Budgets Improvements Part 2

Budget Process Improvements Ė Part II

In Part 1,we discussed the first two one-time reductions that involved the Art Gallery and Transit services. I will now discuss the third potential area that Council needs to address Ė staff reductions at city hall. I first raised the need for this in my article, Comparing Owen Sound Salaries and Benefits last year. Iíve examine Owen Soundís workforce in the past by comparing Owen Soundís salary expense to that of other municipalities. My analysis can be reviewed in my Hub Article ďComparing Owen Sound Salaries and BenefitsĒ.† This review included some municipalities that contracted out either Fire Services or Police services.† Although the results clearly indicated that Owen Sound was over staffed, the inclusion of municipalities with contracted protective services distorted the results. As a result I decided to revisit the study with carefully selected municipalities and remove Protective Services' salaries and benefits expense..

How I Selected the Municipalities

I selected these municipalities using three criteria. First, I selected those with similar populations to Owen Sound. Then I reduced this list by eliminating rural communities and finally I reduced the list further by selecting only those municipalities with a similar number of inhabited dwellings. †To achieve this I used Statistics Canadaís databases.


Examining the Workforce

To begin my analysis, I reviewed the 2021 audit financial statements for similarly sized municipalities and extracted the total that each municipality paid in Salaries and Benefits.  Since some municipalities contract for fire and police services, I removed all protective services salaries from the data.  The graph below shows what each municipality paid in Salaries and Benefits for all areas except for Protective Services in 2021.
Figure 2; Salaries and Benefits Expense for Similarly Sized Municipalities

As you can see there are four municipalities with greater populations than Owen Sound and three with lower populations.† The average salary expense for these municipalities, excluding protective services salaries, was just about $9 million. Huntsville, Amherstburg and Owen Sound all had a Salary Expense greater than the average. Owen Sound spent $13 million on Salaries & Benefits, excluding Protective Services salaries. To reduce Owen Soundís expense to the average of $9 million, an expense reduction of $4 million would be required.

One Part of the Problem

As I mentioned above this data was acquired using each municipalityís audit financial statements. These statements do not provide any visibility into the number of employees in each municipality. However we can get a feeling the portion of each municipalityís salary expense involving management by looking at the numbers of managers with salaries greater than $100,000.
Figure 3; Managers with Salaries Greater Than $100,000  

As shown above the average number of managers, in municipalities in the study group, on the Ontario Sunshine List is 12.8. Amherstburg, Essex and Owen Sound all have more that the average number of employees earning more than $100,000 with Owen Sound having the greatest number at 19.† This seems to confirm that when it comes to managerial salary expense, Owen Sound leads the pack, at least in this group of municipalities.

An interesting side note is that the total number of employees earning more than $100,000 in 2021 was 73. Therefore, 54 or 74%, of Owen Soundís employees earning more than $100,000, work in Protective Services. Perhaps protective services will be examined for cost savings in a later study.

Verifying the Results

These results strongly suggest that a portion of the excessive salaries and benefits expense is due to the overstaffing of managers.† One method of verifying this would be simply to count the number of managers in each of the comparative municipalities.

Most municipalities post either their organization charts or staff directories on their websites. Using this information along with their budget books we can get an estimate of the number of managers employed at the municipality.† This information was only available on five of the municipal websites. Itís important to note that these sources give us only an estimate of the actual numbers since this information is often outdated. The most reliable data was from those municipalities that had their current organization charts on their websites. The results are show in the graph below.

Figure 4; Estimated Number of Managers

As shown above, it is estimated that Owen Sound employs approximately 29 managers based on information gleaned from the city staff directory and confirmed by the 2021 budget book. In contrast, Strathroy, that has a population that is slightly greater than Owen Sound, yet employs only 15 managers to manage its municipality.† The fact that it appears that Owen Sound needs 14 more managers suggests that the workforce is top-heavy and that the management ranks needs to be downsized.†

Although this is at best, an estimate, of the number of managers, it does correlate with data from more reliable sources such as the Audited Financial Statements and the Ontario Sunshine List. However, all of this data combined gives Council ample justification to begin the process of ďright-sizingĒ the management team and examine the entire workforce for areas that can be downsized to bring Owen Soundís Salary Expense more in line with similarly sized municipalities.

What is the Right Size for the Management Team

The average number of managers in Figure 4 above is 20.2.  So, this should be the targeted size of the management team based on this comparison.† This would require a reduction of 9 managers.†

When we examine the Sunshine List comparison in Figure 3, we see the average number managers were 13; which this should be the targeted size of the management team. Since Owen Sound had 19 managers on this list we would need a reduction of 6 managers.

As a result itís safe to say the Owen Sound management team is overstaffed by 6 to 9 managers. Based on an average salary of $130,000 the annual savings would be $780,000 to $1,170,000, not including one-time severance or early retirement costs.†

The average salaries and benefits expense in the study group was approximately $9 million. Owen Soundís salaries and benefits in 2021 expense was $13 million. If Owen Sound reduced its salaries and benefits expense to the average in the study group it would realize an annual savings of $4 million. Based on the results of the analysis of the manager data 25% of the reduction should come from the management team leaving the non-management workforce to provide $3 million in savings from staff reductions.


Go To Part III

www.OwenSoundTaxes.com

Return Home


  Add a Comment:


  

Name: 

Email: 


Preview of Next Article

 

 Overstaffing at City Hall

is costing taxpayers $5.8 million per year relative to Strathroy
(that represents 17.6% of this year's tax levy)

Owen Sound city hall is grossly overstaffed in comparison to
similarly sized municipalities delivering similar services.


Want to save 17.6% on your taxes each year?

Email your councilors here 


If you don't speak up Council will rely on an expensive consultant's report, coming out in May, to either not make any changes at all, or to make only minor, symbolic, changes. Why? - because staff, not council, are the real decision makers at city hall. I will address the critical factors involved that make this possible and allow staff to drive decisions at city hall in a future article.

   

Comparison Not Including Protective Services

  Salaries & Benefits Number Earning > $100,000 Number of Managers
  Owen Sound   $13,025,279

19

29
  Strathroy    $7,245,246

9

15
  Over Staffing   $5,780,033

10

14

    

Budget_Improvements-2
0 comments