FORENSIC EVALUATION FOR THE CITY OF MERIDEN, CT PUBLIC UTILITIES DIVISION
JANUARY 2018
FORENSIC EVALUATION FOR THE CITY OF MERIDEN PUBLIC UTILITIES DIVISION
JANUARY 2018
PREPARED BY: WRIGHT-PIERCE 169 Main Street 700 Plaza Middlesex Middletown, CT 06457 Phone: 860.343.8297 | Fax: 860.343.9504
FORENSIC EVALUATION FOR THE CITY OF MERIDEN, CT PUBLIC UTILITIES DIVISION
TABLE OF CONTENTS SECTION 1
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DESCRIPTION
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INTRODUCTION 1.1 Introduction ........................................................................ 1.2 Project Approach ...................................................................
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EVALUATION OF EXISTING SUPPORT SERVICES 2.1 Introduction ........................................................................ 2.2 Department Interviews ........................................................... 2.2.1 Information Technology Department ........................ 2.2.2 Legal Department....................................................... 2.2.3 Human Resources Department .................................. 2.2.4 Purchasing .................................................................. 2.2.5 Tax Collector ............................................................. 2.2.6 Finance Department ................................................... 2.2.7 Public Works/Engineering Department ..................... 2.2.8 City Manager & City Council .................................... 2.2.9 City Garage ................................................................ 2.2.10 Employee Benefits/Overhead .................................... 2.3 Comparison of Departmental Cost-Sharing ...........................
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SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS 3.1 Conclusions ........................................................................ 3.2 Recommendations ..................................................................
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TABLE OF CONTENTS (CONTINUED)
LIST OF TABLES TABLE
DESCRIPTION
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Public Utilities Division Share of Departmental Budgets .................
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Human Resources Department Support Services .............................. Purchasing Department Services ....................................................... Meriden Tax & Other Collections 2016-2017 ................................... Public Works Support of Public Utilities Division – Example.......... Employee Benefits/Overhead Calculation by Department ................
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Comparison of Existing and Recommended Public Utilities Division Budget Contributions ..........................................................
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SECTION 1 INTRODUCTION
SECTION 1 INTRODUCTION
1.1
INTRODUCTION
The City of Meriden, Public Utilities Division (PUD) is billed by the City of Meriden for support services provided by other departments within the City of Meriden. These support services include:
Purchasing,
Human Resources (HR),
Information Technology (IT),
Engineering/Public Works,
Bill Collection by the Tax Collector,
Financial,
Legal,
City Garage,
City Council and City Manager.
The PUD recognizes the need for these support services and values the support that these departments provide. If this support was not available from the City the PUD would have to contract out these services or hire staff to provide these services. The PUD also recognizes the economy of scale by sharing these services with the City. However, the PUD also believes that these costs should reflect the value of the services provided and be equitably distributed among all City departments based on utilization metrics. At this time, the PUD believes that these support service costs are not equitably distributed. Therefore, the Meriden PUD retained Wright-Pierce to conduct an evaluation to determine if the costs for these support services are shared equitably, and make recommendations, as necessary, to improve the distribution of costs for these support services among the various City departments.
