Behind the Headlines August 23, 2013 — Changes for the Memphis Sanitation Department

Behind the Headlines August 23, 2013 — Changes for the Memphis Sanitation Department


(female announcer)
This is a production
of WKNO – Memphis. Production funding for “Behind
the Headlines” is made possible in part by.. A look at the major changes
being proposed for trash and recycling services in
Memphis tonight on “Behind the Headlines”. ♪♪♪ We are joined tonight by a
number of guests to talk about big changes in the way that
sanitation workers are paid, services are delivered,
even changes in the fees. And we have a big table tonight. Thank you all for being here. Kemp Conrad,
Memphis City Council. Thanks for being here. Thanks for having me. Duan Gillam, director of public
works for the city of Memphis. Thanks for the invite. George Little, C-A-O
for the city of Memphis. Thank you for being here. Thank you. Gail Tyree is executive director
of the Sanitation Workers Union. It’s my pleasure. And Bill Dries, senior reporter
with the Memphis Daily News. So there are a couple of
interrealted parts to this. And I think maybe
I’ll start with you, Mr. Little There are changes to
the way services are going to be proposed, changes to the
fees and changes to retirement benefits for the
sanitation workers. Maybe give us an overview of all
those changes and then we’ll dig deeper in to them. Certainly, Eric. In terms of the
service delivery, what is being proposed here
jointly through the cooperation of the sanitation workers over
and above what they usually do, I might add, would be an
increased emphasis on recycling services. We’re actually at providing
not one cart but two carts right now. Citizens get a tub to
carry their recyclables. They have to sort them out. Under the new system, you just
dump off your recyclables on one cart, your waste
in the other cart. Get it down to the curb. We take it from there. Not only will this simplify
matters but in the long term, it will increase recycling,
reduce landfill costs and really help the environment. Beyond that, we’re going
to invest in new equipment, somewhat better, more
reliable equipment. We won’t have that much
chronicled in infamous garbage juice to trail behind our
crews where ever they go. So I’m sure that will help with
the overall quality of life. And then we’re looking at
improvments as far as how we pick up the waste
that goes on the curb, the rubbish and
that sort of thing. But we’re going to take that on
as we deal with teh recycling issue. It also creates the
plan, a retirement benefit, a pension benefit, for I guess
all sanitation workers which I have to admit, and I’m
fairly close to this now, I didn’t know they weren’t
in the retirement system. That goes back many decades. There were decisions made
certainly before my time between the city and local 1733. The sanitation workers currently
receive Social Security. The city does provide
for a match on a 456. Which is a 401-k type. Basically a 401-k type. And I think it’s
important to point out, we’re not talking about adding
the sanitation workers to the existing pensin plan nor are we
talking about setting up a new pension plan. Rather part of what we will be
achieveing under this plan are increased efficiencies,
lower costs per stops. So in effect what we’re
talking about is a savings, sharing and a supplemental
retirement plan that will be fully funded out of the savings,
fully funded out of the sweat equity that the
workers are putting in. City has a whole nother
discussion coming down relative to pesnions. And so rather than adding
on to the pension burden, we’re creating a seperate
supplemental avenue under this agreement. And we’ll come back to
the big picture then. But let me bring
you in, Gail Tyree. What is the history of the
sanitation workers not being in the pension system? I mean how did that.. Walk us through
how that came about. Well let me say this. You have to go back to 1967 and
what was happening in the city during that time. The local was
chartered like in 1963. And in 1967 right before
the famous sanitation strike, the decision was
made by those workers. And you’ve got to remember, we
were dealing with Henry Low. There was not a whole lot of
trust between the workers and the city. For a lot of the workers, you
have to understand these were men that were not
men who had P-H-Ds. So they were looking at what
would be the most trusted avenue to take. And so they chose going with
Social Security because that was explained as the new plan, the
more secure plan at the time. And they had an option between
taking the Social Security and the pension. At that time, they
could not have them both. So they chose Social Security as
opposed to the pension plan as a way to really
secure in their future. And so now you’ve got
workers who are in there. I can’t remember the number. You probably know. The number of worker over 65. It’s quite a few. It is quite a few. Who you expect would take
this plan if it’s put forth, if it’s approved by
council in the next few weeks. Exactly right. Currently there’s about 39
workers that we have looked at according to the data we have
that December of this year would be elligible to take it. And most of them are
looking forward to it. Okay. And with their Social Security,
they won’t make enough to live on. Councilman Conrad, as
George Little just mentioned, I mean, there’s a big debate. We just came through a budget
season where there was a lot of discussion about
benefits, long-term benefits, the state getting
involved and saying, “Look, in Memphis you’ve got
problems with how you’re funding things.” But does this create? Does this only add
to that problem, the whatever it is 600 to
