Budget Review Committee

BUDGET REVIEW COMMITTEE SEPTEMBER 26, 2011 A meeting of the Budget Review Committee was held Monday, September 26, 2011 at 7:18 p.m. in the Aldermanic Chamber. Alderman-at-Large David W. Deane, Chair presided. Members of Committee present: Alderman-at-Large Mark S. Cookson, Vice Chair Alderman-at-Large Lori Wilshire Alderman Jeffrey T. Cox (7:32 p.m.) Alderman Diane Sheehan (7:38 p.m.) Alderman Mary Ann Melizzi-Golja Members not in Attendance: Also in Attendance: Richard Dowd, Board of Education Mark Conrad, Superintendent of Schools PUBLIC COMMENT - None NEW BUSINESS – RESOLUTIONS R-11-150 Endorsers: Mayor Donnalee Lozeau Alderman Jeffrey T. Cox Alderman-at-Large Ben Clemons Alderman Mary Ann Melizzi-Golja Alderman Kathy Vitale Alderman Diane Sheehan Alderman-at-Large Lori Wilshire APPROVING THE COST ITEMS OF A COLLECTIVE BARGAINING AGREEMENT BETWEEN THE NASHUA BOARD OF EDUCATION AND THE NASHUA SCHOOL CUSTODIAN UNION, LOCAL 365/COUNCIL 93, AFSCME, AFL-CIO, FROM JULY 1, 2011 THROUGH JUNE 30, 2013 MOTION BY ALDERMAN WILSHIRE TO RECOMMEND FINAL PASSAGE OF R-11-150 ON THE QUESTION Chairman Deane Mr. Conrad and Mr. Dowd, would you like to come up? The resolution that we were given has Mr. Conrad’s cover letter from 10 August 2011. The Financial Analysis can be found on page 40, and right after that is Mr. Conrad’s overview of the contract. Why don’t you go over this Mr. Conrad, if you don’t mind? You wrote the letter, you can read it. Mark Conrad Okay sure. Let me begin perhaps walking through the cost sheet for the cost items and then we can tie into some of the other items in the contract… Budget Review – 09/26/11 Page 2 Chairman Deane Sure. Mark Conrad …just so you have an overall view. This contract is consistent with other contracts from the School Department that have been approved by the Board of Aldermen and the Mayor in recent months. The salary increase is based on an increase of $225 per employee, which equates to just over .6% and that is in each of the two years of the contract. What is a little bit different in how it is being paid out is rather than simply increase the salary scale, they asked of they could receive it in a lump sum. In the first year of the contract they will get that amount at the point the contract is approved. The salary scale will stay the same from where it is today. Then at the beginning of next year it will go up that little .6% and then the second year they will get the same stipend and the salary scale will go up again one more time at the end of the contract so that overall, at the end of two years, it will be up 1.25%, but they will have received their increase in lump sums. I think the sense of that that they wanted to convey was with the increase in withholding for health insurance, they really weren’t going to see the impact of that small pay increase so they thought it would be more visible, it would be more meaningful to the membership if they could see it in a lump sum. Chairman Deane So if you take the $30,150 and you divide that by 134 employees you come up with $225 per person? Mark Conrad Right, and it is a flat sum per employee, it is not a percent of whatever their current salary is. Chairman Deane So it is a flat sum out of the transfer of the $30,150… Mark Conrad Correct for the 134 FTEs we have. Chairman Deane Okay. Mark Conrad As you look at other salary costs, we looked at additional hours for overtime and there are overtime requirements in this contract largely driven by staffing requirements for after school activities either because of use of facilities by outside groups for which we are reimbursed, or our own school activities. Some of that may be driven by beginning of the year or year end activities like preparing for graduation ceremonies or award ceremonies. Much of it is driven by outside groups. Budget Review – 09/26/11 Page 3 Chairman Deane I have a question on that. When you look at Line #53 it says: “Notes: Additional hours includes Biddy Basketball…” Where do I find those additional hours? Mark Conrad Well if you look at the sum of $244,646 in the base year that would include commodity codes 13021 and 13120, which overtime for maintenance and custodial staff and then the difference of $52,000 is what we estimate to be the overage for Biddy Basketball. Chairman Deane That is associated with a $50,000 or so transfer from the Park Department to the School District? Mark Conrad I assume that would be the case. I assume that is how they accomplish that. Chairman Deane They don’t transfer that in a lump sum do they? Mark Conrad No, it is billed out based on actual costs. Now we have assumed a 10% increase in overtime costs largely from a new provision in the contract. There is a small provision, which says if there are events with fewer than 40 people, even if food is being served, we don’t need to provide custodial coverage. We do have a chart we use within the contract now to determine the coverage that is required, but the larger piece of that projection is they can now seek comp time in lieu of overtime for staffing events. Municipalities, and we do this in the school district for hourly staff, can put into place a policy that says in lieu of overtime say you work two hours overtime, in lieu of being paid overtime you can ask for compensation time for two hours. We track that into the personnel system and then at a later date and time they can take that as time off if you will, almost an additional bank for vacation time. Alderman Deane So if you go to page 11 on the contract, Section 10.9. Alderman Cookson Is that the marked up language or is that… Chairman Deane No, this is the one that is on the front …I think this is… Alderman Cookson Alright. Budget Review – 09/26/11 Page 4 Chairman Deane This is the one that we are discussing. My question is; when you read this, as you had just stated, when you go to the left hand column where it says Number of Attendees, for Inside School Facility, 41 to 249, with no food is 1, with food is 1, that is on the weekday, on the weekend with no food is 1 and weekend with food is 1. Are we going to have an extra janitor at all of the Biddy Basketball games now? I have attended those games for probably 23 years, and I have never seen a sum total of 250 people at one of those games. They are in and out, in between. Mr. Dowd did your children ever participate in that? Mark Conrad It is my understanding typically you have one custodian at those games. Chairman Deane Is this a custodian on top of the people that are already working, so we will have somebody… Mark Conrad Yes, this is the person who is dedicated to the event so doing the set-up, policing the hallways. This reflects our current practice and what has been in place for some time. It was our hope with the compensatory time it would be a way of reducing costs whether it be in Biddy Basketball or within our own programs so we have assumed a 10% reduction. Chairman Deane I don’t get it. I don’t get the need. Mark Conrad Quite candidly, the issue is this; in negotiations you are