Confusion At City Hall

Posted by jsaino on Sep 10, 2014

September 8, 2014

Confusion At City Hall

 

It was interesting to watch the confusion at the committee discussions Tuesday (a week ago)  about the budget. The following was in the budget document.

 

The proposed FY 2015 Operating Budget includes an increase of approximately $15 million to help fund our pension system. Combined with a FY14 contribution of $20 million, pension payments will be approximately $35 million. Since 2008, financial constraints have prevented us from paying the full Actuarially Required Contribution (ARC) needed to maintain solvency long-term. The current ARC is approximately $95 million.

 

Under newly enacted Tennessee law, the City will be required to ramp up our annual contributions until we reach 100%, no later than 2020.

 

The FY 2015 Operating Budget includes fundamental changes to medical benefits provided to current and former employees. First, the FY 2015 Budget assumes that the city will no longer pay 70% of the health care premium of retired, Medicare-eligible employees, their spouses and dependents. These retirees will have options: remain on the City’s plan; join plans offered by either their current employers or their spouses’ employers; purchase Medicare supplement plans; or join the new Affordable Care Act’s health insurance exchanges or private exchanges. This change will save approximately $27 million in FY 2015. Also, it will be the first step toward eliminating the $1.3 billion unfunded OPEB (Other Post Employee Benefits Programs) liability. Second, the Budget assumes that we implement long overdue changes to the base health plan that will result in an additional $4 million savings in FY 2015.

 

The City Council and the Administration are looking for ways to save money to increase the pension fund contribution. The easy target was the health insurance costs for active employees and retirees. However the real problem is the pension structure itself. We have too many retirees  from the City when compared to the County. The ratio of retirees to active employees at the City of Memphis is 79 per 100 versus 57 per 100 at the County. This of course means more retirees on the City health care plan. Then consider that the average City pension is $31,000 versus $19,000 at the County. Also the average health care cost for retirees at the City is $10,900 versus $7,100 at the county. The whole pension fund at the City needs an independent study to determine why more people proportionally are retired at the City than the County. This and the past refusal to take needed reforms is the root cause of the current problem.

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Return On Investment

Posted by jsaino on Sep 01, 2014

September 2, 2014

 

Return On Investment

The City of Memphis pension board voted to change their investment strategy to raise their return on investment. I hope they are successful but they are taking a chance like the gambler at Tunica on the crap table. Seven come Eleven.

Look at this Asset Class Return Chart. These sectors rotate from very good to average to bad to very bad. Anyone that says they know what the future will be, will be very rich or very poor if they are risking their money. If they are risking someone else’s money, they will be very sorry but well paid for their advice.

Now here is what I would like to see. What is the return on the investment for the $43 million dollar development known as the Beale Street Landing? I went there a few days ago and below are some pictures. I would like to see a financial report on the return on investment for this structure. This is not like spending money for roads, sewer lines, parks, street lights, public safety and criminal justice. We must have that for a civilized society. CIMG1891But the Beale Street Landing must produce a return on the investment. Give us a report on RETURN ON INVESTMENT and a reason to continue to hire the high priced staff that brought us this investment. Here are some shots from our $43 million dollar investment. Parking $5.00 minimum, $15.00 maximum. Nice restaurant and bar with average lunch prices but they cannot get a professional restaurateur to operate it so they are running it themselves.  Hours, 9 AM to 4:30 PM Monday through Thursday, 9 to 7:30 on Friday, 11 to 7:30 on Saturday and 11 to 5 on Sunday. Where is the romantic nighttime supper watching the boats on the mighty Mississippi?

 

 

CIMG1880

 

 

CIMG1888

 

 

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Talent Rank Of Memphis

Posted by jsaino on Aug 25, 2014

August 25, 2014

Recently I was scrolling around the City of Memphis website and I clicked on the office of talent and human capital and this is what I found.

From the City of Memphis Website

From the City of Memphis Website

 

I congratulate the Mayor for printing this information and pointing out that we have a long way to go. In looking at the chart, we are 47th out of 51 for people 25 and older who have completed a four year college degree. If you restrict that to 25 to 34 years old, we move from 47th to 46th. We are 51st out of 51 for mathematicians and scientists etc. We are 45th out of 51 as a percentage of metropolitan workers that have a college degree and are employed in private sector businesses but excluding health care and education. Lastly we are 43rd out of 51 as a percentage of metropolitan population 25 and older that have completed a four year college degree and were born outside the United States.

This last number is interesting as Memphis is at 7.7% and the leading city is at 49.6%. I would take a guess that the leading cities are places like San Francisco, San Jose, Dallas or Boston.

