Saturday, June 26, 2010

Payson department heads switch to contract

By Matt Brabb
Mogollon Connection Editor

In an effort to control costs, the Payson Town Council gave Mayor Kenny Evans the authority to sign an employment agreement with Water Superintendent Buzz Walker and Community Development Director Ray Erlandsen a day after allowing the two to take early retirement.

Both men will be employed by Educational Service Incorporated (ESI), and will basically be leased back to the town.

Though they will both be paid a substantial sum in a an early retirement buy-out, the town hopes to save money because the two will accept a less costly retirement package.

According to Evans, legacy costs incurred by the town for its retired workers or workers nearing retirement are becoming an insupportable financial burden for the town. Though steps were taken to deal with the matter for employees hired after January 1, 2010, employees brought on before that time are entitled to a varying number of costly benefits that the town is finding difficult to support, particularly in these tough economic times.

“There has been some misinformation about this,” stated Evans. “Walker and Erlandsen did not come to us for this. We went to them. We are trying to save some of the legacy costs that are beginning to be a heavy burden on this town.”

“We cannot break a contract unilaterally; there are some 14,000 pages in the rule book to interpret.”

Speaking of conditions in place at the time when contracts made companies and other entities responsible for lifelong pensions and health benefits for entire families, Evans said, “No one in 1980 could have envisioned the weight of legacy costs. Not the feds, not General Motors, not the towns and cities. This was an effort on our part to get employees to give up some of their contractual rights in order for us to continue to benefit from their experience,” he added.

When asked for a specific figure that the town is likely to save from the early retirement program, which approximately seven to eight town employees are eligible for, Town Manager Debra Galbraith said the town stood to save $298,000 in fiscal year 2010-11 and $332,000 in 2011-12.

When asked about the potential for conflicts of interest arising because Walker and Erlandsen are no longer employees of the town, and could potentially take other jobs where conflicts could arise, Evans said the town could not prevent the two from exploring other opportunities.

“As a matter of federal law, we can’t prohibit them from doing that, but as a practical matter we are in control. We are never more than 31 days from being able to terminate the contracts.”

Evans said that the town would have to come up with an additional $3.2 million to cover a projected shortfall in money set up in a fund for legacy costs next year, and that that number would likely rise year after year.

“We’re trying to stop the bleeding,” he said. “We can’t continue to have a declining employment rate while at the same time seeing an increasing retirement rate.”

“Everyone will be on the same page before I leave,” he said.

(For the real story, pick up your copy of the Mogollon Connection every Wednesday. It's the one Rim Country newspaper that tells it like it is.)

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