Council sidebar: Earling explains next steps for ‘surprise’ Fire District 1 billing

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Fire District 1Edmonds Mayor Dave Earling had more to say Tuesday night about the $1.67 million bill the City of Edmonds received for retroactive pay raises for the Fire District’s union employees.

“It was not a surprise that we got a bill,” Earling said during the mayor’s comments section of the Edmonds City Council meeting. ” We knew that was coming. It was a surprise — the size of the bill.”

Edmonds along with the cities of Mountlake Terrace and Brier “were taken aback that we weren’t given any particular preview of the amount of money that would be coming,” Earling said, noting it that the bill covers represented employee pay raises accruing from 2013 and 2014.

“And I should point out that this particular contract agreement was put together in November of 2009 under a different council and a different administration,” the mayor said, referring to the council vote to contract with Snohomish County Fire District 1 to handle City of Edmonds fire services.

“We’ve asked Fire District 1 for a full accounting, and are working with them and our attorneys to be sure that all costs that they are billing us for are in fact justified,” Earling said. “We will have on our Oct. 14 study session the Fire Chief Ed Widdis, and perhaps he’ll bring a commissioner with him, so we can have a full understanding of the process they went through and the amount of money we are being billed for.”

 

20 COMMENTS

  1. If the City knew a bill was coming, the City may have recognized an expense for what the City thought it owed and recorded the related liability. Or, maybe the situation was discussed in a note to the financial statements. Government accounting is kind of strange, but modified accrual accounting generally recognizes expenditures when liabilities are incurred. Therefore, it would be very helpful if Mayor Earling and the City would disclose the amount that the City THOUGHT it owed and whether or not such was disclosed somewhere in the 90 page long Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2013.

    A local newspaper is reporting this morning that Edmonds was told by the fire district in 2009 to expect salary increases of about 3% per year. The paper said that the union contract for 2013-2014 was settled 2 months ago and included retroactive raises of 4.51% for 2013 and 1.2% for 2014. The fire district is representing its within $122,000 of projections for Edmonds over the course of five years.

    If true, how big of a surprise is this? Hopefully the Mayor and staff will disclose what they thought we owed promptly. Maybe it is already in the financial statements and I just can’t find it.

  2. I wonder where the 4.51% for 2013 comes from.That seems very high for 2013. Maybe most of the surprise amount relates to this 4.51% figure.

    Also, I wonder if the Fire District recorded a receivable on its books -or otherwise disclosed that it was owed a significant amount from Edmonds, Mountlake Terrace and Brier.

  3. The Mayor’s statement that the amount was more than expected implies that the City must have calculated some expected amount. I wonder what amount the City expected and I wonder how long the City has known that a bill was coming.

  4. Simple math shows there is something strange about the $1.67 million number. From what I can find, the city supports 11 full time fire fighting professionals in 3 stations. Doing simple division, that’s about $155,000 per person of back pay for less than two years because we are not through 2014 yet. Am I wrong and the city is supporting far more than 11 people? The details of this increase need to be made public.

  5. This is the Mayor’s problem. He is responsible for the administration of the City. When that contract was established or how many finance directors ago is totally irrelevant to the fact that there is a $1.67M debt that apparently was unaccounted for by his administration.
    It is not down to the Council ( past or present), it has nothing to down with any of that. The Mayor presents his budget every year. How did he miss such a large expense is really the only real question.
    I haven’t seen an answer and one that deserves a direct answer.

    • Diane:
      It is premature to be condemning the mayor; we haven’t yet been given enough information to be doing that. We’ve been told that the city is still awaiting more details from FD1. We know that the city has been prepared for a bill, but of a much lower magnitude, My review of the contract did not get me to such a high number. FD1 also has competent people, so I can’t wait to hear the explanation.