The person in charge of the office of talent and human capital is Douglas Scarboro and in a recent news article it was stated the following.

“In March 2010, Wharton hired Douglas Scarboro to serve as the head of the city’s new Office of Talent and Human Capital, designed to attract talented workers. After a staffer said Scarboro’s initial salary of $125,000 a year would be funded by a local nonprofit group, Wharton issued a public apology and said the city was funding the position.”

If Mr. Scarboro can bring these numbers up he is certainly earning his salary. What do you think?

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Property Developer With Other People’s Money

Posted by jsaino on Aug 18, 2014

August 18, 2014

Property Developer With Other People’s Money

A recent CA article stated the following “After a delay of several months, Robert Lipscomb said recently that his team is ready to move forward with a long-standing plan to redevelop the Mid-South Fairgrounds into a sports complex and retail center.”

What a remarkable statement. Most professional property developers risk their own money or gather together other investors based on their good track record. However Mr. Lipscomb uses government programs such as TDZs (Tourist Development Zones), TIFs (Tax Incremental Financing) and various State and Federal programs paid for by the general taxpayers. Bonds are issued with the promise of payment from a fund of incremental taxes over and above a predevelopment base tax rate. If the incremental taxes are there to pay off the bonds then everything works out fine. If they are not there, then the local taxpayers pick up the load.

My question is who appointed Robert Lipscomb as chief Memphis property developer? If the City of Memphis is his property development company, then we need to study the financial records of his company. The State of Tennessee through the office of
Continue reading the full article…

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A Smoking Gun

Posted by jsaino on Aug 04, 2014

August 4, 2014

A Smoking Gun

I have a reluctance to throw out old files that I have from 2001. So I decided to start cleaning out and throwing away old files. The first one I came across was an open records reply from 2007. It was a Mercer Health and Benefits report dated July 24, 2006. The title was “City of Memphis Retiree Medical Landscape 2006 and Beyond”.

Take a look at this report. It was a warning of what was coming from GASB (Government Accounting Standards Board 43 and 45) concerning OPEB reporting, Medicare Coordination, Service Based Contributions and Future Hires.

Why was this report Important?

  • It will be a required part of the annual audit statement
  • This will impact bond rating
  • Unfunded liability is potentially 50 times current retiree health-claim cash flow

The report recommended plan changes such as

  • Coordination of benefits on medical and surgical coverage with Medicare (Parts A & B) for all post 65 retirees.
  • Adopting an age and service based contribution rate structure.
  • Plan design changes to the retiree medical plan that will reduce costs to some reasonable level and help manage the liability.
  • Medicare coordination will mean the City of Memphis will provide coverage for post-65 retirees only on a secondary basis and all post 65 retirees will be required to buy Medicare coverage.
  • The City of Memphis will adopt separate rates for pre-65 and post-65 retirees.
  • Retirees will contribute different amounts depending upon their length of service in active employment.

Is it any surprise that the City of Memphis ignored these recommendations and the County took the warnings to heart and adopted a similar recommended plan? This lack of action by the City in 2006 explains the current crisis we have at the City of Memphis.

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Work Time Versus Time Off

Posted by jsaino on Jul 30, 2014

July 30, 2014

 

Work Time Versus Time Off

 

The CA has been on the case of certain judges concerning the amount of time they are working versus their time off. While this criticism seems to be justified it also applies to the City of Memphis, Shelby County and most other public employees.

First look at the salaries of the various officials we are currently voting on.

MAYOR

$142,500

ASSESSOR

$108,617

REGISTER

$107,975

TRUSTEE

$107,975

COUNTY CLERK

$107,975

CHANCERY COURT CLK

$117,453

CIRCUIT COURT CLERK

$117,453

CRIMINAL COURT CLERK

$117,453

GENERAL SESSIONS COURT CLERK

$117,453

JUVENILE COURT CLERK

$117,453

PROBATE COURT CLERK

$117,453

JUDGES

$167,686

 

I am conflicted in my opinion about judges. I am very much in favor of term limits. I think the people should elect the judges but it
Continue reading the full article…

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An Important Election

Posted by jsaino on Jul 24, 2014

July 18, 2014

 

There is a very important election coming up. Early voting starts today (only

downtown at the election commission). General early voting starts Monday July

21st and early voting ends Saturday August 2nd. The last voting day is Thursday

August 7th but only at your normal local voting site.

 

The ballot is huge. I have attached the ballot with my selections. I want you to

make your own choices but I want you to get out and vote.

 

I have been working with Eve and Eddie Settles and they have done a wonderful

job in researching the candidates. Be sure to go to www.backinrivercity.com and

read about the research they have done.

