Members of Dover's new ad hoc Financial and Operational Advisory Committee held their first meeting Dec. 12.
Members of the newly appointed ad hoc Financial and Operational Advisory Committee wasted little time getting down to work the afternoon of Dec. 12, with their inaugural session taken up with briefings about the city’s financial policies and organizational structure.
The five-member panel, appointed by City Council President David Bonar, includes James L. Hutchison Sr., D. Wayne Holden, former first vice president of Merrill Lynch, Russell T. Larson, former controller general for the state of Delaware, Dr. Cynthia Newton, associate professor of political science at Wesley College, and Christopher S. Smith, financial advisor at Edward Jones. Except for Hutchison, who is a member of City Council, all of the committee members are serving without compensation.
Holden agreed to take on the chairmanship of the committee, which in the face of a looming $7.5 million budget deficit over the next five years, has been tasked to look at all departments in city government and to review Dover’s budget with an eye toward increasing efficiency and improving city services, despite a continuing downturn in revenue and increasing expenses.
Panel members first heard from City Manager Scott Koenig, who went over the organizational structure of city government, and then from city Finance Director Donna Mitchell, who explained the city’s budget process and monetary policies that govern city finances.
Regarding human resources costs -- one of the biggest parts of the city budget -- Koenig said Dover has made progress over the past few years with cutting back personnel expenses, although much of that has been through not filling positions that become vacant. City staff has dropped from 362 full time employees at the beginning of Fiscal Year 2011 to the current level of 347.
But Koenig said some of those cuts might have gone too deep.
“There is some pressure in the next budget year to add positions,” he said. “We’ve been getting feedback that the city has not been providing the services expected.”
Issues that face the ad hoc panel will include keeping up with pension payments that have not been funded, overtime policies and working with the three unions that represent city employees, including the police department.
“We’re looking for ideas on what we can do to change the operation of government and how do we modernize it,” Koenig said.
Mitchell’s discussion of unfunded pension liabilities -- the need for the city to put aside money to pay pension and medical expenses for retirees -- brought an immediate reaction from Holden, who called the situation the “Achilles heel” of governments.
“That’s Detroit,” Holden said, without need to elaborate.
“That’s Jefferson County,” he added, referring to an Alabama county that filed bankruptcy in 2011.
“We need to attack it, literally,” Holden said of the pension situation, “and find out where you can outsource or eliminate between 10 percent and 20 percent of staff.”
Failing to address pension issues can be calamitous for a city, he added.
“Your liabilities will go up and up and up,” he said. “The longer you wait to address it, the more catastrophic it will be.”
Afterward, Holden said he’s like to see how Dover’s governmental structure, as well as its income and expenses compare to other cities of similar size. He noted the state of the city’s infrastructure also needs to be addressed, particularly in light of the recent need to put off several maintenance projects, including street improvements and work on water, sewer and electric utilities, because of a lack of funds.
“I think our focus should be providing the services people expect,” he said. “Municipalities are finding they need more revenue and less expenses.”
Smith and Newton also found the city’s pension issues a major concern.
“We need to find a way to make sure pensions are not a future hindrance that can cause catastrophic risk to the city,” Smith said. “We need to find ways to cut some of the personnel expenses, if possible.”
“I had the same reaction,” Newton said. “The unfunded liability is something that will catch up with us.”
Newton also felt the committee should examine the structure of city government itself.
“Our organizational structure raises some flags,” she said. “That’s interesting to me.”
Newton also conceded that major changes, particularly if they affect an employee’s pay and benefits, would not be easy.
“There are significant obstacles to addressing any personnel-related costs,” she said.
Holden said afterward the next meeting of the ad hoc committee will be within the first two weeks of January.