taxpayers and make this same shift to 401k plans.

posted by: Howdwegethere on June 13, 2018  6:50am

@3/5 paying overtime in some cases is cheaper NHFD makes straight time until they exceed 212 hours in a 28 day cycle. Having said that, gross mismanagement and union gerrymandering over the past few years at least on the FD manipulated the distribution of overtime to the highest paid employees most of which were nearing the end of their careers. What is not considered here is the legacy where P&F participants can retire at 80% of their best 4 years, regardless of age and have the ability to cash in 5 years of unused sick time toward service credit, in some cases up to 4 years military time. So in theory you could have a fireman who worked 11 years after getting on the job at 18 years old, work 11 years, cash in sick and military time and retire with a 20 year pension he collects immediately upon retirement and forever! The calculation needs to change, buybacks of any kind need to end, new employees need to be put in a defined contribution plan and should work a minimum of years and be a certain age to qualify. Existing employees should lose the buybacks and be capped at 70% of base pay and meet service years and age minimums.

Buybacks just rob the pension!

posted by: Brendantibbets on June 13, 2018  7:08am

Overtime needs to be eliminated from the pension calculation for all employees. New employees need to move to a 401k. Some pensions over the past couple of years were unsustainable firemen and cops in their 40’s and early 50’s making $180k for life? Someone should be looking into that! The fire union has a contract that dictates staffing and hamstrings the city to manage personnel. It’s no secret that the place can run with 3-4 less engine company’s and at least 1 less ladder truck and needs more paramedic units. The fire contract is up for both police and fire, management should start acting like managers and eliminate the absurd overtime. The fire class at the academy was absolutely not needed and is the reason the fire budget salary line is in the red.

posted by: Noteworthy on June 13, 2018  7:49am

Spending Reduction Notes:

1. Reducing city spending is not hard nor is it complicated. During the budget hearings, citizens provided the Finance Committee with millions of dollars in direct, verifiable savings - including the consolidation and closing of schools. This raised eyebrows but you see what happened.

2. The problem is the same committee then took the savings from the schools and turned around and spent it - on a health budget that is grossly out of balance and has across the last three years, accumulated a deficit of some $26 million. They didn’t take any action to reign in costs.

3. What’s missing is intellect, courage and a commitment to reduce spending to reflect the extremely fragile state budget, its billions of dollars of deficits for the foreseeable future and our own inability to absorb an unlimited property tax raise.

4. Mayor Harp is in denial. She fails to recognize or accept that there is a financial crisis. She endorses the highly questionable practice of continually refinancing city debt, structuring bond payments to get upfront cash - something the state has done at its great peril and now crushing debt. And taking money from pensions?! The stupidity of doing that is extraordinary. It’s like tapping your 401K to pay your electric bill. It’s what desperate people do.

5. It’s now clear that Harp can no longer claim that all the financial issues her family continues to have paying their mortgage commitments are without her knowledge or input, that the state’s financial problems aren’t related to her “leadership.” These actions are remarkably similar and stunningly reckless and a careless disregard for both common sense and our own charter requiring a balanced budget and not using debt to fund operational expenses.

posted by: Colin Ryan on June 13, 2018  8:25am

“... the city projects a budget deficit of $14.07 million by the end of the current fiscal year, which closes at the end of the June.

During the Finance Committee hearing, Jones stressed that the city has a revenue problem, not a spending problem. He said the city did not find out until October 2017… that it would be around $5 million short in expected revenue from Hartford.”

These are two different numbers. $14.07 million is a different number than $5 million.

“Jones… said actuaries will likely recommend that the city increase its annual pension contributions above the current budgeted amount to make up for this year’s pension budget deficit.

Marchand asked if the alders should look into increasing its budgeted pension contributions for next year based on the likely pension deficit for this year. Jones said he would recommend keeping the current $61 million budgeted pension line item the same.”

So the decision has already been made to not do what needs to be done next year.

