METHUEN — As Methuen suffers through the worst budget crisis it's seen in years, two departments lie at the center of the city's fiscal woes: the school department, already $4 million in debt from this past fiscal year, and the police department, whose contracts will cost the city more than $1 million in raises.
While the School Department has fallen into debt mainly due to special education costs, the police contracts, which city leaders say they are unable to afford, are the result of poor negotiation on the city's part, officials said.
City Auditor Thomas Kelly and Mayor James Jajuga said Friday the contract negotiated under former Mayor Stephen Zanni included language that never should have been approved because of the exponential increases in salary it afforded all 96 officers, plus the chief.
"I don't know how this got to the point it got to," Jajuga said. "I spoke to Tom Kelly about it, and Tom said, 'I was never asked to really analyze it, when I did I said there were problems and I was ignored.'"
The city's five captains stand to gain the most from the contracts. One police captain, who currently earns $157,052.16 with ancillary benefits included, will earn $440,735.42 next fiscal year if the contracts are honored — a raise of 180.63 percent, according to data provided by Kelly.
"A lot of things happened that shouldn't have happened," Kelly said. "I went to the Statehouse yesterday with 14 people in a room, and (the Department of Revenue employees) were like, 'We feel bad for you. How did this happen?'"
The police contracts were approved in the fall, shortly before Jajuga was elected mayor. According to the language in the contracts, each patrolman's pay is calculated off of a "base pay" wage, to which certain benefits — including stipends for length of time with the department, uniform cleaning, and holiday pay — are then tacked on to reach the patrolman's total salary.
Traditionally, the superior officers — sergeants, lieutenants and captains — then receive their own "base pay" that is derived from the patrolmen's base pay. According to the most recent contract, a sergeant's base pay is calculated as 132 percent of the highest-paid patrolman's base pay; then the lieutenant's is 116 percent of the highest-paid sergeant, and so on. The chief's salary is calculated as 2.6 times the highest paid patrolman's base pay.
The big change in the recent contracts is in a practice known as "stacking." While the officers' base pay has historically been calculated as a separate entity from ancillary benefits, the new contract rolls many of those benefits into the base pay — significantly inflating each officer's salary for the next fiscal year even before adding the contracted increase of 2 percent, and compounding those increases as they go up the chain of command.
That means patrolmen will on July 1 receive a raise of 2 percent of not just their base pay, but of their base pay plus all their ancillary benefits. And the ranking officers, whose salaries are dependent on the pay of their subordinates, are raking in the compounded benefits of every inflated base pay below theirs.
The biggest ancillary benefit any of the police officers receive is allocated through the Quinn Bill, which provides monetary incentives for officers who hold degrees in criminal justice-related fields. Officers with an associate's degree get an extra 15 percent tacked onto their base salaries, while those with bachelor's degrees can get an extra 20 percent and those with master's degrees get an extra 30 percent.
'Bankrupting the city'
The ongoing dispute between the city and the police unions hinges on the stacked benefits. While the officers are arguing they are entitled to the raises spelled out in the contracts, city officials — including Jajuga and Kelly — have said they "disagree" with including stacked benefits in the pay rate calculations. City officials have therefore offered the police officers the 2 percent raise they had been promised, including all the ancillary benefits, but without taking those benefits into account when calculating their new base pay.
"I disagree with it. And there's where the rubber meets the road," Kelly said. He questioned why superior officers should benefit monetarily from the educational achievement of their subordinates and their subordinates' stipends, when the superior officers are already receiving their own benefits.
The three-year contract Zanni presented to the City Council last year seemed a modest agreement that offered police officers raises of zero percent in the first year — the current fiscal year that ends June 30 — and raises of 2 percent in each of the second and third years. The first year the raises impact the city budget is in the fiscal year beginning July 1.
But Kelly questions whether Zanni understood the consequences of stacking the benefits.
"When they came up with this — I wasn't there — they proposed this thing, did they show (Zanni) what the impact (was) of how this worked? Or they just said, 'No, this is what we want?'" Kelly asked. "Because the mayor said to me later on, in all fairness, 'Hey, I have them 0-2-2, I kind of tweaked a couple things here and there, they're going to be fine.'
"That is not fine. This is bankrupting the city," Kelly said.
The architects of the contract were "really bright and knew how to work the system, and knew that the stacking would cause the salaries to rise significantly," Jajuga added.
Kelly said he told Zanni at the time the language in the contracts was invalid and could not be approved, but said his concerns "fell on deaf ears."
As the budget deadline looms and the mayor and City Council scramble to make cuts to fund the schools, Jajuga said he has budgeted the 2 percent raises without stacking and is still working to renegotiate the signed contracts with the police unions.
"They're not satisfied with that. Of course they want what they signed in the contract," Jajuga said, adding he understood their position. "I know it's unsustainable from a fiscal standpoint so I'm going to have to reject it and take my chances with arbitration and the courts. I don't want to do that, but I'm going to have to."
"I'm optimistic that we can reach some agreement," he added, "and I just hope reasonableness prevails."