Overture Round Up (Updated!)

This is one of the many meetings I didn’t make it to last night, but here’s some of the information you might be interested in.

BUILDING COSTS
One headline says that the is in “very good” shape. There is a second headline with a story about it costing us an extra $500K per year. $19.5M in the next 15 years is the total cost and the city will pay half, plus or minus $4.4M (or really $2.2M). Committee members argue that much of that should be the expense of the operators at the facility, not the landlords. Of course, the people who have to fundraise the money argue otherwise.

So, in addition to our $1.5M+ operating subsidy every year, we’d pay nearly another $10M in costs over 10 years. Does this math make sense to you, we’re doing this to get rid of $28M in debt of which we might be responsible for $5M, but we are doing it at a cost of $10M over 15 years plus the $22.5M in operating costs. On this issue, I feel like I continue to miss why we would do this. The bottom line doesn’t make sense, maybe it just can’t and we’re just doing it for other reasons, if so, I wish they were clearly laid out so we knew what our goals are.

Can you imagine if we were having a conversation about this much money, but instead it was being invested in affordable housing, real job creation and local arts? Couldn’t that amount of money do so much more good for our community.

If you want to see the gory details, they are all here.

I read through them all and the items I find of interest are as follows:
– Inflation is not factored in, the estimates are based on today’s dollars. So, it will cost us a whole lot more!
– The interest rate they used was 5%, we may be able to borrow for less than that, so perhaps that number makes up for the estimates in today’s dollars, but only if the interest rates remain favorable.
– They only budgeted $225,000 for “miscellaneous” over the 15 years, with a building of this size, that seems low.
– They pushed many costs off to 2023 and 2024 which are the highest years and the costs are $2.9M and $1.6M in those years respectively. The rest of the years is it much less with the highest being $1M in 2013.
– By the year 2025, we’ll be paying $1M per year in debt service, which comes out of the city operating budget and takes away from other services. It will be .5M by 2021 (in 10 years).
– There are some items that have design flaws like the boiler plates for the steam boilers and they have needed frequent repairs. Since they cost $129K each and there are two, these costs could come much earlier than 2015 and 2020.
– There are 26,000 square feet of glass in the building, and it is costly to replace.
– There are items like the Turkish travertine floor that to replace even with cheaper materials is still $2M and items like the rotunda LED’s that have systems in place that are “troublesome” and might need to be replaced with different systems.

Room Tax
One of the big headlines that I didn’t see really articulated is that they plan to pay for this with Room Tax. In 2014 major obligations will be done at the Monona Terrace and that will free up $704,800 per year. And again in 2020 major obligations will be done freeing up $990,000 per year. Of course, room taxes have been down and there is pressure from the Greater Madison Convention and Visitor’s Bureau to say that money should be theirs to use.

Fundraising
Another area of concern for me is that the non-profit hasn’t budgeted for debt service, because they think they will just raise the money that they need for capital costs. Part of the reason there has to be negotiations for the $4.4M in dispute is they think they can’t raise money for the less sexy items so they want the city to pay for them. Seems to me if they have fundraising doubts on some of those items, they really need to schedule for that debt service.

STAFFING REPORT

Costs and number of employees under various models
The staffing report also came out yesterday. They looked at the 5 different models and determined the following:
1-Existing Operating Structure (2010)
$5,456,699.211
48.65 FTE
97 part-time

2-Operating OC with all non-profit employees
$5,154,144.93
43.6 FTE
113 part-time

3-Operating OC as a non-profit with custodial/ maintenance performed by City employees
$5,502,978.11
50.6 FTE
106 hourly

4-Operating the OC as a non-profit with all represented staff as City employees
$5,720,930.20
54.85 FTE
106 hourly

5-Operating the OC as a non-profit with all City employees
$5,811,053.93
52.05 FTE
97 hourly

Makes it hard to compare, cuz its not applies and oranges since the number of employees range from 43.6 to 54.85. So the cost of $5.1 to $5.8M aren’t very comparable.