 

You will have to declare that you want to vote in the democrat or republican

primary. This is for the Governor, United States Senate, United States House of

Representatives, the Tennessee Senate, the Tennessee House of Representatives,

and the State Democrat or Republican executive committee people. This party

declaration will not prevent you from voting on the rest of the ballot which is

 

The final page of the ballot is interesting. It is to vote to Retain or Replace the

Tennessee Supreme Court judges (3 ea.), Court of Appeals Judges (10 ea.) and

Court of Criminal Appeals judges (10 ea.).

 

The Tennessee legislature voted recently to let the Judicial Nominating

Commission to expire and in November 2014 we will vote whether to adopt a

constitutional amendment for Tennessee, a system like the one set forth in the US

Constitution. I believe that an 8 year term is sufficient and should be at the end of

a distinguished legal career or the justice should go back to his legal practice to

earn his living, not be a career justice. Therefore I support the REPLACE vote.

I will be glad to answer any questions. 7540699

Joe Saino

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An Important Election Is Going On

Posted by jsaino on Jul 24, 2014

July 24, 2014

 

There is a very important election going on. Early voting is going on. General early voting started Monday July 21st and early voting ends Saturday August 2nd. The last voting day is Thursday August 7th but only at your normal local voting site.

The ballot is huge. I have attached the ballot with my selections. I want you to make your own choices but I want you to get out and vote.

 

I have been working with Eve and Eddie Settles and they have done a wonderful job in researching the candidates. Be sure to go to www.backinriversity.com and read about the research they have done.

 

You will have to declare that you want to vote in the democrat or republican primary. This is for the Governor, United States Senate, United States House of Representatives, the Tennessee Senate, the Tennessee House of Representatives, and the State Democrat or Republican executive committee people. This party declaration will not prevent you from voting on the rest of the ballot which is open.

 

The final page of the ballot is interesting. It is to vote to Retain or Replace the Tennessee Supreme Court judges (3 ea.), Court of Appeals Judges (10 ea.) and Court of Criminal Appeals judges (10 ea.).

 

The Tennessee legislature voted recently to let the Judicial Nominating Commission to expire and in November 2014 we will vote whether to adopt a constitutional amendment for Tennessee, a system like the one set forth in the US Constitution. I believe that an 8 year term is sufficient and should be at the end of a distinguished legal career or the justice should go back to his legal practice to earn his living, not be a career justice. Therefore I support the REPLACE vote.

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On The Back of Taxpayers

Posted by jsaino on Jul 24, 2014

July 24, 2014

On The Back of Taxpayers

We hear the constant slogan, “Don’t balance the budget on the backs of
current employees and retirees”. In past years there was a used car lot on
Lamar with the sign saying “We Tote The Note”. As taxpayers, we have
been toting the note for years. Look at the facts.

The annual cost per retiree at the City of Memphis is $32,518 versus
$19,218 at the County.
The unfunded pension liability at the City of Memphis is $709 million versus
$161 million at the County.

The ratio of retirees to active employees at the City of Memphis is 79
per 100 versus 57 per 100 at the County.

In 2012, I calculated the cost of retiree health care cost per retiree
paid by the taxpayers. For Memphis it was $8533, for MLGW it was $7440
and for Shelby County it was $5605.

The inescapable conclusion is that City of Memphis has had a loose

Continue reading the full article…

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$568 Million New Tax Revenue

Posted by jsaino on Jul 21, 2014

July 21, 2014

 

$568 Million New Tax Revenue

 

Pilots (Payments In Lieu Of Taxes) are front and center in the current controversy about bringing our City finances under control. I went to the EDGE website (Economic Development Growth Engine). It is beautiful. On the lead page is the following information.

$568 Million in new tax revenue

Well the problem is solved. With $568 million in new tax revenue why are we cutting health care benefits for City retirees and raising health care costs for active employees? Why are we discussing changing the pension plan at the City of Memphis?

 

The reason is that it is all smoke and mirrors. If you go to the City of Memphis CAFRs (Comprehensive Annual Financial Reports) and the same for the County you will see that sales tax receipts have been level at best and decreasing over the last few years.

 

The Pilot program is a crutch used by local developers and real estate interests to give us something to attract new companies to Memphis and to keep local companies from leaving. Memphis has many assets to recommend it. Location, water, transportation and utilities. However it has two deficits. A high tax rate and poor education of the local work force.

The real report that EDGE should produce is a report that shows all companies that have come off the PILOT program at the end of their tax abatement. The report should show the amount of taxes abated over the length of the pilot program, the ending date and the amount of taxes paid after the end of the abatement period. This they have refused to do. Until they do that and show us where the $568 million is, I will continue asking the question   WHERE IS THE BEEF?

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