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1.2
PROJECT APPROACH
Based on information provided by the City, the basis for the current cost contribution from the PUD for support services from other City departments was updated in the early 2000’s. At that time, the financial support of the Purchasing, Human Resources, IT, Engineering/Public Works, Tax Collector, Finance, Legal, City Garage, and City Manager/City Council by the PUD was most likely based on an equitable contribution for the services provided. However, it appears that the cost contribution by the PUD increased by 3% per year since then regardless of the actual increase in each department’s budgets over the past 12 years. Because of this, the PUD now believes they are contributing a disproportionate share of many department’s budgets compared with other City departments and compared with the actual value of the services provided. The Fiscal Year 2017/2018 budgets for the City departments that provide services to the PUD is presented in Table 1-1 below. The contribution made by the PUD to each department’s budget is also presented in Table 1-1 along with the percentage of each department’s budget support currently received from the PUD. TABLE 1-1 PUBLIC UTILITIES DIVISION SHARE OF DEPARTMENTAL BUDGETS Department
Total FY 2017/2018 Budget
PUD Contribution to FY 2017/2018 Budget
Information Technology Legal Human Resources Purchasing Tax Collector Finance Public Works/Engineering City Manager City Council Garage TOTAL
$1,031,496 $ 882,463 $ 263,852 $ 294,043 $ 449,889 $ 726,070 $ 696,047 $ 564,136 $ 226,112 $ 464,581 $5,598,689
$350,248 $130,206 $110,850 $ 74,890 $296,569 $197,040 $611,626 $101,780 $ 64,932 $122,994 $2,061,135
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PUD Contribution as percentage of budget 34% 15% 42% 25.5% 66% 27.7% 88% 18% 28% 26.5% 37%
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To evaluate the relative amount of time and complexity of the services provided by various City departments to the PUD, Wright-Pierce met with the director of each City department to discuss the contribution by the PUD to their budget and the amount and types of services provided by their department to the PUD. Wright-Pierce also reached out to several Connecticut Water Pollution Control Agencies/Facilities to determine if/how they supported their respective City’s/Town’s Purchasing, Human Resources, IT, Engineering/Public Works, Tax Collector, Financial, Legal, and City Manager/City Council Departments. Wright-Pierce contacted water pollution control staff in Stamford, Torrington, Glastonbury, and Vernon as part of this study. Our findings and recommendations are presented in Sections 2 and 3.
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SECTION 2 EVALUATION
SECTION 2 EVALUATION OF EXISTING SUPPORT SERVICES
2.1
INTRODUCTION
As stated previously, to better understand the types of services provided, Wright-Pierce met with the Director of each City Department that provides support to the Public Utilities Division (PUD). As part of our interview with each department’s director, we discussed the types of support services they provided both to the PUD and city-wide. These discussions focused on determining if the PUD received more in-depth support, and/or required a more complex or more time-consuming level of service as compared with what is provided to other departments city-wide. In general, based on these interviews, it appears that the complexity of the services provided to the PUD is no different than services provided to other City departments. 2.2
DEPARTMENT INTERVIEWS
Each City Department provides a unique type of support to the PUD. Some of these support services are more easily quantifiable numerically, than others. A summary of the results of the interviews for each department is presented below. As part of these interviews, Wright-Pierce made a determination as to the best approach to quantify, measure, the support provided by each Department: a numerical measure, number of employees or pieces of equipment; or, function/operation based support. 2.2.1
Information Technology Department
The Information Technology (IT) Department manages and maintains all City computers, currently numbering approximately 500, and all City cell phones, currently numbering approximately 180. These numbers do not include the Board of Education (BOE) computers and cell phones which are managed and maintained separately by the BOE. It also does not include the PUD’s 19 SCADA computers which are maintained and managed by the PUD.
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The IT Director, Russ Ford, stated that the PUD’s computers and cell phones do not require any greater support than a computer or cell phone in the Public Works Department or any other City Department. He also stated that computer support requires much more time and effort than cell phone support. As the IT Department measures its workload based upon the number of City-wide computers and cell phones that it manages and supports, the metric that should be considered as a more equitable way to determine the PUD contribution to the IT Department should be PUD’s percentage of the total computers supported by the IT Department. At the time of our interview, we were informed that the IT Department managed and maintained 17 computers and 14 cell phones for the PUD. This represents 3.4% of all computers and 7.8% of all cell phones maintained by the IT Department. By comparison, the PUD is contributing $350,248 to the IT Department’s FY 2017/2018 budget of $1,031,496, or approximately 34% of their budget. Because the level of service required by the PUD from the IT Department to support their computers and cell phones is no different than the support required by computers and cell phones utilized by other City departments, it appears that the percentage of the IT Department budget contributed by the PUD is not equitable. 2.2.2
Legal Department
City Attorney, Debbie Moore, and the City Legal Department provide a full range of Legal Services to all City Departments, including the PUD. These services include, but are not limited to: tax sales, foreclosures, easements, property transfers and purchases, property evaluations, title searches, deeds, tracking outstanding delinquencies, lawsuits, pursuing collection for damages to City property such as fire hydrants, etc. While the amount of legal services required by the PUD will vary over time, the Legal Department indicated that the services they provide does not disproportionately support any one department throughout the City on an annual basis. As typical for most municipalities, the Legal Department does not routinely track it’s time to support any specific individual City department. It just supports the departments as needed. The Legal Department does track the time of any outside attorney brought in to provide specific expertise when needed.
