Vacancy funding: The other type of deficit

We hear a lot about the affects of structural deficits for things like school maintenance, but there’s another huge gap that ends up costing us more money—filling vacant positions.

April 20, 2016; 12:13 PM • by Aaron Williams

Photo by: Michael Chronister

Unlike the federal government, Virginia and the City of Richmond are required by law to pass “balanced budgets.” This means that revenues must more or less meet expenses. But debts can come in denominations other than dollars and cents, and budgets that are balanced can be stuffed full of deficits. All too often, “balanced budgets” contain the deficits of deferred maintenance or departments starved of talented civil servants, which can compound over time and come due, with interest, just like a bond.

In Richmond, years of structural deficits mean many of these debts are coming due, and at the same time, many new debts are being made. For an example of what’s coming due, look no further than the talk of the town: Richmond City Public Schools.

New schools need about $1.40 to $1.60 per square foot for annual maintenance while older buildings, of which RPS has many, need close to $4.00 per square foot per year. For a long time, Richmond was spending $0.06 per square foot on maintenance according to Richmond Forward’s Garet Prior. Now, RPS faces maintenance and facilities costs that will likely far exceed those neglected annual appropriations.

Superintendent Dana Bedden and City Council seem committed to making investments today in order to improve schools and bend the future cost curve. Last year, City Council gave $9 million additional dollars on top of Mayor Jones’s approved budget to RPS. Part of the way they did this was by cutting $9.2 million in vacancy spending from other departments. But this creates another deficit which is adding up and taking on interest every day.

Each year, the city funds vacant positions in departments and the money is used to hire new full-time and temporary employees, pay for overtime, and increase administrative pay. In the past, the funding was also used as a slush fund to pay for snow removal and leaf collection since those services didn’t have line-items in the budget. Cutting this funding isn’t as direct as cutting filled positions, but it can eliminate a lot of positions over time.

According to the RTD, the city had 3,630 filled and 582 open full-time positions to start 2015. 146 of those empty positions were in public utilities and 134 were in public works.

Building institutional knowledge, empowering employees to specialize, and staffing departments with a diversity of skills, ages, and experience requires consistent and predictable funding. This is paramount to building efficient government. When the little things are neglected, extra costs like all-star teams and consultants for fixing poorly implemented financial systems add up — just like interest on debt.

In a city that is geographically confined, where power is constrained by the state, and revenues are limited, it’s impossible to truly balance the budget. Budgets are the formalization of the trade-offs in what deficits and debts are most tolerable — between deferring school maintenance and employee attrition, or at-risk water systems and an aging workforce.

Local lawmakers have lots of important decisions to make over the next few weeks. Regardless of what happens, Richmond’s structural budget issues mean something is going to be neglected and whatever it is will come due in a few years. With interest.

April 20, 2016 12:13 PM 0