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Wednesday, November 23, 2016

Report Reveals Administration Exaggerated Potential Savings in Tentative Firefighter Contract by $11M+

The administration’s latest claim regarding its tentative agreement (TA) with the firefighters’ union overstates projected savings by more than $11 million, according to a financial report from the City’s internal auditor Matt Clarkin. This is the second major shortfall Clarkin has discovered in the administration’s calculations this month.

Clarkin discovered a $7 million shortfall in the administration’s first fiscal note in early November. The administration revised the fiscal note and submitted it to the City Council’s Finance Committee in mid-November. In the second fiscal note, the administration alleged the TA would save taxpayers more than $20 million over a five-year period. Clarkin’s comprehensive analysis of the administration’s revised fiscal note reveals a discrepancy of $11 to $13 million.

The auditor outlined his findings in a memorandum to Finance Committee Chairman John Igliozzi on Wednesday. Discrepancies were found in most of the administration’s calculations, ranging from failure to include savings in some instances to widespread inconsistencies in calculation methods that exaggerate the TA’s potential savings. For unknown costs like sick time usage that require a range of possible savings, the administration overestimated even best-case scenarios.

The administration also failed to include the addition of twelve new battalion chiefs in its first fiscal note; the second fiscal note referenced the battalion chiefs but calculated only their base salaries and excluded fringe benefits and the staffing factor from expenses. When calculating savings, however, the administration included fringe benefits and the staffing factor. “The administration’s haphazard approach to calculating the TA’s financial impact resulted in understated costs and bloated projected savings,” said Igliozzi.

One of the administration’s more disingenuous claims is an alleged savings of $9 million from the elimination of the 8% stipend firefighters currently receive as compensation for the schedule shift to three platoons. According to Clarkin, a “contractual fiscal note should be a representation of the financial impact of changes to the current contract made in a TA. The 8% salary stipend was unilaterally provided by the administration and is not part of the current firefighters’ contract. Therefore, the savings from the discontinuation of the stipend should not be included in the fiscal note.”

The administration will have an opportunity to explain this shortfall and inconsistencies in methodology at the next Finance Committee Hearing.