Archive for May, 2015

The Great OPEB Dump

Tuesday, May 26th, 2015

May 26, 2015

The Great OPEB Dump

OPEB (other post employment benefits), basically retirement health care benefits, are much in the news. Retirees are acting like it is a great surprise that their health care plans are being cut and possibly it is a surprise. They made the mistake of believing political promises.

But look at the facts. Funding for the school systems (the old Memphis City Schools and the old Shelby County Schools) was always the responsibility of the Shelby County Government. The City of Memphis kicked in some money over the years and then when things got tight at the City, they cut that funding and the Courts said NO, they had to continue the funding on the basis of the principle of MAINTENANCE OF EFFORT.

For years the old City of Memphis Board of Education had a free hand and they loaded up the budget and the teachers and other unions participated in the loading. In particular look at the OPEB provisions of the old City School Board versus the old Shelby County School Board.

Here is a statement from the 2010 Shelby County audited financial document. Their unfunded OPEB liability went from $787 million in 2008 to $242 million in 2009. Look at the reason.

“The Board began recognition of OPEB on July 1, 2007. Limited trend information may be discerned from the three valuations made to date. The change in AAL for OPEB from the June 30, 2008 to the June 30, 2009 valuation date was due to actuarial assumption changes related to reduction in claim costs for post-65 retirees. Effective January 1, 2011, post-65 retirees formerly covered under the self-insured plan will be covered under an insured Medicare Supplement plan   which is estimated to reduce claim cost by 63% to 72% depending on age. Additional reductions are anticipated due to census changes, changes in retiree contributions, and any retirements or terminations that did not occur as expected in the prior valuation.”

Then look at the old City of Memphis School Board OPEB condition and lack of action from their 2010 CAFR (Comprehensive Annual Financial Report).

AS OF JUNE 30, 2010, THE ACTUARIAL ACCURED LIABILITY FOR BENEFITS WAS $1,534,912,045 (that is $1.5 billion), ALL OF WHICH WAS UNFUNDED.

They failed to take the actions that the old Shelby County School Board took. They eventually dumped this unfunded liability on the new Shelby County School Board and the County and City taxpayers.

Again this is the result of failure of the old City School Board to recognize the huge unfunded promise and like the City of Memphis they will be forced to make the retirees pay for their past poor decisions.

 

Are Smart Meters A Smart Purchase?

Monday, May 18th, 2015

May 18, 2015

Are Smart Meters A Smart Purchase?

Tomorrow there will be a City of Memphis committee meeting and in that meeting will be the subject of further purchase of smart meters as shown below.

MLGW COMMITTEE (Chairman Berlin Boyd)

  1. Resolution approving the purchase of a Mobile Energy Efficiency Educational Unit (vehicle) for an amount not to exceed $250,000
  2. Discussion of opting-out of Smart Meters
  3. Resolution awarding Contract No. 11776, Smart Meter Solution Full Deployment, to Elster Solutions, LLC, in the funded amount of $240,000,000 for work to be done over a period of approximately five years.

I have received the following email from a friend and a very active citizen in various local public policies.

  • 240 million dollars over five years is an astronomical amount of money. The rate payers in Shelby County will be stuck with the bill.
  • Firing meter readers and using their salaries to pay for smart meters does not add up. They are not paid that much!
  • Please share this with Shelby county friends. I know several people there who spoke out and opted out of smart meters without paying a monthly fee to mlgw. If they had not spoken out, refusing a smart meter would have resulted in a monthly fee.
  • The biggest reason for smart meters will be time-of-day-rates. While you will be sold on these rates because they are cheaper at certain hours, those rates will be much higher at other hours (example: summer rates in the afternoon hours 3-8 pm will double).
  • Smart meters take usage readings every fifteen minutes and send that information directly to mlgw. Many people consider that an invasion of privacy because your usage patterns are kept by mlgw. Anyone with access can know your routine by those usage patterns. There is also concern that these meters can be hacked.

(more…)

More Money Sources For Government

Tuesday, May 12th, 2015

May 12, 2015

More Money Sources For Government

The question on my mind during these budget days for the City, County and the School System is where can we go to find more money other than just cutting expenses and raising property taxes on homeowners and businesses that are already paying their full mandated share. I am not against cutting unnecessary public expenses and there are plenty examples I could point out. (Excessive sick days and vacations, line of duty disability approval at the City, dumb capital projects, etc). But let me point out two major questions that I have concerning pilots (payment in lieu of taxes).

???? When a Pilot expires does the named property actually pay the full tax load that was abated (reduced) for the following years after the expiration date ????

???? Why are pilots given for abated personalty taxes for some companies but not others? What is the policy on personalty taxes ????

I have attached a pilot file from 2007 when Bob Patterson was trustee. Part of that file shows pilots with expiration dates (pages 71 to 109). I have been asking Reid Dulberger (EDGE-Economic Development Growth Engine) for some time to show a report on those pilots that have expired and to show the pre-expiration abated tax and the post expiration tax actually paid. He has done nothing. This is not easy to do and remember that this report by the Trustee is only for County taxes and if the property is in the City, there is a similar but somewhat lesser amount owed the City. As an example I checked just recently on Hershey at 975 Kansas St. I found that their abated real estate tax was $294,065.74 and was due to expire on 12/19/2009. I looked at what they paid in 2011 and it was about $72,000. But then I looked at their personalty tax and they paid a very large tax even during the period of their real estate tax abatement. Then I look at other abated taxes in the 2014 Lenoir report and there are companies listed with personalty tax abatements. What are personalty taxes? Personalty taxes are levied on business furnishings and equipment that you report to the Shelby County Assessor each year. My question is what is the policy concerning real estate tax abatements and personalty tax abatements? Why do some get an abatement and some do not? What is the policy difference concerning real estate taxes and personalty tax abatement?

The public needs to know if when a pilot expires does the property pay the full abatement tax or do they get some kind of reduction or get a further extension of the deadline or do they just leave town? There needs to be an audit of the before and after numbers of the Pilot expiration subject and let the public see the numbers.