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Thursday, Nov. 12, 2009 | It’s a job that lives on in the city’s budget, even though no one is there to perform the work. It’s a concept designed to account for people retiring, quitting or otherwise leaving the city. It’s a solution, make that the solution for Mayor Jerry Sanders to fix five years of budget holes.
Such is the strange status of the “vacant position” in the city of San Diego. Created when an employee leaves the city, the vacancies have served as Sanders’ primary mechanism for slashing employee expenditures in the short term.
It’s easy to understand why Sanders and City Council have targeted vacancies for cutting costs. Vacant positions don’t have mortgages. They don’t belong to unions or vote, either.
“Nobody wants to tell somebody they have to find another way to feed their family,” said Kurt Thurmaier, director of Northern Illinois University’s Division of Public Administration and an expert in local government budgeting and finance. “People try to do all else besides that.”
But in some ways this effort has resulted just in a paper savings. And not the money kind of paper. If a position goes unfilled for a year, the city spends no money. The appropriated dollars flow back to the city coffers and could go somewhere else, such as reserves. In short, you don’t need to eliminate vacancies to save money. A hiring freeze does the same thing.
Regardless, this method of cost savings will soon become a stone from which there’s no more blood to draw.
Sanders told reporters Wednesday that his proposal to begin hacking away at the current $179 million budget deficit will include cutting at least 800 of the city’s 832 general fund vacant positions.
This proposal is so drastic that it goes beyond the savings the city builds into the budget each year to account for normal employee turnover.
The depth of Sanders’ new proposal eats into the savings for which the city had already accounted. In other years, Sanders said, eliminating 800 vacancies would save the city $70 million to $80 million. This year, he said, doing so will save $20 million because the city had already accounted for the savings associated with so many of those vacancies.
In some ways, it’s the final correction to the abnormal number of vacancies the city in Sanders tenure, the result of hiring freezes, retirements and an existing surplus.
And don’t think that cutting these vacancies do not affect city services. After all, many of the vacant positions used to have a person in them. Should Sanders’ new proposal pass City Council, next year San Diego will have fewer of general fund employees per capita than it did 11 years ago.
Because the elimination of vacancies has been essential to the budget process, we thought a story explaining the similarities and differences between a vacant position and a full time employee was necessary.
How a Vacant Position Is Like an Employee
From a budget perspective, a vacant position and a full-time employee are the same thing. The budget appropriates money for a position’s salaries, wages or benefits. Numbers don’t know, or care, if there’s a face attached to them.
In this way, cutting a vacancy saves money for this year and going forward. If a position is removed from the budget, it’s gone forever, as are the possibility of paying those salaries, wages and benefits.
“It’s a real savings,” city Independent Budget Analyst Andrea Tevlin said.
Though the vacant positions the city has eliminated dwarfs the 30 people laid off since 2006, the number of city employees is decreasing.
Last summer more than 600 employees retired due to changes that would have affected their benefits. Not replacing some of those workers as well as others who leave the city for other reasons means the employee roster and payroll drops.
“I’ve told people this in the past,” Sanders said in an interview Thursday, “if it would make you feel better I could hire somebody today and then fire them tomorrow. But that would cost us a lot of money and the impact would be the same.”
How a Vacant Position Is Not Like an Employee
There’s a two-part process for controlling budget expenditures, explained Thurmaier, the Northern Illinois professor.
“One is the number of positions that are available to be filled,” Thurmaier said. “The second is actually filling those positions.”
A vacancy provides a department and the city with a budget surplus it wouldn’t otherwise have. It means money is there, but it hasn’t been spent. In theory, that money only could be used toward paying an employee. If an employee isn’t hired, it would go back into general city coffers. In practice, departments can find other uses for the funds.
San Diego’s Fire Department, for example, doesn’t fill some of its vacant positions on purpose. It uses that money to pay firefighter overtime, new Fire Chief Javier Mainer said in a radio interview Thursday morning.
“It’s almost like creating an informal reserve account,” said Max Neiman, a senior fellow at the nonpartisan Public Policy Institute of California.
In this vein, cutting vacancies enforces fiscal discipline on departments but also it decreases their flexibility. Without those vacancies, the Fire Department will have to find another way to pay that overtime or eliminate it.
Keeping vacant positions open also paradoxically allows the city to hire employees it couldn’t otherwise. Provisional and temporary employees are not counted in the budget, and the city recently has had a spate of them.
Most notably, former Fire Chief Tracy Jarman worked as a provisional employee from her retirement in June until she gave way to Mainer last month. Even though Jarman was working, during that time the fire chief position was considered “vacant.” Further, the department used dollars from the vacant chief’s position to pay her. Nuances like these can lead to confusion when discussing vacancy rates.
All these issues ignore the most significant difference between a vacant position and a full-time employee. Numbers may not know, or care, if there’s a face attached to them, but people making the decisions do. For any number of reasons, it’s easier to cut a vacancy than an employee.
“These are real people,” Sanders said. “They’re not just a number out there.”
If Sanders’ plan to eliminate 800 more positions goes through, vacancy cutting days are over. With no more than a handful of vacancies left, the budget deficit will remain more than $100 million.