700 million in unfunded city pensions? Is this just
adding to that pool? Well first I want
to thank George, Duan and Gail for all the work
they’ve done on this in getting us to where we are. Especially Duan is one of
our best city directors. He does a great job. And the men and women who are
out there working hard for the citizens of Memphis
need to be recognized. I think one of the things that
kind of just gets lost in that is we’ve got a lot of people
that everyday go out there and get it done for the citizens. So I just want to
thank them for that. I think Chief Little
really spelled it out well. I don’t think this
adds to that burden. It would be a seperate plan
the way it’s proposed now. But one of the concerns that I
had and a lot of my colleagues had on Tuesday was it is a
deifned benefit plan as more of a plan possibly that
we could build on, that we could maybe go up and
down and contribute more in years where there are more in
savings and maybe less in the years in the other. That’s one of the
questions we’ve asked, have not got the
answer to that yet. But this would be a
defined benefit plan. And so what we typically do
in city government and I’d say governments all across the
country is usally benefits only go up. They don’t usually go down. So what happens in a year if
there aren’t those savings? What if the cost of fuel spikes
and goes up like in the single last few years although
trending down here recently? Do you think that we’re going
to and the 86-year-old retiree, are we going to
reduce his check? Probably not. So what’s going to happen? Well that’s going to be on. The taxpayers are going
to have to pay for it. So that’s my main concern
with the way it’s proposed now. You know the council proposed a
buy out which would have given, I believe, up to 70 or 75
thousand dollars lump sum to some of the older, the most
senior workers as opposed to a maximum $12,000 benefit now. That’s one of the
discussions we had Tuesday. Is there a way to possibly do
more of a lump sum for the folks that are ready to retire? So I think
personally we’re about 85, 90% of the way there. There’s a lot of
good in this plan. But these are kind of the final
details that I think need to be discussed or worked out just to
make sure we’re considering all options. And right now
there’s solid waste, sanitation services. Correct me. Anyone at this table
correct me if I’m wrong. Out of solid waste fee. It doesn’t come out of our city
taxes or it it supplemented by that solid waste fee? And that’s a key question. Right now solid waste is
entirely funded out of the fee structure. And so there is a third leg if
you will to this stool and that is the fee structure. Director Gillam and his staff
have looked at the current fees which have been reduced to
$22.85 and have determined.. And the fact that it’s in the
budget documents that that’s not sufficient to cover our costs. And so the small would get us
back really to where we were before June 30 would not only
fund this program but would keep the funds in solid. That’s critical because one of
the issues that the comptroller approached the city about was
having these special funds, enterprise funds that were
having to be either supplemented out of the general fund or
frankly carrying a debt. And so regardless of what we
do on this plan and we’re very supportive of it. We’ve got to make sure that
we’re rightin terms of how we’re funding solid waste services
so we don’t add to our issues. Can I say one thing? I think it’s important to
know that over the last 10 years before this became
an enterprise fund, the general fund, the
system was so inefficient, lent the solid waste operation
effectively over 10 years around $102 million. So that’s why we do need
to make a decision on this. That is the price of delay. A hundred million dollars that
was sucked out of the general fund because things were
delayed and things like this. So we do need to get
it figured out quickly. And Director Gillam, let’s
get you in the mix here. There’s the fee and there are
the efficiencies if this goes forward because you’re talking
about new trucks that are, I think, more efficient. And you’re also talking
about more stops per truck, another hundred
stops per day per truck. Is that correct? Absolutely, it’s
part of this plan. We’re projecting to generate
a savings of $4.7 million annually. Most of the savings is a result
of eliminating more than 80 vacancies that are
on the books today. There’s going to be some savings
realized through providing more efficient services through
adding 100 additional stops to the current routes. Which means that a truck or
a crew that goes out in the morning instead of
pulling 467 stops, it would be pulling 467 stops
which means we won’t need as many employees. We’re also getting rid of what
we called or referred to as a trash truck which is a truck
that usually goes behind a garbage truck to
pick up those little, small hand piles. Under this particular proposal,
the garbage crews will be responsible for all
of those hand piles. If it’s larger than a hand
pile, we still have our special equipment crews and our heavy
equipment crews that will come in and pick up that debris. So there’s going to be a savings
realized by providing more efficient services. And most cities, including
some of the private companies — pretty much all of
the private companies, they don’t have a trash truck. The garbage crews are
responsible for all of those hand piles. So there’s a lot more efficiency
being planned as part of this proposal. And then down the
road, there’s talk of, what do you call it? — pay per throw. And some of the
debris that you put out.. I mean as a homeowner, when
