Download - Analysis of City of Hamilton Expenses
1
Analysis of City of Analysis of City of Hamilton ExpensesHamilton Expenses
Civic League Financial Sub-team
January 8, 2013
2
Truth in NumbersTruth in Numbers
Present information that informs and motivates citizens to increase involvement in municipal affairs
Identify topics to become issues in 2014 municipal election
3
MethodologyMethodology
Obtained data from the Ministry of Municipal Affairs and Housing website for Financial Information Reporting (FIR) and Municipal Performance Measuring Program (MPMP)
Used data from reports for 2002 to 2011◦ Amalgamated city’s first year was 2002
Looked at data for ◦ Salaries, wages and benefits◦ Materials◦ Contracted services◦ Number of employees◦ Number of citizens and households◦ Fire, Police and Waste Management
4
Consumer Price Index (CPI)Consumer Price Index (CPI)
CPI has increased by 19.9%◦ from 100 in 2002 to 119.9 in 2011◦ 2.2% / year
5
Population and Number of Population and Number of HouseholdsHouseholds
City’s population has increased by 8.3%◦ from 490,270 in 2002 to 531,057 in 2011◦ 0.9% / year
City’s households have increased by 9.3%◦ from 194,155 in 2002 to 212,262 in 2011◦ 1.0% / year
6
Number of City Employees
5,895 5,930
6,296
4,631
1,870
1,618
838
19578
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2002 2006 2011
Full-time funded positions
Part-time funded positions
Seasonal employees
7
Number of employeesNumber of employees
City’s full-time funded employees have increased 6.8%◦ from 5,895 in 2002 to 6,296 in 2011
City’s part-time funded employees have decreased by 65.1%◦ from 4,631 in 2002 to 1,618 in 2011
City’s seasonal employees have decreased by 90.7%◦ from 838 in 2002 to 78 in 2011
8
Compensation Expenses
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2002 2006 2011
Total Salary and wages Benefits
9
Compensation SpendingCompensation Spending
Total salaries, wages and employee benefits have increased by 61.2%
◦ from $388MM in 2002 to $625MM in 2011◦ 6.8% / year
Salaries and wages have increased by 37.6%◦ From $354MM in 2002 to $487MM in 2011◦ 4.2% / year
Benefits have increased by 310.8%◦ From $33MM in 2002 to $137MM in 2011◦ 34.5% / year
10
Compensation Expenses Actual annual compensation
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
11
Compensation Expenses Actual annual compensation and CPI-inflated compensation
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Actual annual compensation
CPI-inflated compensation
12
Compensation Expenses Cummulative premium of actual verses CPI-inflated compensation
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Actual annual compensation
CPI-inflated compensation
Cummulative difference
13
CompensationCompensation
If compensation had grown at the same annual rate as the CPI, spending on compensation would be 32% less than it is today
For 2011, this equates to $153MMTotaling the annual differences from 2002 to
2011, actual compared to CPI growth, the City has “over compensated” by $892MM
14
Compensation and TaxesCompensation and Taxes
Net taxation available for municipal purposes in 2011 was $720 MM
86.8% of net taxation is used to pay for salaries, wages and employee benefits
15
Materials and Contracted Services Expenses
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2002 2006 2011
Materials
Contracted Services
16
Materials and Contracted Services Materials and Contracted Services SpendingSpending
Materials have increased by 43.0%◦ from $163 Million in 2002 to $234 Million in 2011◦ 4.8% / Year
Contracted Services have increased by 102.2%◦ from $89 Million in 2002 to $181 Million in 2011◦ 11.3% / Year
17
QuestionsQuestions
Why are expenses increasing faster than the population and households?
Why are expenses increasing faster than the CPI?
Why are employee benefits increasing so fast?
Why are contracted services increasing so fast?
18
Police Expenses and Crime Rate
$214.82
$244.42
$269.27
62.987 61.27453.041
2005 2008 2011
Operating costs for Police service / citizen
Total Crime Rate (Criminal code offenses less traffic)
19
Policing Services SpendingPolicing Services Spending
Policing operating costs per citizen have increased by 25.3%
◦ from $214/citizen in 2005 to $269.27 citizen in 2011◦ 4.2% / Year
Total crime rate has decreased by 15.8%◦ from 63 in 2005 to 53 in 2011◦ 2.6% / Year
20
QuestionsQuestions
Why is the cost of policing increasing faster than the population and households?
Why is the cost of policing increasing while the total crime rate is falling?
21
Fire Services Spending
$55,928,268
$66,327,398
$80,551,308
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
2005 2008 2011
22
Fire Services SpendingFire Services Spending
Fire Services operating costs per have increased by 44%
◦ from $55.9MM in 2005 to $80.5 in 2011◦ 7.3% / Year
23
QuestionQuestion
Why are Fire Services costs increasing faster than the households?
24
Waste Management Tonnages
0
50,000
100,000
150,000
200,000
250,000
300,000
Total tonnes Collected from AllProperty Classes
Total tonnes Disposed of fromAll Property Classes
Total tonnes Diverted from AllProperty Classes
Total tonnes Disposed of andTotal tonnes Diverted from All
Property Classes
2005 2008 2011
25
Waste Management Costs
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
2005 2008 2011
Operating Costs for Garbage Collection
Operating Costs for Garbage Disposal
Operating Costs for Solid Waste Diversion
26
Waste Management CostsWaste Management Costs
Collection costs increased 69% from 2005 to 2011◦ 11.5% per year
Disposal costs increased 102% from 2005 to 2011◦ 17% per year
Diversion costs increased 60% from 2005 to 2011◦ 10% per year
Combined costs increased 77% from 2005 to 2011◦ 12.8% per year
Total tonnage handled decreased 12% from 2005 to 2011◦ 2% per year
27
ConclusionsConclusions
City of Hamilton’s expenses are too highHigh salaries, wages and employee benefits costs
make the City increasingly dependent upon higher taxes, higher user fees and funding from federal and provincial sources
City of Hamilton needs to improve efficiencyCity of Hamilton needs to understand their cost
driversCity of Hamilton needs to review their
procurement practices
28
Possible Solutions
Pension plan going forward converted from defined-benefit to defined-contribution
Eliminate banking of sick daysRestrict vacation carry-over to 2 weeksReduce number of employees through attrition,
i.e. do not hire to replace all retireesRe-deploy employees to highest prioritiesRequire retirees to pay 50% of their medical
benefitsApprove expenses based on efficiencies and
service levels