Archive for the ‘OPEB’ Category

Amazon and Nashville/Memphis

Monday, November 19th, 2018

Now that the election is over, let us get back to important things like comparing Memphis/Shelby County to Nashville/Davidson County.

We have the news that Nashville is getting a piece of the Amazon pie, 5000 high paying jobs. It comes at a high taxpayer price but is probably worth it. Why Nashville and not Memphis?

Comparing Nashville to Memphis has been a project for me for some time. It is not easy to go through all the published financial data and come up with understandable comparison data. However, let us start with a few facts.

Population: Shelby County: 936,961, Davidson County: 691,243

Population of the core city: Memphis 653,236, Nashville 444,297

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Area: Shelby County: 755 sq. miles, Davidson County: 525 sq. miles

Area of the core city: Memphis, 324 sq. miles, Urban Nashville, 198 sq. miles, general service area 327 sq. miles for a total of 525 square miles.

Conclusion: population density of core city Memphis 2016/sq. mile

Population of core city Nashville 2243/sq. mile

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Property tax revenue: Memphis $458,671,000, Shelby County $793,849,000 for a total of $1,252,520,000 or 1.25 billion.

Property taxes, Nashville Metro, $971,643,000.

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Budget of Memphis and Shelby County $1.88 billion.

Budget of Metro Nashville $2.23 billion.

Budget expenditures per resident Memphis and Shelby County $2006

Budget expenditure per resident of Metro Davidson $3226

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Debt service as a % of operating expenditures

Metro Nashville                  9%

Memphis                               20%

Shelby County                     21.45%

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Memphis pension liability 2018- $2.68 billion 89.6% funding ratio

Shelby County pension liability 2017- $1.2 billion 71% funding ratio

Nashville Metro pension liability 2017- 3.08 billion 95.4% funded

 

Memphis OPEB liability 2018 $334 million, 0.8% funded

Shelby County OPEB liability 2017 $232 million 83.3% funded

Nashville Metro OPEB liability $2.33 billion, zero % funded

Typical Winter utility bill

Memphis- $244.10

Nashville- $375.65

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The Statement of Net Position presents information on all the Government’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Government is improving or deteriorating.

 

Metro Nashville net position decreased by $266 million for the year ending 2017.

Memphis net position decreases by $58 million for the year ending 2017.

Shelby County net position increased by $86 million for the year ending 2017

 

If you have additional financial comparison information or disagree with any of the above information, please let me know.

 

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I think Memphis is a great city, beautiful trees, weather is consistently great, wonderful  people and compared to Nashville, a low cost of living. What is the difference?

 

EDUCATION AND TRAINED WORK FORCE.

 

We are told that these 5000 jobs Amazon will bring to Nashville have an average salary of $150,000/year. These are jobs that require high tech skills in management, engineering, computer science and programming. It is a pleasure to go to the Amazon website as its ease of use is outstanding and much better than its competitors.

 

However, Amazon’s main business is selling things made by others and getting those things to you fast and at a low cost.

 

Memphis needs to compete in the area of technical job training and skills that are needed in the next few years in manufacturing, health care, auto and aircraft maintenance, warehousing and transportation. Our new governor has promised to continue free junior college training (Tennessee Promise) and hopefully he will allow qualified non-profits like our local Moore Tech College to participate in the Tennessee Promise program.

 

Our local shortage of trained people needed by companies like Amazon will not be solved in a few years but while we upgrade our primary grade education, we need to emphasize trade school education to upgrade our local working wage level and reduce our comparative high poverty level.

 

I would appreciate your thoughts on what we can do to help Memphis to reach the next level of prosperity. Memphis is great, but we can make it grow and prosper with the right education policies. EDUCATION IS THE ANSWER.

 

 

 

 

 

NO-YES-YES

Tuesday, September 18th, 2018

 

September 18, 2018

 

NO-YES-YES

 

There are three interesting proposals at the end of the upcoming November 6th ballot here in Memphis.

These three are very interesting and particularly difficult to understand but I will try to explain them to the best of my ability and research.

 

City of Memphis Ordinance #5676 Vote yes or NO

Shall the Charter of the City of Memphis, Tennessee be amended to provide no person shall be eligible to hold or to be elected to the office of Mayor or Memphis City Council if any such person has served at any time more than three (3) consecutive four-year terms, except that service by persons elected or appointed to fill an unexpired four-year term shall not be counted as full four-year term? Vote NO

 

 

This is an attempt by the political class to undue the terms limits put on the City of Memphis by voters. You can see what happens when politicians get too many terms in office. Look at the 2001 pension resolution by the City of Memphis when they approved elected and appointed officials to get immediate pensions after 12 years of service regardless of age. This cost the city of Memphis millions until finally rescinded. More recently the Shelby County Commission tried a similar plan which was vetoed by the outgoing County Mayor and may come up again with the new County Commission and new County Mayor. VOTE NO!