Is anyone else going nuts here?

posted by: BetweenTwoRocks on June 13, 2018  8:46am

Raiding the pension fund to pay our current debts is the most Connecticut thing ever and exactly how we got into this mess. Stupid, stupid, stupid. That’s going to cost WAY more in the future, and then what? This isn’t a strategy.

It’s going to make things harder in the future.

We also need to figure out how to reduce costs in the fire dept and police dept. They just spend however much they want, give out however much overtime they want, and there are no consequences. Hell, you can get in trouble for abusing your authority and hurting people and you STILL can’t get fired.

I’m not sure if Harp is TRYING to lose her next election or what, but she’s doing a bang-up job. I supported her, but this is a circus.

posted by: observer1 on June 13, 2018  9:26am

The folks posting comments here are not the problem and are preaching to the choir. The folks that are the problem, are the balance of people in New Haven who either do not read about what is going on, can’t comprehend what it is they are reading or just do not care and continue to vote for these incompetent people running the city into the ground. We need a competitive election between the current political establishment and “something” else. Republican, Socialist, Green, whatever. One party rule has to end.

posted by: quercifolia on June 13, 2018  10:43am

yes @ everyone commenting with insightful and practical information as to ameliorate this situation. let us band together not only here but at newhaventaxpayers ‘dot’ proboards ‘dot’ com. also, join us at;

Whalley/Edgewood/Beaver Hills (WEB) community management team at 332 Whalley Avenue on Wednesday, June 27th 6:30pm. There’s free parking available and you can access the community room through the second door on the parking lot side.

the time has come to take this conversation out of NHI, out of the internet, and into the real world. we have been passive for too long. unfortunately, as some of you are reading the tea leaves, they will again try to raise taxes next year, again by 11% +- and now is the time to start spreading the word that this “business as usual” has come to an end. next year we have our local elections and that is when we are responsible for finding new alders, a new mayor, new and logical voices to represent us. however, we have to start now!

in fact, we are getting quite close to July 2nd, when the masses, who may not be aware of the new tax increase, receive their new tax bill. you can imagine your neighbor will be equally enraged as you are. speaking of which, July 2nd the BOA meets for a scheduled meeting and that would be an excellent time to show up with your new bill and make your presence known! i believe we have more power than we know. let us unite.

posted by: steve on June 13, 2018  1:54pm

@TheMadcap   Quote “Tweed loses money and its unlikely anyone would purchase it without the runway being expanded at public cost.” First its very rare for airports to be sold to private corporations and second, the runway project will be 90% funded by the FAA and those funds are gotten by fees on all airline tickets, not from state or federal tax dollars.
Just think, if the airport had upgraded its runway when first proposed years ago, its income would be considerably higher and the cities cut on fees for car rentals and other airport related fees would have been greater. You are true in saying the airports value would be higher with the upgraded runway but a few small minded individuals who blame the airport from traffic jams to diseases to constant noise from a never ending stream of planes and one even saying larger planes would make the runway sink have invented these fairy tales to frighten area residents.
An improved Tweed no serious danger to anyone including one who said diesel fuel is in their pool, planes don’t use diesel.

posted by: HillVilleAnnex on June 13, 2018  2:40pm

New Haven city administration and department heads are going to have to “budget” and manage like the residents do everday. City residents adjust to financial conditions on the ground, the city should do the same. 

I’m beginning to wonder if we’re being hustled. Things appear to be good for a privileged few in certain zip codes.

The magnet school lottery is a scam. If your kid didn’t win the lottery, call your “connect” at the BOE. They got the “hookup”. 

No city employee should make more the sanitation workers. I see them every Friday. They smile, they get the job done efficiently and you see real results. You can’t say that for a lot of other departments. The attitude is more like court-ordered community service instead of municipal public service. Municipal employment is a privilege…

posted by: JCFremont on June 14, 2018  9:44am

Companies try to limit overtime by using part time workers, change work rules and hours, and buy and invest in technologies that will eventually eliminate positions. If unionized the union will do it’s best to protect it’s older workers hopefully getting them to retirement, the new hires take the brunt of change. The municiple, state and federal unions and elected and un-elected officials have a quid pro quo.