Commentary: Putting facts behind city budget numbers

Recently, Councilmember Will Chen wrote a letter to the editor (Commentary: Facing this financial crisis together – calling for unity between the administration and city council – My Edmonds News) in which he addressed the current fiscal challenges that the city is facing. In that letter, Councilmember Chen wrote: “The fact that our city has a net gain of 47 employees in the first nine months indicates that the city administration has expanded quickly in a short period of time.”
If accurate, this would indeed represent a rapid and unsustainable growth in city government but the number quoted seemed frankly incredible. The primary drivers of the city’s fiscal state are the increased costs of staffing the various city departments and the increases in payments to South County Fire to provide emergency services to Edmonds; so understanding the origin of the increased labor costs is clearly an important factor in the upcoming election cycle. Councilmember Chen did not provide any data to back up this claim or any breakdown of where those additional staff were added so I made a public records request to the City of Edmonds for the data.
Using the available budget reports from 2015 to 2023 and the mayor’s proposed budget for 2024, I have compiled data on the trends in city employment for a 10-year period, covering both the current administration and the previous one. In the interests of providing facts that may help to remove the emotion surrounding the rising labor costs that the city is facing, I would like to share my observations from these data. Note that these data are subject to interpretation and my assessment may not be completely accurate but I am confident that the broader conclusions I draw are accurate.
First of all, according to this budget data, there is no plan to increase city hiring by the number quoted by Councilmember Chen. The 2023 city budget does include a substantial increase in headcount (the largest I see in this 10-year period that I analyzed) but the total net gain in headcount is 22.3. I interpret this to mean that the maximum headcount increase that can occur in 2023 is 22.3, but I am working with 2023 budget data whereas for previous years I have actuals. Assuming there are currently open positions with the city, then we would not yet have reached this limit.  In addition, the 2022 actuals indicated that there were more than 24 vacancies for previously budgeted positions in various departments at the time that report was prepared, so it is reasonable to assume that the hiring which Councilmember Chen referred to included the backfilling of some or all of those vacancies, as well as any new vacancies that may have arisen during the year to date.
While the hiring plan for 2023 is indeed an outlier in comparison to the years that I have reviewed, it is not excessively so. Average headcount growth over this period has been ~3.4% with a peak of 8.8% for 2023 and a minimum of 0.1% for 2021.  Other years that exceeded the average growth rates include 2016 (4.9%), and 2022 (5.2%)
Of the net increase of 22.3 headcount in 2023, more than half of that was for the police department, which was budgeted to increase from 72.8 to 84.6 full-time equivalent (FTE) heads. I noticed, however, from some of the data in the budget packet that was debated at council that some of these police positions remain unfilled. Other areas to increase in the 2023 budget were human resources, administrative services, economic development, parks and rec, and engineering.
In contrast to 2023, the budget proposed for 2024 keeps new hiring to a minimum, proposing only 5.6 additional staff across several departments.  This proposed increase of 2% is among the lowest over the 10-year period.
Total city employment has grown by 34.6% or 72.4 headcount in the 10 years 2015-2024 and there has never been a year in which headcount did not increase under either the current administration or the previous one. During that period, the police department has seen the largest growth with 20.6 FTE. Parks and rec (10.4 FTE) and finance/administration (9 FTE) have seen the next largest growth but the growth in finance/administration appears to be due primarily to a transfer of city clerk employees from the mayor’s office to that department, which occured in 2022. Other departments that have seen above average growth over this period include HR, information services and economic development and community services.
In the same period, 2015-2024, city revenues will have grown from under $80 million to an estimate of $122 million next year, a rate of increase that far exceeds the rate of growth in city employment.
In conclusion, Edmonds is a growing city that is investing in its community and their public safety. With that growth and investment comes additional cost, some of which the city can control and some of which (e.g. South County Fire charges) it cannot. The argument that city hiring is out of control does not appear to hold water. While 2023 budgeted hiring was above recent historical norms, it does not appear to be excessive and appears to be directed at areas that are important for the good of the community and the economic health of the city.
— By Niall McShane
Niall McShane is a former executive with a strong analytical mindset who moved to Edmonds in 2022 and is enjoying learning more about how Edmonds is run by its mayor and council.
  1. Interesting assessment, although agenda driven. New hiring proposals in 2024 is really a straw-man to why there was such a budget deficit in in 2023. Arguing whether such increases in FTE are important for the “good of the community economic health of the city is an opinion” statement, which lacks a independent financial review as well as professionalism. Mr. McShane Is not an elected official. I would think a “strong analytical mindset” would include the notion that if you spend more money than you take in, go in the red, have to dip into and emergency funds, one-time funds, and spend bonded funds for operating expenses. asserting that this is not excessive does not hold water.

    1. Councilmember Chen’s headcount number for 2023 stating an increase of 47 over 2022 at the end of September is correct – see the Oct. 17 council meeting, packet page 248. The approved budget for the full year of 2023 is for a total headcount of 274.5 – only 19 above 2022.

      1. Thank you, Ron Wambolt. That makes a lot of sense. It seemed very unlikely that Will Chen would get numbers wrong. He is an accomplished professional accountant running a thriving business. We are lucky to have an accountant like him on the City Council.