 

City of Memphis Ordinance #5677 Vote YES  or no

 

Shall the Charter of the City of Memphis, Tennessee be amended to repeal Instatnt Runoff Voting and to restore the election procedure existing prior to the 2008 Amendment for all City offices, and expressly retaining the 1991 federal ruling for persons elected to the Memphis City Council single districts?

 

Instant runoff voting is a very bad idea and it is being sold to save money by not having a run off election. Nationwide it has proved to not work and to cause confusion with the electorate. More importantly it does not necessarily lead to a candidate winning with a majority as is required in the single member districts of the City Council. A good example is the 2015 election to the City Council. City council races for Districts 2, 3, 4, 5 and 7 required runoff elections on November 19, 2015, with no candidates receiving majorities of the general election vote. A particularly bad example was the race eventually won by Worth Morgan.  There were 4 candidates in the first round that won 90% of the votes. In the runoff between Morgan and Springer, Morgan won by only 136 votes. If we had had instant runoff voting it is probable someone else would have won and that person would have won without a majority of voters thus violating the 1991 federal ruling. 2nd and 3rd choices do not count as a majority decision and you end up with a winning plurality candidate. Only a one on one runoff election insures a majority winner. VOTE YES!

 

City of Memphis Ordinance #5677 Vote yes or NO

Shall the Charter of the City of Memphis, Tennessee be amended to provide that in any municipal election held as required by law, the candidate receiving the largest number of votes shall be declared the winner, thereby eliminating run-off elections?

 

This is an attempt to change from a majority vote system to a plurality vote system. The County uses a plurality system for their 13 seats on the County Commission as to the 6 City Council members in the super districts. These runoff elections which happen only in the 7 City Council single member districts were caused by a 1991 court ruling should be reversed as circumstances and population has changed. VoteYES and pending the court ruling there will no longer be a need for runoff elections.

The New Shelby County Government Is Looking Like the Old City Government

Tuesday, September 4th, 2018

September 4, 2018

The New Shelby County Government Is Looking Like the Old City Government

 

The new Shelby County government is just beginning and we all wish them well. We all want and need low cost and efficient government to furnish fire and police services, bring us our utilities, repair our roads, run our legal system, furnish medical services and educate our children.

 

Shelby County government has been well run for many years as compared to the City of Memphis. Let me give you several examples.

 

In 2007 the Governmental Accounting Standards Board issued GASB 45 which required that other post-employment benefits (OPEB) must be recognized as the benefits earned rather than as they are paid. The county in 2008 made certain positive changes as shown on the attached document. The City of Memphis did nothing until 2017 when they made changes to the benefit plan. The County OPEB unfunded liability went from $319 million in 2008 to $46 million today. The City of Memphis did nothing until 2017 when the benefit changes brought the unfunded liability from $857 million to $417 million, due to plan benefit changes.

 

The City of Memphis pension board regularly approves line of duty liability at 10 times the rate per employee as the County and the MLGW. This has led to an annual cost for LOD disability for the city of Memphis of some $17 million dollars per year, 10 times that of the County and the MLGW. The problem is the makeup of the pension board membership that grants these LOD disability pensions.

 

And finally, the new County pension scam allowing benefits for life with 12 years of service looks much like the January 2001 pension scam of the City of Memphis. That disastrous action allowed elected and appointed employees with 12 years of service to receive their lifetime pensions immediately.

 

It is noteworthy that the new county resolution passed with an 8-2 majority. Commissioner Walter Bailey sponsored the resolution saying that “since elected officials with term limits shouldn’t be penalized for their public service”. Commissioner Walter Bailey was term limited after his first two 4 year terms and then reelected later after laying out for a term for another term.

 

Now some politicians want to do away with term limits. The above scams only make me want to tighten terms limits so that term limited politicians do not twist the rules to feather their nests. We need term limits pension scam rules not only locally but also for the US House of Representatives and for the US Congress.

 

What are your thoughts?

There Is No 4 Or 8 Year Solution To Poverty

Monday, August 20th, 2018

Lee Harris will become the new Shelby County mayor on September 3rd of this year. In a recent article in the CA he stated that he would use the borrowing power of the state’s most populous county to spur regrowth in old Memphis neighborhoods and ease poverty. A graduate of Yale law school, he wants blight and poverty eased, and favors building four or five public schools (each costing $100 million) in humble neighborhoods.

