Apparently Higher Spending Is "Savings" in Tiverton

Unfortunately, time-critical tasks kept me from tonight's Tiverton Town Council meeting, at which the council will (or won't) ratify the latest AFSCME union contract. However, I did take a moment to rereview a document that the town council posted online titled "Contract Negotiations Summary."

That document shows a negative "net change" for each year of the contract and proclaims "total savings" of $117,065. Based on my inability to match the numbers, I emailed Town Administrator James Goncalo for the formula, and as I suspected, the town derives that dollar amount by assuming increases in salaries and other costs and counting some mitigating changes as savings. Basically, one totals the "wages," "health increase," and "co-pay" numbers for each year, finds the difference between one year and the year before, and then adds and subtracts the new expenditures and savings items.

Now, I don't believe that those who put together this spreadsheet are being deliberately dishonest, but I'm reasonably sure that they have made a conceptual mistake that conveniently embellishes their "savings." Simply put, the various line items are calculated from different starting points. For a measure of "net change," the wages, health increase, and copay items are calculated from the prior year,but everything else is calculated from the last year of the prior contract (2007-2008).

Thus, for 2010-2011, aggregate wages increase to $927,367 from $904,759, but estimated overtime savings don't actually increase an additional $60,000. They increase $60,000 compared with 2007-2008 rates. For the wage amounts to be comparable, they would have to be listed as the actual dollar-amount increase from 2007-2008 — or, $8,654 for 2008-2009, $39,375 for 2009-2010, and $61,983 for 2010-2011. Alternately, one could calculate all numbers as a change from the previous year. Recalculated in these ways, the "net change" amounts would render as follows (adjusting for a $10 error in the original calculations for the final year), with savings denoted as negative numbers:

	Town Council Calculation	Change from 2007-2008	Y-o-Y Change
2008-2009	-$12,249	-$12,249	-$12,249
2009-2010	-$46,948	-$16,870	-$4,621
2010-2011	-$57,858	$23,886	$40,756
Total "savings"	-$117,055	-$5,233	$23,886

The most reasonable measure of this contract's impact is the total increase or decrease compared with a flat-lined continuation of the status quo, or $114,647 -$5,233,* and I hope the town council isn't in the process of ratifying the contract as I type. If it does pass, residents can expect to hear that "locked in" phrase repeatedly during future budget battles, and we will be entirely justified in making these specific councilors pay a political price for having done the locking in.

* My initial number resulted from a data entry error as explained here.