I first moved to Memphis, somebody said, “Oh, you just put
it all out there and it doesn’t cost anything.” Wow, that’s great. But it’s costly. I mean I can put anything on my
street and you guys will pick it up and it doesn’t
cost me anymore. And a lot of cities have gone
to at a certain point and time, if you’re going
to put, you know, half a forest on your
porch, I mean on your sidewalk, you’re going to pay a
little extra for that. Memphis has always provided what
I considered to be a premium service. And that is that the homeowner
places the items or the debris on the street. We’ll pick it up. Some of the larger piles may not
get picked up on your collection date but we do a pretty good job
picking up any and everything that homeowners
place on the curb. In terms of pay-as-you-throw,
that is so far down the road that it is really not necessary
for us to speak of this morning. Uh, Bill? Gail, there have been talks
about this going on for several years now. What was the key for the
American Federation of State, County and Municipal employees
to make the deal here to agree to this? What made this something
that you wanted to go for? People like Mr. Nickleberry,
Reverend Smith who have 47 years service in their
70s that said to us, “We’re ready to go. “We’re ready to go but
we can’t afford to go.” And I want to go back and speak
to something that Councilman Kemp spoke about
earlier about the lump sum. You know we talked about this
lump sum a couple of years back. And the concern we have is that
we have senior employees that if they go out and they
get this lump sum, two or three years with family
members being strapped for cash, they’re going to be
back at our door saying, “I’m out of money.” You know what can you do? Or, “Is there
anything I can do?” And so we’re more
concerned with long-term. We don’t want to offer them a
short solution where we dump a bunch of money on these seniors
and then in four or five years, they’re broke. And so for us to be able to sit
down and come up with a way to take care of them
a little longer. And then another reason why we
don’t want to do the lump sum is because we get to do a smaller
investment out of the pot we get for a longer term return. Becuase when you do a lump sum,
you have to invest a greater amount of the money. And we want to fund
this from the savings. We don’t want to take out of
the pot and fund something where you’ve got to give
everybody 80, $90,000. We want this to be long-term. And so we looked at
making a smaller investment. But just the humanitarian side
of us wanting to make sure that our older employees
are taken care of. Kemp, as you outlined, you
had a different idea about this several years ago about how to
get to this general goal and meet the issues that you wanted. This is a
different way, it seems, to that goal. Can you live with a
different way to this? As I said, yes. But so perhaps you do. But I think one thing is you do
something for the folks that do want to retire or are near
retirement age whether it’s a lower pay out over a
certain amount of time. Although someone, you know,
they could get a lot less money depending on their life
expectancy or what not. But then possibly
different for, again, the younger workers. Because my concern is and we’ve
seen it in Memphis and around the country with the defined
benefit plans is usually they’re added on to. And if there are no savings and
it is funded out of savings and that’s great. But what happens when
there aren’t savings. And then we get to a point
where your subsidizing it again. And is there a way where we can,
through a defined benefit plan or through a structure
that’s already in place, perhaps contribute more and
then over time in that invest vehicle. If you look at returns
in the market over time, they’re much greater than fixed
amounts despite what happened in 2008 or what happened in 1937. So will people be better
off in to that scenario? I don’t know because I haven’t
gotten the answers back to their questions that we’ve
been asking for weeks. George, what does happen if
more workers take this than you anticipate? Well let me say a
couple of things. First, I think what was changed
over the last couple of years is I think there’s a greater trust
between the administration and local 1733. We spent a lot of time working
on this issue after the earlier proposal was made. And so I think there’s a point
where we can actually get around the table and agree on the facts
and the basis and not only wtih Gail’s leadership but
her predecesor will. Again, this is not a
defined benefit program. A typical defined benefit
program would have a city contribution and an employee
contribution or I guess the city could put it in. In this case, this is being
funded entirely out of the savings that would be realized. The quesstion has been asked
do we anticipate those savings continuing to be realized. We all have skin in the game. Director Gillam and his staff
have identified a number of avenues that down the road
whether it’s pay-as-you-throw, the benefits of recycling
which is I think going to be a cultural change here in
terms of how we do business. Memphis is way behind
the curve in other cities. Even apartment complexes
are required to recycle. It’s just part of what you do. We’re not there yet. It’s a landfill cost. We make money off
of the recyclables. And so I think working together
with the unions that we can, in fact, have this
supplemental program. They recognize that
this could go down. There’s a risk that they assumed
out of this program unlike the general fund retirement
plan that we had for the city. Let’s go to.. You just mentioned making money
