For Stamford fire service, it’s benefit costs vs. overtime costs
STAMFORD — Something in the fire department budget caught Richard Freedman’s eye as he reviewed the city’s first-quarter financial projections.
The Board of Finance chairman saw “variances all over the place.”
As head of the body that controls the city’s purse strings, Freedman was doing his job in asking Jay Fountain, director of the Office of Policy and Management, “Where do these numbers come from?”
They showed a $325,000 drop in the amount spent on fire department salaries, but a $627,000 increase in overtime costs, “which is a lot,” Freedman said.
The department is understaffed, Fountain explained.
“Are they hiring more people?” Freedman asked. “Because it looks like for every dollar that we save in salary, we pay two dollars in overtime.”
“It shouldn’t be that way,” Fountain said.
“I agree,” Freedman replied.
The exchange came during the finance board’s November meeting when members learned the city had a tough first quarter in fiscal 2018-19, which began July 1.
Projections so far indicate a $1.66 million budget shortfall.
But the fire department numbers reflect an intention to spend less money, Chief Trevor Roach said. It involves the complex relationship between staffing, salaries, benefit costs and union contract terms, he said.
Besides, some of the numbers provided to OPM and spotted by Freedman were inaccurate, Roach said.
“There was a calculation error. About $250,000 in salary was not accounted for, so that has to be added. And the overtime was high,” Roach said. “The assistant chief is working with OPM to correct it. Our projection for the end of the year is that we will be just about even in those two accounts.”
The quarterly results are the result of an effort to rein in the ever-escalating cost of employee benefits, Roach said. The fire department made no new hires this year to avoid incurring the expense of additional benefits, he said.
“The cost of benefits increases every year, and far faster than the cost of wages,” the chief said. “Wages are going up about 2.5 percent a year, but benefits go up 8 percent to 10 percent. We are looking to try to save money on the benefits side as much as we can.”
It means fewer new employees, and more hours for those on staff, he said.
“With overtime, you pay people ‘time and a half,’ or 1.5 times” their hourly wage, Roach said. “But benefits — pension, medical, sick pay, vacation, etcetera — comes to 1.6 or 1. 7 times” the hourly wage.
So, in the 2016 contract, city negotiators eliminated a provision that required 62 firefighters per shift — 53 to work and nine to stand by to cover those out on vacation, or on personal or sick leave.
“We brought the number of assigned people per shift from 62 to 57,” Roach said. “It drives overtime up, but the cost of benefits decreases.”
It’s a function of the unique complications that come with staffing a fire department, he said.
“We have to have people here 24/7, and a certain number of people, in order to protect the city,” Roach said. “It’s not a normal business model, with people working 8 a.m. to 4 p.m. every day, and if a few are missing, that’s OK.”
The renegotiated shift minimums permit options, he said.
“Fiscally, it allows us to actually manage the department, where before we were glued to whatever the contract made us do,” Roach said. “We can experiment a little and see where we can dial in the best savings for the city.”
The department is unable to weigh the cost of paying benefits for additional employees against the cost of paying overtime to existing employees, the chief said.
“The city looks at benefits as a three-year running average, so it’s too soon to calculate the savings,” Roach said.
City officials will be looking hard for money-saving measures for the rest of the fiscal year.
Finance board members at this month’s meeting learned about an error in the assessor’s office that led to a $2.2 million overestimate of the amount of revenue the city can expect to collect from a tax on business equipment.
That decrease in projected revenue follows two large expenses incurred in the first quarter.
In July, officials learned they had to pay a company $700,000 to haul away recyclables, which earned the city money until the market for them collapsed earlier this year.
A far larger expense is ongoing. It will cost $2.5 million — so far — to clean up mold in school buildings and repair them to prevent further water damage. One school, Westover elementary, had to be closed and 700 students moved to a refitted office building.
Officials have said it remains unknown how much it will cost to clean up the mold.