 

He states that better schools would help children climb out of poverty. Improved education and could draw new residents in waves. They’d repair blighted houses to live near the schools, bring new life to entire neighborhoods. He’d have the county borrow the school construction money.

 

I have several thoughts about his vision.

 

  • A fancy $100 million-dollar school building does not guarantee a great educational institution. It is the eager to learn students and great teachers that make a great learning place.
  • How do you pay for $500 million dollars in bonds for education services without raising property taxes or cutting other county obligations such a health services, law and fire services, pension and OPEB obligations?

 

These short-sighted political solutions to a long-term problem is typical of many politicians. The real problem of poverty lies in a lack of education in the population that Mr. Harris wants to help but his solution will not work and could be counterproductive. Poor education is a generational problem caused by the destruction of the family and children growing up without the support of two parents who demand that their children learn principally at home and also in school. A demand for learning at home and for discipline is what is missing and fancy schools will not help.

What is your opinion of Mr. Harris’s plan to end poverty?

ELECTIONS ARE COMING

Wednesday, July 11th, 2018

Elections Are Coming

 

July 11, 2018

 

There is an important election coming up on August 2, 2018. Let us look at some of the important elections.

A new Tennessee Governor will be elected as our current governor is term limited. You will be asked to choose whether to vote in the Republican or Democratic primary. I am voting in the Republican primary. For me it comes down to Diane Black or Randy Boyd. I met Ms. Black recently and was impressed. Mr. Boyd has the support of Mike Huckabee. Take your pick but I am voting for Ms. Black.

Another important election is the United States Senate because of the retirement of our current senator, Bob Corker. I am voting for Marsha Blackburn. She will have a tough fight in November against Phil Bredesen, the Democrat.

The most important local election is the County Mayoral election. Shelby County has been well run under Mayor Luttrell and David Lenoir is the best candidate and I will be voting for him.

Another important election is the District 8 United States House of Representatives between the current representative, David Kustoff, and George Flinn. I know and like George and while he has a high hill to climb I would vote for him, but I am not in his district. In my district I am voting for Charlotte Bergmann.

I am in Tennessee Senate District 31 and will be voting for Brian Kelsey.

I am in Tennessee House of Representative District 93 and there is no Republican running, so I will not be voting on this district.  I used to vote in District 83 and if I was still there I would vote for Mark White.

Another important election is the Shelby County Commissioners. I am voting in District 7 and will vote for Samuel D. Goff. I recommend the republican candidates where they are running.

I have listed a complete ballot with my choices listed in red. Vote your convictions but please vote.

Why Can’t The Public See Public Bids And Price differentials?

Tuesday, April 10th, 2018

April 10, 2018

 

Why Can’t The Public See Public Bids And Price differentials?

 

Bids for items purchased by public entities should be open and public information. Organizations such as the City of Memphis, Shelby County, MLGW and others paid for by local, state or federal tax money should have transparency on their bids.

However, this is not the case. Here are some local examples.

If you go to the City of Memphis website (www.memphistn.gov) and click on Business and then on RFPS and RFQS (request for proposals and request for quotations) and click on current solicitations you will see a table of upcoming quotations.

However In regards to the posting of Bid Awards online, the City currently does not post these online, but plans are in motion to soon place online links to reports detailing all bid awards for a given time frame plus the awarded vendor name, amount, description of the bid and Division name.  (attached are two examples of this report—one for 2017 and one for 2018 YTD).  However, there is no report available that includes the above information along with details on the losing bidders. Info on losing bidders would have to be obtained via the Open Records Request system on an individual bid basis or by reviewing the contract documents for each awarded contract.

If you look at the above two lists (one for 2017 and on for 2018, you will see the types of items purchased by the City of Memphis and the amounts spent. There are huge amounts of pubic money being spent.

The tax paying public is entitled to know how this money is being spent, who is getting this business, how much higher the other bidders quoted and if the lowest bidder was not awarded the contract, why not.

The rules and regulations for being able to bid on this public business are very complex and discouraging for private businesses to jump though all the hoops. I know several local business who add 10% plus whenever bidding on public buxiness due tothe paperwork.

I asked Shelby County for similar information on purchasing and their reply was as follows.

In response to your inquiry, the County does not publish the information on our website. There is no intentional exclusion of the public’s right to see the information but rather there has never been a demand for the information.  Another problem we have is that we do not have a sophisticated system to process purchasing and contracts information.  We are in the process of obtaining a modern system that will facilitate providing the information in question.