      • Ron,
        We have not been told much. What was budgeted? How was it accounted for? What was the administration doing to assure it was aware of the City’s debt obligation? What did the administration do to ascertain the amount of the debt? How did a $1.67M debt obligation “unexpectedly appear”?
        The Mayor runs the City. The cost of our fire protection obligation is pretty darn basic. Where is the explanation from the Mayor?

        • Diane:
          I expect that we’ll hear more when the city gets the info they’re looking for from FD1, so that they can then issue a complete explanation.

  6. I agree – Why did Mayor Earling feel the need to point out that this particular contract agreement was put together in November of 2009 under a different council and a different administration? That is irrelevant.

    Here is some more information for those interested:

    From the Snohomish County Fire District #1 2012 Annual Report:

    The cities of Mountlake Terrace, Brier, Edmonds, and the town of Woodway contract with Fire District 1 to provide fire suppression, inspection, and prevention services as well as basic life support and advanced life support responses. The contract amounts are adjusted annually based upon increases in the cost of labor. There was no cost of living increase for 2011. In 2012, the bargaining unit took a cost-of-living allowance pay increase for one month only, keeping contract rates relatively unchanged since 2010.

    I believe the following is related information from a Snohomish County Fire District 1 Budget Amendment Request Form attached to their July 29th agenda:

    Amendment Title: 2013 and 2014 Contract Adjustments

    Budget Amendment Request Narrative: At the beginning of January 2013 the District and Local 1828 were still negotiating the labor contract, the District notified its contract cities that there would be no increase to their contract amounts until the contract with the Union was settled. On May 6, 2014, the Board approved a contract with Local 1828 for 2013 and 2014. The Budget needs to be amended for the increased revenue due from Contract Cities in the amount of $1,215,849 for 2013 and $887,938 for 2014. The reason the amount in 2014 is lower than the 2013 amount is the 2014 Budget included an increase in 2014, however the labor contract settled for higher than anticipated therefore the revenue budget needs to be increased as well.

    My comments: The above totals to $2,103,787. An article I read in another newspaper indicates that the total due from contact cities (not Woodway?) is $2,587,558.

    I am not sure what the difference relates to.

    Should Edmonds have known since sometime in May that a bill for roughly $1.3 million or more was on its way? Maybe they did and maybe such is reflected in our Financial Statements somewhere. I asked Scott James via email and am awaiting a response.

    Hopefully more information will be shared soon.

  7. FD1’s 2012 annual report indicates that wages combined with benefits make up approximately 79% of general fund expenses. This amounted to $29,160,718 in 2012.

    Labor expenses include wages, overtime and benefits for the district’s uniformed and administrative staff.

    I am using 2012 information because the 2013 Annual report is not on FD1’s website yet.

  8. I really wish Mayor Earling would promptly disclose the amount that the City thought it owed. The comment that the bill was more than expected implies that the City must have calculated some expected amount. Was anything budgeted for the expected amount?

  9. The following is found in Fire District 1’s March 7, 2014 Board Meeting Minutes:

    Commissioner Meador acknowledged he did have a meeting with Commissioner Chan and expressed his concerns about the District’s leadership and the Edmonds contract.

    I am not sure what the comment above relates to – it is in a section of the minutes where an addendum to the Fire Chief contract is being discussed.

    Edmonds is mentioned again under a section titled “Local 1828 Report”. I’ll post that section in full below for anybody interested.:

    Local President Hovis appreciated the open discussions at the retreats and workshops.

    Local President Hovis was encouraged by the poll results and felt there was benefits from a fire benefit charge. He did not see any reason for the Local to not support it. He would want to know where that would move the organization and how it would translate into EMS deployment and service.

    President Hovis said they had had good discussions with external partners and Mukilteo’s Local voted to support becoming part of District 1. He added that the new hires were a boost to the moral of the District.

    The negotiations teams planned to meet again March 10 and both sides shared a desire to get to a quick resolve. President Hovis felt a settled contract provided a platform for Mukilteo to have a solid cost to base a decision on.

