I recently asked County Manager David Fanslau to explain the budget process and to answer some criticism.
Last April, Fanslau instituted a hiring freeze. Unions were told there would need to be about 200 employees to participate in the early retirement incentive program to avoid layoffs. Participation was far less.
The budget ultimately recommended deferment of salary increases and longevity bonuses to avoid layoffs. Unions protested and filed lawsuits, thus the layoffs.
Critics argue more exploration of the budget is needed to avoid layoffs, but they are not coming up with any concrete numbers or real suggestions.
Fanslau says the gap between expenses and revenues was about $12.5 million. He claims there would not have been a need for layoffs or a need to appropriate $6.9 million from the Fund Balance if enough employees retired.
Attrition assisted in reducing the $12.5 million gap to about $10.4 million. The remaining gap was addressed by further cuts, an appropriation of $6.9 million from the Fund Balance, and the $3.3 million wage and longevity bonus freeze.
Fanslau maintains the $3.3 million is not in the budget for wage or longevity bonuses; rather appropriated in a contingency line, but is balanced by $3.3 million revenue anticipation from concessions related to the wage and longevity freeze.
Several vacant positions also needed to be filled despite early retirement to comply with State regulations.
He says the Teamsters statement that vacant positions equate to $2.8 million is factually inaccurate and misleading. “The expense of an average employee salary is about $42,000, after applying health benefits, employer FICA taxes, and employer pension contributions, the expense is about $74,000.”
Fanslau points out that the Federal Medicaid Assistance Program (FMAP) funding is one-shot revenues.
In December, the County received notice weekly Medicaid rates that must be paid to Albany will be reduced for the first half of 2011 that will equate to a cost avoidance of about $1.3 million, but that cost will be realized in 2012, plus an additional $550,000 for the property taxpayers share of the State’s Medicaid program.
“Therefore, the $1.3 million could be “spent” in 2011, but that will leave a hole of $1.855 million in Medicaid expenses in 2012. There may also be a reconciliation of FMAP sent to the County, but no amount may be relied upon, and that won’t be realized until October of 2011.”
He adds, “It would be fiscally prudent to use the funds, if realized, to reduce the amount of appropriated fund balance as opposed to funding recurring expenses, such as wage increases and longevity bonuses.”
Fanslau may not be at his game when it comes to employee relations. He has to understand a “pat on the back” and a “thank you” goes a long way. You do get more with honey than vinegar.
Despite his lack of employee communications skills, Fanslau appears to be doing his job. The problem is no one wants to hear or accept the truth.
Still, county employees are human beings, and they have some legitimate concerns and gripes. Next week we will hear from some of them and more from union honcho Sandy Shaddock.