 

Occasionally we will have a request for the information you are citing but it is usually from an unsuccessful bidder or sometimes from a company interested in bidding on a certain service or commodity.  Is there anything in particular that you would like to see?

 

To date I have not gotten any response from the MLGW concerning the question of purchasing transparency.

Now here is the problem with all local public purchasing.

A local news report stated the following. “Shelby County commissioners approved a moratorium Monday, April 2, on all county contracts and budget amendments worth more than $50,000 through the end of August.

The 10-3 commission vote follows concerns some commissioners expressed last week in committee sessions about a multi-year contract worth $20 million for medical services to county corrections center inmates.

The contract is specifically exempted from the county’s ordinance setting percentage goals in awarding county government contracts to minority-owned businesses.”

Now I have no objection to seeing minority-owned businesses getting a leg up in establishing an efficient and competitive private business. If they need a price differential for several years in order to get up and running so be it. But the public should know what it is costing the taxpayers and it is obvious we do not know the extent of this public cost. Let us put it out there so we know what it is costing. What is your opinion?

What Pubic Retiree Healthcare Costs You As A Taxpayer

Tuesday, January 16th, 2018

What Pubic Retiree Healthcare Costs You As A Taxpayer

 

January 16, 2018

 

Years ago, I started investigating healthcare costs for active employees and retirees at the MLGW, the City of Memphis, Shelby County and the school system. At that point (before 2007) there was no requirement that the unfunded liability of medical and other costs for retirees be put on the financial statements of the various local governmental units. I started checking on the unfunded liability which was called OPEB. (Other Post Employment Benefits, mainly health care costs and life insurance).

I was shocked by the amount of unfunded liability. Look at the history of this huge unfunded liability over a certain time period.

OPEB History- unfunded liability

MLGW 2007            658 million

MLGW           2015              461 million   down 30% from 2007

 

City of Memphis 2008                  857 million

City of Memphis 2015                  730 million

City of Memphis 2017                  504 million  down 58% from 2008

 

Old Memphis School System 2008                   1.34 billion

Current Shelby County School System 2016  1.25 billion   down 9% from 2008

 

Shelby County Government 2007                     319 million

Shelby County Government 2016                     101 million   down 69% from 2007

It is obvious that this is still a large problem. But as usual, our Shelby County government recognized the problem early (in 2007 when notified by GASB) and acted. The City of Memphis was slow in acting but eventually addressed the problem. The Memphis school  system as usual has stuck its head in the sand and is hoping for a government bailout. The MLGW is well healed and is slowly addressing the problem.

The next question that occurred to me was “What is the cost to the taxpayers for the portion of annual health care premiums for retirees paid by taxpayers?” I asked for and received the following answers.

MLGW           2528 retirees’ cost/retiree paid by rate payers            $11,733/year

City of Memphis 1524 retirees’  cost/retiree paid by taxpayers            $6466/year

Shelby County   1941 retirees’   cost/retiree paid by taxpayers            $4658/year

 

It is obvious that the MLGW is different and that Shelby County Government is more efficient. In my next posting I will take up the cost to public employees (active and retired) for their annual health care premiums so that you can compare your cost to what public employees pay and look at the annual cost rise since the affordable care act came into our lives.

MLGW Rate Increases

Wednesday, December 13th, 2017

MLGW Rate Increases

 

MLGW has proposed rate increases in gas, electric and water rates over the next few years. MLGW management says that part of the need for increases are related to decreasing sales in product. Well I decided to review the latest annual report available (the year ending December 31st, 2016).

 

The City Charter designates the disposition of revenue from MLGW three divisions, light, gas and water. MLGW is not a profit-making organization but it is required to breakeven and pay it debts and keep a reserve to cover its debts and emergencies with a proper margin. It also pays to the City of Memphis a payment like a for profit business would pay.

 

I have looked at the statements of the three divisions for the year ended 12/31/16 and the electric division lost $12 million dollars after paying $40 million to the City of Memphis. The Gas Division lost $14 million after paying $17.5 million to the City of Memphis. The water division made $9.8 million after paying $4.4 million to the City of Memphis. It is not clear if this includes the 2 million payment for the FedEx arena.

 

It seems clear to me that the MLGW needs a price increase to keep its financial situation secure. It is a well-run organization with well trained employees and with advanced technical knowledge.

 

Now I want to point out that MLGW employees have a much richer health care benefits then the City of Memphis and Shelby County employees. I am gathering current information of these benefits and will be publishing information as soon as I obtain the data.

