Accrued benefits obligation to employees up 113% in 5 Years
The following letter from Wayne Schulstad was sent to Mayor Ruttan and Nanaimo City Councillors May 16, 2009
Attn : Mayor and Council
Dear Mr. Mayor : Re: Accrued Benefit Obligation
I trust you have taken the opportunity to review the City’s Accrued Benefit Obligation as outlined in the recently issued 2009 Financial Report. But just in case you haven’t, the financial figures for the latest year end, and those going back to 2004, are listed below. This liability to taxpayers represents an estimate of the amount of accumulated termination benefits and earned sick leave for City employees as of December 31 for the year noted.
Read the balance of the letter here: Accrued Benefit Obligation
This addendum includes Note 1(f) to the Financial Statements for 2007.The explanation provided is “In 2007,the accumulated sick leave has been amended to include a calculation for active sick leave”.
Call me a cynic if you wish,but all this means to me is that City staff are increasing the taxpayers obligation, thereby ensuring their “entitlements ” are protected.
Posts and Comments on Nanaimo Governance 
Questions: Why the big bump in 2007? Did somebody miscalculate in previous years and then discover that there was a shortfall in accrued benefit obligation funding, which might be a statutory requirement? If so, who? Is there a pay-out of total unused earned sick leave upon retirement or leaving the city, a partial pay-out, or no pay-out at all? If there is either no pay-out of earned sick leave at all or partial pay-out, then it’s possible that some of this money may flow back into the city’s budget. Treat that as a question, too.
If the city does not use the services of a professional negotiator but depends on existing city staff, it seems to me that’s similar to an Old West gunfight, with one shooter carrying an unloaded gun. Frightening to think that negotiation of a contract of this size is not handled by a professional. Yes, they are expensive to hire, but this, to my mind, would be a case of “Penny wise and pound foolish”, an old English saying.
Accrued Benefit Obligation is in regards to commitments at the time of the calculation based on projected retirement times. This figure is not always accurate due to many variables. Variable include early retirements, resigned and fired employees, transfers to jobs outside of the city.
The retirement commitments just to the fire department personnel in this city is unbelievable and we face a lot of fire chiefs and others to retire in the next few years.
I believe that the jump in 2007 was due to councilors and mayors being able to pay into their own retirement fund partially funded by the City (ie: you and me).
Can someone clarify — do municipal mayors and councillors have a pension plan as part of their remuneration?
No,mayors and councilors do not participate in the provincial municipal pension plan.
Oh. OK. I suppose I misread this, or don’t understand the jargon, since I’m a newbie. I assumed that “termination benefits” meant golden parachutes. I didn’t realize that this means the city’s portion of payments into the employees’ pension plan. And councillors are, in effect, covered by this pension plan, too? Is that correct? Good God. I’d like to read the fine print in that pension plan. They may have opened a whole can of worms they’ll come to wish they hadn’t.
Wendy-The accrued retirement benefit obligations referred to herein are mainly for what the bureaucrats call “earned sick leave”(The correct term is “unearned” sick leave), which all City employees can accumulate up to 60 days just for showing up for work, and then cash these out at taxpayer expense on retirement.
Pensions are another matter altogeather.Employees are covered under the provincial municipal plan.In 2009 the City (read taxpayers) contributed $3,468,581 to the employee plan,up 11.8% from 2008.Isn’t it just amazing how all these employee entitlement contributions are much greater than inflation.Wow,do these public sector workers ever have the golden goose at their beck and call.And that golden goose includes thee and me,Wendy.
Are councillors given the opportunity to participate in any benefits plans including, possibly, a private pension plan?
Great question.I understand they receive the same medical benefits but don’t know about other benefits.I am going to find out and will follow up.
Wendy-Furthur to your question on benefits for Council members,I posed the following to the City:
“I understand that the City’s elected officials (Mayor & Council) are allowed to participate in certain benefits (ie:medical)available to employees.Could you kindly advise what these benefits are,and secondly what percentage of the cost is paid for by the City for each individual benefit provided.”
The City responded as follows:
“Council members are provided with health care benefits during their term of office.This consists of 100% employer paid B.C.Medical,Dental and Extended Health Care (including vision care).The cost is about $400 per month for a Council member with family benefits.”
