Longevity pay puts strain on budgets
Bonuses continue amid city, town layoffs; Benefit long standard in unions' contracts
The city of Boston spent more than $12.1 million last year on a largely overlooked benefit that rewards city employees for their years on the job. In Worcester, where budget cutbacks could force the layoffs of hundreds of city employees, a similar benefit to police and firefighters cost taxpayers $726,000 last year. About 40 city employees got laid off in Lawrence two weeks before Christmas in 2007, yet the city spent nearly $400,000 in longevity benefits to employees.
Longevity pay is a guaranteed bonus that comes in the paychecks of thousands of municipal employees in cities and towns across the state. Nearly unheard-of for most private-sector employees in today's faltering economy, the benefit has become a standard perk in the contracts of many public employee unions.
The terms are negotiated between unions and city officials every several years. Yet even now, when such cities as Boston and Worcester have asked unions to temporarily suspend pay increases or have had to lay off workers, there has been little or no public discussion about eliminating the perk.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, called it an "abuse that justifiably outrages taxpayers."
"Massachusetts is riddled with these kinds of inside, hidden . . . expenditures of taxpayer dollars," he said. "In the midst of this kind of gigantic fiscal crisis, these kind of expenditures are particularly insulting."
But union leaders defend the pay, and municipal leaders say they often feel compelled to agree to it.
The benefit began innocently enough. Richard Paris, vice president of the Boston firefighters' union, said that when he was a firefighter in the 1970s, he and other firefighters received an extra dollar a year for every year of service with the department after five years. Today, a Boston firefighter with five years experience receives a longevity benefit of $8,000 a year, spread over paychecks. A firefighter who retires at the rank of captain with 25 years experience will have been paid more than $167,000 in longevity benefits by career's end.
Paris said the benefit is the outcome of negotiations with city officials, "a give-and-take situation - you give up something to get something." In recent years, for example, public employees have seen their healthcare co-pays increase.
"If we weren't here, [city officials] would love to take that away. They would take that away," Paris said.
David Holway, president of the National Association of Government Employees, based in Quincy, called criticisms of the benefit naive. The longevity payments were initially offered decades ago as a way to retain experienced employees, but now they are part of an employees' salary compensation. The pay also counts toward an employee's pension.
Holway said it is a way to reward good employees. "It's not collective bargaining, it's collective begging," he said.
Yet the pay bump, now a standard element in most public employee contracts, is not contingent on job performance.
In 2008, the city of Boston paid $11 million to city firefighters in longevity benefits. City employees also receive full healthcare benefits, including care in retirement that includes an employee's spouse. A firefighter receives extra pay for hazardous and night duty. And many city employees are allowed to get paid in exchange for unused vacation and sick days.
Sam Tyler, president of the Boston Municipal Research Bureau, said some city employees in Boston are allowed to redeem five days of the 15 days off granted each year, which cost the city $3.9 million in 2007.
Police with 10 years or more in the department also receive longevity benefits of $2,000 a year; the benefit grows to $4,000 annually after 20 years. The city's 300 library assistants receive an extra $365 annually after 11 years of service. Librarians with degrees and 10 years on the job get $1,200, and those with 15 years get $1,700.
John Dunlap, who represents the city in negotiations with 24 municipal unions, including police and fire, said unions tend to watch one another's negotiations closely.
"Everybody is constantly pointing their finger at the benefit in the other union's package and saying, 'no fair,' " he said.
Tyler called the longevity benefit a hidden perk, quietly negotiated into employee contracts as a way to settle. This month, the bureau plans to release a report analyzing city employee benefits called "Hidden Compensation."
The fact that it is "something that's not generally discussed or known" by the public makes it hidden, Tyler said. "And I think it's an issue that ought to be talked about."
Holway dismissed the idea that the benefits are negotiated behind the scenes.
"They don't understand the collective bargaining process," he said of critics. "People's economic packages are written out quite plainly, and there's nothing hidden, nothing secret."
Yet transparency is often lacking. Copies of union contracts for municipal workers in Boston, Worcester, and Lawrence are not posted online and are available only on request. In Boston and Worcester, the longevity benefit to firefighters is called a Transitional Career Awards Program stipend, even though the benefit has nothing at all to do with career transition funding. Hazard pay, another pay benefit awarded to most firefighters, is not special pay awarded for hazardous duty. It is a stipend for all firefighters because of the dangers associated with the job.
In Worcester, city firefighters took home more than $681,000 in longevity benefits last year. Under terms of the city's contract, a $1,200 benefit kicks in after five years and increases by a percentage every five years. A firefighter with more than 30 years experience receives a $2,336 longevity payment each year. Jarrett Conner, the city's budget director, characterized the payments as stipends and "how we pay firefighters."
When asked why the benefit wasn't a direct part of an employee's compensation, he said, "Sometimes it happens in contract [negotiations], they don't want to say we gave more than X raise," he said referring to city officials. "So stipends are how it's done."
Last week, Worcester laid off 32 new police recruits. And Boston Police Commissioner Edward F. Davis said that 40 cadets and 20 civilian employees will be laid off July 1.
In Lawrence, population 70,000, city officials spent more than $300,000 on longevity payments to firefighters last year. About $44,000 went to police. The city is facing a $4.5 million budget deficit in 2010.
Mark Andrews, Lawrence budget director, said his efforts to rein in employee benefits have been unsuccessful. When he tried to talk with union officials two years ago about saving $200,000 by limiting the amount of unused vacation pay employees could buy back, the union filed a grievance. Ultimately, the city's lawyers advised him to drop the effort and make the payments.
Now, Lawrence officials are predicting worker layoffs. They have instituted a $5 fee for late tax payments from residents and saved $65,000 by replacing some city workers' cellphones with walkie-talkies. Ten-day furloughs for city employees are also under consideration as a way to save an estimated $1.7 million.
Andrews said his efforts taught him how hard it is to win contract concessions.
"I have a master's degree in public administration, but I had never had a class on this," Andrews said of negotiations. "It just grinds you down."
Megan Woolhouse can be reached at mwoolhouse@globe.com. 