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The factors used in establishing the financial support provided by the PUD to the Legal Department were established in the early 2000s and appears to have been set based on either a flat rate or a percentage of the total Legal Department budget to cover operating expenses and employee benefits/overhead. The supporting documentation for how the initial financial support from the PUD was established is not available, and, without this information it is not possible to determine if the level of support provided by the Legal Department has changed over time from that initial baseline. Additionally, because the Legal Department does not specifically track it’s time related to service provided to a particular City department, it is not possible to quantify the value of these services or any changes in the value of the services provided to the PUD over time. Because the type of support services provided by the Legal Department to the PUD and other City departments are related to the operational functions of these departments and will vary in level of effort required from year to year, there does not appear to be a good metric to quantify the value of these services to determine the level of financial support provided by the PUD to the Legal Departments’ budget. Because of this, it is suggested that an equitable way to develop the PUD’s contribution to the Legal Department budget to cover operating expenses and employee benefits/overhead would be based on a fixed percentage of the annual budget. Currently, the PUD is contributing 15% of the Legal Department’s budget.
Consideration should be given to
maintaining this percentage moving forward rather than the current practice of increasing the contribution by the PUD at an annual rate of 3%. 2.2.3
Human Resources Department
The City of Meriden has 672 employees, not including Board of Education employees. Of these, 50 employees work for the PUD, which is approximately 7.4% of all City employees. The Human Resources (HR) Department provides support functions on an individual-employee basis and not on a departmental-basis. Typically, the services provided by the HR Department are related to employee turnover, processing new employees, grievance hearings, and retirement. As with other departments, the HR department indicated that services provided to employees in the PUD are no more complex or time consuming than what is required by employees in other departments. A summary of the overall typical services provided by the HR Department both City-wide and specifically for the PUD is presented in Table 2-1.
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TABLE 2-1 HUMAN RESOURCES DEPARTMENT SUPPORT SERVICES HR Service Total Employees Annual Turnover (2016/2017) Grievance Hearings (2016/2017) Retirements (2016/2017)
City-Wide No. of Employees 672 15 6 44
PUD No. of Employees 50 1 0 0
Percentage for PUD employees 7.4% 6.7% 0% 0%
As shown in Table 2-1, the number of employees in the PUD represents about 7.4% of the total City of Meriden employees. When looking at annual turnover rates, grievance hearings, and retirements the PUD represented less than this percentage. Currently, the PUD is contributing approximately 42% of the HR Department budget annually to cover operating costs and employee benefits/overhead. Based on the number of employees within the PUD as a percentage of City employees and based on the services provided to the PUD by the HR Department being no more complex or time consuming than for other Departments, it appears that the PUD is contributing an inequitable amount to the annual HR Department budget. As the HR Department’s workload is based upon the number of City employees it provides support to, a more equitable approach would be to base the PUD’s financial support of the HR Department upon the number of PUD employees as a percentage of overall City employees. 2.2.4
Purchasing
The Purchasing Department handles the procurement of all items required by City departments. These items range from office supplies to telephone services to engineering and construction services. The purchasing department processes requisitions, negotiates contracts, administers the request for proposal process and sends out formal bids. The Purchasing Director indicated that the level of services provided to different City departments could vary greatly depending on the items being procured. For example, some departments’ purchasing requirements may be mainly office supplies while other departments may need to procure larger, more complex equipment, such as firefighting equipment or sewer maintenance equipment. Departments such as the PUD also periodically issue requests for proposals (RFPs) or requests for qualifications (RFQs) for professional engineering services or for large-scale
