Editor's note: This is the second in a two-part examination of the contract from Stevens & Lee to create a plan to pull Altoona out of the distressed municipality status.
Labor costs comprise 84 percent of Altoona's budget.
So it's unsurprising that the successful proposal for the city's Act 47 distress recovery plan emphasizes labor changes.
Led by consultant Stevens & Lee, the recovery team plans to review labor contracts and meet with department heads to "determine areas of operational concern and inefficiencies."
All three union contracts expire at the end of 2012, giving management extra flexibility to make changes, according to City Councilman Dave Butterbaugh.
The team plans to propose modifications to all the contracts, which could involve contract language, traditional practices and prior arbitration awards, as well as proposing wage and benefit boundaries to govern future labor agreements.
It also plans to propose "changes to human resources policies and practices that will not require collective bargaining," within the boundaries of state laws like the Third Class City Code.
The team will compare service levels in Altoona with those of comparable municipalities and consider alternate means of delivery - and whether the city could drop some services altogether.
It will look for alternative ways to handle pension obligations and post-retirement health care benefits.
The team plans to solicit suggestions from employees; seek to speak directly with local officials, community organizations, unions and business groups; and hold "tele-townhall meetings" and roundtable discussions.
Experience emphasized
The extensive listing of the firms' and team members' qualifications and experience may be telling in their emphasis.
The proposal emphasizes experience in labor relations, the shedding of operational costs, sale of municipal assets, representation of clients in bankruptcy cases, obtaining payments in lieu of taxes and the turning around of troubled firms through consolidation and streamlining.
S&L has represented local government management and private employers in relations with labor. The company also has wide experience in connection with mergers, acquisitions, reorganizations, relocations, closings and work force reductions.
S&L has helped municipalities create authorities to buy or lease municipal assets and helped municipalities create authorities to take over operating control.
And it has done the reverse - helping municipalities take back assets and operations from authorities and helped municipalities sell off assets to private companies.
This kind of experience could be significant in connection with the city's water and sewer systems, which the Altoona Water Authority operates.
The city threatened to privatize those systems several years ago, but backed off after the authority agreed to increase its "payments for services" by more than $2 million a year.
S&L has represented both debtors and creditors in bankruptcy cases and has worked with municipalities to review tax-exempt status of properties owned by veterans groups, retirement communities, hospitals and colleges and to negotiate payments in lieu of taxes.
And S&L subcontractor DSI Civic has worked as a turnaround agent for troubled firms, including Iron City Brewing Co., beset by a fraud scandal.
In his previous job, a DSI member launched a shared service initiative that consolidated administrative functions for similar kinds of agencies statewide in Illinois.
Another DSI member in a previous job launched a performance-enhancement program in a county in New York, overcoming employee resistance to privatize the feeding of jail inmates and to eliminate a substance abuse clinic that was redundant with private efforts, saving millions.
What it's looking at
In Altoona, the team requested documents on taxes, fees, budgets, audits, capital planning, debt, insurance, labor deals, department organizations and more.
The team also made a barrage of requests connected with the fire department: time-off records since 2005, fire incident data, training plans, performance standards, retirement documents and more.
It also asked for crime information, response time and vehicle maintenance statistics.
The proposal speaks of an increase in earned income tax to 2.5 percent - up from the current 1.2 percent, with 0.5 percent going to the Altoona Area School District and 0.2 percent going for city pensions.
It speaks of the potential for rejecting collective bargaining agreements and future pension and health care obligations under Chapter 9 bankruptcy.
And in a move that would run counter to housing trends in recent years, it talks about upgrading existing housing stock to increase the supply of quality rental housing - affordable to people with median incomes or higher.
The cost is "hefty," Butterbaugh said.
But the consultant team can play a "vital role" in getting Altoona out of financial trouble, he said.
Mirror Staff Writer William Kibler is at 949-7038.
