The town of Atherton is preparing to outsource its entire building and public works departments, handing 13 of 16 non-management staff members their pink slips by the end of the month.
Peter Finn of Teamsters Local 856 told the Almanac that town representatives informed him and two employees who are union stewards on May 26 of the plans. Employees were officially notified by the town the next day, according to Mayor Jim Dobbie.
"I am very, very sad that this was necessary to help bring the town into financial viability," Mr. Dobbie told the Almanac. "We take no pleasure in laying off these employees whatsoever, but if we don't take these steps, everybody's going to lose their jobs because we'll go under."
The town is facing a nearly $900,000 deficit in fiscal year 2011-12, a figure that's projected to climb steadily if spending cuts are not put in place. The structural deficit is due to falling property tax revenue and rapidly rising employee costs.
The 13 represented employees working in the building department and the public works department -- which provides streets, parks and facilities services -- will lose their jobs effective July 1.
Mayor Dobbie said a bidding process -- known as an RFP process -- for private companies wishing to provide the town's services has been under way, and should be wrapped up in time for contract employees to step in by July 1. He said office space will be provided for them in town facilities.
Mr. Finn said he and the two employees attending the May 26 meeting were "blown away by the depth and breadth" of the cuts. "In my experience, this is unprecedented in the Peninsula."
The three employees represented by Local 856 whose positions were not on the cut list are administrative support staff in town hall, Mr. Finn said.
The town's planning services are already outsourced, leaving police services as the only remaining multi-staffed department operated by town staff. When asked if that will change, Mr. Dobbie said, "I don't think there are any plans to outsource our police department."
As for those who will lose their jobs, Mr. Finn said he and other union officials "are concerned about their livelihood and their families." But residents should also be concerned about how services will be affected by outsourcing, and that the decision to lay off such a large number of employees and outsource critical services was made with no opportunity for the public to weigh in, he added.
He also expressed concern about the degree of "institutional knowledge" about the town and its workings that will be walking out the door along with the employees, some of whom have decades of experience in their positions.
"I don't believe that's going to be a big problem," Mayor Dobbie said.
Speaking at the May 18 City Council meeting, building inspector Joseph Aiello cautioned the town against outsourcing services, saying that it may not save the town money, and could in fact be more costly. A comparison he made of his time and compensation with that of a consultant working in the building department showed that the consultant cost the town about one-third more than he did, Mr. Aiello said.
He noted, too, that the building department is supposed to pay for itself, "when it's run correctly," with revenue generated from fees charged for permits and services.
During a special May 9 meeting, the council gave Mr. Danielson its support and expressed confidence in his judgment when he stated that staff cuts would be necessary if the town hopes to address its financial crisis. He noted that 80 percent of the town's costs are for labor.
A financial analysis presented at the meeting projected deficit spending of about $856,000 in the 2011-12 fiscal year budget, assuming no salary increases and no capital improvement spending. And Finance Director Louise Ho projected that the town's reserves, which have been tapped into in recent years to balance the budget, will be exhausted by 2015, offering no bail-out of the town's projected $1.2 million deficit in the 2015-16 fiscal year.
"This is the picture of a structurally insolvent (entity)," Mr. Danielson told the council after Ms. Ho's presentation.
Expressing his support for Mr. Danielson during the May 9 meeting, Mayor Dobbie said: "He'll be using a scalpel, not an ax. Therefore, he has my support."
New labor contract talks are set to reopen soon, Mr. Finn told the Almanac after the announcement of the staff cuts, and "the union is more than willing to engage in serious discussions on providing concessions to save services."