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construction services. These types of RFPs and RFQs can require significantly more effort from the Purchasing Department than for the annual purchase of office supplies. During our interview with the Purchasing Department Director, it was confirmed that at times and for some services, the support provided to the PUD requires more time and effort because of the complexity of their RFPs, quotes, bid documents, bids, bid waivers, and subsequent follow-up. The Purchasing Department stated that they do not track the extra time related to these value-added services. It was also noted that many of the purchasing requirements for the PUD are somewhat routine and do not require any more effort than for other departments. For example, the PUD’s annual chemical procurement for FY 2017/2018 did not require an RFP and the existing vendor contracts were extended. While Purchasing has a value-added component to some of its support services, the majority of their services are quantifiable as they track all RFPs, quotes, bids, and bid Waivers. A summary of these services is presented in Table 2-2. TABLE 2-2 PURCHASING DEPARTMENT SERVICES Purchasing Service
City-Wide
PUD
36 36 50 29 16 15 16
2 0 7 3 2 15 16
Requests for Proposals/Bids (2015/2016) Requests for Proposals/Bids (2014/2015) Requests for Proposals/Bids (2013/2014) Quotes (2017) Quotes (2016) Bid Wavers (2014/2015) Bid Wavers (2012)
As shown in Table 2-2, the PUD’s proportion of RFPs/Bids/Quotes has typically ranged between 0 and 14% of the total supported by the Purchasing Department over the past several years. Currently, the PUD’s financial support of the Purchasing Department’s Budget for 2017/2018 is $74,890 or approximately 25.5% of the Purchasing Department’s 2017/2018 Budget of $294,043. This is for Operating Budget costs and employee benefits/overhead. However, this is not the only metric for evaluating the Purchasing Department’s support of the PUD. As discussed above, some of the support required by the PUD from Purchasing is more complex than for other departments and there is a value-added component based on the services
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provided. The time associated with these additional services have historically not be quantified. In addition, the support required by PUD for these more complex projects is infrequent and does not occur on an annual basis. The Purchasing Department’s Support of the PUD is an operations function, and is a task-based type of support which is available to the PUD regardless of the actual workload required. Based on our discussions with the Purchasing Director and our understanding of the type of support provided, it does not appear to be practical to adjust the PUD’s financial support annually based on forecasted workload (i.e. number of RFPs or quotes anticipated). A better way to assess PUD for support from Purchasing would be either based on a fixed-amount adjusted annually or a fixed percentage of the Purchasing Department’s annual budget for operating costs and employee benefits/overhead. 2.2.5
Tax Collector
The Tax Collector collects many of the funds paid to the City of Meriden including real estate taxes, motor vehicle and personal property taxes, and supplemental taxes/bills. The Tax Collector also collects Water and Sewer payments for the bills generated by the PUD. This includes collection of quarterly water and sewer bill payments and collection of payments as a result of the issuance of shut off notices (termination and final notices) and lien notices. The Tax Collector’s support includes working with customers to develop payment plans, follow-up of water and sewer delinquent accounts, bills, and the annotation of all records relating thereto. In addition to this support to the PUD, the Tax Collection Department also performs bank reconciliations for the PUD two to three days each month. For the latter the Public Utilities Division provides Financial Support in the amount of one part-time employee, year round. The Tax Collector tracks all monthly transactions. A summary of the Tax Collector’s transaction records for July 2016/June 2017 is presented in Table 2-3 and below:
July typically has the highest number of transactions, which totaled 42,390 in 2016. 37,762 transactions that month, or approximately 89 % of all transactions, were attributed to real estate and motor vehicle taxes. Water and sewer collections in July 2016 number 3,297 or 7.8% of the total transactions.
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In September, December, March and June total transactions ranged from 16,967 to 20,495, with water and sewer collections accounting for between 60% to 77% of these transactions.
November is the lowest month for total transactions/collections in FY 2016/2017. A total of 5,042 transactions occurred, of which real estate and motor vehicle transactions made up approximately 70% of the total.
February 2017 is another low month of transactions, 7,974 total, and water and sewer was 3,757 of the total, 47.12%.
