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Can GF City Hall downsize?

Amid layoffs and pay freezes in Grand Forks last fall, some City Council members made the argument that if residents are feeling the pain of economic contraction, maybe City Hall ought to, as well.

Downsizing

Amid layoffs and pay freezes in Grand Forks last fall, some City Council members made the argument that if residents are feeling the pain of economic contraction, maybe City Hall ought to, as well.

They called for a downsizing of the city's work force by offering buyouts to city workers to hasten their retirement. Many city leaders seemed to agree then that it was at least worth looking into.

What's happened since?

The idea has pretty much been on the backburner, in part because buyouts may not be as affordable as once thought and because with retirement investments in rough shape, many aren't very eager to retire.

The city still is looking at downsizing, according to Human Resources Director Daryl Hovland; it's just waiting for employees to retire instead of asking them to retire early. For example, he said, the new finance director, Saroj Jerath, who had been assistant finance director, is considering not replacing herself and thereby saving the city one managerial position.

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So far, no city leader has advocated layoffs, though they did agree to reduce wage hikes from 3.6 percent to 1.5 percent.

By the numbers

Let's look at some rough numbers to see where the city's at now.

The city's work force stands at 451, of which 76 are eligible for retirement from now to 2010. That means 16.9 percent of the work force is available for buyouts.

The city spends 26.6 percents of its budget on salaries and benefits, or $36.1 million. That averages out a compensation of $80,034, of which about a third are benefits.

The Metropolitan Planning Organization has estimated the city population at 55,136, with about 8.2 employees for every 1,000 residents. This is higher than the pre-flood period when that figure was 7.9, but much lower than the peak in 2003 when it was 8.8.

If the city were to aim for 7.9, it would have to bring its work force down to 438.

Let's drill down into the numbers and see where the biggest savings might be.

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The big three categories of employees in terms of numbers and dollars spent on salaries and benefits are, in this order, public safety, streets and utilities and general government.

The first two are, by far, the biggest. Your police officers, firefighters, street cleaners and the like make up 67.2 percent of the work force and use up 58.3 percent of the money. That's 303 employees earning $21.1 million total.

The third include your engineers, planners, accountants and the like. They make up 17.7 percent of the work force and use up 19.4 percent of the money.

Of the remainder, economic and community development -- your bus drivers and jobs program specialists -- has 8.4 percent of the workers and 16.4 percent of the money, while public health -- your nurses and mosquito control crew -- has 6.7 percent of the workers and 5.9 percent of the money.

Cost constraints

That's the big picture. Look closer and cuts, though possible, are not a simple matter.

One example of where cuts would seem simple but aren't is the city's utilities, the folks responsible for cleaning the drinking water and getting rid of the sewage.

Over the years, the utilities have invested in more automation so that, instead of having maintenance workers checking a sewage lift station periodically, the lift station sends its own status electronically to the main office.

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Public Works Director Todd Feland said more automation could help the city downsize, but that would require spending in newer technology and, ironically, on individual employees. "If you want to downsize, you can downsize, but you have to be willing to find and pay talented people who can do multiple things."

The flipside of salaries and benefits is the cost of maintenance and operations and the cost of buildings and equipment. Streets and utilities are the champs in each category. These functions eat up 51.4 percent of the city's maintenance and operations expenses, or $16.7 million, and a whopping 83.4 percent of its building and equipment expenses, or $25.2 million.

More technology could drive these numbers up.

Service industry

In most city departments, though, the services can only really be provided by people.

"We are in a personal service-delivery type governmental business," Police Chief John Packett said. "The majority of what we do requires access to an employee."

The department has moved from two to one officer per squad car and changed where officers patrol to focus more on trouble spots, according to Packett. It's even asked residents to report minor crimes over the phone rather than have an officer show up in person.

But there's a limit to cuts.

The chief already is looking at a smaller than average force on the street.

Ideally, there should be 1.7 officers for every 1,000 residents, Packett said, though he's doing alright with a little less than 1.5. The problem is when officers go on vacation, are away training or recovering from injuries, he said, which means more spending on overtime and fewer officers working the same number of cases.

Fewer savings

But the real challenge of downsizing is making it work financially.

Many of the 76 workers eligible for retirement are in supervisory positions, people with years of institutional knowledge who would be hard to replace, Human Resources Director Hovland said.

Besides the skills lost, what this would mean for the city is a lot of money spent. Buyouts in the public sector are about the same as they are in the private sector. Typically, a package would include severance pay based on years of service and health insurance coverage for a certain period, say, until Medicare kicks in at age 65.

At the low-end of the retirement scale, a 55-year-old might cost the city $400,000 to $500,000 for both, Hovland estimates. He figured it wouldn't change substantially for someone closer to 65 because, while insurance costs would drop, severance pay would rise.

Council President Hal Gershman, who was among those suggesting the city consider downsizing via buyouts, said recently that, with retirement accounts pummeled by the recession, it's hard to imagine too many city workers seeking early retirement.

He recalled the way the buyout discussion petered out late last year when the economy plummeted. "We made an assumption that most people would not be interested in it at this point."

Council member Terry Bjerke, another buyout proponent, said he'd still like to see a report from city department heads. "If they say we can't get rid of anyone, then we can have that conversation," he said, but a formal report on downsizing should be a part of the budget process.

Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send e-mail to ttran@gfherald.com .

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