looking at an overtime budget and the concern from the membership in the midst of negotiations was you are already reducing take home pay by asking employees to pick up a larger share of their health insurance on top of only a very small increase in salary so if they are looking at a reduction in take home pay we just weren’t in a position to negotiate large reductions in overtime. One way we started to work that through was to eliminate coverage for events with under 40 individuals and to look at a compensation time as an alternative to paying overtime. The level of overtime remains a concern for the board. I think we have been clear about that all along, but in the midst of negotiations there is only so much you can accomplish in one round of conversations, and that is what this reflects. Chairman Deane I understand that. I don’t understand what the function of the person is. On the weekends, I don’t have a problem with it; they have to go there, they have to unlock the school and do what they are supposed to do, but… Budget Review – 09/26/11 Page 5 Mark Conrad Well depending on the event, there is set-up, there is take down, they should be policing the laboratories to make sure they are clean and baskets are being emptied and the like. If the rest of the building is closed down…this wouldn’t be so much an issue at North or South, but if the rest of the building isn’t open at that time or there are areas of the building that aren’t supposed to be open, they are supposed to be policing the building to ensure participants are staying within the gymnasium area or the auditorium area of the building. Obviously there is additional cleanup if food is involved. And, it depends on the event, if it is such that they don’t need to be in the area then we do have the ability to go ask them to do other things whether it is cleaning windows, internal windows or doing other things during the event. Chairman Deane I can’t speak for every employee, but I can say from my observations I haven’t seen that happen. Maybe it has, but just last year the overtime for that was over $53,000. You are saying the reason why it didn’t get dealt with is because of the increase in the health insurance percentage…employee’s percentage of increase plus their… Mark Conrad Right. In essence, for all of our employees in the school district, take home pay is going down this year because of that. That was their concern in negotiations. Richard Dowd They basically stated two concerns. They wanted more overtime than we allowed in this contract and we had to negotiate very hard to come up with the compensation time versus the overtime pay. They cited a number of examples where, and I’m sure it’s not in every instance, but children were running throughout the school because they weren’t being watched and the custodians are the ones that had to bring them back to the gymnasium. I haven’t cited that myself because I am not there during those games, but they made a very strong argument. And the fact that we were negotiating such a tight contract to begin with with the health insurance benefits and the very small increase in pay, in order to make this work we had to find some areas to, as in any negotiation, to give and take. I would say that on the whole this contract was probably much better than we expected going in. Mark Conrad If I could just… Chairman Deane I just wanted to take one moment and recognize that Alderman Cox has arrived. Thank you. Alderman Cox Thank you. Budget Review – 09/26/11 Page 6 Mark Conrad Just two other points; some of the conversation that came from our own management staff; there are disruptions when you have to set-up for events, take-down for events, deal with students or siblings or other people moving through the building who shouldn’t be there, and that is specific more to Biddy Basketball, but even if you look at other events, if it is in an auditorium there are usually requests that come from the organization to set up on the stage, to pull out the bleachers, to set up chairs, take them down, and it may not seem like a lot but cumulatively when it is happening night after night it does have an impact on our custodial services. One of the issues we have is we don’t have substitutes when people are out sick so if we have three people in a building and somebody is out sick you have two people left covering the remainder of the building. If you then have to pull somebody off to deal with whatever issues arise or set-up and take-down requirements there are, it does have an impact. The only other point I would make with regard to the impact of these contracts is we also have to remember the State instituted an additional 2% from everyone’s salary, for all employees, from 5-7% towards the retirement system, and while we all understand why that is taking place, it is another impact on employees’ salaries. People are feeling all of that. Chairman Deane I can attest to the fact that, with my participation in the programs and the usage of the facilities through the rentals through baseball and attendance at basketball games, we have always helped put everything away at the end of the night. When we rented for baseball we always put everything away, we always assist the fellow. It is cost effective to us to get him out of there as soon as he can because we are being charged an hourly rate, a minimum plus whatever the hourly rate is. But people in the community I have seen have been helpful in folding up the chairs and putting them on the racks. Everybody pitches in at the end of the night. Mark Conrad People are helpful. Alderman Cookson Thank you. Just had a question; Superintendent Conrad you mentioned that most of the employees within the school district are receiving a lower salary this year based upon healthcare contributions. Mark Conrad Just to be careful, not a lower salary, but less take home pay because more is being taken out, withheld from their salary if they have health insurance, which is the majority of folks, and then on top of that the State now withholds an additional 2% for retirement. Alderman Cookson Okay so the take home pay is reduced because of… Budget Review – 09/26/11 Page 7 Mark Conrad Take home pay, right. Alderman Cookson Thank you. And these benefits assume a 10% contribution rate increase beginning FY12. Mark Conrad Right. If you look at that line on the cost sheet, what has been put into place for health insurance here reflects what we have put in place for the other contracts in terms of both the higher employee cost sharing and the plan design changes. Now in this particular contract, the plan design changes will be implemented either July 1, 2012, next year, or when half the contracts in the City come into line with that so this language is more reflective of the library contract language as opposed to some of our other contracts. Alderman Cookson Can you tell me what this bargaining unit contributed or how they contributed to their healthcare benefits in the last contract? Mark Conrad We could go to that section of the contract… Chairman Deane