Friday, February 23, 2007

And Closer Still...

As predicted, questions about the Pittsburgh Police Department's secondary employment policy are still being asked. One day after the Post-Gazette had their turn with the story, the Tribune-Review's Jeremy Boren is taking the administration of Interim Mayor Luke Ravenstahl to task for it's decision to eliminate the city's cost recovery plan late last year. Mr. Boren seems to have obtained some of the data from the Pittsburgh Police Department's frequently-bypassed secondary employment computer system, which is meant to handle the details of these off-duty assignments. He also has applied a bit of the city's own guesswork to estimate just how much secondary employment is going on under the radar (and most likely under the table), uncontrolled by the computer system in the department's Special Events Office:

Pittsburgh officials missed out on more than $300,000 last year they could have gotten from lucrative off-duty security jobs that netted $3.4 million for hundreds of city police officers, budget records show.

Police Chief Nate Harper wants the city to get its share and improve a computer system that tracks fewer than half of the estimated 189,400 off-duty overtime hours police worked for private businesses in 2006.
I find the $300,000 figure a bit off-the-mark myself. That's the same amount that Fraternal Order of Police President Jim Malloy claimed that the city could make if it adopted the FOP-proposed fee schedule. But that proposal, presented in a letter from Mr. Malloy to Interim Mayor Ravenstahl (see this earlier post for details) was almost laughable in its bargain-basement pricing. At most, it would recover between 5 and 10 percent of an officer's off-duty wages. The City of Pittsburgh would stand to make far more money, on the other hand, if we implemented the standard 22% rate used by many other county police departments.

Nevertheless, this article is an important development. We have a mainstream media outlet openly acknowledging that the Ravenstahl administration shut the door on at least $300,0000 of much needed-revenue. The next question is why they would do something so mind-blowingly stupid. The article explains it this way:

Mayor Luke Ravenstahl in December dropped a $3- to $4-per-hour surcharge the city used to levy, a move that curried favor with police and mollified business owners upset that they had to pay an average $37.50 hourly overtime rate plus the fee, said Jim Malloy, president of Fort Pitt Lodge No. 1.
It has to be stated that this paragraph contains some glaring inaccuracies. First of all, the proposed cost recovery fee was eliminated by Interim Mayor Ravenstahl during a meeting with FOP leaders on 21 November 2006, and not in December as the article claims. Secondly, the proposed fee was set either at $4 or $5 per hour, and not at $3 or $4. Third, the city had not yet gotten around to actually levying this charge on most secondary employers. Instead, Master Ravenstahl killed the program before it ever got off the ground. And finally, as we shall see later on, the average wage of an off-duty police officer -- at least according to the city's own numbers -- is just $26.39, and certainly not anywhere close to $37.50. I guess they must not provide calculators to their reporters at the Tribune-Review.

But still, despite these errors, the presentation isn't all that bad. The article doesn't quite make obvious connection that this effort to "curry favor" was really an blantant attempt to purchase the FOP's support in the coming primary, in the same way that fomer Mayor Tom Murphy won the "gratitude" of city firefighters just days before the 2001 election. But it does at least nudge up against the truth.

Some other choice nuggets from this latest article:

  • The settlement amount seems have gone up in the lawsuit filed by Devon Werling after his off-duty encounter Sergeant Mark Eggleton (described elsewhere in these pages). While my sources had predicted that city taxpayers would have to shell out $150,000 to settle Mr. Werling's claims against the city, the amount has now increased to at least $200,000.

  • Only 28% (at best) of all secondary employment hours are currently being tracked by the $30,000 computer system in the department's Special Events Office

  • This small fraction of off-duty jobs that have been tracked by police department accounted for 53,218 hours of employment, during which the officers made $1.6 million in wages.

  • Doing the math, that amounts to an hourly rate of about $30 per hour.

  • Just on these tracked jobs alone, 6 police officers made over $20,000 in off-duty income last year. Another 104 officers made over $5,000. Remember, the off-duty jobs at bars, restaurants, and the stadiums -- which are commonly believed to be far more lucrative -- are currently not being tracked by the computer system.

  • The city estimates that these untracked secondary employment jobs accounted for 136,240 hours of work, and resulted in about $3.4 million in wages for the police officers who performed them.

  • These numbers amount to a ridiculously low-ball estimate of these officers earning just $25 per hour from these untracked jobs. Then again, since much of this money would have been provided under-the-table and tax-free, perhaps the normal economics don't apply here.

  • In total, on both tracked and untracked jobs combined, Pittsburgh police officers earned $5 million over 189,454 hours of off-duty employment. That works out to an hourly rate of $26.39.
All of these numbers are important, because they provide the first concrete values by which one can estimate the amount of revenue that a properly-designed cost recovery program could net for the City of Pittsburgh. Our police officers worked approximately 189,454 hours of off-duty employment between February 2006 and January 2007. We don't have the exact dates here, but let's assume that this period covers a full year. Those who were working through the Special Events Office were being paid at an average rate of $30. If that same rate was applied to all secondary employment, the total wages would amount to roughly $5.7 million.

