Higher personnel costs spur call for a leaner CA

April 03, 1994|By Adam Sachs | Adam Sachs,Sun Staff Writer

Robert Kugler Jr. saw casualties from downsizing at the Department of Defense, where he works. But he also saw improved productivity and reduced spending.

"Everybody thought it would be catastrophic, but I've seen an awful lot of [money-saving strategies] because of budget pressure," says the electrical engineer.

But when Mr. Kugler looks at the Columbia Association (CA), the nonprofit corporation that runs the unincorporated city where he's lived for 21 years, he sees annual personnel costs that have doubled from $5 million to $10 million over the past six years and are set to increase 10 percent next year.

While he doesn't suggest anything as drastic as layoffs, Mr. Kugler says he hasn't noticed the association tightening its belt the way industry and government have. He recommends that the association cap personnel costs, allow attrition and search harder for efficiencies.

"I haven't seen any economies show up in the CA budget based on lessons learned or re-examinations," says Mr. Kugler, who testified at the association's annual budget hearing in February about the need to control personnel costs.

Association President Padraic Kennedy rejects that view.

"We make the effort to evaluate efficiency constantly, not periodically," he says, citing a consultant's analysis of open-space maintenance chores, internal audits and a current effort to hire private firms for several landscaping jobs to compare costs.

Columbia Council and association leaders say the rapid growth in personnel costs results from adding new services and facilities, such as the Supreme Sports Club and nine new summer camps, an increase in part-time and seasonal employees to run them and increases in the minimum wage and other employee costs.

The Columbia Council, the association's elected board of directors, haggled over rising personnel costs during deliberations on CA's $32 million 1994-1995 operating budget, rejecting proposals to reduce the average 4 percent raises for association employees or to make other broad cuts.

According to a survey of 540 private companies conducted by the Conference Board, a New York business membership organization that analyzes business trends, salaries in private industry are projected to increase by an average of 4.5 percent this year.

183 full-time employees

At 183 full-time employees, the association has just a few more salaried workers than in 1988, with additions including an internal auditor and in-house attorney. But the num

ber of part-time workers has steadily increased, fluctuating seasonally from about 700 to 1,400.

At the top, the association's president, treasurer and six vice presidents receive an average of $77,580 this year, including three who are paid more than $90,000. Until 1989, the association paid full medical benefits for employees. Now it pays from 74 percent to 100 percent, depending on the medical plan.

Since fiscal 1988, association employees have received annual raises averaging 5.1 percent, not including incentive bonuses for the eight officers. During those years, Howard government salary increases averaged 6.5 percent. For fiscal 1995, the association's 4 percent increase in salaries would equal about $300,000.

Councilwoman Norma Rose says benefits should be evaluated along with a study the council has commissioned comparing salaries for about 35 association management positions with similar jobs in government, nonprofits and business.

Mr. Kugler says he's concerned the burden on Columbia residents to pay the association's climbing $87 million debt will grow unless personnel costs and other expenses are reduced.

Kuecker sees no problem

Council Chairwoman Karen Kuecker says personnel costs have increased in proportion to the association's growth.

"I don't think you can cut back on personnel costs as you're expanding into new arenas," she says. "We're adding new programs residents seem to enjoy. I'm comfortable with it."

Rising personnel expenses shouldn't be viewed in isolation, say association leaders, noting that revenue from recreational memberships and program fees -- about half the corporation's income -- continues to increase annually.

The rest of the association's income comes from the property charge of 73 cents per $100 of assessed value, which has leveled off after years of rapid growth.

"If we provide more programs that generate revenue, it's not the same thing as personnel costs increasing because of extraordinary salaries or hiring unnecessary people," says Fran Wishnick, council vice chairwoman.

But some council members disagree. Ms. Rose says the increase in personnel costs from $10 million this budget year, ending April 30, to $11 million isn't justified, because the inflation rate remains low.

"I don't think there's a corresponding increase in services to justify a substantial increase," she says.

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