Line 32. Mark Conrad ... their employee cost sharing is the same as it is for many of our other contracts so if you were on an HMO plan it is going from 90% to 80% and if you were on a POS plan it is going from 80% to 70% that is paid by the City. Your employee share is either going from 10% to 20% or 20% to 30% depending upon the plan you have. Alderman Cookson Was it approached similar to how the teachers’ contract was organized where it went percentage points so you didn’t assume the entire increase in one fiscal year, but there was a step from say 90% to 95%... Mark Conrad Actually there was no step in any of our contracts. They all went right…they took that 10% all at once. Alderman Cookson In the previous contracts? I’m talking about the previous contracts. Budget Review – 09/26/11 Page 8 Mark Conrad Oh I’m sorry. I didn’t understand that. I can’t speak to the past history of the contracts in regard to health insurance because I wasn’t here. I can only speak to… Alderman Cookson Would Mr. Dowd be able to respond to that question? Richard Dowd I don’t recall exactly, but I know that we were trying to make inroads on the contract before. I don’t know if you have a copy of it. I can’t say for certain. Mark Conrad I believe they did step it up in the last contract like our other contracts actually. Alderman Cookson So certain percentage points… Mark Conrad Small increments. Alderman Cookson …every single year going toward that goal. Mark Conrad Correct. And they tended to be much smaller increments than they are in the current contract. Alderman Cookson By the end of the contract… Mark Conrad They were at 90% or 80%. Alderman Cookson Okay. Mark Conrad I think all of our contracts were stepped up in that fashion. Budget Review – 09/26/11 Page 9 Alderman Cookson Chairman Deane to you, am I correct in understanding that it was…were there any other contracts within the entire City that took that route or were most of them…did they contribute their healthcare contributions all at one time? Chairman Deane I thought it was being done all at one time. Alderman Cookson With the exception of the school district. Only those contracts negotiated by the Board of Education had steps to get to a certain point? Richard Dowd There are no steps in the custodian contract. Are you talking about steps in insurance? Alderman Cookson Insurance contributions going from a certain percentage point, adding certain percentage points each year until finally at the conclusion of the contract is when you reach that threshold of 10% contribution. Richard Dowd In the latest teachers’ contract I don’t believe that is true. Chairman Deane In the prior one it was. Alderman Cookson In the prior one. Richard Dowd Alright. Mark Cookson Right. Alderman Cox Point of Clarification; are we still discussing the previous contract not the current one that we just passed, for the teachers? Budget Review – 09/26/11 Page 10 Chairman Deane For the teachers we’re discussing the previous one. Alderman Cox Previous one. Alderman Cookson Just trying to better understand. Alderman Cox Thank you. Chairman Deane You are welcome. Richard Dowd I will say that the guidance we were following on the health insurance benefits were what we were provided by the City. Alderman Wilshire My question is more along the line of the comp time versus overtime. Does that fall in line with the Fair Labor Standards Act for hourly employees? Mark Conrad Yes it is. It is actually a provision that is specific to municipal employees… Alderman Wilshire Okay. Mark Conrad …it is something we have had in place for many years with our secretaries as an example. There are certain provisions; you have to record it when it is either accrued or used, if somebody leaves the employment of the district and it has been accrued, they have to be paid at whatever their hourly rate is. In the instance of most employees and certainly with custodians, where it typically represents overtime, you would accrue it at time and a half and then they would be able to take it, so if you work an hour you would accrue and hour and a half and then you would have an hour and a half of time to take off at another point in time. I think that was a recognition that most municipalities don’t have the funds necessary for overtime that some private employers might be able to use in specific instances. We have used it for years with Budget Review – 09/26/11 Page 11 secretaries and now they have introduced it here. I actually thought it was one way to look at reducing potential costs. There is a cost to it in terms of additional time custodians may be out, but it helped address a budget issue. Richard Dowd One of the primary areas is we had people, during snow storms, plow for quite a few hours and in the end they were just as happy to be able to go home and sleep rather than go back into work and get the overtime pay. I think if they had their druthers they would have preferred the overtime pay, but the comp time was a second best. Alderman Wilshire Is there a timeframe when someone earns comp time that they have to use it? Does it lapse at any point? Mark Conrad It doesn’t lapse so there isn’t a specific timeframe. We do have a limitation on what can be accrued. Typically it is no more than one week. Alderman Wilshire Thank you. Chairman Deane Let the record reflect Alderman Sheehan has joined us about 5 minutes ago. In your second item here in your letter, it states changes in the plan design. What does that mean plan design? Is that the change in percentage of employee contribution? Mark Conrad No it is not the cost sharing. It’s the institution deductibles, changes in co-pays, removes named carriers in the contract. It was all of those changes that were similar, actually identical, to other contracts as well that have been put into place. Chairman Deane Your sentence goes on to give a date and then it says or earlier if 8 City or school district bargaining units…are there 8 units in the school district? Mark Conrad Well City or school district so there are 16 in the City as a whole so it refers to the total number of bargaining units in the City. The language is actually identical or very similar to the library contract that was approved. Chairman Deane So this is retro back to July 1? Budget Review – 09/26/11 Page 12 Mark Conrad Yes. Chairman Deane Okay. Please continue. Alderman Sheehan How do you go back for the employee contributions where it is going to… Mark Conrad What we are going to be working with with union members is a withholding schedule that would spread the retroactive piece over the remaining pay periods so their withholding would be a little bit deeper so they could make up that difference. Then if somebody came on and started mid-year obviously they wouldn’t have to address that, but for anybody that has been employed since July 1st we will take whatever they would owe at the point in time the contract is put in place and spread it over the remaining pay periods to try to lessen the immediate impact of that. Alderman Sheehan Thank you. Chairman Deane