Security costs examined

A government program that arranges “extra duty” security jobs for Spokane police officers and Spokane County sheriff’s deputies isn’t paying its way, according to a county cost-recovery specialist.

Other public officials disagree, saying private employers shouldn’t be forced to pay fixed costs the government would have to pay anyway.

The program essentially sells government service, including the use of patrol cars and other equipment, to private organizations.

It’s an alternative to allowing officers to arrange their own off-duty work without supervision, or to prohibiting them from doing freelance work.

The problem, according to Guy Cavender, manager of the county’s “cost recovery project,” is that the sheriff’s extra-duty program – presumably the city’s, too, he said – isn’t covering expenses.

Cavender was hired away from the state auditor’s office last year to help the county do a better job of assigning and collecting indirect costs. That’s made him unpopular among department heads who must pay more for services provided by other departments, such as payroll processing.

Sheriff Ozzie Knezovich calls the new indirect-cost allocations an “internal tax” that’s “killing us.”

If the county can’t recoup all its costs in the extra-duty program, “we don’t need to be doing it,” County Commissioner Mark Richard said in June when Knezovich complained. “It’s a pretty cushy job … and you see a lot of officers out there taking advantage of it.”

The extra-duty program might be viewed as an accommodation to powerful unions whose members want to pad their incomes, but that “doesn’t come into the thought process at all,” according to Knezovich.

“The bottom line is you have more law enforcement on the streets and the taxpayer is not paying for it as long as we are recovering all of our (extra) costs,” Knezovich said in an interview.

City spokeswoman Marlene Feist agreed. She said an SPD detective hired by Gonzaga University, for example, was the first officer to arrive at a fatal domestic dispute on the edge of campus in December.

Gavin Cooley, Spokane’s chief financial officer, said the program promotes commerce by providing businesses a needed service.

“That’s what municipal government is supposed to do,” he said. “We’re supposed to serve commerce wherever we can at the appropriate cost, in this case break-even.”

Officers are subject to their ordinary chain of command while providing security for special events, malls, stores, restaurants, casinos, houses of worship and a host of other employers. If an emergency occurs, they can be called away from their private jobs.

Private work must be approved by police or sheriff’s supervisors to ensure appropriate staffing levels at job sites and to protect the departments’ reputations.

Spokane police policy prohibits work at establishments that primarily serve alcohol.

“We don’t want our officers to become de facto bouncers,” Feist said.

Lauri Lucas, a contractor who manages the extra-duty program, said sheriff’s deputies who frequently work at Hooters restaurant or city police who work at Big Daddy’s Casino typically stay out of bar areas. Most of their work is in the parking lots, she said.

Last year’s jobs generally appear to have been routine security work that could have been performed by private security guards, but commissioned officers provided more clout.

As Lucas put it, “People listen better.”

Sometimes, the public and free-enterprise security services overlap. Securitas Security Services was a major employer of Spokane police officers last year.

City and county officials set the rates and collect the payments, subject to Spokane Police Guild approval of wages. Officers are paid through the government payroll systems.

Cavender acknowledged the program has public value.

Still, he said the Sheriff’s Office should have charged clients an additional $16,061 in 2010 to cover services from other departments. Those indirect costs would have added almost 15 percent to the total.

“That sounds like a lot, but it’s really not,” Cavender said.

In comparison, he said Spokane recently billed the Sheriff’s Office a 42 percent overhead charge for records and property-room services. The charge was reduced to approximately 32 percent, Cavender said.

Both the city and county parts of the extra-duty program would generate more income except for decisions to charge private employers only for personnel expenses that go up because of the outside work.

The private employers pay for increases in Social Security and pension contributions, but don’t pay a share of fixed costs such as equipping officers and providing medical and dental benefits.

Cavender recommends charging clients a proportional share of all costs, not just those that rise, but said “that’s a managerial decision.”

He said private employers’ share of the sheriff’s fixed costs would have been $12,052 last year.

Collecting that money would have offset the $10,693 Cavender said the extra-duty program would have lost last year if other departments had been paid enough for their support.

The amounts are relatively small, but significant in a time when the Sheriff’s Office is having difficulty paying for ammunition.

City records show the Spokane police extra-duty operation would have lost $37,180 in the 10 years from 2001 through 2010 if fixed costs had been passed to employers.

However, the department gained $47,857 when medical, dental, life insurance, disability insurance and industrial insurance are removed from the calculation. On a similar basis – counting only wages and increases in Social Security and pension costs – the Sheriff’s Office gained $114,310.

In addition, the Sheriff’s Office received $29,692 in vehicle fees in 2001 through 2010. Spokane police car income wasn’t readily available.

Both the city and county had large year-to-year swings in profits and losses because of difficulty in assigning costs to short-term contracts.

SPD and sheriff’s officers are paid nearly identical wages for private, off-duty work, about $29 per hour for patrol officers depending on the job and as much as $50 an hour for law enforcement supervisors working on movie sets.

But the departments use different methods to recover other payroll costs. The Sheriff’s Office charges an additional $8.34 an hour for extra Social Security and pension contributions while the Police Department charges clients an extra 34 percent of officers’ pay.

The Sheriff’s Office hasn’t changed its extra-duty rate for several years, and Cavender thinks the profit-and-loss variations are too wide to ensure the program stays in the black.

“We need to make a little more timely adjustment,” he said.

Knezovich was poised in April to raise the county extra-duty fee 20 percent upon the recommendation of his finance director, Skip Chilberg.

Chilberg said in an interview that his recommendation reflected the amount Cavender at the time estimated was necessary to avoid a $22,000 budget shortfall.

Knezovich balked when Assistant Spokane Police Chief Jim Nicks declined on April 15 to follow suit.

Nicks didn’t respond to requests for comment.

A public records request revealed that Nicks discussed the extra-duty program with Assistant City Attorney Erin Jacobson and Risk Manager Pam Schroeder on May 3. City officials said state law allows them to keep the contents of the emails secret.

Knezovich said last week that he thinks an increase based on higher charges from other county departments isn’t warranted.

Cavender said the county Budget Office is imposing higher indirect-cost fees even though county commissioners haven’t yet approved the policy.

“You show me that we’re upside down and we’ll raise the (extra-duty) rates,” Knezovich said.

“But don’t tell me it’s upside down because we’re not doing our jobs. It’s upside down because (the Budget Office) hit us with a new fee.”