Archive for September, 2010

City of Memphis Legal Bills

Wednesday, September 29th, 2010

I have been investigating the City Attorney’s office and the increase in legal costs over the past few years. The budget for the City Attorney’s office, 2005 was $5.7 million and $15 million in 2010. A 263% increase. I am (more…)

Florida School Improvement Zone Repeats Itself Here In Memphis

Monday, September 27th, 2010

We have all been reading about the plans of the Memphis City Schools to spend this waterfall of money from the Feds, from Bill and Melinda Gates Foundation and from RACE TO THE TOP funds in an intervention plan to improve performance in certain underachieving schools here in Memphis. (more…)

Pension Costs, Who Pays and Who Benefits?

Monday, September 20th, 2010

I have been doing a lot of study and research on pension plans, costs, benefits and who pays.

There can be no doubt that the taxpayers pay most of the pension costs but I was surprised in the difference in the costs to the public servants. I am compiling information from across the state but just look at the five biggest local systems. They are the City of Memphis, Shelby County, MLGW, Memphis City Schools and Shelby County Schools.

I have listed in the spreadsheet below the monthly pension that a public servant making $60,000 and $100,000 average salary would receive under the various pension systems. Look at the employee contribution and the employer contribution and the total pension contribution.

political unit monthly pension for retiree 25 years, $60,000 salary average monthly pension for retiree 25 years, $100,000 salary average suggested employer contribution july 1, 2009 employer contribution % of covered payroll employee contribution total pension contribution social security
memphis $3,125.00 $5,208.33 $47,631,000.00 16.1% 5% 21.1% no
shelby cty $2,937.50 $4,895.83 $15,261,041.00 6.9% 6% 12.9% no
mlgw $3,125.00 $5,208.33 $22,400,925.00 14.87% 8% 22.87% no
mcs $3,147.00 $5,285.00 ? 15.3% 11.2% 26.5% yes
SCS $3,147.00 $5,285.00 ? 15.3% 11.2% 26.5% yes

 

? I have asked for these numbers but have not received them yet. They would be 26.5% of the applicable salaries.

 You will see that the monthly pensions are all pretty close to each other but look at the employees’ contributions and the employers’ contributions. I believe that Shelby County’s is low because they have done a better job of funding past obligations whereas the City of Memphis has been reluctant to fund their actuarial required contributions. If you take into account the unfunded OPEB liability of the City of Memphis ($934 million) versus Shelby County ($257 million) on basically the same number of employees, you must conclude that Shelby County has done a far superior job of management (to the tune of $677 million) than Memphis. Then consider that Memphis has 648 retirees on disability and 76% of these are line of duty disabilities and Shelby County has 254 disabled retirees and only 33 (13%) are line of duty disabilities). The difference: Shelby County turned over the disability determination to an insurance company and Memphis turned their determination over to an insider pension board loaded with friends of the retirees. Clearly this disability situation at the City of Memphis needs to be reformed.

I do not claim to be a pension expert but something is not right here. Although Shelby County has done a far superior job in management of these high costs, the coming increases in Shelby County pension costs are shown in the attached chart of projected future increases with and without reform.  

We need to reform our local pension systems away from a defined benefit plan to a hybrid plan (social security level benefits plus a 401K type plan) or a defined contribution plan like most of the taxpayers paying for these public plan have. Equity and fiscal sanity demands it.

Further Details About City Attorney Office

Monday, September 13th, 2010

Ms. Jill Madajczyk, senior assistant city attorney, law division, took over the additional duty of open record coordinator from Bridgett Handy-Clay after Bridgett was fired. I went down and met Jill and found her to be very cooperative, competent, pleasant but overworked due to her having a (more…)

Backdoor Taxes

Tuesday, September 7th, 2010

I just paid my City of Memphis property tax bill and as usual I waited until the last minutes to drop it into the post box. Also as usual I was and still am in a bad mood.

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How to Pay $57 million to MCS

Wednesday, September 1st, 2010

Looking back over the Herenton administration, particularly since 2003, the previous Mayor and the current majority of the City Council saved or created 1157 public sector jobs.  And they did this when the population of Memphis went down 12%. Does that sound familiar?

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