Please continue Mr. Conrad. Mark Conrad I really believe I have reviewed any changes in the cost items of the contract. You can see a small change in longevity just based on we don’t assume turnover in longevity, but in essence typically there is and so longevity tends to be pretty stable. There are really no other changes in cost items within the contract. If you would like I could move back to the memo and we could review some of the other changes in the contract. Chairman Deane Does anybody have any questions on the cost analysis? Just under the insurance benefits, you’re looking at a 3.23% increase for 2013. Mark Conrad Yes I think that reflects the fact that we would have already…if you are comparing FY12 to FY13 you would have already incorporated in the increasing employee cost share so what you are seeing is the 11% increase projected for the premium increase offset somewhat by the savings from the plan design changes; the high co-pays and new deductibles… Budget Review – 09/26/11 Page 13 Chairman Deane So you are looking at a cost avoidance, but what they have factored in here is an 11% increase… Mark Conrad Correct. Chairman Deane …although they haven’t done the working rate so you are figuring it is going to be around 11%. Mark Conrad In fact, if you look at lines 32, 33, and 34 the first line assumes the 11% increase each year, the second line shows the employee contributions, and you can see the jump from the base year now to FY12 and then it just increases on the margin in FY13, based on the higher premium, and then you can see the plan design changes, which we assume would save about 6.8% kicking in in that second year of the contract. Chairman Deane Are there further questions on the cost analysis from anyone? The memo is located on the other side of the cost analysis. We’re on item 3 I believe. Mark Conrad There were a number of other items in this contract that were not direct cost items, but do reflect changes in the contract. In #3, we have removed seniority from the provision for consideration for promotion or transfers to different job titles so promotions within the bargaining unit will now be based on performance and ability. Chairman Deane I don’t believe that is a cost item that we have any … Mark Conrad That is what I’m saying… At this point I’m just reviewing items, which wouldn’t really be cost items just to give you an overall. Richard Dowd There are a few items in the contract that we negotiated to clarify the contract to get rid of any ambiguity and al to allow us a little more flexibility from a management side on hiring. Mark Conrad We have more flexibility in terms of temporarily reassigning custodians from one building to another; we have more flexibility in utilizing volunteers, which was important to us. First of all the union has, I think, worked well with us in recent years in beginning to have volunteers come into our schools and I think this Budget Review – 09/26/11 Page 14 language accelerates that flexibility even further. Most of our volunteer work is around painting, landscaping, and perhaps minor repairs occasionally. We have wrapped in a number of sidebars that were written over the course of the last contract and they really don’t reflect changes from our current practice, but we have noted those. I was looking at #5 for that. Number 6 we have noted that is the compensatory time. Number 7; clarify bereavement leave to include brother-in-law and sis-in-law along with brothers and sisters. Finally we did, and this has been a concern from time to time, we did put in a requirement that custodians cannot take vacation seven days before or after the first day of school so that we have a full staff compliment right at about the time we are trying to have doors open and our programs up and running for the year. That is a brief overview of any substantive changes in the contract. Alderman Cookson Thank you. I had a scenario introduced to me a little while ago, and I don’t know how it fits in this, but I think it does. I would really like your help in understanding the roles and responsibilities of a custodian. I know that a PTO president was coming into a school and was looking for some help bringing stuff in from the vehicle. I don’t know if it was heavy, I don’t know if it was large in number. I don’t know the specifics of that, but I know that the response that she received from the custodian, who she was seeking help from was, that is not in my job description, I don’t have to do that, I’m not going to do that. How does this contract either address that situation, does it address that situation or …how is that handled? Mark Conrad First of all I do hear those kinds of stories from time to time and I’m always concerned when I hear those stories because simple courtesy would say you would help that individual when they are there for the benefit of the school and they are volunteering. I think what could have happened is had the PTO volunteer gone to the Principal the custodians have to follow the directive from the Principal and if the Principal had asked them to unload the car they really would have been obligated to do that, and then if they wanted to challenge whether that was in their job description and launch a grievance they certainly could have. I would have argued it is within their job description to assist individuals in unloading supplies or anything related to the operation of the school. But if the volunteer didn’t go to the Principal, and I can understand where they don’t want to make an issue of it and they don’t want to detract from the Principal’s time, but if the Principal is not aware of it, then it really can’t be addressed, but if they had gone to the Principal, the Principal could have directed them to assist. Mark Conrad So this contract doesn’t address it, but you’ve got a process in place that really… Mark Conrad The basic process, and we have had conversations with the union on this, and I think they understand and agree with this, is if there is a question you follow the directive of the Principal or your supervisor and then you can grieve it later on. If you don’t follow the directive it becomes insubordination. I also want to note that these occurrences, although I hear about them from time to time, are rare and most of our custodians really do work hard to do whatever needs to be done to assist in the school, and I know you know that too… Budget Review – 09/26/11 Page 15 Alderman Cookson Yes. Mark Conrad …but I have heard those stories from time to time and it is a concern. We always say to folks when that occurs, talk to the Principal, custodians will follow the directives of the Principal and then if they want to raise it as a concern after the fact as something that was outside of their job description, they certainly have the right to raise that through the union. Alderman Cookson Thank you. Richard Dowd In dealing directly with this negotiation, we found that most of the custodians would not answer that way. We did have discussions with their senior leaders and expressed our concerns