February 21, 2009

Avedisian Locks in... Savings?

Justin Katz

Out of Warwick comes a "tentative agreement" with the municipal unions in which Mayor Scott Avedisian purports to have secured $10 million in savings between March 2009 and June 2012. The dollar amount is measured against the current contracts, expiring at the end of June, and an assumption that a subsequent contract covering the next three years would otherwise have been substantially the same.

The specifics of the "concessions," however, give the impression that the objective is to lock in some very modest changes to help the unions weather the escalating economic storm. Furthering the impression that the taxpayers of Warwick may not be getting the best of deals, here, is the fact that the city council has called for a special meeting on Tuesday night to ratify the contracts, which (according to my sources) will require "unanimous consent" among the councilors, because the required procedure will have been circumvented.

According to a cover letter to the above-linked packet by Personnel Director Oscar Shelton:

... the bulk of the savings comes from increasing health insurance copayments, temporary wage reductions, deferring holiday pay and clothing allowances and from the FOP and Municipal Unions' willingness to reduce their ranks through attrition. The police union is amenable to allowing the City to reduce their force from 180 employees to 163 without filing for arbitration or any other types of litigation. The Municipal Union's workforce will be reduced by at least 12 employees and the Management/Non-union employee Group will be reduced by at least 16 employees (28 total).

The salient points are as follows:

  • The health insurance savings come from an increase in the weekly pay-check reduction from $11 for all employees to a whopping $14 for an individual plan and $28 for a family plan, which is minimal to say the least, by current standards.
  • The wage reductions vary in significance from one contract to the next:
    • The police will see a 3.25% salary reduction for the remainder of this year (which began, last July, with a 3.75% increase). Unfortunately, my documentation is missing the page that lays out the raise schedule for '09 to '12.
    • The firefighters will see a 5% salary reduction for the remainder of this year (which again began, last July, with an approximate 3.75% increase, although I didn't check the increase for each position). Come July, they'll get that money back as their raise for the first year of the new contract, and then they'll receive a 1.5% increase every six months until June 2012 (equivalent to 2.25% annual increases).
    • Municipal employees will see a 3% decrease for the remainder of this contract year (which began with a roughly 3% raise, although again, I didn't calculate every grade). As with the fire department, a return of that money will be their raise for the '09-'10 year, followed by 1.5% increases every six months.
  • In all cases, the deferred holiday pay and clothing allowances are redeemable as paid days off (with clothing allowances converted thereto) — timed, at least, so as not to trigger overtime costs — or as cash payments upon retirement.
  • The ability to secure attrition of workforce comes at the cost of no-layoff clauses in the police and fire contracts. (The police contract specifies the current contract period, but as I said, I'm missing an important page.) Moreover, none of the attrition or staff reduction language that Shelton cites is actually in writing within the document that I have.

The most insidious part of the agreement, however, is that it is absolutely contingent upon the city's revenue shortfall. As the police section of the agreement puts it:

In following, the parties hereby agree that should the City become able to partialy or wholly fund the above-referenced Budget Shortfalls for the (current) Fiscal Year ending June 30, 2009 and/or the Fiscal Year ending June 30, 2010 through the receipt or generation of additional revenue through:

(a) its receipt of any reinstatement of or new source of State of Rhode Island State Aid/revenue sharing,

(b) its receipt of any applicable funding from the Federal Government, or

(c) its reduction of applicable costs and expenses from the implementation of any legislatively and unilaterally reduced wages and benefits levels affecting those wages and benefits levels set forth in the parties' current 206-2009 CBA or the successor 2009-1012 CBA (i.e. such as those changes proposed in Article 33, Article 45, etc. of the Governor's proposed Supplemental Budget);

the parties will re-open negotiations concerning the 2009-2012 CBA in order to reinstate levels of benefits reduced in said CBA (i.e. the Holiday Pay and/or Clothing Allowance deferred in the 2009-2012 CBA) in amounts that are commensurate with the level of additional revenue received or generated.

In other words, should budgetary matters turn around in a way helpful to the city, the unions will be first in line for renewal of their money flow. Part C goes so far as to require renegotiation should, for example, the governor and General Assembly implement a statewide minimum healthcare copay; Warwick's savings from that measure would be cycled back to the unions. If only Rhode Island's cities and towns could draft their contracts contingent upon the continuation of short-term market booms and annual windfalls!

As I suggested above, the agreement has an air of union protection in a disastrous and unpredictable time, and the people of Warwick should insist that their elected representatives protect them instead.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

Deferrals, attrition, ballyhoed sub 10% co-pays.
All part of the smoke and mirrors, tap-dancing, shucking and jiving that makes up the charade of "municipal governance" in the state.
Wait till we see details of the chimera that is Lombardi's "almost" $200k in alleged givebacks.

