Benefits for Town Workers Too Costly: Finance Officials

Benefits for municipal workers cost Westport taxpayers more than $10 million per year - a tally that finance officials say cannot be sustained long-term.

For every dollar spent on salaries, an additional 53 cents goes to benefits such as health insurance and pensions, according to the Finance Department.

“It confirms that essentially the benefits costs are what’s driving our budget, and the Board of Finance has been saying that for years,” said Helen Garten, chairman of the town’s fiduciary board.

Retiree payouts, which totaled $9.3 million in the last fiscal year, are not included in the calculation, which is based on the 2010-11 fiscal year. School employees also were not included. There are approximately 330 full-time town employees eligible for benefits.

Garten said that Westport is in better shape than other places, but that if nothing changes, she said, more departments will have to be cut in order to meet contractual obligations. Even minor tax increases wouldn’t be enough to outpace the rising costs, she said.

“The only way to change the benefits is to change the package of benefits employees get and that’s the fight that’s been going on in just about every state and municipality out there,” Garten said.

That belief crosses party lines on the Board of Finance.

"Our town's pension and post employment benefit levels are not sustainable," said Avi Kaner, a Republican on the board, in an e-mail. "These plans were designed for past needs, pushing the mushrooming benefit levels into the future. The future is now. Examining the numbers makes it clear."

Public vs. Private

According to the Bureau of Labor Statistics’ most recent benefits survey, 65 percent of private employees had access to retirement plans, and the vast majority had defined contribution plans, such as 401Ks, that offer payouts commensurate to the performance of financial markets.

Nationally, 90 percent of state and local government employees had access to retirement plans. Most of those employees – 79 percent – were eligible for defined benefit plans. Even if the stock market collapses, much like it did in 2008, employees will receive a guaranteed payout. The government has to make up the difference.

That, along with rising health insurcance costs,  is part of the problem facing Westport. In the 2008-09 budget, which was approved before the economy tanked, a mere $1.1 million was needed to fund the pension properly. The next year, it was $4.8 million. In First Selectman Gordon Joseloff preliminarily 2011-12 budget, $10.1 million is allocated to the pension.

Negotiations

Rising costs were cited by the Representative Town Meeting as the reason for for firefighters’ and municipal employees’ unions in November.

The two unions represent a total of more than 100 employees. Gary Marks, president of the Local 1081, the firefighter's union, could not be reached for comment on Wednesday afternoon.

The two contracts, which were negotiated between the town and the unions, offered wage freezes in the current fiscal years followed annual raises between 1.25-3.25 percent for the next several years. The proposed contracts also stipulated that employees pay more for health insurance, but it wasn’t enough for the RTM. Pensions were not addressed in either contract.

"I know the people in this town work hard and I'm very supportive of them in general, but I'll tell you what: if this gets approved, there's going to be less of you working next year," said RTM member Kevin Green, District 9, said at the November meeting. "It's just not going to happen any other away."

With the RTM rejecting the contracts, a state arbitrator will weigh in. It could be a move that saves the town – and taxpayers – lots of money. Or, the arbitrator could side with the unions. Only time will tell, and town officials have no indication on when the arbitrator will decide.

Last year, town officials rejected a federal grant that would have paid to hire new firefighters. While the government would fit the bill at first, the costs would eventually shift to the town.

"Last year we planned on hiring four new firefighters with the new pension plan. The union refused and, directly as a result, ," Kaner said. "The town must continue staying steadfast in protecting current and future taxpayers, while also providing our essential staff with reasonable plans.

Until then, the will be in full force. On March 2, the muncipal and school budgets will be presented to the Board of Finance. They may mandate cuts on top of the already slimmed-down budgets.

Correction: Gary Marks was incorrectly identified as the president of the firefighters' union. His term expired last year and Nathaniel Gibbons is the new president.