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TABLE 2-3 MERIDEN TAX & OTHER COLLECTIONS 2016-2017
The Tax Collector’s budget for 2017/2018 is $449,889. The PUD provides $296,569 or 65.9% of this budget for operating costs and employee benefits/overhead. The Tax Collector appears to dedicate two-thirds of their efforts to the collection of water and sewer bills four months out of the year, consistent with the PUD’s financial contribution to their budget. However, on an annual basis, the total water and sewer collections represent less than 40% of the total collections by the Tax Collector’s Office. Also, as shown in Table 2-3, in the months that PUD collections are the
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highest, percentage and numerically, numerically they are much less than July’s Real Estate and Motor Vehicle collections. Based on the above, it appears the PUD contribution to the Tax Collectors’ Budget is inequitable based on the level of service provided. However, determining what should be an equitable contribution cannot be based solely on the number and types of transactions as described above. The Tax Collector has indicated that for every water bill payment transaction processed there are at times numerous sub-transactions that occur and the level of effort associated with these sub-transactions can vary greatly and are not numerically accounted for in the numbers presented above. One such service provided to the PUD by the Tax Collector is related to water termination and shut off notices which can require more time and effort than for any other transaction. These services include, but are not limited to, accounting for partial payments, helping customers develop payment plans, annotation of records, verifying amounts to be paid, verifying correct accounts, reissuing bills if they were incorrect, and responding to numerous calls and calling back customers. Prior to our interview with the Tax Collector as part of this project, 2,010 water shut-off notices were issued by the Tax Collector. During our interview on October 18, 2017, we observed that all three collection windows were busy with long lines of people waiting. We understand that, at that time, a significant portion of these customers were dealing with water-related issues. At other times of the year, similar peak customer service demands occur that are not related to water and sewer service. While the level of support provided to the PUD by the Tax Collector is significant, based on the above information, it does not appear that two-thirds of the year-round effort of the Tax Collector is needed to support the PUD. For the four months when water and sewer bills go out, it appears that between 60% to 75% of the transactions completed by the Tax Collector during those months serve the PUD. For the remaining eight months of the year, it appears that 33% or less of the transactions are related to the PUD, except for February’s 41.2%. A conservative estimate could be calculated by assuming that for four months each year, 70% of the Tax Collector’s effort goes to supporting the PUD and for the other eight months approximately 25% of the monthly effort is to support the PUD. This results in a weighted annual average of 40%. Based on this, we would recommend that the PUD contribute in the range of 40% of the Tax Collector’s operating budget on an annual basis. Employee benefits/overhead are in addition to this and are reviewed in 2.2.10.
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2.2.6
Finance Department
Finance Director, Michael Lupkas, and the Finance Department provides typical financial support services to departments throughout the City of Meriden including the PUD.
The Finance
Department includes the Assessor’s Office, the Tax Collectors Office, reviewed above, and the Purchasing Department, also reviewed above. The Finance Office has seven people, including the Finance Director, and the Assessors’ Office has five people. The Finance Office does not track their time supporting the PUD or other City Departments. Based upon a working knowledge of his department and staff Mr. Lupkas’ assessment is that his Department on average spends approximately 10% to 20% of their time supporting the Public Utilities Division. However, at times, annual budget preparations, forecasting and selection of financing large projects (i.e. WWTP phosphorus upgrade) require more time. According to the Finance Director the departments that require a large portion of his department’s time are the Police and Fire Departments. The Finance Department’s support services to the PUD and other City departments is an operations function and is not tracked based on a specific employee’s time. There does not appear to be a good metric to assess the value of the services provided. Therefore, the PUD’s financial support of the Finance Department, should most likely be based on a fixed percentage of the overall budget. As noted above, the Finance Director estimated that 10% to 20% of the services provided by the Finance Department are related to the PUD. Currently, the PUD contributed approximately 27.7% of the FY 2017/2018 Finance Department budget for operating costs and employee benefits/overhead. Based on the above estimates, it appears that a more equitable distribution of financial support would be for the PUD to contribute a fixed percentage of approximately 20% of the Finance Department’s annual budget.
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2.2.7
Public Works/Engineering Department
The Public Works Department is responsible for managing, operating, and maintaining all of the infrastructure within the City of Meriden with the exception of the water and sewer infrastructure. As part of our efforts to understand the types of services and level of effort provided by the Public Works/Engineering Department to support the PUD, we met with the Public Works Director on two separate occasions, August 14, 2017 and again on October 16, 2017. Typical support services provided by the Public Works Department to the PUD include:
Call Before You Dig mark out services
Water Main inspection services
Sizing meters for large commercial services
Updating water and sewer as-built drawings
Review of Utility Plans
Unlike many other departments, the Public Works Department tracks most of its work hours to specific projects and specific departments. During our discussions with the Public Works Director, an example of a typical summer week of support services provided to the PUD was provided and discussed: Table 2-4. Based on these tracked hours and costs, a typical week’s service had a value of approximately $6,200 which equates to $322,400 for the year. As stated by the Public Works Director, this appears to be reasonably representative of his Department’s yearly support of the Public Utilities Division. Some weeks it may be more and some weeks it may be less, but it is a good representation on average.