on this area and several other areas to make the arrangement with the custodians in the schools much better than it had been. Alderman Cookson Thank you. Chairman Deane I have always had good experience with the custodians. Richard Dowd I would say most of them are really really good. Alderman Cox Outstanding. Chairman Deane I have another question. On the coversheet of the resolution there is also a transfer, the $30,150 reflects the $225 or $235 per person, that is going to be a lump sum payment, and then below that there is the cost avoidance I guess of the $102,737 that is coming out of the self insurance fund. Where did you get that figure from? Mark Conrad That figure would have come from the Mayor’s office I believe. Budget Review – 09/26/11 Page 16 Chairman Deane So nobody understands that total? Mark Conrad I can’t really comment on how that figure was derived, I wasn’t part of that calculation. Chairman Deane What are your plans with that money? You can’t use it for pay raises right? Mark Conrad Right. Chairman Deane Anywhere. Mark Conrad Correct. Richard Dowd No. Mark Conrad As those restoration of funds for lack of a better word have come back in whether it be through the teachers’ contract or the secretarial contract, we have gone through a process of taking that to the Board of Education, making recommendations for how to use those funds. Although with the teachers’ contract it was somewhat over $600,000 we have implemented a few positions, most of what we focused on is one- time costs because that may help us in another year since it becomes part of our base, to offset the loss of $1.2 million. We’re really trying to stabilize our budget for the coming year. In conversations with Sean Smith, our Director of Plant Operations and I did give the board a head’s up on this, couldn’t ask at this point, it would be presumptuous to actually make a proposal until this resolution is approved by the Board of Aldermen, but the conversations with Sean Smith have been to place the majority of those funds into a new sidewalk plow. The plow we have, and it is the same plow that the City uses, they are about $110,000 for the full fit-up. The one we have is 8-9 years old. It came when Nashua North was originally opened. We are having increasing difficulties with the break down of that. I think the City has one of similar age they are using as a backup so this would be a good opportunity to be able to use that since those funds aren’t budgeted at this point. There may be some CERF funding that would be available to offset some of those costs, but I think that would be our first focus would be looking at purchasing a sidewalk plow both because it is a need, it is an opportunity to make a relatively large capital equipment investment that we won’t have in future years, and it is a one-time expense so we can then use those funds moving forward to help offset other costs in the budget as we look at losing $1.2 million in ARRA funds. Budget Review – 09/26/11 Page 17 Chairman Deane The $1.2 million is that the number that is reflected in all of these dollar amounts of… Mark Conrad No, that is just what we know we will be losing in the last year of our ARRA funding, economic recovery funding… Chairman Deane Stimulus money? Mark Conrad Stimulus money. This year we are tied into $1.2 million, which is far less than we had in the last three years, but next year it goes away altogether. Chairman Deane How much was the teachers’ contract was what about $300,000? Mark Conrad No that was $602,000. Chairman Deane This is $102,000. So by the time you figure all of your contracts, what are you looking at for a dollar total from this… Mark Conrad About $800,000 and I think $500,000 to $600,000 of that will be focused on one-time expenditures, and that means that moving forward perhaps our loss of revenue impact we can put it against that so maybe our deficit is $800,000 rather than $1.2 million for example or maybe it is $600,000 or $700,000. We’re trying to be conservative. Chairman Deane This is a one-time funding. Mark Conrad Right. Well it’s my… Chairman Deane You’re not going to get this next year. Budget Review – 09/26/11 Page 18 Mark Conrad It was always our understanding it would be rolled into the base. That is at least the understanding we have been working from. Chairman Deane Everybody understand that? I didn’t think so. Alderman Sheehan Where you are using it for one-time expenses are you using any of this to update technology where our average age of equipment is woefully outdated? Mark Conrad We used, and I didn’t bring the budget with me for how we have allocated it, we did use about $31,000 for technology. Much of that went to severance so that we were able to meet our severance obligations without tapping into the severance trust fund, which will enable us perhaps next year to reduce our severance line as another way of offsetting some of our loss of revenue. Alderman Sheehan But next year you will have a better feel on severance because we have moved the drop dead date … Mark Conrad We will, but… Richard Dowd Yes. Alderman Sheehan …for notification. Mark Conrad …we will still have $615,000 available in our severance trust fund. That means next year, FY13, we can reduce our severance account in our operating budget if we know we can draw down some of the funds in the severance trust fund. We really didn’t want to use that fund this year. We are trying to look two years out. A large portion of those funds, not quite half I think, went towards meeting our severance obligations this year, and then next year, whatever they are, we will have $615,000 the board could draw upon. Presumably you would want to draw it down over time so you are not in this…if you were to use all $615,000 in one year and you pull severance out of your budget then the next year you’ve got to build severance back in and it becomes very destabilizing. Preferably you draw it down over a period of time and leave some balance in there form year to year as you draw it down so it is more stable. Budget Review – 09/26/11 Page 19 We will have that ability now in February to understand what our severance obligations are and budget accordingly. Alderman Sheehan I was also asked to extend that they missed you at the cookout. Mark Conrad I did see them this afternoon and said I would be preparing for this meeting. Thank you. Alderman Sheehan You are welcome. Chairman Deane What is the total dollar amount that you are anticipating out of this transfer from the self-insurance fund back over to the 581 operating budget, $1.2 million? Mark Conrad No, no, no… Chairman Deane Your teachers’ was $600,000 right? Mark Conrad Teachers was $600,000… Chairman Deane This is $100,000… Mark Conrad Right, the second… Chairman Deane …The next one is $70,000. Mark Conrad Right, and then I… Budget Review – 09/26/11 Page 20 Chairman Deane You are at about $800,000 right there. Mark Conrad Right and then there is some from the secretaries, I think roughly $40,000. Chairman Deane And then there is no other… Mark Conrad