off of recyclables and you piped up. How much does the city
make off of recycling? It varies from one
year to the next. Just depends on the market. But as Chief
Little has indicated, when other cities in our area. What he said. When other cities were paying to
dispose of theirr recyclables, city of Memphis was
actually getting paid. We wanted a more
lucrative recycling deals. Is that mostly from the
aluminum form the cans? Plastics.. Because you hear the stories
of communities that have to really.. They think they’re recycling
but actually a lot of it is just going on a barge, getting
sent to China or some place and buried there. But that’s not what’s happening? I don’t think it’s
being buried in China. I think it’s
being sold in China. Seriously but we have a very
lucrative deal with a recycling vendor. But the biggest savings is for
every ton that we divert away from the landfill, we’re
actualyl going to save $26 in disposal cost. And so you’re really
getting paid twice. You’re going to get paid based
on what the market is offering in terms of every ton. And then you’re going to get
paid again because every ton that we divert away
from the landfill, we’re saving $26
in disposal cost. So we’re projecting once we
get everything off the ground and running, that we’re probably
going to save somewhere in the ball park around two million
dollars a year in disposal costs, landfill disposal costs. Alright. And I cut you off. I was just going to say but
what if there are no savings? I mean if the
savings aren’t there, who? I mean you can’t. It’s a defined benefit. I mean are we going to reduce
the payments to someone who’s 86 years old if the savings? Was that in the document
that was given to council? That’s in the document
that was signed off on, yes sir. So what happens? But let me say this, also. We had our
economists look at this. I mean we’re not going to go and
commit to something that we know are going to hurt the members. And we’re open to
continue to talk this through. But the one thing that the
economists has said is that just from the initial numbers, we’re
looking at about 15 years that this plan is going to be
secure just from our initial investment. Because you’re talking about
initially only 39 workers as of December that’s eligible. And then we’re looking at
another 65 that will be age 60 by the end of this year. So after that, then we’re
looking at the numbers to fall off to about on the average
about 13 people per year based on the data that we have that
will be eligible for the plan. Now when we look at this plan
and we look at these numbers, we took a very low figure. We took $400 a year times
30 years and that’s a cap. So it’s not like Mr. Nickelberry
that has 59 years is going to multiple, that his multiplier
is going to be 59 by the 400. Its only going to be 30
which is a maximum of $12,000. And if we’re giving
them $1,000 a month, that’s the $12,000. So when you look at your first
pay out for these 39 people, we have the initial investment
that’s in a fund that when we look at the age of the
people that we have coming out, we’re looking at already up
front having this investment for a minimum of 15 years. Let me ask you a
couple of questions. First, how many
members in local 1733? Give or take. Okay, now are you saying?.. How many sanitation workers are
there now who over time would be eligible for this? Uh, the exact number is
right now we are at 426. And what are sort
of average wages? I don’t know how that works but
just so we have some perspective for people. The average wage is right
between $31,000 a year and $35,000. If you’re at the highest level,
you’re the crew chief right at about 35. Okay. And there was another thing. I don’t know if this
was a new proposal, forgive me. But there in this
whole discussion, a private company is
handling, what is it? — 40,000 homes out
in Hickory Hill, Cordova, Country Wood,
Southwind and Wyndyke. And those areas served by
private companies or would that be new? We have 38,000 customers that is
receiving garbage and recycling services through Republic which
is a private hauler operating in Memphis and Shelby County
and several of the other local municipalities as well. Where we’re getting the 40,000
is we’re having an annexation of Southwind coming
on line in January. And we’re just estimating. And I don’t think the numbers
are going to be somewhere in the ballpark of 2,000
but maybe 1,000. We’re saying 40,000 but it could
be as low as 39,000 at the end of the day. And do you? Would you like to see more
privitization of these services? I mean obviously we
have not, you know, gotten or received any flack
from local 1733 when we speak of allowing the private haulers to
take on Southwind once it comes online. So in terms of seeding,
we’re outsourcing more services. I’m satisfied with the
plan we have for us. We’ve worked together. This is something
that we agreed on. It has not been any push
back with the plan to outsource Southwind as it was when we got
prepared to provide services in South Cordova. And just a few minutes left. Would you like to see
more privitization over? All things being equal, I would
rather city crews do the work. All things being equal. My goal is to deliver the
best service as efficiently as possible in a way that’s far to
the people that are paying for it and for the retirees. If I could say one thing. About 25% of the city
is already outsourced. It’s not like this
is a new concept. I think it’s smart to
have private companies, some city employees. We’ve got competition. You’ve got benchmarking. If I could say one more thing. When Councilman Lowrey and I
met with the administration last time.. This was before Ms.
