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Erdmann proposes sweeping changes to meet challenges

Date: 3/15/2011

March 16, 2011

By G. Michael Dobbs

Managing Editor

SPRINGFIELD — As baseball great Yogi Berra once said, "It's d j vu all over again."

By law, the city of Springfield must prepare and present a financial plan for the upcoming four years every year by March 30. Last year was the first such exercise and on March 10, Lee Erdmann, the city's chief administrative and financial officer, presented his second annual draft plan.

This second plan reflected the continuation of financial challenges first discussed last year. Simply put, the cost of city government is predicted to quickly outstrip its revenue stream.

In this year's report, Erdmann has suggested some sweeping policy changes from pay freezes to union concessions in order to increasing the retirement age to close the multi-million dollar gap he said the city will begin to face in FY12.

At the press event, Mayor Domenic Sarno said the city has suffered from cuts in state aid and shouldn't expect any increased funding until at least FY13.

While Sarno reported the good news that the city has a healthy stabilization fund and that Standard & Poors recently upgraded the city's bond rating to AA-, he warned that "budget-busters" would create gaps between revenue and spending.

Sarno said those factors increasing the budget include the cost of pensions, health insurance and trash collection. Sarno said eliminating the existing trash fee would add to the city's financial woes, especially in the next four years as the cost of disposing trash is expected to increase.

Erdmann and Sarno said that if the city proceeds with its current levels of spending and revenues, there would be a gap of $46.6 million in FY12. By FY15, the difference would be $87.7 million.

Sarno added using the city's stabilization fund to fill the deficits would exhaust it.

Erdmann explained that department heads were asked to prepare budgets with level funding and with a decrease of 15 percent. Sarno called a 15 percent decrease a "worst case scenario."

Erdmann added that Sarno took a cut in his pay and that "everything is on the table at this time."

Among the steps Erdmann suggested to cut expenses include the following:

• Consider cutting all less-essential vacant positions.

• Consider pay freezes for bargaining employees.

• Consider pay freezes for non-bargaining employees.

• Consider a strict hiring freeze and eliminate staff as attrition occurs.

• Investigate entering into a bi-weekly and paperless payroll process.

• Update policies for special Education.

• Update policies for school transportation.

• Consider updating divisional and departmental reorganization studies. These reorganizations could eliminate duplication of services and transfer those resources to other high-priority departmental functions.

• Increase the age for pension eligibility and retirements. This has been recommended by the state (as it requires a state law change) and is being reviewed by the Retirement Board as to its impact on the city.

• Review all functions that have been outsourced to assess if costs have really been reduced.

• Consider targeted reductions in work force that would eliminate specific programs and services.

• Evaluate the implementation of a four-day work week that would shut down buildings and/or reduce employee pay.

• Implement performance evaluations for all employees and base annual raises and terms of employment on that evaluation.

• Investigate the cost of offering a cash stipend to employees who opt out of the city's health insurance plan.

• Request contract concessions by collective bargaining units.

The complete plan is on the city's Web site, www.springfieldcityhall.com and Erdmann invited comments from the public. Erdmann can be reached at 866-5289.



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