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TABLE 2-4 PUBLIC WORKS SUPPORT OF PUBLIC UTILITIES DIVISION - EXAMPLE
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Currently the PUD contributes $611,626 to the Public Works Department’s Engineering Division’s budget of $696,047 for FY 2017/2018 for operating expenses and employee benefits/overhead. This represents approximately 88% of the overall Public Works Department Engineering Budget, which is not equitable based on the level of services provided. An estimate of the value of annual services provided by the Public Works/Engineering Department was approximately $322,400 which is 46.3% of the FY 2017/2018 budget. Based on the above, and because the level of services provided will vary, it appears that a fixed percentage of the overall Public Works/Engineering Department budget would be equitable. A fixed percentage of 45% of the annual Public Works/Engineering Department budget should be considered for operating expenses and an additional percentage for employee benefits/overhead as presented in 2.2.10. 2.2.8
City Manager & City Council
The City Manager’s Office and City Council provide administrative, management and oversight support to the PUD. This support is typically not extensive nor time consuming for the City Manager or City Council because the PUD is overseen by a Public Utilities Council that provides administrative, management and oversight support of the PUD operations and management. The Public Utilities Council is the policy-making body for the PUD, and acts as the decision maker, the reviewer and editor of budgets, billing reconciliation, consumption adjustments, protests of bills, report on projects, responses to requests for fund transfers, sewer authority, and personnel issues and related matters. After it fully vets these issues it then forwards on its recommendations to the City Manager and City Council. As a result, the required effort provided by the City Manager and City Council is more oversight than management. The PUD provides financial support to the City Manager’s Budget and City Council’s Budget, in the amounts of $101,780 and $64,932, respectfully of their FY 2017/2018 Budgets. This is equivalent to 18% of the City Manager’s budget and 28% of the City Council’s budget. These values appear to be inequitable based on the fact that the PUD’s Public Utilities Council performs many of the functions that the City Manager’s office and City Council would provide to other City-wide departments. The PUD should likely contribute a fixed percentage of the annual budgets for the City Manager and the City Council. This percentage should be approximately 15 %, similar to the Legal Department, based on the fact that the City Manager and City Council only provide
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oversight of the Public Utilities Division because the Public Utilities Commission provides the administration and management functions that make up the bulk of the work load. 2.2.9
City Garage
The City Garage has a Fleet Manager, who also heads the Traffic Division, and a Crew Leader and four Mechanics. This Crew of 5 employees maintains and services over 400 City vehicles, trucks, trailers, back hoes and other City Rolling Stock. Fifty six vehicles are from the Public Utilities Division. The City Garage bases its workload upon the number of City-wide vehicles and equipment it maintains. Typically this is adjusted for use. So high mileage departments, such as the Police Department, will have a higher use of the garage than the PUD. However, discounting this potential high use and just basing the use on the number of vehicles in a department it appears that the PUD only accounts for 14% of the vehicles, equipment and other rolling stock maintained and serviced by the City Garage. Therefore, it appears that the 26.5% of the City Garage Department Budget contributed by the PUD is not equitable and should be adjusted to reflect its percentage of the fleet rolling stock. 2.2.10
Employee Benefits/Overhead
In the previous sections we reviewed the various Departments who provide support to the Public Utilities Division (PUD), their respective Operating Budgets, the technical and administrative support provided to the PUD, the PUD’s current Financial Support of these Departments’ Budgets (Operating and Employee Benefits/ Overhead) for this technical and/or administrative support, and the recommended Financial Support based on our review of the technical and/or administrative support provided. Not included in each Department’s Operating Budget are Employee Benefits. Employee Benefits are a separate line item, 0213, in the City Budget for all City employees and are not listed separately by Department. Despite this separation in the City Budget, the PUD’s current Financial Support of these Departments covers not only Operating Costs but Employee Benefits/Overhead as well. Therefore, in computing each Departments equitable cost to the PUD an equitable Employee Benefit/ Overhead Cost must also be identified and if not included in our previous calculations, included.