No, paraprofessionals isn’t up this year so that should be all of the groups. And food services… Chairman Deane You have nothing from the lunch ladies right? Mark Conrad Pardon? Chairman Deane Nothing from the lunch ladies? Mark Conrad Correct. Chairman Deane And what other contracts are there? Mark Conrad That is it. Four contracts settled this year, one that is still in effect. Chairman Deane So it is your understanding that this $800,000 plus will be rolled over into the mix next year. Mark Conrad That was our understanding. Now whether or not that is the case, we are being conservative in not just putting those into reoccurring costs that we are then faced with potentially having to eliminate in another year so we are looking more at one-time expenditures, and I we’re also, where we can, linking it to what we know will make a difference for the staff in that contracts. In the case of the secretaries, we used it to help Budget Review – 09/26/11 Page 21 purchase photocopiers, which we hadn’t done in three years. In this instance, we would look at a sidewalk plow, which we know is a significant need and a significant cost. Richard Dowd The board is very careful not to spend it on anything where we are hiring anyone or using it for something that is going to cause a cost in the next budget. We did not want to be hiring someone and have to let them go in the next budget. It has not been used for that. Chairman Deane That is good to hear. Not to stray away from this, but I’m going to anyway. In the other resolution we have pertains to another $70,000 transfer for the unaffiliated. Is this pay raise retro back to July 1st? Mark Conrad The non-affiliated received a pay increase of .6%... Chairman Deane Same as this union. Mark Conrad Essentially. And it is retroactive. It was approved I think July 25th and it was retroactive back to the first week in July for non-affiliated. Richard Dowd Let me also point out that last year they voluntarily took a zero. They were the only ones. Mark Conrad Many did. Chairman Deane A lot of people in this world took a zero Mr. Dowd. Richard Dowd I understand, but I’m talking about this part of the unions and other people in the district, the employees. Chairman Deane All they have to do is look around. Any other discussions on this? Budget Review – 09/26/11 Page 22 Alderman Cookson Thank you. Could you speak to Article V and specifically 5.2 where the district agrees there will be no layoffs, demotions, or involuntary transfers as a result of contracting out work? Mark Conrad Yes. We have a process, we maintain a list of those…this has been a long-standing practice over the last three or four, maybe five years, based on grievances, where we have a list of those tasks that can be contracted out and if we have work that has to be done and we want to contract it out, we go through a process with the union to determine if there is a basis for contracting it out. If there isn’t then we are required to use employees within the bargaining unit. That is what that… Alderman Cookson Could you give a for instance? Mark Conrad Well for instance if we want to come in and add a wall, we have a carpenter and electrician on staff so the carpenter and electrician could come in and install the way. We wouldn’t be free to just determine well we want to go call P.M. McKay to come in and put it up for us and contract it out. There are certain instances where we don’t have the skill sets that we require so if we’re looking at some of our HVAC work that may have to be done or those kinds of requirements then we will contract out. If we have to refinish our floors we contract that out. Hazardous material/asbestos abatement we contract that out. If it is a particularly large job we typically work with the union to determine what makes the most sense. I think for them it was a matter of job protection so we are not over time beginning to contract out more work at the expense of hiring maintenance staff. And we feel it is working fairly well. Alderman Cookson Okay. The language where it said the district agrees there will be no layoffs or demotions or involuntary transfers… Mark Conrad We actually didn’t have difficult with that language because we just don’t see ourselves being in a position of saying we’re going to lay somebody off so we can contract out all of their work. It really becomes more of a concern on overtime or avoiding overtime by contracting out the work. Alderman Cookson Thank you. And you have added a different category into this particular contract; school year employees versus full time or part time employees. Mark Conrad Yes. That was one of those sidebars that we had. The only school year employees we have at this point would be the two security monitors at each high school and they were wrapped into the contract, those Budget Review – 09/26/11 Page 23 positions, about three years ago, and they wrote a sidebar to deal with how you address benefits and other requirements for school year staff as opposed to full year staff because we do reduce benefits in some areas for school year staff. We have now written that into the contract by having a sidebar out there. Alderman Cookson Specifically in the paid sick leave aspect of it, you say that 8 hours of school year employees per calendar month on the active payroll, that is how you…so they get 8 hours of paid sick leave for every month that they work. Mark Conrad Right and… Alderman Cookson And they can accumulate up to 670 hours total. Mark Conrad Right. I think the important piece there was full time employees can accumulate up to 960 so in essence… Alderman Cookson How do you generate that number? How do you come up with 960 hours that somebody can accumulate? Mark Conrad Well when you have employees that have been there 20 or 30 years and they don’t use much sick leave. Alderman Cookson So how much do you pay out? How many people actually have 960 hours of paid sick leave? Mark Conrad I honestly can’t tell you that off the top of my head. There are some employees who are at that level, but they are accruing 10 hours per month so they could accrue 120 hours per year so if they are not using sick leave very much, in 6 or 7 years they could be at that 960 hours. Richard Dowd That was an area we looked at, but there weren’t a significant number at that level. Alderman Cookson Do you recall where they fall within … Budget Review – 09/26/11 Page 24 Richard Dowd The numbers? Alderman Cookson …how many hours do they typically accumulate? Richard Dowd You mean on average? Alderman Cookson Yeah. Richard Dowd I don’t recall a number. Mark Conrad In the contract they would accumulate 10 hours a month I believe, which is a little over a day. You have to divide that by 8 to think in terms of days. But I couldn’t give you the scattered grain among where different people are in the levels of… Alderman Cookson Do you know what the rate is for payout at the end, once they decide to leave the district? Mark Conrad Typically you only pay out vacation time not sick leave unless it is tied into severance. I’m looking