Wayne–Can they cash in the total amount or simply a portion of the amount of accrued and unused sick leave? And did other public employers have to pay similar increases in pension contributions?
Wendy-On retirement an employee can cash out the total amount of their “earned” sick days up to a maximum of 60 days.For example,Jerry Berry when he departed, received a lump sum payment of $50,194 which the settlement agreement described as the “employees earned entitlement”.
Concerning other public employers,if they participate in the provincial municipal plan then they would be subject to the same contribution levels.Other public service retirement plans,say for H.E.W.,would be governed by their respective employer/union agreements.Do employers have to pay similar increases? I don’t have these details but have you ever heard of public sector employees ever agreeing to decreases?
So we are providing coverage not only for council members but also for their family members? Interesting. Questions: how much per year is paid out on their behalf for new glasses or contact lenses? For many employees in other public areas, there is a $100 – $200 annual limit, with the employee paying the balance, and this annual limit cannot be carried over to future years. On dental care and extended health benefits other than vision care, what are the “deductible” amounts–the amounts which would have to be paid by the councillors before the plans begin to pick up a portion of the cost?
Another question: When councillors receive their T4s for each income tax year, is this approximately $400 a month paid for their benefits coverage shown as a taxable benefit–therefore, they would be paying income tax on it? Other employee groups do.
And if a councillor has a spouse/partner working for the city who is covered by the same plans, are they permitted to “double dip” as others are? What I mean by “double dipping” is that each person in a couple has coverage and when it comes to paying the portion of bills not covered by the plans, they can “dip” into the coverage offered by the other partner, possibly halving the amount of the bill.
So–councillors receive payment for services rendered, they receive reimbursement for out-of-pocket expenses incurred while on city business, and they are covered by city benefits plans, along with their family members whom the insurance companies would accept as “dependents of the insured person”. They are, as I see it, edging themselves very close to a legal definition of an employee, not an elected official.
Revenue Canada determines what is a taxable benefit and a non-taxable benefit.The City complies with these regulations whatever they may be.I am certain that the $400/mth is a taxable benefit and Councillors would pay income tax on this benefit.
I don’t know anything about “double dipping”.
Wayne – Great thread … there is a real “need to know” about this topic. I started enquiring about it in October, 2009, immediately after Mr. Kenning was appointed to the position of City Manager. Here is my letter that was published in the Nanaimo Daily News on October 29, 2009 – (Wrote another letter in March 2010, as it appeared that our elected reps had been focusing only on those employees of the City, who are excluded from the unionized bargaining unit, and no mention of addressing collective agreements, as well. Letter published in March in NDN.)
New city manager needs to review staff contracts
Published: Thursday, October 29, 2009
In Mayor John Ruttan’s announcement of Oct. 26th, regarding the appointment of Al Kenning to the position of city manager, he advises that one of Mr. Kenning’s top priorities will be to seek budget solutions that meet council’s identified need for fiscal responsibility.
As council at its finance policy committee of the whole meeting of Aug. 17 directed that the terms and conditions of all employment agreements be reviewed, one would expect that the newly-appointed city manager should soon be acting on the directive.
As we are living in fiscally-challenging times, is it reasonable for the city’s burdened taxpayers to be expected to pay out, potentially, thousands of dollars to their employees for such “benefits” as unused sick days?
Janet Irvine
Nanaimo
Hi Janet-Unfortunately it’s not thousands of dollars that will eventually be paid out,it’s millions.
The terms and conditions of employment for exempt staff (ie:non-union) are governed by the infamous Bylaw 7000.I believe it is already posted somewhere on the blog, but if it is not, we will do it.
Janet-City Bylaw 7000 can be found under’City Committees,Commissions,Panels’ on front page of blog.
Thanks, Wayne. Yes – – I am familiar with the City’s Bylaw 7000 … Have previously referred to its terms and conditions on another public forum. And yes, I understand what you mean about “millions”. My letter was written with the thought that there is the distinct possibility that “several thousand” could potentially be paid out to each municipal employee with respect to accrued, unused “sick” days. :)