What this means is that the $300,000 in lost revenue, as described in the article, amounts to a cost recovery fee of just 5.3%. If the city instead charged the 10% fee that was first proposed by former Police Chief Dominic Costa shortly after he took office, we could earn $570,000. Using the standard rate of 22%, our city could bring in just over $1.25 million of much needed revenue, every single year, to cover the costs that these off-duty work details impose on city taxpayers.

If the average wage of an off-duty officer were really $37.50, as Mr. Boren reports in his article, then the total amount of money earned by police officers would swell to $7.1 million. In this case, a 22% cost recovery fee would bring in $1.56 million to compensate the city for it costs.

Indeed, the true hourly rate, when an officer is hired through the city's Special Events Office, may be even higher than what Mr. Boren indicates. An anonymous comment left in response to another post here at The People's Republic contained some revised wage values for the current year:
Anything that runs through the city computer system is charged at the current year's Police Officer 4 time-and-half rate. Which as of 2007 is $38.54.
If this value is accurate, then the police officers can be expected to earn around $7.3 million over the next year. A 10% cost recovery fee would net $730,000, while the standard local fee of 22% would bring in $1.61 million for city taxpayers.

The Tribune-Review article, however, notes that current Police Chief Nate Harper doesn't want to use a percentage-based fee structure. Instead, he prefers to stick with former Chief Costa's plans to charge a fixed dollar amount for each hour worked, regardless of how much the officers themselves are getting paid. If the city goes with the FOP-proposed rate of just $2 per hour, only $378,000 will be recovered. While this seems like an impressive amount of money, it probably won't even be enough to cover a single big legal settlement like the one in the Eggleton case. Once you factor in legal fees, other smaller lawsuits, worker's compensation for off-duty injuries, the costs of replacing uniforms and equipment, and the wages of the employees who work in the Special Events Office, there would likely not be enough left over to cover the $200,000 that we are paying to settle just this one case. When applied to the average hourly rate of about $30 per hour for work tracked by the city's computer system, the FOP proposal amounts to a meger recovery of just 6.6%.

The final Costa proposal of a $4 per hour fee, made just before he left office in September 2006, would do a bit better. It would bring in nearly $760,000, which would be equivalent to a percentage-based fee of about 13%.

As I noted yesterday, the key here will be the precise nature of the cost recovery fee that Interim Mayor Ravenstahl -- now that he is in full flip flop mode -- will be brave enough to propose. Anything less than about $6 per hour (20%, with revenue of $1.14 million) will be a betrayal to the taxpayers of this city. We'll just have to see if he has the cojònes needed to do his job. Frankly, I'm not enormously hopeful.

UPDATE: The various figures which appear in this post have been updated numerous times as additional information has come to light, and as new calcuations have been applied to them. A detailed spreadsheet of these values can be seen here.


Smitty said...

it's ironic that the three biggest volume users of extra duty officers,the Pirates,the Steelers and Giant Eagle are raking in huge profits while complaining about the increase in the hourly fee for extra duty officers.These three "Pittsburgh Institutions" should voluntarily agree to any program that will help meet their security needs while at the same time help our financially strapped city.Step up Rooney,McClatchy and Shapiro and do the right thing!!

Anonymous said...

I give kudos to Jeremy for digging in and doing some work - he certainly took this further than Rich did.

I also think you're being a little hard on Jeremy over the applicable hourly rate, because even though rates might vary from employer to employer, employers like the Pirates and Steelers pay the cops at a rate of time and 1/2, which is the $37/hr. rate quoted by Jeremy.

Richmond K. Turner said...

Hey, the man said that the average wage was $37 per hour. He didn't say, "just for the Pirates and Steelers". He didn't say "rates that can go as high as $37.50". He described it as the average wage.

The mathematical definition of an average is the the sum total (in this case, dollars) divided by the number of units (in this case, hours). And by the city's own figures, that's no where close to $37.50. Even for the tracked jobs that were done through the city, the average was just $30.

He had the numbers right there in front of him. It's simple division. He used the word "average". He was wrong. Since I'm kind of a statistical geek in my day-to-day work life, these things are important to me. So maybe I hit back a bit harder than most people would. But it's hardly advanced math, and it would have been easy for him to get the numbers right.

Thanks for your comments.

Grant W. Stapleton said...

I can tell you that the dollars I have tracked since 1998 to date are more likely in excess of $100,000,000 .. that is one HUNDRED MILLION. Some of that money was charged through PennDot and their contractors by a few of these illegal "officer schedulers" for off duty officers who (reported to me personally by top level agents of PennDot and some large contractors)NEVER EVEN SHOWED UP to do the work - "work" which was paid for by the contractors, PennDot IE: Taxpayers... since PennDot reimburses the contractors for this city-mandated extortion called off-duty detail.

What would be VERRRrrrrry interesting in this case, would be to see Dick Skringar later be deposed as a former PennDot employee, and be asked if he had any idea that this overcharging/non-appearance by the officers was going on

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