  2. While this is interesting information, I would quibble with the as-presented assessment of the data. Looking at the rate of headcount increase since 2019 (discounting the Covid year 2021), it is alarmingly high. The fact that the proposed 2024 budget has fewer employees added is because WE’RE OUT OF MONEY! Also, if I look at our headcount on a per capita basis, it’s increasing at a much faster rate than our city population is. So, are we getting more services for our taxpayer dollars? The other issue this brings up is, if we’re increasing headcount, why are we also outsourcing more via professional services at an increasing rate as well?

    There is no escaping it now, Mr. Mayor. We are in a fiscal emergency which you have created. The warning signs were there, and you ignored them. Now, we the taxpayers, are going to have to pay for your mismanagement. These are the real facts behind the budget.

  3. Mr. McShane – if you are going to report a time series and then draw conclusions from it, I suggest you normalize the data first. There were headcount transfers between the Departments that distort the bar graphs you produced. I also suggest you follow council meetings and council committee meetings to learn more about city business. You can find a report of job openings in one of the committee meeting packets. The fire/EMS cost is a negotiated contract. It is not ‘a cost we have no control of’. In fact, the perception of Lynnwood and MLT officials is that we are not paying our full share of So Cnty Fire services. As members of the RFA, they pay more than we do (not sure what the per X metric is, however). That’s why the upcoming review of whether to allow the RFA to annex Edmonds is a big, big deal. I’m sure you’re familiar with the substitution principle in micro economics. Some of our departments use professional services in lieu of city employees (look at the contracted planner in Planning and Dev in 2023) so any headcount trend analysis that comments on the amount of work getting done should include that vendor cost.
    Welcome to Edmonds!

  4. Thank you, Mr. McShane, for another interpretion of the budget numbers and increase in staff. I think it is important to acknowledge the increase in police staffing, which is important for public safety. I also appreciate that we are continuing with a healthy Parks and Rex department. I trust that our city council and mayor can work together to create a sustainable budget and that we are not in an emergency situation.

  5. So much of the Nelson Administration’s observed performance, just does not add up to the claims they make about how well and efficiently they are spending our tax dollars. This year city funds were spent sending the Mayor, his entire immediate family, and his Planning and Development Director to our sister city in Japan with not much, if any, real specific accounting to the citizens of just how much money was really spent on this and exactly where the money actually went. It begs the question as to how someone so overworked and time burdened as our Planning and Development Director is alleged to be; can just drop everything at the office and go on a nifty paid for by the citizens trip to Japan. In terms of real dollar value to the city, how does the Mayor, the Planning and Development Director and a bunch of highly paid consultants; putting on what was basically a sales pitch and campaign event; (Landmark Conversation) add up in all this? None of these analytical accounting charts and theories ever give you a real indication of the efficient use of public funds, or not.

  6. Niall,

    It’s also a fact that “the city is using reserves to fund day-to-day operations,” as in Councilmember Chen’s Commentary:

    CM Chen states:

    “We need to declare a fiscal emergency because the fact that the city is using reserves to fund day-to-day operations, we are in an emergency.”

    Also in his plan to resolve:

    “Second, the city council can authorize the administration to use American Rescue Plan Act (ARPA) funds for general fund usage in 2023 to get through 2023 and not start 2024 with a general fund reserve deficit.”

    “Knowing that using ARPA funds is not a long-term solution, we now need to look at all reasonable options to control costs in 2024 and beyond to ensure our budget is balanced while continuing to deliver quality services to our residents and businesses.”

    Niall, you’ve ignored facts and the plan presented by CM Chen to deal with this “fiscal emergency.” Instead of using your “strong analytical mindset,” you’ve cherry picked “facts” about “headcount” to support your own opinion.

    I agree with Theresa Hollis’s suggestion that “you follow council meetings and council committee meetings to learn more about city business.”

    1. Niall is entitled to his opinion, but he is not entitled to his own facts. For some peculiar reason, many of the mayor’s supporters are trying to gaslight the city’s current financial emergency. We are fortunate to have councilmember Chen, a CPA professional, legitimately reviewing the 2024 budget.

  7. My “agenda” in all of this is simply to tease out some of the context around the claim that the city added 47 headcount and ensure that the debate on this matter is based on fact and not emotion.

    The primary drivers behind the financial picture for the city over the last two years have been in the areas of labor and benefit costs, and services which includes the ~$4M increase on payments to South County Fire since 2021. The data on headcount came from a HR department update to council. When asked about this number, the HR director responded that “some of the employees are seasonal Parks; not all the positions are full time regular employees”. It is clear with a budgetary approval for adding ~20 heads in 2023, some of that hiring also represents unfilled vacancies from 2022. The impression given, that city hiring had increased by 47 headcount in 2023 alone, is not accurate.

    None of this is to say that we should ignore the cost of city employees, but we should debate this in the context of what those people are being hired to do and the fact that this hiring was approved by council over multiple years.

    1. Mr. McShane:
      It seems like you are a spokesman for Mayor Nelson. The increase of 47 does not represent an unusual situation; only the magnitude of the number is unusual. There are always unfilled positions from the prior year and seasonal Parks positions are filled every year.

