CDCPTR summary of “The Plan” by the “Community Action Committee”….
The 1st covenant of The Plan seems to contain some “funky” math. For instance, the claim of “A savings of $42,000.00 per annum resulting from the closing of three stations is estimated at $14,000.00 per station….” Well, first of all let’s look at the current MFD arrangement; 7 stations of which 2 are scheduled to close at an estimated savings of $14,000.00 per year each, leaving a total of 5. Under the proposal which includes 2 CTVFD stations not currently in the MFD inventory and not considered previously, adding 2 and closing 3, really only removes 1 from the current MFD station numbers…at savings of $14,000.00 per year not $42,000.00. For the balance of 2009 that savings would actually only amount to $7,000.00. The 1st covenant also reveals the willingness of Center Township to pay for MFD provided fire protection to the tune of $150,000.00 for the balance of 2009 and $300,000.00 per year until the current fleet of CTVFD fire trucks are fully paid for and then $400,000.00 per year thereafter. Of specific note regarding that offering is the fact that the CTVFD 2009 payment is exactly one-half of the annual consideration which is an indicator that The Plan, and its arithmetic, is based upon an enactment of The Plan by July 1, 2009.
The 2nd covenant of the Plan raises some confusion relative to the staffing numbers. It starts out reciting the 115 contractual staffing and the 100 proposed staffing and the “retirement buy-out” of 10 firefighters. I’m missing 5 in the head count here, unless it should be inferred or acknowledged that there are only 110 currently on the payroll. The reduction of 10 for the balance of the year, it is alleged, will yield $483,000.00 savings while it is estimated to save $750,000.00 in years thereafter. Are we to assume that the $483,000.00 number comes from something other than the last 6 months of 2009 as supported in the first covenant regarding the Center Township payment to the City? Because based upon the $750,000.00 annual savings figure, that savings number for 2009 should be $375,000.00. This is a discrepancy that we’ll hold out as a questionable consideration in our summary of The Plan until we can reconcile the difference. This covenant goes on to request a “buy-out” of the 10 firefighters being “retired” for $750,000.00. Another fact worth noting at this point is that we have always considered the total average cost per firefighter as between $73,000.00 and $76,000.00 per year including all benefits, insurance and PERF (retirement). This buy-out proposal puts that figure at $75,000.00 per firefighter and would obviously include ALL costs associated with each firefighter as well. The Plan requests that the City borrow the $750,000.00 to provide for the “buy-outs” and that the revenues from Center Township and “further concessions from the Union members” will be used to pay for the “buy-out loan”. This raises two issues; If the City incurs a debt to reduce a cost, the revenues resourced to pay for that debt cannot be considered free and clear and additional revenue until that debt is retired; If the City also uses the saved resources from the “further concessions from the Union members”, they as well cannot be considered free and clear savings computed into the arithmetic of The Plan until the debt is retired. For the purposes of this summary, we will consider the fact that the fire protection payments by Center Township of $25,000.00 per month ($300,000.00 per year) are fixed and known and will be obligated fully to the amortization of the $750,000.00 buy-out loan so as to retire the debt as expeditiously as possible to minimize the additional costs associated with loan interests. A 36 month loan for $750,000.00 at 4% interest and amortized at $25,000.00 per month, will be retired in 32 months at a cost of $42,000.00 in interest for a total cost of the buy-outs being $792,000.00 to the City. The “further concessions from the Union members”, while not specifically known, will be considered into summary of The Plan as savings to the City.
Covenant number 3, pretty much speaks for itself. It calls for $70,000.00 in overtime savings in 2009 and $140,000.00 in future annual overtime savings. The primary question this raises with us is why haven’t these savings been found up until now? AND these savings are achieved with reduced manpower? That issue could be a discussion for another time.
The 4th covenant indicates a number of $73,000.00 regarding ONE-TIME reduction in pensions. We assume that this is the pension payments that the City would be relieved of for the balance of the year with the buy-outs of the 10 firefighters. However, as stated in our interpretation of the 2nd covenant, the $750,000.00 per annum savings of the reduction of 10 firefighters appears to already take in to consideration all the associated costs of each firefighter INCLUDING the benefits and pensions at $75,000.00 each per year. If that’s the case, we certainly cannot plug pension savings into the arithmetic of The Plan twice. Once again, like the discrepancy between the $483,000.00 in salaries and benefits savings for 2009 as stated in 2nd covenant as opposed to the $375,000.00 for the balance of 2009 as gleaned from the acknowledged $750,000.00 annual savings, we are left to try and guess where this number is being generated from. Probably the reasonable thing to do, like the discrepancy in covenant number 2, is to hold this issue out as a questionable consideration in our summary.
The 5th covenant refers to a $100,000.00 “short-term” reduction via “personal miscellaneous concessions” and contains no promise or numbers relative to future concessions only to the extent that they might be “possible”. The dialog contains a specific reference to the fact that any considered concessions, none of which have been yet conceded, would only be effective until the “cost of the retirement buyouts is paid”. We find that to mean that once the loan associated with the buy-outs is fully amortized, all bets, if they exist, are off the table. Although there hasn’t been any future concessions specifically laid out, whatever they might be, if any, won’t continue beyond the next 32 months if we use the Center Township payment in its entirety to expeditiously amortize the loan.
The 6th covenant suggests that the City should sell off the excess inventory of equipment for approximately $200,000.00. That in its own certainly puts into question as to why we’re now on the verge of buying 2 new fire trucks for a total cost of nearly $1 million courtesy of the Morrison TIF and taxpayers and why the architects of The Plan haven’t called for the suspension of that effort pending the final resolution of The Plan’s offerings. The CTVFD has a very substantial inventory of firefighting equipment that would not only compliment, but literally fulfill the MFD’s needs and wish list at an ultimate savings of $1 million to the taxpayer, specifically the Morrison TIF. The covenant additionally states that the abandoned fire stations could be sold as well but attached no value to them and this number wasn’t used in the budget numbers (savings?) provided.