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Wright-Pierce’s recommended equitable Financial Support for the Departments reviewed in the previous sections did not include Employee Benefits/Overhead for the following Departments: IT, HR, Tax Collector, City Garage, and Public Works/Engineering. For the other Departments, Legal, Purchasing, Finance and City Manager, they were but were not separately listed. Therefore, in this section of the Report, Employee Benefits/Overhead are calculated for each Department and identified. Line Item 0213, Benefits, in the City Budget include Social Security, Medicare, Retirement, Medical, Life Insurance, Hypertension, Longevity, Unemployment Compensation, Unused Sick Leave, and Benefits in General. The Benefits Line Item in the City’s FY 2017/2018 Budget is budgeted at $25.52 million for 622 employees. The Police Department’s Employee (120 employees) Benefits cost is $7.08 million. This is $59,000 per Police Department Employee. The Fire Department’s Employee (103 employees) Benefits cost is $5.72 million. This is $55,500 per Fire Department Employee. All other City Employees (399) Total Benefits cost is $12.65 million. This is $31,700 per nonPolice/Fire employee. The PUD’s Benefit (Overhead) Financial Support Cost by Department is as follows, and is based on the number of employees in the Department supporting the PUD and the recommended percentage support of the respective Department.
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TABLE 2-5 EMPLOYEE BENEFITS/OVERHEAD CALCULATION BY DEPARTMENT DEPARTMENT IT Legal HR Purchasing Tax Collector Finance PW/Engr City Manager City Council City Garage
2.3
EMPLOYEE DEPARTMENT RECOMMENDED BENEFIT BENEFIT EMPLOYEES # SUPPORT SHARE COST $31,700 $31,700 $31,700 $31,700 $31,700 $31,700 $31,700 $31,700 $31,700 $31,700
5 4 4 3 5 7 8 3 0 5
4% 15% 7.4% 25% 40% 20% 45% 15% 15% 19%
$6,340 $16,500 $9,380 $18,070 $63,400 $33,280 $114,120 $12,363 $0 $22,190
COMPARISON OF DEPARTMENTAL COST-SHARING
As part of any evaluation, benchmarking against other utilities is beneficial to determine if the results of the current evaluation are consistent with what is seen within the industry. Concurrent with the interviews with the directors of each of the City’s departments, Wright-Pierce contacted several other Connecticut municipalities to compare the relative financial support provided by the PUD with the support provided by these other utilities to their City’s/Town’s other departments. As part of these efforts, we contacted the Stamford Water Pollution Control Authority (WPCA), the Torrington WPCA, the Vernon WPCA, and the Glastonbury WPCA. In FY 2016, the Stamford WPCA contributed $454,666 in financial support of other City Departments which represented a contribution of approximately 3.64% of those department’s total annual budget. In Torrington, the WPCA supports 10% of the Public Works Director’s salary. Torrington does not provide financial support to any other City departments. In Vernon, the WPCA supports two full-time positions in the Tax Collector’s Office for sewer billing but does not provide other financial support to any other Town Department. Glastonbury’s WPCA does not provide any financial support to the other town departments. However, it is noted that in Glastonbury, the
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WPCA is responsible for the pump stations and the Water Pollution Control Facility (WPCF) but is not responsible for the operation or maintenance of the wastewater collection system. Currently, the Meriden PUD provided FY 2017/2018 financial support for the IT, Legal, HR, Purchasing, Tax Collector, Finance, Public Works/Engineering, Garage, City Manager and City Council Departments, totaling $2,061,135, or approximately 37% of the overall budget of these departments in FY 2017/2018. Compared with the above four WPCAs’ support of their City/Town departments, the amount of financial support that the Meriden Public Utilities Division provides to other City departments does not appear to be equitable.
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SECTION 3 RECOMMENDATIONS
SECTION 3 SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
3.1
CONCLUSIONS
Based on the discussions with the different department directors interviewed as part of this evaluation and based on a comparison with other municipalities, it appears that the financial support provided by the Meriden Public Utilities Division (PUD) is inequitable and for some Departments may be considered excessive.
We have developed the following specific
conclusions:
In many instances, the level of effort and complexity of services provided to the PUD by other departments is no more complex or time consuming than for other City departments.
The primary exception to this seemed to be the Tax Collector’s office who indicated that there are several aspects of the services provided to the PUD that are complex and time consuming.
The use of a specific numeric metric for establishing the PUD’s annual budget contribution appears to be a feasible method to establish the financial support for the IT Department and the HR Department. Both departments indicate that services provided to the PUD are no more complex or time consuming than other departments. Additionally, both departments provide services relative to a quantifiable metric. In the case of the IT Department, this metric is the number of City-owned computers and cell phones. In the case of the HR Department, this metric is the number of City employees in each department.