Posted by: Mike at February 22, 2009 7:00 AM

The logic is something like this:

I'm going to take my credit card to the mall and spend 10 grand on new clothes. However, I've had a change of heart, and instead am only going to spend 8 grand on clothes I really don't need, but really, really want. Therefore, I have just "saved" 2 grand. Forget for the moment that at some point I'll have to pay back the money, since it's not on hand, but only on credit.

Good luck with "unanimous consent" among the councilors. Maybe some DEMOCRATS will vote against it and save the day.

Posted by: Will at February 22, 2009 12:45 PM

This is so much of a push down your throat we know what is best for you and you have no idea so we're going to do this any way. I don't think the unions boy Coulintalno will even be able to get this pushed through.

Posted by: tom at February 22, 2009 6:07 PM

I decided to do the full analysis

If the General assembly passes the 25% co-pay of health care insurance here is the amount of money that will be lost if Warwick passes the Mayor’s proposed contracts.

Based on individual health care costing $7,500 and family plan costing $15,000 compared with the $14 per week co-pay for individual and $28 per week for family negotiated by the mayor.

Assuming 25% co-pay passes by March 1 2009.

$7,500/52 = $36 per week co–pay vs. current $11 per week co-pay being paid = $25 more saving per week per employee.

$15,000/52 = $72 per week co-pay vs. current $11 per week co-pay being paid = $61 more saving per week per employee.

Assume no change in health care cost for FY2011 & 2012.

Additional savings = number of employees * additional weekly co-pay dols* num weeks paid in year

Police Department

Police FY 2009 individual = 33*$25*16 = $13,200
Family = 140*$61*16 = $136,640
Total FY2009 savings = $149,840

Police FY 2010 ind 30*$25*52 = $39,000
Family = 133*$61*52 = $421,876
Total FY2010 = $460,876
Total FY2011 = $460,876
Total FY2012 = $460,876

Total three year difference in savings with 25% co-pay over mayor's fix rate co-pay for the three years is $1,532,468

Fire Department

FY2009 individual = 22*$25*16 = $8,800
Family = 184*$61*16 = $179,584
Total FY2009 savings = $188,384

FY2010 savings = 22*$25*52 = $28,600
Family = 184*$61*52 = $583,648
Total FY2010 savings = $612,248
Total FY2011 savings = $612,248
Total FY2012 savings = $612,248

Total three year difference in savings with 25% co-pay over mayor's fix rate co-pay for the three years is $2,025,128

Municipal Employees

FY2009 individual = 99*$25*16 = $39,600
Family = 218*61*16 = $212,768
Total FY2009 savings = $252,368

FY2010 Individual = 99*$25*52 = $128,700
Family = 218*$61*52 = $691,496
Total FY2010 savings = $820,196
Total FY2011 savings = $820,196
Total FY2012 savings = $820,196

Total three year difference in savings with 25% co-pay over mayor's fix rate co-pay for the three years is $2,712,956


The total three year saving with all police, fire and municipal employees paying a 25% health care co-pay over the current $11 per week co-pay is $6,270,552

The total three year saving with all police, fire and municipal employees paying a $14 per week for individuals and $28 per week for family is $1,644,304

If this contract is signed and the General Assembly passes the 25% health care co-pay it will cost Warwick Taxpayer $4,626,248 in three years.

Posted by: Warwick taxpayer at February 22, 2009 11:40 PM

Don't believe for a second that if the cities and towns save money from union concessions (no matter what they are) that the saving will be socked away in a bank account and saved. It will be wasted on something entirely different and the unions will again be blamed. Don't hate us for having a job nobody else wants.

Posted by: Earl at February 23, 2009 10:36 AM

Right on, Earl. This just seems like boilerplate Avedesian bashing to me.
Maybe Scott should've kissed Laffey's ring LOL.

Posted by: rhody at February 23, 2009 2:13 PM

I love the way all the people throw the numbers around, like the city Actually pays that amount per person for healthcare, Theyre self insured and only pay an admin. fee.They only pay out when someone uses the plan,so if you dont go to the dr. all they pay is admin. fee,so theres your 25%, the better question is where is the money going,to health ins,yeah right,I Haven't heard 1 administrator say that any of his/her staff was going to take a pay cut or pay more for their health insurance.Sound like trying to put all the blame on the unions again to me.

Posted by: BoB at February 28, 2009 8:24 PM
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