Figure 9; Protective Services Comparison    source: BMA Municipal Studies

The above graph shows the cost of Fire and Police services for both municipalities in the year 2018. Again, the BMA studies display the data for most of their studies relative to $100,000 of assessment. So, the difference in the cost per $100,000 of assessment doesn’t really tell us much since each municipality has a different assessment. However, what’s significant about the graph above is that the cost for Fire Services is nearly identical for each municipality while the cost for Police Services is vastly difference. Therefore it’s reasonable to conclude that it is not Fire Services that is driving up the costs. So we need to do a comparison of Police Services for both municipalities to get a better understanding of what’s driving costs.

To achieve this we have to look at the actual cost for each year. Fortunately, the Town of Collingwood has structured their Audited Financial Statements so that the individual statements for each department are included. Therefore it was a simple process to record the total annual expenses for Police services for Collingwood. Unfortunately, Owen Sound Audited Financial Statements do not give taxpayers the same visibility into the individual department statements. Several departments are included in each statement identified in the Audited Financials. For example, the Protective Services statement includes the police board, police department operations and fire department operations. However we can calculate Police Services expenses by using the per capita assessment data provided in the BMA reports along with the census data from Statistics Canada.

The BMA Reports provide us with the cost of Police Services on a basis of cost per $100,000 of assessment. Since Collingwood and Owen Sound have different Assessments we need to calculate the total cost of Owen Sound’s Police Services. The BMA Reports provide us with the assessment on a per capita basis. We first find the total assessment by multiplying the BMA numbers by the population for each year. To obtain an estimate of population for the years between each census year we assume a linear change in population between the years and calculate an estimate for the population.

We then calculate the cost for Police Services for Owen Sound by dividing the total assessment by 100,000 and multiply this by the BMA report data for police services. We obtained the total cost of police services for Collingwood directly from their audited financials. The result is displayed in the graph below. 

Figure 10; Police Services Comparison    source: BMA Municipal Studies and Collingwood Financials

We can easily see from the graph about that unlike Fire Services the cost of Police services is far from being relatively equal. In 2021 Owen Sound spent about $3 million or 53.2% more on Police Services than Collingwood spent on their Police services. Note, for Owen Sound BMA gives us the net costs so these figures are reduced by grants and other revenues which are in the order of $2 million per year.

Collingwood contracts it police services from the Ontario Provincial Police. The cost for this contract was $5,476,405 in 2021. In 2017 Owen Sound received a proposal from the Ontario Provincial Police to provide Owen Sound with police services at an annual cost of $8,485,056 after initial start-up costs. (Click Here to Review)  As you can see the OPP costing did not include revenue from grants and other income which seem to be in the order of $2 million. The total cost for Police Services in 2019 and 2020 before applying grants was $10,417,159 and $10,857,671 respectively as shown in the budgets on the Owen Sound Website (Click Here). As well you can also see this data in the Financial Notes to the city’s Audited Financial Statements.

Given that Owen Sound’s Policing Costs are in the order of $3 million greater than Collingwood’s costs and that current policing costs are in the order of $2 million greater than the OPP 2017 proposal it would seem appropriate for Council to revisit the OPP proposal.

Figure 11; Police Services Cost Comparison    source: BMA Studies and Collingwood's Financials

When we compare the net cost of police services for similarly sized municipalities we see that Owen Sound pays significantly more for police services than all similarly sized municipalities. Note, these represent the net costs after grants and other revenues are included. This confirms that the comparison with Collingwood was not unique and that Owen Sound is definitely over paying for police services. Unless Owen Sound’s crime rate is much higher than the municipalities we used for the comparison, it is highly likely that the Owen Sound police department is overstaffed as compared to Collingwood's.


Comparing the Highest Salaries
  
One of the largest cost drivers for most public sector institutions is the cost of Salaries and Benefits. To have a good understanding of salary costs we need to look at the size of the workforce in addition to salary costs. Unfortunately Owen Sound stopped reporting workforce sizes in 2016. However we can get a good feeling for the salary differences between the two municipalities by reviewing those salaries over $100,000 as reported online at www.ontariosunshinelist.com.

Figure 12; Cost of Salaries of Employees on the Sunshine List    source: Owen Sound and Collingwood

As shown above, we see evidence that Owen Sound is either overstaffed at the senior levels or paying senior staff salaries in excess of the norm. For example, Owen Sound had 73 employees in 2021 receiving salaries greater than $100,000 for a total cost of $8,982,610. Collingwood, on the other hand, had only 47 employees receiving salaries greater than $100,000 for a total cost of $5,811,265. That works out to be a difference of $3,171,345. This is remarkable given that Collingwood has a larger population and a higher assessment than Owen Sound.

