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Middletown budget plight

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Vivian Moon View Drop Down
MUSA Council
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Joined: May 16 2008
Location: Middletown, Ohi
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Vivian Moon Quote  Post ReplyReply Direct Link To This Post Topic: Middletown budget plight
    Posted: Dec 24 2016 at 9:09am

Middletown budget plight could spur layoffs, city manager says

Mike Rutledge

Staff Writer

11:38 a.m. Friday, Dec. 23, 2016  Middletown

 

MIDDLETOWN

The city of Middletown is experiencing financial problems because it is self-insured for its employee health care and expenses have been significantly above expectations, City Manager Doug Adkins told City Council.

Adkins announced belt-tightening moves, including leaving vacant positions open until at least June. If things don’t improve, layoffs are possible, he told the city’s elected officials this week.

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Because of the higher health-care costs, the council approved transfer of $1.25 million from the city’s general fund — essentially, its checking account that is used for most purposes — to the city’s employee benefits fund, a month after City Council approved the 2017 general-fund spending plan of $30.3 million. That $1.25 million will serve as a loan to that fund. It follows a $750,000 transfer last year to the same fund.

During the Great Recession, as a way to avoid layoffs, the city decided to self-insure for health care, and that worked out well, Adkins said.

“With the exception of 2013, we kept our spending flat on health care,” he said, “which means even though health-care costs were going up 6-, 8-, 10 percent, we did not increase the amount of money we were spending on health care.”

“This worked fine when we had low-claims years, and at the end of ‘14, we had a positive balance of $1.2 million in that fund,” Adkins said. “It worked for a while.”

In 2015, “We saw dramatic increases in health-care claims from our covered employees,” he said. “Because we are a smaller group, we have volatility — we have up years, we have down years.”

Adkins said city administrators assumed 2015’s high-cost level “was a blip in the radar,” when the general fund last year loaned the $750,000. The city adjusted health-care plans and premiums in an effort to stabilize the fund, so that loan could be repaid.

Then, Adkins said, “2016 comes, and claims have substantially increased over 2015 levels. We have seen multiple cancer claims, premature babies, and new serious chronic conditions in 2016 that we simply have not seen in the last 10-15 years.”

“The good news is that our employees and their families were covered during catastrophic times,” he said. “The bad news, however, is not only have we not been able to pay back the $750,000 that we borrowed in 2015, you now need another $1.25 million to end the year at $0 in the health-care fund, which means we are $2 million in the hole.”

The 2017 budget, which council approved in 2017, assumes 2016 expenses are “the new normal,” he said. A city health-care committee has cut coverage and increased premiums to save and generate about $150,000 toward repaying the general fund. Salary and benefits that Public Safety Director David VanArsdale’s salary would have earned — he’s retiring Jan. 6 — plus some other expenses will be trimmed to cut costs.

“I am putting a hold on all of the new positions we had budgeted for 2017, until at least June 30,” Adkins said, saying that can save $120,000. In all, Adkins has found $613,000 in cost savings to help with the $2 million gap.

“In 2017 — I’ve already talked to the department heads — our policy will be any turned-over position will remain vacant for 90 days,” Adkins said. “I reserve the right, respectfully, to not do that if there’s something that’s critical.”

Plus, there was a $400,000 claim that was paid that the city is appealing, with hopes of being reimbursed for that amount, Adkins said.

He hopes to be able to repay $1 million of the $2 million in loans, and promised to report quarterly on the situation to his bosses on council “so we don’t let this get far away in 2017.”

If the situation worsens, premiums can be changed, and, “there are things that we can do, all the way up to laying people off,” he said. “This is the best plan that we could put together for you tonight.”

Over the next few years, the city will have to carefully manage the health-care program, he said.

“We can always get more aggressive,” he added. “It means probably laying people off, if you want to get it done faster than that.”

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Richard Saunders View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Richard Saunders Quote  Post ReplyReply Direct Link To This Post Posted: Dec 25 2016 at 1:06am
Strange.  One day he's leasing more office space due to needing more municipal staff.  The next day he's talking about laying off staff.
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What A City View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote What A City Quote  Post ReplyReply Direct Link To This Post Posted: Dec 25 2016 at 1:00pm
Originally posted by Richard Saunders Richard Saunders wrote:

Strange.  One day he's leasing more office space due to needing more municipal staff.  The next day he's talking about laying off staff.

Good point. We never did get an explanation as to why the need to lease additional office space is needed when the city owns the old Seniors building right next to the city building that could house the overflow. 

How about it Mr. Adkins. For a second time.....why can't the city use the old Seniors Center for city employee overflow rather than to pad the pockets of another owner and save the taxpayer some lease money as well?

