Calvert's 'padded payroll' leaves false impression of city government


WHENEVER reports emerge about new ways for Baltimore government to work more efficiently, we at City Hall take them seriously. That's why the recently released Calvert Institute for Policy Research report "Padded Payroll" caught our attention.

Authors of the report claimed that their data proved Baltimore's government has far more workers than cities of comparable size. But a review of the report by the city's Program Assessment Unit (a group of analysts who are charged with making recommendations to improve the efficiency of city government) have concluded that the report is seriously flawed.

The report acknowledges that when considering city jobs financed by the city's property-tax revenues, "Baltimore emerges from [the] analysis looking reasonably lean." It is only when the report is subsequently expanded beyond property-tax-funded positions that it purports to show the city has too many employees. However, it is in the very analysis of staffing levels that the report's shortcomings become obvious.

In a recent article on this page, Douglas P. Munro, president of the Calvert Institute, in responding to the inevitable criticism of the report, argued against supposed city positions on whether Baltimore has "special needs" because it's not part of a surrounding county, the comparability of functions between cities and the quality of the services provided.

Quality of service

As a practical matter, these issues can never be completely resolved. Arguments about "special needs" are highly subjective and difficult to quantify; the degree to which functions are comparable can be argued endlessly (because each city is unique); and, as Mr. Munro points out, quality of service is difficult to measure.

So does the validity of the staffing analysis boil down to merely a matter of opinion or, at best, a duel of statistics? Neither.

The report contains a flaw of logic so basic that even if all the aforementioned arguments were resolved, its conclusions would still be baseless. The flaw: It relies entirely on a comparison of positions, not expenditures. This approach fails to recognize that cities with smaller work forces often must employ outside contractors for labor.

The report assumes, incorrectly, that all reductions in city employment would result in cost savings equal to the eliminated city employees' salaries and benefits. The more likely result is that salary and benefit savings would be offset to a considerable degree by increased contracting costs.

For example, city A and city B might employ two and 10 employees, respectively, for a similar function. If the function in question is indeed comparable, as the report asserts, it is unlikely that city A is able to do the same work with eight fewer workers. Any complete study would have to account for this apparent contradiction by determining the degree to which contracting makes up for the difference. How efficiently city A or city B is doing the work depends, therefore, on how much work is done by outside contractors and its cost.

Mr. Munro admits that the report ignores these factors. The postulated $224 million in savings Baltimore would gain by cutting 5,500 employees from the payroll is, therefore, groundless.

In The Sun OpinionCommentary article, Mr. Munro belatedly recognizes the shortcomings of the report and hurriedly shifts from an employee-per-capita to a cost-per-capita comparison. Using this measure, the dramatic differences between Baltimore and the comparison cities vanish and are replaced by much less startling figures. For example, the report claims that the number of public works employees per capita is 267 percent above the average for the comparison cities. On a cost-per-capita basis, however, the margin shrinks to insignificance: within 1 percent of the average, using Census data.

In fact, for all of the functional areas named in the report are taken together, Baltimore is within 6 percentage points of the average on a cost-per-capita basis. When total city expenditures are compared (with only education removed for comparibility), Baltimore is second only to Milwaukee in cost-effectiveness, using Census data.

Flawed report

Nevertheless, we do not dismiss the report out of hand. Though it is clearly flawed, it usefully points out that savings may be possible by reducing the city's work force through increased efficiencies and privatization. City management agrees and efforts to increase efficiency have been going on for some time. Reductions in the overall number of city employees and the elimination of redundant management layers in the public works department (from 11 layers in 1993 to five currently) illustrate progress in these efforts. The privatization of fire and police medical clinic services, police helicopter operations, public markets, the trolley works, automotive parts supply and the Baltimore Arena attest to the city's commitment to privatization where it makes sense.

Despite our disagreements about the report, we appreciate the well-intentioned efforts of Mr. Munro and the Calvert Institute to encourage greater efficiency in city government. However, we hope that their future reports will be more carefully reasoned.

William R. Brown Jr. is Baltimore's director of finance.

Pub Date: 6/09/98

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