at the… Chairman Deane Why wouldn’t it be tied into severance? Mark Conrad That is why I… Chairman Deane It is accumulated time, they are going to… Mark Conrad …you don’t pay it out dollar for dollar, you do vacation time, but it depends on your severance requirements. I need to find that in the contract. Budget Review – 09/26/11 Page 25 Chairman Deane I thought it was a percentage of 50% or 60% or whatever. Richard Dowd Again that was a sidebar that was folded into the contract without change. As Mr. Conrad can tell you I have been sort of a stickler on all of the contracts on trying to get these sidebars wrapped into the contract rather than dragging them from contract to contract. It only makes sense that if you come to this agreement in a previous contract you enter it into the next contract. We did that universally on this contract; all of the sidebars are wrapped in. Mark Conrad If I could in answer to your question and Alderman Cookson’s question, upon retirement or resignation after ten years of continuous employment, an employee shall be paid for all sick leave accrued, but not taken, at the rate of 50% of the wage rate. If they have been there 10 years they would get 50% of accrued sick leave. Alderman Cookson Thank you. Chairman Deane Mr. Conrad I wanted to go back to the unaffiliated for a minute. These folks aren’t going to have to start making an increase in their contribution until the 1st of October. Mark Conrad Correct. Chairman Deane However, they have gotten the same amount of pay increase as what is in the custodians’ contract. The custodians are being asked to go back from the date of passage of this back to July 1st to pay the increase in contribution. However, the unaffiliated are not being asked to do that, their’s start on the 1st and their rate goes back. Why is that? Mark Conrad I respond in two ways; when you have contracts you are really governed by the contract renewal date. In the instance of non-affiliated employees the decision wasn’t made until mid July regarding the health insurance piece and the salary increase, and it seemed fair to give employees fair notice since it tied into…it is a qualifying event for a new enrollment period, and we are finding some employees as they are faced with higher costs for the employee cost sharing, will elect to go onto their spouse’s coverage. We thought it made sense to put it into place October 1st at the end of the open enrollment period for them in September. Budget Review – 09/26/11 Page 26 I think the second point to be made is, and this is a point we have had a lot of conversation with our board on, recognizing the cost of the teachers’ contract, we have been steadily losing ground every year for non- affiliated employees. As an example of that, in 2004-2005 an Assistant Principal who works 199 days a year at the elementary level earned about $20 a day more than a teacher did, which is appropriate given their additional responsibility, the hours that come with evening events at the schools they have to be at a lot, the fact they are evaluating and supervising teachers. They now make $10 a day less. Chairman Deane Did they have a union back then? Mark Conrad Well they did back in 2004-2005, right… Chairman Deane And then they decided to disband the union and be unaffiliated. Mark Conrad That is correct. So I think both the administration and the board is becoming sensitive to continued erosion of salaries and benefits of our small group of non-unionized employees to what unionized employees are earning, and I think this, and as Mr. Dowd said last year about half of our non-affiliated took no increase in salary. I think the concept of fair treatment and ensuring we are treating these employees at least as well as we treat our unionized employees is important. I think that was some of what you were seeing as well. Plus it made sense because that was the end of the open enrollment period, and traditionally… Chairman Deane Is the open enrollment period not the same for the union? Mark Conrad No it is the same for the union. Chairman Deane It is the same. So were they given the same opportunity if they were going to change insurance plan, were they given the same opportunity to do so as the unaffiliated got? Mark Conrad In the instance of the food service or the teachers it is a difference of one month, but that was governed by the starting date of the contract. Chairman Deane Well their contract passed prior. I’m saying the custodians are they given the same opportunity that the unaffiliated are…. Budget Review – 09/26/11 Page 27 Mark Conrad Oh I’m sorry. I don’t think they will have an open enrollment period until December because the contract isn’t in place until the end of September. The City has been working with their health insurance carriers and through their consultant to look at a number of different open enrollment periods during the year so I think with custodians it won’t come up until December for January 1st. So there will be a differential impact on them just based on the difficulties of the timing of when the contract is approved and when the health insurance carriers were willing to re-open the enrollment periods. Chairman Deane But the budget adjustments that are shown on 153 of $70,105, does that reflect the changes from the open enrollment when they can change their plans or does that show the current… Mark Conrad None of the cost projections assume any changes in open enrollment. It may not be large. We don’t know. We haven’t been in this position before. If anything it might have a somewhat higher savings if somebody is migrating off our health insurance plan, but we would rather be conservative and not assume a savings that doesn’t materialize. Chairman Deane You mean a cost avoidance. Mark Conrad Or cost avoidance. Thank you. Chairman Deane So the $70,105 transfer could be significantly higher if say everybody goes from a POS to an HMO. Mark Conrad Well the cost avoidance to the City could be higher. I think that is a fixed number regardless of what occurs with that over time. You could also see a savings if you have other contracts coming in, potentially you could see a savings in the health plan design changes too. Chairman Deane I don’t think it is right. I think this whole…whether these people took a pay increase last year or not I really don’t care. Everybody is looking at fairness across the board and you are asking custodians to pay retro back to July and you are allowing the unaffiliated who make some significantly good salaries not to have to do it. I think what is fair for one is fair for all. I know our merit employees started on July 1st and our merit employees didn’t get a .65% increase. They got half, .5% not .65%. Anyway, we will talk about that in a minute. Budget Review – 09/26/11 Page 28 Is there any other discussion on this R-11-150? The motion on the floor is to recommend final passage by Alderman Wilshire. MOTION CARRIED R-11-153 Endorsers: Mayor Donnalee Lozeau Alderman Jeffrey T. Cox Alderman Diane Sheehan Alderman Mary Ann Melizzi-Golja AUTHORIZING