Archive for the ‘budget’ Category
May 16, 2013
Last Monday I wrote about the coming train wreck in health insurance premium increases. Today I want to point out a change that could save the City of Memphis millions of dollars in the coming year and in the future.
Again I point to the Shelby County government as a model of fiscal responsibility. In June 2007 the Shelby County government passed a resolution to provide for OPEB benefits and approve changes to health insurance benefits to employees and retirees.
Shelby County acknowledged that the Government Accounting Standards Board issued Statement No. 45 (GASB 45) and that the new standard recognized that the expense must be recognized as the benefits are earned rather than as they are paid. The resolution went on to say that the County’s actuaries calculated the annual required contribution to be $49 million, a $36 million dollar increase over (more…)
May 13, 2013
Health care costs at the City of Memphis, Shelby County and MLGW are very expensive. Shelby County has been fiscally responsible in the past and their situation is much better than the City of Memphis. MLGW’s health care benefits are much richer and more expensive but they have the income from your utility bills to pay the tab. The City of Memphis is the worst. Active employees’ and retirees’ share of the cost is not fully funded to the 30% level as they are supposed to be. Also the City’s OPEB fund for retiree health care is an empty bucket to the tune of $1.2 billion dollars unfunded liability.
May 2, 2013
Atlanta (the core city) is much like Memphis. (The metro area of Atlanta is split up into four counties and has a much larger population than the Memphis metro area.)
Still the comparison is interesting. Atlanta has a core population of 432,000 and Memphis has a population of 652,000. Both core city populations have fallen over the last ten years. Atlanta has 6647 city employees (2224 police, 1021 fire). Memphis has 7568 employees (3028 police and 1862 fire).
Atlanta made some changes to their pension system. Following the bullet points are the actual words from their most recent CAFR (Comprehensive Annual Financial Report). The most important points are:
- In 2001 they put new city employees (other than fire and police) on a defined contribution plan.
- Then in 2011, all current employees in the traditional defined benefit plans had to contribute an extra 5 % (up to 12 or 13% of salary) to keep their promised benefits.
- There is a new defined contribution plan for fire and police and certain employees below grade 19 for employees hired after September 1, 2011 that is quite interesting. There is to be a cap on City contributions and other cost sharing provisions. See below.
- All in all, these are some major changes. It is significant that Atlanta has finally recognized that defined benefit plans are no longer supportable and changes must be made. Employees must take the same market chances that private sector employees take. In other words your future retirement depends on the success of business and capitalism, not government.
April 29, 2013
I heard City Councilman Jim Strickland recently talking about the upcoming budget hearings. He is chairman of the budget committee. He has a tough job as it is difficult to get seven votes to pass any significant cuts.
His suggestion seems to be to put the budget beast on a diet. In other words, the County Assessor has predicted that the new property tax assessments will be down 4-1/2%. Jim wants to let the pot of property tax money fall by this amount which would mean a reduction of about 3-1/4%. The Mayor, on the other hand, wants to increase property taxes rates by 28 cents or 9%. Faced with those (more…)
April 23, 2013
This FY2014 budget is a balanced budget that can also essentially be termed as a “continuation budget” in the sense that the level of services provided for in the FY2013 budget are essentially the same.
April 15, 2013
Hurry and write those checks and get them into the post office. Also more good news, the City Council and the County Commission start budget discussions. I have looked at the proposed 2014 County budget and compared it to the 2009 adopted budget. The 2009 adopted budget (countywide total) was $1.12 billion. The 2014 proposed budget is $1.17 billion.
The county up until the recent last few years has done a good fiscal job compared to the City of Memphis. The real problems are down at City Hall. However, I do not like the trends I see on the current County Commission which is looking more like the City Council.
Looking at the expenditures, it is obvious that the main items are personnel and education.
Let’s start with personnel. This is the real areas of possible savings. However, can seven votes be garnered to cut salaries and benefits? The figures show that the average city and county salaries and benefits are 50 to 60 percent greater than the average (more…)
April 1, 2013
On April Fool’s day it is hard to believe anything that someone tells you. Well here is one that you can believe or not but read the facts.
I attended a City of Memphis pension board meeting last Thursday at City Hall. I have attached the agenda for that meeting. There were two people on the agenda that decided to take a reduced service retirement in a lump sum amount rather than in a semi monthly pension. I asked why they would do this and was told that there are a number of reasons. If a person is in very bad health, that could be one reason.
The amounts of these lump sums were $56,503.64 and $92,330.61. I decided to research the pension ordinance and found another possible reason. According to the pension rules, the following is the schedule of lump sum distributions.
March 25, 2013
Last Friday I participated in the WKNO’s Behind The Headlines show moderated by Eric Barnes (WKNO), Kemp Conrad (City Council) and Bill Dries, Daily News reporter.
The subject was local pensions, principally those for Memphis, Shelby County and the MLGW. We discussed the definition of pensions which really includes the promises made to retiring employees. These promises include not only the normal pension payment (a (more…)
March 5, 2013
In looking at how to save money on what we pay our public employees, there are a number of things that come to mind. Salaries and benefits (vacations, sick days, personal days etc) and pensions compared to private sector comparable jobs. There are millions of dollars to be saved here and still maintain fairness with the private sector. Hopefully Mayor Wharton’s total financial review will address these items in the upcoming budget season.
However there are two things that need special consideration concerning the City of Memphis, the MLGW, Shelby County and the school system and any other public taxpayer financed subsidiary in Shelby County.
One is the line of duty disability system at the City of Memphis. I was the first one to notice that the line of duty disability rate of approval at the City of Memphis was 10 times higher than Shelby County government or the MLGW. I asked why.
February 11, 2013
When the school consolidation vote passed I went to the first few meetings of the transition board. They regularly met at each meeting for 5 hours or more and they met often. The seats were as hard as high grade steel so I stopped going.
Now I read that the proposed new consolidated school system has an $80 to $90 million dollar looming budget deficit. How could this happen?
Before the vote to give up the City School Charter, the Memphis City School 2011 actual budget was in balance ($1.175 billion). The Shelby County School actual budget ran a small deficit.
Now I read in the CA article that the preliminary general fund budget for the new unified school district is $80 to $90 million dollars in the red.
You smart people out there please help me out. We voted to combine the two school systems and supposedly to come up with a more efficient, fair, more intelligent new school system by doing away with duplicate jobs, outsourcing services, reforming retiree health care and having one superintendent with one staff. However, with all these savings, we still cannot balance the budget.
People, something stinks here and I would like an explanation. We have to start educating the students in the basics; math, reading, history, science and needed trades. All the other stuff is nice and if we can afford it should be added. However let us get back to the basics so that 2+1=2.75.