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A Crowe 1-iorwath. Mr. Steven Bocian Page 6 December 23, 2013 Salaries and Wages Union Labor At the time of our review PGS was updating its union agreements with Teamsters Local 70 applicable for the 2007 to 2017 contract period.4 This Teamsters Local 70 agreement covers the 22 PGS route drivers. PGS projected CY 2013 union wages by doubling the first three months(January to March, 2013)of actual union labor costs for the first half of the year, and applying a union labor index of 2.77 percent to this figure for the second half of the year.5 PGS union labor costs also reflect the addition of three(3)new drivers(for the commercial recycling program), including two drivers hired on August 1, 2012, and one driver hired April 15,2013. Non-Union Labor Non-union labor includes five(5)management,thirteen (13)administration(clerical), and thirty-three (33) transfer station workers. PGS projected 2013 non-union wages by doubling the actual first three months of data from CY 2013 for the first half of the year and applying half of an assumed annual CPI index of 3.00 percent to the second half of the year. PGS projected salary and wages in CY 2014 by applying the union labor index to prior year union expenses, and the CPI index to prior year non-union expenses. We accepted this methodology, but for 2013 and 2014 reduced the non-union labor escalation rate to 2.56 percent rather than 3.00 percent.We also found some minor differences in the calculations based on our application of the PGS projection methodology to the 1st quarter data provided by PGS. Impact(s): Decrease in salaries and wages expenses by$15,902 in CY 2013 and$54,600 in CY 2014. Dump/Tip/Diversion PGS projected disposal costs of$850,627 for CY 2013 and$876,146 for CY 2014. PGS calculated the CY 2013 estimate by doubling actual data from the first three months of CY 2013 to estimate disposal for the first half of the year, and then applying the 3.00 percent CPI to this first half figure to determine disposal costs for the second half of the year PGS projected CY 2014 disposal costs by applying the 3.00 percent CPI to the CY 2013 figure(an increase of$29,792). PGS assumed that refuse tonnage in CY 2013 and CY 2014 remained at CY 2012 levels.After reviewing January 2013 through June 2013 monthly invoices charged to PGS by Republic Services-Vasco Road Sanitary Landfill Co.,we project CY 2013 refuse tonnage to be approximately 3.25 percent below CY 2012 levels. Dumping costs are driven by projected refuse tons and a fixed tipping fee rate of$9.00 per ton.We projected tonnage for CY 2013 and CY 2014 to equal 69,812 as opposed to PGS's figure of 72,151.We reduced disposal by 2,339 tons at$9.00 per ton ($21,054)for CY 2013.We also did not allow a CPI escalation on tonnage for CY 2014. 4 PGS's Teamsters Local 70 union agreement is tied to terms of the Waste Management Teamsters Local 70 agreement.The agreement was unsigned as of this writing,and the plan was for the agreement to be finalized later this month. 5 Union wage rates are adjusted July 1 of each year.