The use of a specific metric for establishing the PUD’s annual budget contribution to the City Garage also appears to be a feasible method to establish its financial support: number of PUD rolling stock versus total city rolling stock.
The Public Works/Engineering Department tracks their work effort. Currently, the services provided by the Public Works/Engineering Department to the PUD, an estimate, was that the value of these services were about 45% of the total Public Works Department’s Engineering Division’s budget, not including employee benefits/overhead. Therefore, a fixed percentage of the overall Public Works/Engineering budget should be established as the PUD contribution.
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The remaining departments did not have a specific metric that appeared suitable for determining the value of the financial support to be provided by the PUD to other City departments. For the Legal, Purchasing, Tax Collector, Finance, City Manager, and City Council, it appears that a fixed percentage of the annual budget may be the most equitable distribution of these fees.
Currently the Public Utilities Division’s Budget is 21.35% of the Total City Budget, excluding the Board of Education.
3.2
RECOMMENDATIONS
Based on the above, we recommend that the Meriden Public Utilities Division’s (PUD) financial contributions to other City departments that provide services to the PUD be modified as follows: 1. The contribution to the IT Department should be based on a percentage of the number of computers managed and maintained by the IT Department compared with the number of computers in the PUD. Currently, utilizing this approach, we recommend that the PUD contribute approximately 4% of the IT Department Operating Budget and 4% of the five employees’ benefits. 2. The contribution to the Legal Department should be based on a fixed percentage. Currently, the PUD is contributing 15% of the Legal Department’s budget. This value should be locked in at a fixed percentage of 15% of the Legal Department’s annual budget, which will cover both Operating expenses and benefits. 3. The Meriden PUD currently has approximately 7.4% of the total employees within the City. Therefore, we recommend that the PUD Financial Support of the HR Department be based on this percentage, 7.4% of the Operating Budget and 7.4% of four employees’ benefits. 4. The Meriden PUD currently has approximately 14% of vehicles, equipment and rolling stock maintained and serviced by the City Garage. Therefore we recommend that the PUD Financial Support of the City Garage be based on this percentage, 14% of the Operating Budget and 14% of five employee benefits.
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5. For the Purchasing, Tax Collector, Finance, Public Works/Engineering, City Manager, and City Council, it is recommended that the PUD contribute to the budgets for these departments on a fixed annual percentage rate as follows: a.
Purchasing – 25%
b.
Tax Collector – 54%
c.
Finance Department – 20%
d.
Public Works/Engineering – 61%
e.
City Manager & City Council – 15% Each
Utilizing the above percentages, the current contributions made by the PUD to each individual department budget is compared with the modified contribution based on the above percentages. The results of this comparison is presented in Table 3-1.
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TABLE 3-1 COMPARISON OF EXISTING AND RECOMMENDED PUBLIC UTILITIES DIVISION BUDGET CONTRIBUTIONS
DEPARTMENT Information Technology Legal Human Resources Purchasing Tax Collector Finance Public Works/Engineering City Manager City Council City Garage TOTAL
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FY 17/18 BUDGET $1,031,496 $882,463 $263,852 $294,043 $449,889 $726,070 $696,047 $564,136 $226,112 $464,581 $5,598,689
CURRENT CONTRIBUTION AMOUNT $350,248 $130,206 $110,850 $74,890 $296,569 $197,040 $611,626 $101,780 $64,932 $122,994 $2,061,135
% 34% 15% 42% 25.5% 66% 27.7% 88% 18% 28% 26.5% 37%
3-4
PROPOSED PUD CONTRIBUTIONS OPERATING AMOUNT $41,260 $114,720 $19,525 $55,868 $179,955 $108,910 $313,221 $73,338 $33,917 $65,041 $1,005,755
BENEFITS AMOUNT $6,340 $16,484 $9,380 $18,069 $63,400 $33,285 $114,120 $12,363 $0 $22,190 $295,631
TOTAL AMOUNT $47,600 $131,204 $28,905 $73,937 $243,355 $142,195 $427,341 $85,701 $33,917 $87,231 $1,301,385
CONTRIBUTION % 5% 15% 11% 25% 54% 20% 61% 15% 15% 19% 23%
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