 

People are becoming energy savers and the combination of advanced energy saving appliances like light bulbs and AC/heating units and smart meters are saving energy and this is a good thing for the ecology. Again this is a well run organization with competitive rates and I hope that whomever replaces Jerry Collins will be as able as he has been.

The Local Charter School Fight

Wednesday, July 5th, 2017

Our Shelby County School Board has an aggressive legal bent. They seem ready to sue at any hint of competition from the charter school community or push back from taxpayers. Already they have spent over $340,000 on a lawsuit against the state of Tennessee claiming that education in Tennessee is underfunded and not adequate as required by the Tennessee Constitution. They want the school boards in Tennessee to set an adequate tax rate for education separate from the elected local politicians.

 

Now they are proposing a resolution from general counsel Rodney Moore to “research and pursue any and all appropriate legal and judicial remedies including but not limited to legal action” to stop the Achievement School District from operating grades it wasn’t authorized to operate.

 

The problem here is that the majority of the Shelby County School Board does not want competition from any charter schools or any state imposed Achievement School District schools. They think that they know best and they should not have any competition from other education ideas or other means or educating our children.

 

The old Memphis School Board and the successor Shelby County School Board has a record of failure and cannot point to much success. The old centrally controlled model does not work. Competition schools that are measured against the centrally controlled schools are the answer. Let the best results win.

 

The real prize is the tax money spent on education. Now we have a central bureaucracy which last year spent $11,231 per student. The 45 charter schools got only 70% of that piece of the pie at $7826 per student. A large part of the difference is the bureaucracy and the teachers union. Here is a current copy of the teachers/helpers contract. When you read the contract you will see that the salary schedule Appendix A was left blank. I have asked again for this information but have received no answer yet. Here is the salary schedule from a previous contract. Also here is a comparison article on management salaries between the old Memphis City School administration and the old better run Shelby County School System. The new Shelby County School System needs competition and needs to be leaner and learn to do with less.

 

The charter and alternate schools make their own deals with teachers but the teachers have to meet state teacher licensing requirements. They have more freedom to experiment with new ideas for education. Each year all schools should be tested in a rigorous method that can be checked for cheating and let the results speak for themselves. Stop the lawsuits and let us have education competition so that parents can have a choice.

The Memphis Police Situation

Tuesday, February 28th, 2017

I read Mayor Strickland’s weekly update (https://mail.google.com/mail/u/0/#all/15a4e354e56b4a71) and it was a very thoughtful and informative article on the Memphis police staffing, recruitment and benefit situation. He blames the current shortage of uniformed officers on two things. One was the Memphis pension and OPEB (other post employment benefits, mainly retiree healthcare) unfunded liability. The unfunded liability was so massive that the State of Tennessee Comptroller threatened to take over the city unless it was addressed. This was in 2014. In order to meet this funding requirement retirement healthcare benefits had to be cut and more and more officers decided to retire or resign.

I have written in the past about this situation and it was the fault of past city of Memphis mayors and past city of Memphis City councils that ignored the 2007 GASB 45 regulation that required that pension and retiree health care expenses be recognized as they are earned rather than as they are paid. The Shelby County government did the right thing and the City of Memphis did not and hence the 2014 year of reckoning.

We all want and need good and effective policing as Memphis is earning a bad reputation for violent crime. I want Memphis to hire more qualified officers and apparently Mayor Strickland is moving in that direction. There is one more thing he can do which will help in the future and that is to stop the abuse evident in the City of Memphis pension board. This abuse is the number of LINE OF DUTY DISABILITY approved by this board. In the past I have compared the number of line of duty disability approvals from Memphis to the MLGW and Shelby County. The approval in Memphis is 10 times higher per active employees than Shelby County and the MLGW. Line of Duty disability approval gives the disabled employee a pension of 60% of his highest average salary tax free for life.

The City of Memphis in 2011 had 429 people on line of duty disability costing the City $11.8 million per year. In 2016 the figure is 510 people costing $14.7 million. Compare this with the MLGW employees. In 2008 they had 37 people in this status costing $523,000 per year. In 2015 they had 34 people in this status costing $485,000. Shelby County in 2015 had only 17 line of duty retirees. Compare that to 510 for the City of Memphis. Clearly there is a problem at the City of Memphis and it goes to the Memphis Pension Board and it’s makeup of members. The membership of this board and its rules need to be changed. The numbers of line of duty retirees at the City of Memphis when compared to the MLGW and the County clearly show a problem and the problem should be addressed. Qualified new officers should be paid whatever the market requires but obvious abuses of the system should be stopped.