Debunking the PERS Problem in Ashland’s Budget – Hang in There and Read This! It Is Worth It

Debunking the PERS Problem.

Executive Summary:             PERS is responsible for approximately 5-7% of the budget.
                                    Negotiated benefits are greater than PERS contributions.

We’ve heard over and again that PERS is the largest intractable problem in the budget.  It’s not true.  Total compensation, however, is a huge problem.

I’m posting a spreadsheet I made adapted from one that Finance Director Melanie Purcell sent me in lieu of giving me the specific position detail that I requested.  Keep in mind that this data does NOT include Department Heads ,i.e., the largest salaries.  Fortunately, it provides enough detail to present the following conclusion:

First, understand that Personnel is about 34% of the total expenses in the budget, call it a third.  Admittedly, that’s a huge chunk.  What my analysis shows is that the legislated PERS portion of total employee costs is 16-20%.  Therefore, it is responsible for roughly 5-7% of the total budget.

That’s nothing to sneeze at, but it’s nothing like the huge proportion as it’s always presented to us.

Notice that the ratio of benefits to salaries is 50-60%.  I don’t know how that compares to other municipalities or the private sector, but it seems very high to me.

The other thing to note is that NEGOTIATED benefits are 20-26% of total employee compensation.  That is the part that needs to be addressed, as well as salaries.  Negotiated employee compensation therefore accounts for roughly 7-8% of our total budget.

To summarize, the negotiated benefits that we pay city employees is GREATER than the TOTAL PERS contribution, including even the portion that is NOT a benefit to current employees.

Dean Silver, Ashland