Even more interesting is that 36 of the 73 employees with salaries greater than $100,000, were in the Police Department, this included 22 Constables, 5 Sergeants and 4 inspectors. That’s almost half of the total number of employees with salaries greater than $100,000. This strongly suggests that Council needs to take a very serious look at the cost of Police Services.

It is clear that expenses grew at a rate that was disproportionate to population growth and are now much greater than similarly sized municipalities. It would appear that a contributing factor was the growth in staff numbers and salaries. Reducing staffing levels can be difficult. I faced this challenge in my last position where I employed a number of techniques aimed at getting “buy-in” from staff on the need to “Right-Size” the organization, that I would be happy to share with Council when and if there is ever an appetite for change.

Conclusions

So, what did we learn from doing this comparison with Collingwood? We all knew before the comparison that Owen Sound hasn’t been growing for some time. So, it wasn’t a surprise that Owen Sound’s population and assessment was pretty much stagnant during the study period. It also wasn’t a surprise that Owen Sound’s taxes were much higher than Collingwood’s in spite of fact that Collingwood has a larger population. However, we did learn a few things about the depth of the impact our financial problems and about some of the driving forces behind the annual taxes that were consistently increased each year at a rate that was twice the rate of inflation. Below is a brief summary.

1. The Average Household Income in Owen Sound is the lowest in Southern Ontario at $75.861.
    
2. Owen Sound residents have to pay 1.2% more of their income, than Collingwood residents, to cover their taxes each year. For someone earning $76,000 per year this works out to about $1,000 per year. For renters you can be sure that your landlord passes the cost of the annual tax increases to you.
    
3. The Median Value of a dwelling in Owen Sound is $117,000 less than that in Collingwood. You would think that would result in lower taxes given the lower property values. But the data shows otherwise.
    
4. The city of Owen Sound’s expenses are dramatically more than those of Collingwood. In spite of Collingwood being the larger municipality, Owen Sound’s expenses for Salaries, Wages and Benefits were nearly $4 million more than Collingwood’s in 2020.
    
5. Salaries, Wages and Benefits for Protective Services were $14.2 million in 2020 and represented 55% of all city salaries & benefits paid by the city in 2020.
    
6. The cost of salaries & benefits for Fire Services were relatively equal to Collingwood’s; however, the cost of salaries & benefits for Police Services were significantly higher than Collingwood’s and similarly sized municipalities.
    
7. In 2021 Owen Sound had 73 employees with salaries greater than $100,000 as opposed to only 47 employees in the Town of Collingwood, in spite of Collingwood being the larger municipality.
    
8. Thirty-six of the 73 employees with salaries greater than $100,000, were employed in Police Services.
    
9. Owen Sound paid $3 million more in salaries to employees earning more than $100,000 than Collingwood.

In summary it is clear to me that Owen Sound has expenses that, at a minimum, are at least $4 million more than they really need to be. This is the difficult topic that Council will have to face head-on. It cannot be avoided if we are to make any progress in even slowing the downhill slide we’ve been on for the last 20 years. We do not need a staff study or a committee report. Everyone knows what needs to happen.

Council needs to have a closed door session with the City Manager and direct him to develop a plan that matches Collingwood’s staffing levels within 24 months and at the same time maintains current service levels. This will require a $4 million reduction in Salary and Benefits to meet Collingwood’s current level of $22 million. Although this is a significant staffing reduction it is very achievable. However, it will come with some short term financial pain. It will require the introduction of early retirement bonuses and other incentives to encourage voluntary resignations in addition to legislated severance. The bottom line is the city has an overabundance of senior staff in comparison to other similarly sized municipality and Council owes it to taxpayers to fully address this disparity.

On a positive note, a portion of the $4 million annual savings could be directed to address our growing social problems. We currently have a very serious problem in our community where some of our residents are living in tents and sleeping in the streets. If Council were to begin to practice sound financial management and reduce expenses by at least $4 million we could subsidize housing for the 300 to 500 un-housed residents in Owen Sound by implementing a “Housing First” program.

The feedback I received when offering solutions to candidates, to mitigate the pain felt by these residents, was that this is a “County Problem”. I disagree with this position. Although the County is attempting to address this issue for all municipalities in the County, it is a City of Owen Sound Problem and I’ve just given you the solution.
 

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