The explanation for the differences is:

1. Operating the Overture Center as is, with all employees being City staff, except for employees of the 201 State Foundation.
2. Operating the Overture Center as an entirely non-profit organization, with no employees being City staff and 201 State employees employed by the non-profit.
3. A hybrid model where all staff are employed by the non-profit with the exception of custodial and maintenance employees, who would remain City employees.
4. A hybrid model where the non-represented staff are employed by the non-profit and the represented staff are City employees.
5. Operating the Overture Center as a non-profit, but with all employees remaining City employees

Current staffing

The 2010 Overture Center operating budget allows for 47 permanent employees (45.65 FTE), which includes represented maintenance, clerical/ administrative, cashier, and theater personnel, as well as 24 non-represented positions, including the Overture Center Director and various professional and supervisory positions. In addition, the Overture Center employs represented hourly staff such as building cleaners, box office cashiers, and security officers, and non-represented hourly ushers. Finally, the Overture Center employs a large number of hourly stagehands, represented by IATSE Local 251. These stagehand employees are hourly employees and their salary is generally covered by the shows that perform at the Overture Center, and this is anticipated to continue. The Overture Center pays stagehands when a show is sponsored by the Overture Center, and this money comes out of the Overture Center’s hourly salary budget.

City Benefits
Unions:

Of the 47 permanent employees at Overture, 23 (22.25 FTE) are represented by AFSCME Local 60. The 23 represented employees include 9 custodial/maintenance employees, 6 clerical/administrative employees, 3 box office cashiers, and 5 stage employees (Theater Technicians and Stage Maintenance Worker). Local 60 also represents hourly building cleaners, box office cashiers, and security officers at the Overture Center. All of these represented Overture Center employees are part of a larger city-wide bargaining unit.

– The contract sets forth specific conditions under which the Overture Center can change work schedules.
– The contract has conditions about overtime
– The contract says that if part time employees work over 1040 hours, they become permanant employees with benefits.
– The contract has lay off provisions and bumping rights
– Local 60 employees have a contractually established grievance procedure. If a grievance is not resolved at the Overture Center level, it is referred to the City Human Resources Department for resolution or possible arbitration. If a matter is arbitrated, the costs of the arbitration are split between the affected department and Local 60.
– The City also has a collective-bargaining agreement with the stagehands represented by IATSE Local 251. In addition to establishing hourly rates of pay, this contract provides that the City will make contributions on behalf of the City and employee into the Wisconsin Retirement System, and will make contributions into the IATSE Health and Welfare fund.
– There are currently 53 appeals pending with Employee Trust Funds regarding the employee status of the Stagehands and whether the City has an outstanding liability for WRS contributions prior to 2010. The pending status and financial liability associated with these appeals will need to be addressed as part of any restructuring of Overture operations.

