2017 NJ STATE PBA Collective Bargaining Seminar
44 NEW JERSEY COPS ■ FEBRUARY 2017
Financial analysis RAPHAEL“ RAY” J. CAPRIO AND MARC H. PFEIFFER- Research and Consulting Services
Ray J. Caprio and Marc H. Pfeiffer presented their take on financial analysis to help NJ State PBA members get a better understanding of ways to determine the shape of a municipality’ s budget and where money to pay for salary increases and other benefits can be found. In short, the speakers presented a detailed explanation about how municipal budgets work.
Here is some additional information and tips from the presentation:
• In New Jersey, a local government financial system includes property assessment, budgeting and property taxation.
• Assess the town’ s financial condition. When putting together
Preparation for the negotiations process
A former Marine, Frank Crivelli knows well the value of preparation. He advocates preparing to negotiate with as much urgency as possible, which is giving the opposing party“ what you want, how you want it and when you want it.”
Additional points of interest Crivelli presented included:
• Success in negotiation often is determined by the party with the greater leverage. Understand where your Local sits with leverage as it pertains to the 2-percent cap and having the opportunity to shift balance backward based upon the ability to negotiate healthcare contributions.
• Law dictates that negotiations shall begin 120 days before the expiration of the contract. This is important because it behooves the municipality to stall to let a contract expire, causing salary steps to be frozen and no raises.
• Begin preparation during the last year of the contract. Eight months should be enough time to get ready. The law requires meeting three times during that 120 days. Schedule the first meeting 90 days prior to the contract expiring.
• Know what’ s negotiable and know what is non-negotiable. There are certain management rights you have no ability to negotiate.
• Understand the economic impact on the jurisdiction and its residents. How much will a raise cost the taxpayers? It often can be pennies as far as a tax increase. Or it can be a matter of reallocating money from a surplus of taxes that have already been collected.
• The 2-percent cap has been in place for seven years, but since 2014 the new 2-percent law basically allows money to be front-loaded, back-loaded or spread around. So if you can
FRANK CRIVELLI- Crivelli & Barbati, LLC
a proposal, it is best to come up with a number based on solid revenue and expenses that the Local can confirm the municipality will spend. Underestimating a budget only leads to problems the following year. This being said, it’ s important to have a clear understanding of annual revenue and spending.
• Don’ t get stuck in the rut.“ The rut” refers to the municipality’ s calculation between the difference of the budget and tax money owed. The difference is charged as an added expense to the budget and triggers an effect on tax levies. This is considered an allowance for bad debt to cover the residents who don’ t pay their taxes. The rut reduces the amount of revenue available to fund salary increases.
• Step movement is a gap that Locals face when the 2 percent budget is not distributed properly over step salaries. Units want to avoid officers moving through steps where the increments cost out to more than the 2 percent that’ s available. This leads to what is called the“ unsustainable bubble step,” which can be avoided by adding more steps with smaller salary increases. d
get more money to your members in year one of a three-year contract, it might be more money in the long run versus 2 percent a year for three years.
• Understand the contract negotiations cycle or the pattern of settlement, which is the term arbitrators use. If you are negotiating in a cycle and have to go to arbitration, watch what arbitrators give to other public employment unions. Don’ t let them take the settlement from the weakest union and shove that down your throat. You don’ t want to wind up at the back end of a cycle if you can avoid it.
• Make proposals clear and easily readable with language you are striving to strike, as well as language you are trying to add, clearly defined.
• Have your empirical evidence in line. If you are asking for 3 percent, show the empirical data that you are falling behind other law enforcement jurisdictions in the county or that you are the lowest paid in the county.
• Set realistic, attainable goals for members. Tell them about the restrictions the law places upon the Local. Don’ t do that at a meeting to ratify the MOA; do it during the negotiations prep.
• When forming the negotiating committee, members should be from different parts of the unit. Have somebody from the top of the guide, somebody from the middle steps and somebody at the bottom. You want that input. Also, make sure to have a numbers person, an individual who is good at math. Have no more than 5 to 7 people. You need people who can devote the time to do the work, going through the many contracts from neighboring jurisdictions and county contracts to look for more favorable provisions that you may want to include. That takes work. Putting together the numbers, drafting proposals and looking at pieces of economic data takes time as well. d