Frederick County estimates $9 million in budget savings -- Gazette.Net



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Frederick County is estimating a savings of $9.6 million, realized in two years from outsourcing the work of government, plus consolidation and other cost savings measures.

But the steps taken to reach those savings are costing them, according to information obtained by The Gazette.

Because much of the savings comes from laying off workers and not replacing those who have left since 2010, the county now is paying out more in unemployment benefits. Between 2008 and 2009, the county paid $237,000 in unemployment-related benefits, increasing to $674,493 between 2010 and 2011 when privitization efforts kicked in.

In the first quarter of 2012, the payout was $71,000 compared to $15,000 in the first quarter of 2008, and $33,739 in the first quarter of 2011.The county reimburses the State Department of Labor directly for unemployment compensation claims, according to Finance Director Lori Depies.

But the Board of County Commissioners anticipates the significant savings will be realized in years to come because the county will no longer be obligated to pay benefits and retirement for full-time employees, said Board President Blaine R. Young (R).

“The big savings are no secret,” Young said this week. “It is the long-term liabilities — pension and retirement health care — and that is not something you can quantify immediately.”

Privatizing functions of government has been a top priority for the BOCC, but in the May 12 edition of The Gazette, County Manager Dave Dunn said the county had not yet quantified savings from outsourcing.

An initial plan in 2010 saw 528 of the county’s 2,000 employees laid off in an effort to save $109 million in five years. But after hearing from hundreds of employees upset with that direction, the commissioners voted unanimously to take it off the table. They decided against privatization of entire county divisions and departments, but continue to look at ways to reduce government costs.

In September, the commissioners appointed a committee to look at outsourcing some services to the private sector. The eight-member “Partnerships (Privatization) and Efficiencies Committee” is made up of residents, employees and municipal leaders.

In the report pulled together for The Gazette by Ragen Cherney, the county’s legislative and constituent services coordinator, county departments detailed areas that had been outsourced in the past two years, as well as functions that have been done by outside consultants prior to 2010. Additionally, department heads calculated savings from employee losses, and listed how the work of those positions has been done — aside from outsourcing — with either volunteers or reorganization. Some described how outsourcing would cost the county more for certain projects, including administering the county’s tax recordation program.

The county has contracted private services in public works, fleet management, Citizen’s Nursing Home, parks and recreation and information technology.

Reporting the largest savings is the Department of Public Works, with an estimated $2.7 million, followed by parks and recreation with a savings of $1.2 million, but with a caveat that “substantial contracting costs” will impact net savings.

Citizens’ Services, which includes social service and workforce programs, has saved $581,000 by not filling full-time positions, consolidating services with outside partners, and using volunteers. IT estimates savings between $597,000 and $896,000 by outsourcing jobs and other functions. Human Resources, using software instead of people, estimates a savings of $320,000.

Since taking office in December 2010, the commissioners have laid off 171 employees; the county work force is down to 2,128 employees. Commissioners said they will not lay off any more county employees, but are counting on the 10 percent average yearly loss of employees through retirements and resignations for more savings.

The county’s $471 million 2013 budget, passed in June, had an injection of revenue from income tax. Along with savings from the prior board of county commissioners and this board, the county reported a fund balance of nearly $40 million, but still is facing budget deficits in the next several years.

Young said those looming budget holes are part of the reason why his board will continue to press for outsourcing, public private partnerships, and efficiencies found in teaming with other entities and local governments.

“Our goal is to eliminate the structural deficit, some call it a cyclical deficit, when the new board comes in [in 2014],” Young said.

kheerbrandt@gazette.net