THE TRANSFER OF FUNDS FROM THE GENERAL FUND EMPLOYEE BENEFITS APPROPRIATION TO THE SCHOOL DEPARTMENT BASED ON CHANGES TO HEALTHCARE CONTRIBUTIONS MADE BY SCHOOL DEPARTMENT NON-UNION EMPLOYEES EFFECTIVE OCTOBER 1, 2011 MOTION BY ALDERMAN COX TO RECOMMEND FINAL PASSAGE ON THE QUESTION Chairman Deane I’m not going to support this. I think if they are going to do this it should be across the board. MOTION BY ALDERMAN DEANE AMEND, IN THE TITLE, BY CHANGING THE DATE OF OCTOBER 1, 2011 TO JULY 1, 2011 ON THE QUESTION Chairman Deane That will push that back to July 1st like the other folks are dealing with. Alderman Cookson Text and body? Chairman Deane Yes. AMENDED MOTION BY ALDERMAN DEANE TO AMEND IN THE TITLE AND BODY BY CHANGING THE DATE OF OCTOBER 1, 2011 TO JULY 1, 2011 ON THE QUESTION Alderman Sheehan Are food service workers affected by this? Budget Review – 09/26/11 Page 29 Chairman Deane No. Alderman Sheehan They are non-union employees… Chairman Deane They are unionized. Mark Conrad There are some who aren’t. Food service site coordinators, there are about 6 or 7 of those, but the cooks and the food service assistants would be in the union. Alderman Sheehan Thank you. Chairman Deane The motion is to amend in title and body the date October 1, 2011 to July 1, 2011. Discussion on that motion? MOTION FAILED Chairman Deane The motion on the floor is to recommend final passage as submitted by Alderman Cox of R-11-153. Is there further discussion? MOTION CARRIED Chairman Deane Thank you for coming Mr. Conrad, appreciate it. GENERAL DISCUSSION Alderman Sheehan Thank you. I just wanted to explain that I was held up tonight at the HDC meeting. There are some very exciting things coming to Railroad Square, but I apologize… Chairman Deane At the what meeting? Budget Review – 09/26/11 Page 30 Alderman Sheehan HDC, Historic District Commission, which I serve on… Chairman Deane People in TV land probably wouldn’t know the acronym. Alderman Sheehan Sorry. Historic District Commission. There are some very exciting things coming to Railroad Square. Chairman Deane Is there any other discussion? PUBLIC COMMENT - None REMARKS BY THE ALDERMEN Alderman Cookson I had a question for you Mr. Chairman. There was an attachment to our agenda, the School District Non- Affiliated Personnel Policy Manual. Is there action that we needed to take on that or is that a courtesy copy? Chairman Deane I just wanted to supply that to everyone. I’m going to do a comparison. Back in 2006 we were told that they were going to adopt a manual similar to the merit manual, and five years later here it is. I’m going to do a comparison of our merit manual compared to this non-affiliated manual to see because they were supposed to be mirrored. Correct me if I’m wrong… Alderman Melizzi-Golja At that time, you are correct. Alderman Deane You are no longer a Board of Education member, but I think Mr. Dowd said they were going to take the merit manual that we had in the City and they were going to mirror image it to the school district so that the unaffiliated were one in the same. I got a copy of this and I just wanted to supply it to the members for review. We’re not taking any action it is just an informational item. Alderman Cookson Thank you. I just wanted to say resolutions R-11-150 and R-11-153 this evening, I couldn’t agree with you more; first looking at what our merit employees contributed, how their contribution was refunded to them in making improvements to the third floor auditorium versus we have $70,000, $102,000 in budget Budget Review – 09/26/11 Page 31 adjustments going back to the school district. While I know there are improvements that can be made I don’t think there is a fairness between the two groups. I have issues with that. Resolution 11-150, the Collective Bargaining Agreement between the Nashua Board of Education and the Nashua School Custodian Union, Local 365, if you look at the cost analysis, it is a band-aid fix. You see healthcare contributions, but in two years we have exceeded where we are today so it is a short-term fix. We don’t have any real solutions yet and this isn’t answering any questions or solving any problems. I think we need to take a hard look at this; we need to have our Board of Education take a hard look at this, work with their labor unions, and figure out what we are going to do. We are in a very tough economic time and I think people are very happy to have jobs, those who have them. The unemployment rate is just something that we shouldn’t be experiencing right now and are. I couldn’t support that particular resolution this evening. I would have supported R-11-153, the transfer of those funds for the non-affiliated employees if it had gone back to July 1, 2011 instead of October 1, 2011. Again, there has got to be fairness between union and non-affiliated. I would have supported it if it had been retroactive back to July 1, 2011. But it wasn’t, therefore, it received my no vote. Alderman Sheehan It was mentioned that these are temporary gains. Being that the healthcare industry we have been told at great length is increasing 10% every year, I would like to hear what the other Alderman who said this isn’t the solution, what do you feel the solution is? Short of there is a 10% inflation on that line item every year, what is your solution to make it work long-term where there is a reduced cost rather than just reducing the in pocket pay for a family trying to support themselves? You said it flat lines after two years. What is your suggestion for that not to happen? Alderman Cookson I’m sorry this is just your opportunity to make remarks. I’m not answering any questions with regard to that this evening. Alderman Sheehan Okay. Well my remark then would be that if this is inadequate I would like to hear some solutions that would fix it because we all know that it is going up 10% every year, and there is no end in sight. Pointing a finger at it is one thing, but I’m very interested in hearing how do we fix this because that is what we are charged with as the bottom line. What can be done where that isn’t going to be the case? Alderman Cookson I would make one comment. I’m sorry. My one comment is that this is not up for an Alderman to negotiate; it is up to the Board of Education to negotiate. Alderman Sheehan I understand that. Alderman Cookson Thank you. Budget Review – 09/26/11 Page 32 Alderman Cox I couldn’t disagree with the earlier speaker I guess any more. But I think the Board of Education and the school department did a great job with the four contracts that they have brought forward, fully acknowledging the hard times that we are in. Both working with the unions and with their budget, I think they did a fantastic job. I couldn’t agree more that they need to continue to do that, but kudos to them; my congratulations for doing a great job on the four that they brought forward. ADJOURNMENT MOTION BY ALDERMAN WILSHIRE TO ADJOURN MOTION CARRIED The meeting was declared closed at 8:23 p.m. Alderman-at-Large David W. Deane Chairman, Budget Review Committee