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Inside the Beaver's Dam

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Location: Beaver Dam, Wisconsin, United States

Wednesday, August 09, 2006

PFC Decision Only Adds to City's Troubles

Last week's decision by the Beaver Dam Police and Fire Commission to uphold a grievance filed by a retiring police officer could lead to millions of dollars in payouts to future retirees.
The decision to side with the police union, another in a string of anti-taxpayer moves by the PFC, may sets a precedent that upholds an agreement reached 10 years ago to pay 25% of a retiree's health insurance premium until that individual is Medicare eligible. That agreement, however, was intended to last only five years, until a reduced pay scale for new hires expired. At least that's what Mayor Jack Hankes, the city's labor attorney, and a high ranking veteran city employee believe. The union disagrees.
City retirees are already able to bank sick days in exchange for health insurance premium payments. This benefit, now upheld by the nearly unaccountable PFC, will cost the city hundreds of thousands of dollars a year, and that number could skyrocket with large increases in the cost of health insurance. According to figures compiled by the city, if insurance costs continue to climb, officers who are currently in their mid-20's will stand to receive more than $700,000 upon retirement.
And then came last night's announcement by Finance Committee Chairman Jon Litscher that health insurance costs will likely rise nearly $230,000 next year, devouring any possible increase in tax revenue.
The decision by the PFC has set the city back hundreds of thousands of dollars a year. It's time the Commission starts considering the needs of taxpayers over the needs of employee unions, not the other way around.

7 Comments:

Blogger Dam Insider said...

Please note: No longer will "anonymous" comments be allowed. This decision has been made simply for the sake of clarity. You will have to register in order to leave comments. However,registration does not require you to give any information that will identify yourself personally. Please create a unique user name and let's continue the good discussions we've had during the past 10 months.

Wed Aug 09, 03:18:00 PM  
Blogger Azor said...

Thank you Dam Insider. I'm just waiting for the first angry response from someone who reads the first sentence and then quits. You might also want to explain that registration simply means clicking "other" on the options.

Wed Aug 09, 09:47:00 PM  
Blogger provethefacts said...

If you are going to post such outrageous figures, state how you came to such outlandish numbers. Between you and the mayor, you should be able to come up with something.

The PFC was only doing what was right, according to a legally binding contract. While it is hard to find in the current leadership of the City, the PFC still has a sense of what's right and what's wrong. They don't state facts they pulled out of the air or make up stuff as they go along.

The taxpayers should thank the PFC members. They SAVED the taxpayers money by avoiding another lengthy and costly mediation and arbitration process. That is what's going to cost the residents of Beaver Dam in the end.

Thu Aug 10, 10:48:00 AM  
Blogger MJ said...

I agree the numbers are outrageous, but again, this is basic math. 13.2% is the city’s average insurance premium increase over the past ten years, thus it is neither impossible nor unreasonable to conclude that that trend could continue. Consider a 26-yr old employee who is 24 years from retirement. 24 years is the compounding period, thus 13.2% to the 24th power = 19.6; 19.6 times the present value of the benefit ($32,604) = $639,124. The younger the employee, the greater the future value. This is not rocket science.

With current officers and truck drivers/EMT the sum under the 13.2% assumption is $8.4 million; at 10% it’s $4.9 million. Since city spending can’t or won’t increase at these rates, public safety could simply devour itself under the cost of this benefit.

We have to stop pretending these benefits don’t cost much, and we have to stop blaming those who take the time to figure that out. MJ

Fri Aug 11, 07:20:00 PM  
Blogger TACKAKC said...

Just a couple quick points. In your latest rant, er, I mean blog, you state:

"City retirees are already able to bank sick days in exchange for health insurance premium payments. This benefit, now upheld by the nearly unaccountable PFC, will cost the city hundreds of thousands of dollars a year, and that number could skyrocket with large increases in the cost of health insurance."

This health insurance benefit is a negotiated, contract benefit. The PFC does not negotiate contracts with city employee unions. If the city isn't happy with what's in the contract, then they need to seek concessions at the bargaining table and quit trying to lay blame for the contract language at the feet of the PFC. The PFC didn't give the union anything they hadn't already won at the bargaining table. What they DID do was save city taxpayers thousands of additional dollars that would have been spent on their labor attorney fighting a losing battle in abitration.

Another clarifying point. You make the assertion that this benefit will cost taxpayers $700,000 per employee, implying that this is somehow above and beyond the current benefit package. It is NOT! It IS the current benefit package, again negotiated between the city and the union. The PFC did not give the union anything it didn't already have.

Ultimately the cost of city employee benefit packages may well need to be pared back, but again, this is accomplished at the bargaining table between the city and the union.

If you have issues with the PFC, and clearly you do, I'd suggest contacting the chair (Nancy Conley), getting on the agenda, and speaking your peace. Taking potshots at them, anonymously from out here is very self-serving and non-productive.

Sat Aug 12, 10:22:00 AM  
Blogger jackswacked said...

Jack, if you, Mike and Mark, are able to arbitrarily pull YOUR numbers out of the air and post them here, then how about this number, In the 28 months Jack has been in office, FACT is that the city has had an $800,000 loss in revenue and excessive NON budgeted costs for HIS agenda. So that number divided into the 28 months you have been in office is about $28,500 PER MONTH. Coumpund that by the scary possibility of you in another term, and I quote "thus it is neither impossible nor unreasonable to conclude that that trend could continue." We are then looking at a loss to the city of $1.25 MILLION dollars in the next 44 months. politicians figure, and figures DO lie. Jack your sixth grade math is as accurate as a weather forecast do to your constant manipulation.

I also find it VERY interesting that you had an Alderperson spew your internet projected insurance number increase so you can't take the blame for it. Ironic that if you talk to any insurance underwriter, you will not be able to get real increase numbers until October or November as they cannot possibly know what they will be until then. Yet, you have managed to pull 25% out of thin air as an "accurate" number and throw it public as gospel and then talk here about 13% in this blog. That makes YOU, not the alderman, YOU an outright liar!

The public wants to know why you and your labor attorney didnt show up the the grievance hearing you caused by trying to manipulate the police contract? They also want to know, when knowing you would be confronted about that grievance, why you hid in your office with the door locked and lights off? Real professional there Jack! We also want to know why you have self appointed yourself to a title of "Chief Executive Officer" of the city of Beaver Dam? The last I knew we were a democracy and we all voted for a mayor and not a CEO. Yet you claim that you are not running the city like your own pet corporation?

Sun Aug 13, 09:10:00 AM  
Blogger MJ said...

We should read more carefully. 13% is the ten-year average (looking backwards, of course). For '07 the preliminary increase (which is what I've always called it) was 25%. We knew and know that that's a preliminary number. If that holds, which we won't know for sure until Nov or Dec, it would have a price tag of about $229K. We do our budget work in Aug-Nov, thus we have to use the figures / estimates we're given.

As far as the retirement costs, a couple of points. $700K per employee is on the high side; if an employee retired today it's closer to $32,000. That's very clear - I thought it would be helpful if someone understood how we got to the 'outrageous' number, which is why I explained that math.

Lastly, the comments about the PFC not doing the negotiations are correct. The retirement health insurance provision, for example, was endorsed by the Common Council in [I believe] 1996.

The CEO role is statutory, not self-proclaimed. I won't dignify the rest with any comment. MJ

Sun Aug 13, 10:34:00 AM  

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