      1. I am not a spokesman for anyone. I have never met mayor Nelson and I have no connection direct or indirect to him or his campaign.

    2. It seems to me that the real question in all this is what do all these so badly needed and apparently badly overworked and underpaid employees actually do and why do they do it. The real crucial functions of a relatively small city are Public Safety (Police and Fire), Public Works (Sewer/Water/Storm Water and Infrastructure building and Upkeep) and Parks and Recreation Everything else is something nice to have but not crucial to getting the city job done. One could even argue that Parks and Recreation are not particularly crucial, but awful nice to have. Do we really need a Development and Planning Director and what has this person been doing since it’s inception? Do we really need an Information Specialist and exactly what duties has this position performed since it’s creation? Do we really need a Social Worker and exactly what duties has this person performed since it’s creation? Parts of our system have obvious accountability because we observe what they are doing, but way too many of our positions lack any real accountability or justification for their continued funding. These things need to be looked at with an eye toward saving money; not just having a bunch of really cool stuff.

  8. mr McShane – words matter, in letters to the editor. your comment above ‘city hiring increased by 47 headcount, in 2023 alone, is not accurate’ is itself not accurate. Council member Chen wrote an article about ‘actuals’, and it’s interesting to add a conversation thread about ‘budget’. but i make it perfectly clear that the City’s report to the Council is that they had a net increase in hiring in 2023 in the Jan – Sept period (adds minus departures) of 47. It’s Nov 3rd today. The net headcount increase in 2023 has possibly crept above 47 by now. Will Council impose a headcount freeze when they meet next week?

    1. Theresa

      I am not privy to current staffing levels in the city but if, as the HR director stated at the Oct 17 meeting, some of those 47 hires were for seasonal positions then I would expect the net headcount increase at this time to be lower than 47 as those seasonal hires depart.

      The real point that I am trying to drive home here is that the city budgeted to hire around 20 additional heads in 2023, mostly in the police department. My reading of the org charts suggest the number was a little higher than 20 but an earlier comment clarified the number as 19. City council approved that increase and if you look at the 2023 budget that the city adopted, the increases seem affordable. That is not a statement justifying the increases: simply a statement of affordability based on the budget numbers approved by council.

      Looking at the proposed 2024 budget, the situation has changed dramatically and I am still trying to understand why it has changed so much. That is the real issue at hand here and throwing around claims of excessive hiring is a distraction from that real issue. I have seen nothing to suggest that the hiring in 2023 exceeded the budgeted levels approved by council.

      1. Niall,

        What I might suggest you’re missing is that while our City Council might approve a budgeting level, it’s up to the mayor to assure that the SPENDING of those dollars adheres to all laws, ordnances, policies and codes. In our case, the mayor has spent funds held for emergencies without notifying Council as required by our policy. The Council must authorize such spending of emergency reserves. To date, they have not. Had the Council been made aware of the situation a year ago, other decisions could have been made to avert the fiscal emergency we’re in now. Hence, it’s a matter of mismanagement of taxpayer dollars by the administration and lack of transparency which made a bad situation worse. Simple as that. Now we, the taxpayers will be flipping the bill for the administration’s excessive spending habits.

  9. Donald Williams: Your comments are rude and do not add to the discussion. Your comments are subjective and a personal attack. Please confine your remarks to discussion of this issue, not biased comments.

    1. Personally, I long for a day when people campaign for something, in contrast to just attacking someone. I guess nasty comments make one feel good, but at least as far as I go, they have the opposite effect – comments such as the ones in question almost drive me into the other camp. Spitting and screaming, oddly, do little good. Convince me of your view, give me reasons, examples – epithets fail to inform or persuade.

      Considered, civil discourse and debate, anyone?

  10. We need more effective City Council Members who really do represent the citizens. This requires back bone and not being afraid to make waves when that is what is needed. Our Mayor’s and their Staffs present a lot of programs and propositions to our City Councils which have a tendency to just go with that flow, because it’s easy and/or quick in some cases (think city attorney services). Then, when things go South, as they so obviously have now, the Mayors and Staffs blame the Council’s for going along with them. It is just a totally broken and dysfunctional system IMO.

  11. I think our current council is trying very hard myself. I think with all that Edmonds wants they are trying their best to be kind in many instances. Supporting our Schools for kids. Being involved with community activities for Veterans, Ecology, Art etc. It is hard to please such a divided group (citizens) I see this now. I like our council pretty much just like it is. Sometimes it votes one way sometimes the other way. This shows me that this group works and by keeping this group as Non-Partisan as possible we will continue to see not much fighting, some genuine caring for one another and all of this stuff that is important to both sides of the show. I support Rosen for Mayor as I think he will be a good leader and have the same attitude. We have L leaning and moderates for the most part on this CC. This is why I choose to vote for Pence and Michelle D, and either Susan or Kevin…If we don’t, we will probably go back to all one sided again. That wasn’t kind at all.
    I also think you all should do more research on individuals and their work history and residential history etc. I might suggest Linked In etc. or google if you research it will show you what you want to know.

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