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.

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Patrick
Patrick
12 years ago

So let me see if I have the math straight with how these towns are “saving” money.
Being a good reader, I tell Justin that I’m going to start donating $5 a month to Anchor Rising and then every three months, I’m going to increase that by $5 per month.
So for three months, I’m paying $5/month, then for three months $10 per month, then for three months $15 per month and then for three months $20 per month. So I’m on the hook for $150 this year. But then I realize, that’s just too much. So then instead of increasing by $5 a month, I’ll only increase by $4 per month.
So now I do the math and I’m only on the hook for $141 for the year. Heck, I’ve SAVED myself $9! I’m sure my wife will be thrilled when I tell her that I saved us $9! Oh and by the way, the monthly expenses are still going to increase by an additional $4 every quarter, but pay no attention to that part, I saved us $9 this year!! Wahoo!!

John
John
12 years ago

Hey! That’s what my wife does. She goes shopping, spends $100 for things we don’t need and comes home to tell me how she saved us $200 by not paying full price.
Amazing!

Patrick
Patrick
12 years ago

Yeah, you see this trick all the time at the grocery stores too. An item will be $4.29, but if you buy two, they’re $7. So even if you don’t need two, or if it will spoil before you use the second one, you can say you saved $1.58 by buying two!

pat
pat
12 years ago

Thats how they do math in Tiverton

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