Other City Benefits:
– Non-represented employees who would otherwise be exempt from the Fair Labor Standards Act are eligible for overtime compensation, either time and a half or straight time, depending on the employee’s pay range. Overtime may be taken as wages or compensatory time.
– Currently, Overture Center employees (and all City employees) receive a wage either negotiated by the union or set by the Common Council as part of the non-represented employee salary schedules found in MGO Chapter 3.4 For permanent employees, this wage includes step increases based on an employee’s time in the position. An employee at step 5 is considered to be at the full-performance level for the position and generally attains step 5 after 42 months of service in the position. Furthermore, the wage may include additional longevity compensation based on length of service with the City, which is calculated as a percentage of the base pay for the position. The longevity schedule for non-represented and Local 60 employees is as follows:
1. Three percent (3%) of base pay at the beginning of the 5th year of continuous employment;
2. An additional 3% (total 6%) of base pay beginning with the 10th year of continuous employment;
3. An additional 2% (total 8%) of base pay beginning with the 14th year of continuous employment;
4 This wage discussion does not apply to stagehands, whose hourly wage is established in the collective-bargaining agreement with the City and depends on the nature of the work the stagehand is asked to perform. Stagehands do not have steps or longevity provisions in their contract. The 2010 benefit rate for stagehands is 22.7%.
4. An additional 1% (total 9%) of base pay beginning with the 16th year of continuous employment;
5. An additional 1% (total 10%) of base pay beginning with the 18th year of continuous employment;
6. An additional 1% (total 11%) of base pay beginning with the 20th year of continuous employment;
7. An additional 1% (total 12%) of base pay beginning with the 25th year of continuous employment.
– The City pays 100% of the 2010 health insurance premium for represented employees. For non-represented employees, the City pays all but $10/month of a single policy and $20/month of a family policy. This ranges from $478.00-$510.60 a month per employee for a single policy or $1,196.30-1,272.80 a month per employee for a family policy, depending on the insurance provider.
– The City makes contributions to the Wisconsin Retirement System on behalf of permanent and eligible hourly employees, above and beyond the wages paid to the employee. Under State law, the City is obligated to contribute 4.8% and employees are to contribute 6.2%, for a total of 11% of wages for 2010 (The annual WRS rate is established by Employee Trust Funds based on WRS performance in prior years). However, State law also allows the employee contribution to be subject to collective bargaining and the City has paid the employee portion of the WRS since at least the 1970s for nearly all employees. This means the City contributes the total 11% WRS contribution for all eligible employees.
– The health insurance rates for 2011 will be approximately 6.3% higher for a family policy.
– The WRS contribution rate will increase to 11.6% in 2011 as a result of unprecedented investment losses in recent years. “Contribution Rates for 2011 Approved” ETF Press Release, June 29, 2010.
– Historically, the Wisconsin Retirement Fund assessed a surcharge as part of municipal employers’ normal pension contributions to recognize the unfunded liability associated with each municipality’s employees. For City of Madison employees, the prior service charge was equal to 1.2% of wages and was payable as part of the normal pension contribution for each employee. Each agency’s operating budget paid a proportional share of this fringe benefit cost. The WRS charged an interest rate of 8% on the total outstanding liability. In 2004, the City’s total prior pension liability was approximately $35,000,000. In that year, the City refinanced its entire prior pension liability, taking advantage of a lower interest rate loan of 5.25% available from the State Trust Fund at that time. This refinancing saved approximately $50,000,000 in total pension financing costs over the life of the new loan. The impact on individual agencies such as Overture was to reduce annual operating costs by replacing an ongoing annual employee fringe benefit cost with a lower annual debt service charge to defray its portion of the outstanding pension liability. Today, the Overture Center’s portion of the remaining pension liability is $366,586, payable through continuing scheduled annual debt payments of approximately $30,000 per year. Settlement of this outstanding Overture liability will need to be addressed as part of any restructuring of Overture operations.
– When figuring out total compensation for Overture Center employees, a benefit rate is applied to the employee’s salary to incorporate these various benefit contributions the City makes on behalf of the employees. The 2010 benefit rate for permanent employees is 40.9% of the employee’s salary, which incorporates payments for insurance, retirement, legally required payments, and other benefits. The rate for overtime work is 18.6%. For an employee whose base salary is $50,000, the total compensation, or cost to the City, without overtime, is 50,000*1.409, or $70,450. The 2010 benefit rate for hourly employees is 11.3%, so the total cost to the City for an hourly employee making $20,000 in a calendar year is $22,260.
– The City provides a variety of leave options for employees. The City offers vacation for represented and non-represented employees according to the following schedule:
Continuous Service Time (years completed) Full-Time Equivalent Annual Work Days of Vacation
0-3 years 10
4-7 years 12-1/2
8-11 years 15
12-15 years 17-1/2
16-19 years 20
20-27 years 25
28+ years 27
In the year an employee retires, the employee is entitled to a payout of all unused vacation for that year, regardless of the date of retirement. This means a 30 year employee can retire on January 1 and get paid out for all 27 days of unused vacation, even though the employee had not yet earned the time.
– Employees receive 3.5 floating holidays a year.
– The City also has 8 paid holidays and 3 paid leave days where employees are not expected to work.
– Employees who work on holidays or paid leave days are compensated with extra pay and the ability to take a day off in the future.
– Employees earn ½ day of sick leave per pay period, to a total of 13 days a year. Unused sick leave can be carried over and accumulated up to 150 days. Once an employee has reached a total of 150 days of sick leave, accumulated and unused sick leave beyond 150 days is paid out to the employee at the end of each year.
– Upon retirement, employees can convert unused sick leave into an account to be used for post-retirement health insurance premiums or as a 401(a) account. This sick leave is converted at the hourly rate of pay the employee earns at retirement.1
– Employees are also entitled to paid bereavement leave which does not come out of accumulated sick or personal leave banks.
– Employees also get paid time off for jury duty and time off to vote.
– Generally speaking, a newly hired employee earns a total of 26.5 days of leave (vacation, floating holiday, and sick) their first year of employment. An employee with 20 years of service earns a total of 41.5 days of leave annually. An employee with 27+ years of service earns a total of 43.5 days of leave annually.
– Other benefits include programs like the salary continuation insurance, unemployment insurance, sick leave escrow, and City’s bus pass program.

