Updated: Ann Arbor, police unions agree to early-outs instead of layoffs; fire department would see 14 positions cut in proposed 2010-11 budget
by Judy McGovern | The Ann Arbor News
Monday April 13, 2009, 10:54 PM
The City of Ann Arbor and the unions representing city police have reached an agreement that will reduce the headcount in the department via early retirements rather than layoffs.
The agreement reached Monday will let 16 to 18 police officers take an "early out."
The plan will cost the city an estimated $4.8 million, said City Administrator Roger Fraser. The payback is four to five years, he said.
The eligible officers are veterans at or near top pay grades. Officers must be within two years of normal retirement to be eligible, Fraser said.
The projected $4.8 million is based on estimated payments of vacation and sick time, payments into the pension system and the early-out incentive under which the city provides two additional service years to the employees while computing pensions. Employees also have an option to buy a third year.
The police department faced the prospect of having to lay off 14 police officers and a reorganization that called for demoting a number of lieutenants and sergeants.
In the "bumping" that would occur under that plan, the department would lose officers hired in the last five to seven years, Fraser said. With early-outs, those officers will be retained while higher-paid senior officers leave.
The staff reductions come as the city faces the first decrease in property tax revenue in memory.
And they won't be the last.
Budget recommendations in a two-year plan Fraser outlined for the City Council Monday call for eliminating 14 positions in the fire department in fiscal 2010-2011.
The situation in the fire department differs from that of the police, said Fraser.
The fire department is already flatter, without a corps of senior officers. Assuming those staff cuts are made - after July 1, 2010 - the reductions would come through layoffs, the city administrator said.
"With everyone essentially the same rank, there wouldn't be the same kind of savings we get from offering early-outs to senior members of the police department. So the cost of an early-out program isn't justified."
The $4.8 million for the police buyout will come from the city's $16 million general fund surplus.
That fund will also be tapped for other one-time expenses including $1.7 million set aside to cover Pfizer's appeal of its property taxes for the now-closed research facility on Plymouth Road. The company may or may not get that full amount when the state Tax Tribunal rules in the case.
The appropriations in Fraser's budget proposal would take the fund reserve to around $9 million. That would be at the low end of city officials' target of having a reserve equal to 12-15 percent of the general fund budget.
The current year's general fund budget is $90.9 million. That includes some non-recurring costs like the $600,000 purchase of the Huron Street property now occupied by Tios' Mexican Cafe.
Fraser's proposal for the 2009-10 and 2010-11 fiscal years calls for reducing spending to $85 million and $82 million, respectively, to pull spending back in line with shrinking tax revenue.
Revenue from real estate taxes is expected to shrink 1.2 percent in fiscal year 2009-10 and 5.2 percent in 2010-11.
Council members are expected to adopt spending plans for the next two fiscal years on May 18. Although city officials are required to approve a budget for each fiscal year, they plan in two-year cycles.
Judy McGovern can be reached at 734-994-6863 or firstname.lastname@example.org.