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Council knotted over whether to move custodial workers onto city’s payroll

Friday, August 24, 2012 by Michael Kanin

A debate at the Austin City Council’s regular Thursday meeting about whether the City of Austin should move 28 contracted custodial positions onto its payroll turned into a larger policy discussion over how the the city hires some of its employees. Wrapped up in the matter are larger questions of whether the city should use its wage rates and benefits to better the prospects of workers that would otherwise serve via contract.


Though Council members did not take any formal action Thursday, they hinted at an ongoing study of the city’s contracts, and implied that further movement could be coming. “It seems like one outcome of that effort might be a standard policy or guideline that would provide some general rules about conditions under which it is appropriate for the city to outsource as opposed to bringing employees in-house,” Council Member Chris Riley said.


The debate dates back to earlier this year when, in the middle of deliberations over the Austin Energy rate hike, the utility asked for funds to continue outsourcing a set of custodial services. Entangled in the difficult analysis of the utility’s then-potential rate hike, Council members still balked at the idea of farming out the positions to an external contractor that would result lower total compensation for employees.


The issue came up again Thursday when the city’s Building Services department asked Council members to increase its budget so that they could absorb the 28 workers that Austin Energy had outsourced to a private contractor. The resulting cost difference between in-house and outsourced employees would, in this case, cost the city $3.3 million more over five years.


For Mayor Pro Tem Sheryl Cole, this was too much to swallow. “When I saw that it would be $682,000 more – and that’s per year – and the total additional cost would be $3.3 million, I was concerned that we were entering into a contract that was over $3 million that if we outsourced would be considerably less,” she said.


Mayor Lee Leffingwell was also against the idea of bringing the Austin Energy custodial staff onto the city’s payroll. “We have many contracts that we outsource,” he said. “And I believe, correct me if I’m wrong, our policy on all of those contracts is that they pay a living wage just as the city requires. There is some discussion of benefits, but I think that the main statements that occur is economies of scale: We get someone to contract that’s basically in that business, they can cover a lot more territory than us trying to hire employees to focus on a task that is isolated.”


Council Member Mike Martinez, however, saw absorbing Austin Energy custodial staff as an opportunity for the city. “We all hear a lot, we’ve talked a lot about things like affordability and ensuring that everyone in Austin has an opportunity to be successful and take care of their families,” he said. “We can’t control the private sector. We can control what we do in the City of Austin. And yes, it’s $3 million more over the life of this contract. What this means is folks are going to have a job at a decent living wage with full benefits to provide for their families, and to be a full part of Austin.”


Martinez was joined by Council Members Laura Morrison and Kathie Tovo. With Council Member Bill Spelman still off the dais, that left Council Member Riley with the deciding vote on whether to outsource the custodial workers.


Though Riley appeared sympathetic to Martinez’s suggestion, he wasn’t ready to commit. He cited ongoing work by city staff to evaluate Austin’s many contracts with an eye toward identifying opportunities for the city to turn at least some of its currently outsourced positions into city jobs.


Riley’s vote against bringing the contracted custodial positions into the city’s workforce was enough to knot Council in a 3-3 tie and, as a result, Council members were unable to take action.


City staff members are expected to return in October to offer Council members a more informed opportunity to weigh-in on the broader issue. However, as part of Thursday’s action, Council members expanded the scope of the upcoming study, while city staff were already concerned about their ability to deliver the original report on time. City Manager Marc Ott furthered that worry.


“The scope of this project was significant to begin with, and…(the) things that have been added during the course of this conversation have added to that substantially, so I’m a little bit concerned about being able to respond sufficiently within the time frame you have been talking about,” he said.


Ott also expressed concerns about costs associated with an in-house staffing switch for some currently outsourced contracts – and that such moves could chip into the city’s conservative fiscal approach of the past four years. “It’s a worthy policy discussion for Council to have,” he said. “As your city manager, though, I remain concerned in an overarching context with the cost implications associated with what we’re talking about here.”

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