Non-profit Model
– Would use more part-time employees for custodial, security, usher, and box office cashier and then likely not pay any benefits.
– They would add 6 professional positions in areas where the City currently provides support, such as Human Resources and Information Technology, as well as other areas where the non-profit will need added support, such as a Corporate Relations Manager, Marketing Manager,12 and a Community Events Coordinator.
– If they re-hire local 60 employees they have certain rights to organize and be recognized by Local 60
– If they are non-profit employees they can fill the positions quicker cuz they don’t have to follow City of Madison rules.
– Employees would lose bumping right, but might get severance packages (yeah, right)
– Salaried employees would no longer get overtime.
– Pay ranges would be set by the non-profit and based on performance, not longevity.
– Employees would only get 26% benefits instead of 40%, most private sector jobs come in at 27.9%
– Employees would only get benefits after working 30 hours per week.
– Vacation, floating holiday and sick leave would be reduced.
– Employees could only accrue up to 30 days of paid time.

Custodial Employees
– Currently, the 5 Custodial Workers 2 at the Overture Center earn between $41,288 ($19.85/hr.) and $43,888 ($21.10/hr.), including longevity, and not including benefits. The permanent Custodial Worker 2 hourly rate at step 5 with no longevity in the collective-bargaining agreement is $20.49, and with the maximum 12% longevity added in is $22.95/hr. A Custodial Worker 2 at step 5 with 12% longevity has an annual salary of $47,736, but earns total compensation of $67,260 with benefits.
– They propose paying these workers $12.91/hr, no benefits.

Box Office Cashiers
– The 3 permanent Box Office Cashiers currently earn $39,910 ($19.80/hr.) at Step 5 with 3% longevity, or $56,233 with benefits. The hourly cashiers, on the other hand, earn an hourly rate of $12.38.
– They propose hiring them all at $12.38/hr., no benefits.

Other changes
– They would take the 2 existing Facility Maintenance Worker positions and using them to create the third Maintenance Mechanic.
– Graphics Assistant and Administrative Clerk would become part time and lose benefits
– They would like drop one of the Maintenance supervisory positions and have one person do all the work

Differences in the models
In looking at the tables of all the employees and what they would make, here’s a few more observations:
– With any other model, the director gets paid a whole lot more, currently, salary (123,875) + benefits (50,664) = $174,539. Under the non-profit model and 3 and 4, he would get paid salary ($164,573) + benefits (32,207) for a total of $196,780. And with a non-profit with city employees he’d get paid salary (164,573) + benefits (50,644) for a total of $215,237.
– In all cases the represented employees would get paid less (partially because they have fewer employees) and the non-represented employees would get paid more.
– Hourly employees would vary from the current 97 to 113.
– Represented employees could drop from 22.25 to 12.

Conclusion
The conclusion cracked me up, there’s no recommendation, just hopeful wishes that this information is helpful! Very politic of the staff!

Well, that’s what I’ve got . . . hope I picked out the most interesting parts of the reports for you, but you might want to take a look yourself and see what I missed!

ADDED:
If you’re interested, here are the upcoming meetings:
Monday, September 20, 2010
7:00 p.m.
Room 260, Madison Municipal Building
Topic: Philanthropy

Thursday, September 23, 2010
7:00 p.m.
260, Madison Municipal Building
Topic: Overture Center Staffing Study

Tuesday, September 28, 2010
7:00 p.m.
Overture Center – Rotunda Studio
Topics: Governance Models & Drafting Report to Council

Wednesday, October 6, 2010
5:00 p.m. (*Note start time)
Overture Center – Rotunda Studio
Topic: Drafting Report to Council