    President Hovis felt the District needed to concentrate on District 1 to stabilize the District and make things better. He noted that taking care of the District would provide strength to lead regionalization. He added he felt it was good the Chief’s contract was renewed and he felt Chief Widdis had done good stuff for the organization and it was good to have him leading the organization moving forward.

    President Hovis was concerned about the talk about the contracts and the perception on the street was the Board going to screw up and lose Edmonds. Commissioner Schrock wanted the employees to know there was no intent to re-think or re-do the relationships with the cities.

    Commissioner Meador noted the Board had to balance the customers with the fiduciary responsibility. He said he would stand up for his point and it would probably be an issue of contention until the facts were being looked at and not personalities.

    Commissioner Schrock noted it was not always a pleasant process to go through and sometimes things can be messy and have a positive outcome.

    Commissioner Chan appreciated what President Hovis had to say and hoped the Board could get past the conflict.

    Commissioner Chan called for a break at 2:25 p.m.

    Commissioner Chan resumed the meeting at 2:37 p.m.

  10. The 2014 budget for the fire district contract was $6,500,000. I can’t tell if it included an estimated amount related to retroactive payment for represented employee pay raises accruing from 2013 and 2014.

    The 2012 actual amount for the fire district contract was $6,222,779.

  11. More info:

    March 26, 2013 – The City of Edmonds held its required annual joint meeting with the Snohomish County Fire District 1 Board of Commissioners. The meeting minutes contain the following:

    Edmonds Councilmember Peterson asked if there was anything on the horizon the Council should be aware of. Commissioner Schrock noted the District was currently in contract negotiations.

    The related video includes more comments by Commissioner Schrock. He states that the contract (with Local 1828) expired at end of 2012. He states that talks are ongoing and that the contract negotiations will be a big issue for FD1 as 80% of their budget is tied to labor.

    December 3, 2013 – City of Edmonds adopts 2014 budget. It is unknown if any amounts were budgeted for retroactive adjustments due to settlement of labor contract negotiations with Local 1828.

    March 7, 2014 – FD1 Board of Commissioners has a Special Board Meeting. Local 1828 provided a report. The related meeting minutes include the following:
    “The negotiations teams planned to meet again March 10 and both sides shared a desire to get to a quick resolve.”

    And,

    “President Hovis was concerned about the talk about the contracts and the perception on the street was the Board going to screw up and lose Edmonds. Commissioner Schrock wanted the employees to know there was no intent to re-think or re-do the relationships with the cities.”

    March 25, 2014 – The City of Edmonds held its required annual joint meeting with the Snohomish County Fire District 1 Board of Commissioners. A review of the related meeting minutes indicates that there was no discussion of the contract negotiations with Local 1828 and/or mention that a retroactive invoice may be issued in the months ahead. Specifically, there is no mention of the March 10, 2014 negotiation meeting.

    August 11, 2014 – FD1 invoices the City of Edmonds for Fire Services Contract Payment amount due for Retroactive adjustments due to settlement of labor contract with Local 1828. The amounts are as follows:
    2013: $786,300
    2014: $881,392
    Total: $1,667,692
    The invoice is due September 15, 2014.

    August 21, 2014 – The City of Edmonds stamps the invoice RECEIVED AUG 21 2014.

    September 15, 2014 – The invoice is due.

    September 16, 2014 – Mayor Earling issues a Press release titled: City of Edmonds Hit with Unexpectedly Large Bill from Fire District 1 for Retroactive Employment Contract.

    • I cannot wait to hear FD1’s explanation for 12% increases resulting from labor costs. The 2013 billing is for 12% of the cost of the annual billing of $6.2 million, and the 2014 billing is 12% higher than the 2013 number. Those are increases not heard of since the early 80’s.

  12. I agree Ron – the % increases seem very high.

    I emailed Teresa the actual invoice a couple days ago. Hopefully she will be able to post it so all can see.

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