At this month’s General Committee meeting the Fire Chief asked Council members to allow him to hire a new employee now to fill a vacancy that may occur sometime later this summer. Whatever curious logic leads to that recommendation, it especially offends common sense today when Council has not completed dealing with one of the main opportunities KPMG identified in its recent management study.
By retaining KPMG last year Council signaled a desire to control future increases in operating costs and more effectively manage the municipal tax levy. KPMG identified payroll costs as accounting for almost 70% of the Town’s operating costs and projected that wage increases for employees would range from 1.5% to 4.0% annually depending on the employee group.
KPMG pointed out that unless changes are made, wage increases will continue to cause significant increases in operating costs and Town taxes. Built-in annual increases in wages and benefits are adding about $600,000 in increased spending every year or a 3% tax increase without any new programs or staff.
KPMG pointed out a way to manage personnel changes through attrition without laying people off. They identified 26 positions held by employees who are eligible for unreduced pensions by 2016. They suggested looking at these positions as possible candidates for staff reductions as vacancies occur.
Some of the positions KPMG identified as possible candidates will need to be replaced. Still, there is a significant opportunity to reduce staffing levels without layoffs. The average pay for Town employees is approximately $58,000 for non-management employees and $82,000 for management employees not including benefits that add about 35% on top of that. If only 8 of KPMG’s 26 identified positions were not replaced after retirement (two management and six non-management) that would create $691,000 in permanent savings every year from now on.
Staff costs are without doubt the elephant in the room and need to be dealt with. And looking for attrition opportunities must include the Fire department – not just every other Department. The Fire Department has added two additional firefighters since 2008 and now has two more than the minimum required under the current collective agreement. The Fire Chief should withdraw his recommendation to add one more firefighter when there is not even a vacancy and Council should very carefully examine any future recommendation to replace a retiring firefighter since there is less than one fire a month in any structure in Midland.
Midland Council needs to get on with the job started by KPMG. We continue to believe Council must seriously review staffing levels with a view to reductions through a hiring freeze, attrition and reallocating existing staff to meet operational and priority needs.
Finally, we note KPMG made many other recommendations that have yet to be pursued. One example is Corporate Services where Midland PUC spends $1.2 million for this function and the Town also spends $1.8 million including $1.4 million just for wages and benefits. KPMG suggested consolidating this function to achieve significant savings and avoid waste and duplication.
Clearly, the work has just begun!