By Jonathan Byrd
I am a resident of DeKalb’s Lynwood Park subdivision who is concerned about my personal finances, the short term viability of the county and finally, the long term stability of the country structure. I have spent some time reviewing the various elements of the budget and broke the ideas out into two “buckets”: short-term (this year’s budget issues) as well as long-term structural issues.
It is no secret that the county has not been operating optimally over the past 10 years.
The term “sacred cow” is one that is used to describe things that should not be touched or changed. To solve not only our short term issues, but also long term issues, we must realize the sacred cows are fair game.
Short Term Solutions:
1. The Georgia State University (GSU) study that was completed recommended cutting the county workforce by 909 positions. There have been a total of 456 jobs eliminated. Evidently, some of those have been hired back, which could change the numbers, but I recommend cutting half of the remaining 453 jobs that were recommended per the study. That would represent the elimination of 226 additional jobs. This would create a savings of $3,051,000 in benefits costs (226 times $13,500 benefit cost per employee) and $9,040,000 in salaries (226 times $40,000 average) for a total annual savings of $12,091,000.
2. Eliminate the pension liabilities associated with all new hires immediately, and set up a 401K option for employees. Cap out the existing employee pension plans now and offer the option for current employees to participate in the 401K plan as well. The county cannot “buy out” those plans (because it cannot currently afford the expenditure), but it can stop contributing as many private organizations did in the 1990s/early 2000s.
I would recommend a generous 6 percent match from the county for employee contributions. This item will not only address the short term but also the long term issue of the county operations. Amount of savings TBD.
3. Review the Grady Memorial Hospital contracts and consider reducing our support associated with the hospital. It is interesting that DeKalb and Fulton are the only two counties supporting Grady via our annual real estate tax bill. I do not think that it would be a stretch to state that there are other counties that are benefiting from the services of Grady. 3.9 percent of our budget going to Grady could be reduced. Amount of savings TBD.
4. Increase the amount of fines by 50 percent this year. The estimated amount of income from Fines for 2011 is currently $25.5 million. A 50 percent increase in fines would result in additional revenue of $12.75 million.
5. Privatize the benefit packages for county employees. The current cost of benefits for each employee is $13,500. The county should provide an $8,000 average stipend (employ a sliding scale of benefits so older workers and workers with families receive slightly more and younger/single workers receive slightly less based on need) for each employee for them to use it as they choose. Like the pension issue above, this is a short and long term solution. Based on county numbers, there are about 7,166 county employees. This solution would save $39.4 million.
6. Begin a study to review whether or not the county can contract out many of the current positions that are now full-time employees. Amount of savings TBD.
The total definable savings from this plan in the 2011 budget is a 11.41 percent reduction in the budget. This amount would of course be reduced by the time it took to employ the changes mid-year.
Long Term Solutions:
1. Consider the option of moving to a county manager system in lieu of a CEO structure which would be both a cost savings as well as a more efficient system of management.
2. Explore the idea of changing the structure of certain parts of the county. The political will and constituent support for breaking off from the county should strongly be considered by the CEO and BOC. There is current interest in this option in North DeKalb. A second option would consist of being drawn in by an existing city such as Chamblee. Either of these options would result in a significant decline in collected taxes and thereby hurt the unchanged portions of the county, but could end up fixing the issue.
With BOC and CEO support, the changes laid out above should enable the county to raise taxes in certain areas (fines) and reduce spending in many areas which should not include a major increase (if any at all) in the millage rate in the short term. If the changes above were committed to on behalf of the CEO and BOC, they will assist in ensuring the stability of our county government.
In taking a look at the “sacred cows,” realize that based on our current path, it is now or later that they become dinner.
Jonathan Byrd is a financial advisor and financial planner.