September 8, 2010
Last week the Civic Federation blogged about the Metropolitan Water Reclamation District’s reaction to its estimated $24 million budget deficit. Specifically, we outlined Executive Director Richard Lanyon’s proposals to reduce this deficit, in part, by making changes to employee and retiree health benefits.
Mr. Lanyon presented his cost-cutting plan to the Board and public at an August 12, 2010 study session. His suggestions were drafted after staff presented a report of the FY2011 budget and the grim financial projection at a study session meeting held on July 8, 2010.
In addition to health benefit alterations, Mr. Lanyon discussed a slate of reductions or eliminations to other employee benefits as a means of reducing District expenses. These changes, including reductions in sick leave, employee benefit leave, tuition reimbursement and termination pay, are discussed in more depth below.
Sick and Employee Benefit Leave:
The District proposed reducing the number of sick days allowed, which currently stands at 15 days for non-union employees, to 10 days. According to District data, few employees claim 15 days of sick leave each year. The District expects a reduction in sick days to result in future savings by reducing severance payments and sick leave incentive payments, but does not expect to see an immediate impact on the budget.
The District also suggested revising its employee benefit leave, which currently provides a degree of leniency for work-time lost due to inclement weather, transportation delays, and, as a statutory requirement, time budgeted to enable employees to reach polling places on election days. The District proposes retaining only time relating to voting and eliminating time budgeted for weather or transportation delays. Some Commissioners pointed out that the minimum state statutory requirement for providing time off for voting is two hours, but the District currently provides more generous time for voting. They suggested that the District should consider revising that policy to reflect the minimum federal requirement. This action may save approximately $103,000 annually, according to the District’s calculations.
Tuition Reimbursement:
Current District policy provides up to $10,000 for tuition reimbursement for employees who enroll in authorized classes. The District proposed reducing the benefit to the maximum IRS tax-allowance of $5,250 per employee. The trend over the past four years has been that more employees are enrolling in a higher number of classes, resulting in a rise in the District’s reimbursement costs. By reducing the benefit allowed, the District expects to save approximately $50,000 a year. This change could be implemented by a motion of the Board of Commissioners.
Termination Pay:
Termination pay is an amount paid to an employee upon retirement or resignation and does not include vacation, sick leave or other discretionary time paid at separation. The amount of termination pay awarded is based on a calculation of working days invested in the District: 1 day’s pay for each of the first five years of service, plus 1.5 day’s pay for each of the next ten years of service, plus 2 day’s pay for each of the next five years of service. The higher termination rates associated with longer tenure are intended to be a retention incentive for employees.
The District proposed to eliminate termination pay, which would save an estimated $450,000 if applied to only non-union employees. This change could be implemented by a motion of the Board of Commissioners, but any change for represented employees must be negotiated with the collective bargaining agents.