Tyree was involved. So again, we’ve come a long
way in a couple of months. But one of the things they
proposed was to end trash collection. End trash collection. And so one of the things that’s
not come out of this plan, which again, is better, is going
to a pay-as-you-throw concept over time, which is good. Because it would be horrible
to end trash collection. Not garbage collection in the
cans but putitng the brush out. We need to continue doing that. I agree people need to
pay more for the service. But that was what was
proposed a couple of months ago. If I may as clarification, the
proposal was to go with less frequent trash collection which
is consistent with other cities. Four, three or four. Three or four times a week? Three or four times a year. When I lived in
Hendersonville, If I may, uh, your scheduled free
collections were three or four times a year. You still put things
out but you paid for it. And so the option was to reduce
the number of scheduled free pick-ups and add to that,
perhaps the pay-as-you-throw. And again.. But drastically decrease. You know I have
lived other place. Many people I have talked to
that live in other places or my friends who live up
in the northwest, I mean they just
can’t believe, again, how cheap, and the service. And everyone can point to a
given day where their trash was late or something went wrong. But I think it is a remarkable
amount of frequency in what you all will pack up and so and so. We just have a minute left. Bill, last question. Councilman Conrad,
$25.05 is the fee here. Is that doable amount for
you and do you think?.. Possibly. I think there can be if we can
get some good collaboration and communication, you
know, with the council. You know we didn’t get the
proclamation that was signed until Tuesday. But I pulled it off
the W-R-E-G website, you know, on Monday night. So I think if we could get more
collaboration and communication with the council as
opposed to the media on things, we’d probably get
more, a lot more, done. I’m interested in a
sustainable service, again, that does right by
the city tax payers and by the employees. And again, I think
we’ve come a long, long way and I think
a great, you know, arrangement is very, very close
which will ensure that goal. And I was wrong. We have another minute here. My timing was a little bit off. Let’s go back to
privitization for a second. I assume your folks would not
like to see a whole lot more privitization of services? You’re absolutely right. That’s right. In closing, I have to say
with all things being equal, we would love for the
members of 1733 to do that work. Yeah, yeah, okay. I’m sorry I’m harping on this
but just because you mentioned something, it caught my ear. Do you run? You know when you look at the
private services and their cost per stop versus the city
of Memphis cost per stop, are they comprable? Is there a big swing
or big difference? Yeah, we went through an
exercise about a year ago because there has always been
this question in terms of how much does it cost for city crews
to provide the same level of services when you
compare to the privates. We did the study. It is a little bit cheaper. It wasn’t as cheap as we thought
it was but it was a little bit cheaper for us to outsource the
services than it is for us to provide the same level
services with in-house groups. But is that outsourcing
with the exact same services? It was outsourcing with the
exact same services — garbage, trash and recycling once a week. I’ve set off bomb here. We’ve got 20 seconds left so we
will come back and talk some more about this. Gail Tyree, Duan
Gillam, Kemp Conrad, George Little, Bill
Dries, thank you. Thank you. And thank you for joining us. Join us again next week. Goodnight. CLOSED CAPTIONS PROVIDED BY
WKNO – MEMPHIS.

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