While on the subject of the potential to downsize the city employee numbers, why is it always a catastrophe to think about such things when downsizing happens in the private sector all the time? Why is it taboo for a public sector person to lose their job but is taken with a grain of salt when hundreds of private sector people are thrown out of work? As in any private sector company, there are layers of useless management that could be eliminated and I know for a fact that the same thing holds true for any city, state or fed level government hierarchy. I am sure that you can do without a Director, Manager and Supervisor in any department, especially when the department has only five worker bees, I would imagine that the management to worker ratio is way out of line in most departments in the city building, just as it is in Columbus and certainly in Washington. I see the over hiring waste everyday at WPAFB. 

Here's a question for you Mr. Adkins......IF a downsizing takes place in your city building, how many losing their jobs will be in positions lower than management and how many will be managers? You can downsize one manager and save three worker's jobs. The three downsizing events I have been involved in threw workers out on the street while most of the managers got to keep their high-paying jobs drinking coffee, going to meetings, passing information up and down the ladder and deciding not to decide until the next worthless meeting. Gotta protect the old high roller buddy system at all cost.  I see no value in keeping multi-layer managers who do little for the bottom line. The days of three level VP's,  Directors, Assistant Directors, Managers and Asst Managers should have been over many years ago. 
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spiderjohn View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote spiderjohn Quote  Post ReplyReply Direct Link To This Post Posted: Dec 28 2016 at 4:23pm
A very difficult situation
A lifetime as a business owner dealing with health insurance tells me that the current negative balance trend will probably continue as the existing employees age and premiums/medical costs skyrocket. I wouldn't expect a return to the black anytime soon.

You unfortunately have to don the black hat, and request a seriously increased employee contribution, increase in deductible, elimination of family plan, elimination of vision/dental or go in to the market(hopefully improved when Trump takes over--nothing will happen quickly).

Then you have the issue of two mill $$$ "borrowed" from the general fund. What are the current plans for "re-payment" of taxpayer $$??

Not an enviable position/situation with probably no warm fuzzy solution.

We ALL want to be with admin working towards a better, happier, successful community for EVERYONE. Outside of a tax increase, how can we help?

And could we please have a serious decrease in emergency legislation? Better planning and a more straightforward approach to citizens might be a start. Only real emergencies instead of convenience.
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Vivian Moon View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Vivian Moon Quote  Post ReplyReply Direct Link To This Post Posted: Dec 30 2016 at 11:11am
Spider
Hmmm…How is this news?
Them boys at City Hall have known for 10 years that this payroll/benefit package was unsustainable and breaking the bank.


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whistlersmom View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote whistlersmom Quote  Post ReplyReply Direct Link To This Post Posted: Dec 30 2016 at 7:43pm
Council, you had plenty of money for an unwarranted 20% raise for Dougie. You had money to buy unneeded real estate on Hook Drive. You had money to lease unneeded office space (you had the senior citizens building) for the unnecessary new people Dougie wants to hire. Two days after passing the emergency legislation to lease office space, you learn there is no money to pay for the health insurance claims (the city is unwisely self-insured), and Dougie says he may need to reduce the number of city employees (no need for the leased space). Council, when are you going to realize that the emergency legislation to get the lease in place before the lack of money was known, was nothing less than a con job? If this is allowed to go on, council should be held personally liable for the wasted money for the lease. Council gets rid of any quality of life assets (Bicentennial Commons, Sebald Park, swimming pools, golf course, etc.) because they claim that they can’t afford them. But they can funnel money to their downtown cronies, even if they can’t pay the city’s bills.
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Analytical View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Analytical Quote  Post ReplyReply Direct Link To This Post Posted: Dec 31 2016 at 7:56am
2017 Prediction #1:  might Mr. Atkins move on to a more stable, less challenging municipality than Middletown now that he has a couple of years of city management experience under his belt plus an enhanced salary/compensation package?  Would he be better suited to Mason-like communities instead of a multi-challenged, troubled Middletown?  Food for thought.
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spiderjohn View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote spiderjohn Quote  Post ReplyReply Direct Link To This Post Posted: Dec 31 2016 at 9:33am
well--the guy inherited a tough situation(although he was a very familiar part of it prior). we have spent enough years and finger power here spreading the word. might be time to simply find something positive that we like, and help the guy to make it all better. It's not like anyone else really wants the job.

OK mr.A----we can move in to 2017 together being optimistic and upwardly mobile. Keep an open and tough skin and tell us what you REALLY want/need from us. Maybe we can unite and deliver. Maybe not---but no real good reason it shouldn't happen. The MUSA crowd knows the town and cares. Obviously Council, admin and you care enough to provide leadership. If we listen and trust each other it can work.

https://youtu.be/9HyhqeWoEuo
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Vivian Moon View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Vivian Moon Quote  Post ReplyReply Direct Link To This Post Posted: Dec 31 2016 at 11:34am
...and the answer is.....
"Adkins also said Middletown has some of the highest property taxes in the state."
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