Archive for the ‘OPEB’ Category
February 20, 2014
Health Care For Public Retirees
This is another huge cost area for which the taxpayers are paying. You are paying 70% of the health care cost for City of Memphis and Shelby County retirees and 75% of the cost for MLGW retirees. The bills come each year for medical care for retirees and their families and the current annual bills are paid by the City, County and the MLGW as they occur.
But like pension liability, there is a future cost liability that is supposed to be taken care of by the OPEB funds (Other Post Employment Benefits), mainly future health care costs and life insurance for retirees). This is where the problem lies, mainly with the City of Memphis, and to a lesser extent with the MLGW and Shelby County.
The unfunded OPEB liability for the City of Memphis is $1.29 billion dollars. For the MLGW it is $420 million and for Shelby (more…)
February 6, 2014
In reading through the Strategic Fiscal and Management Plan for the City of Memphis I keep finding things that amaze me as to the past fiscal mismanagement. It is quite clear that the City is supposed to pay 70% of the health care premiums and the employee is supposed to pay 30%. Look at the attached pages 46 through 49 of the plan. On page 46 the employees paid as low as 23.1% and as high as 26.9%. This cost you, the taxpayers, $9.2 million dollars over these three years. I presume the same was true for the OPEB retirees but I am checking. $9 million here, $5 million there and pretty soon you are talking about real money. On top of this mistake by the City, here is what the report says about the history and direction of health care cost, a huge part of the money problem.
On a fiscal year basis, from FY2008 to FY2012, the City’s General Fund contributions to the Basic and (more…)
January 23, 2014
More Info From the Memphis CAFR
Pick up the CA and you will get more articles than you can read over your morning coffee. They all point to the upcoming decisions of the Mayor and the City Council. The chickens are coming home to roost as they have been disturbed by the noise of the cans that have been kicked down the road.
As I sift through the current 2013 Comprehensive Annual Financial Report (CAFR) of the City of Memphis, I decided to compare several pages from the 2008 CAFR with the same pages from the 2013 CAFR.
January 16, 2014
I have been comparing the past financial policies and results of the City of Memphis with Shelby County. Past Shelby County financial management has been much better than Memphis and the results are obvious when you compare the past and present Comprehensive Annual Financial Reports (CAFR) and the pension and other post employment benefits reports (OPEB).
Here is another example of where the County acted and the City did nothing. Both the City and the County have personnel policies concerning vacation, sick days and personal day policies that are well beyond what the private sector offers. Concerning vacations they both grant 5 weeks’ vacation after 25 years. The private sector is generally 3 to 4 weeks after 25 years.
Now the biggest difference is in sick days. Both the City and the County used to grant up to 2-1/2 days per month (30 days per year) (more…)
December 12, 2013
A Backdoor Tax Increase
The City Council has passed another backdoor tax increase by unloading street lighting electric cost and maintenance on the MLGW. You already see a sewer fee, a solid waste fee, a storm water fee and a mosquito/rodent control fee on your utility bill.
The utility expects the fee to raise a total of $12.9 million per year, of which roughly half would go toward electricity for the streetlights and half would go toward maintaining them. This is an expense that is covered by the services paid for by property taxes. Now the City Council wants to take it out of their expense budget and bill it directly to the taxpayers through the MLGW billing process.
Here is what I investigated and found out. If you will look at the 2012 operating budget. The City shows an actual cost of $4.3 million for street lighting in 2010 but a 2012 adopted budget of $12.1 million. Then look at the 2014 operating budget and they show an actual (more…)
November 4, 2013
This is an issue that the City of Memphis is trying to sneak by the voters in a vote that will probably have a low turnout. These are the reasons to vote NO. Early voting starts today. As they say in Chicago, vote early and often.
- The Commercial Appeal writes that 63% ($30 million) goes to Pre-K and the rest (1$17 million) to property tax reduction. However look at the wording of the Ordinance which states that the money goes to a Pre-K Commission appointed by Mayor Wharton which will make the decisions. Do you trust such a commission?
- Our sales tax is already very high (9.25%) and this would take it to 9.75%, the highest in the state, a very regressive tax.
- There is no evidence that Pre-K works and has any long term benefits,.
- There should be no new taxes until the City of Memphis and the City Council reform pensions and health care costs and get on a path to reduce unfunded liability as pointed out by the State of Tennessee.
October 3, 2013
The Unfunded Liability of the United States
Is the shutdown of government a bad thing? What has happened is that 800,000 nonessential employees have been furloughed. Federal agencies have the power to designate their employees’ status in the event of a government shutdown. The last time Congress and President Obama stalemated, in 2011, the administration estimated that 800,000 of the 2.1 million employees in the federal workforce would be furloughed. Now that the there is a stalemate, we will see how it works. If we can get along without the 800,000 nonessential employees it will give us some indication of how much fat and waste there is in government. I have no doubt that these nonessential employees will be rehired and paid but it is a great demonstration of how much is our government overweight.
We have had one federal program after another and each has cost more than the government projected. Starting with social security, then the war on poverty, then medicare, medicaid, food stamps and now Obamacare. Here is the headline from the CA just yesterday. “Shelby County expects big bill to comply with Affordable Care Act”.
We have to face up to the unfunded liability of the federal government as well as our local government. We have not had a federal (more…)
September 19, 2013
For three days running there have been lead articles in the CA about our City of Memphis pension unfunded liability.
Finally yesterday, they mentioned the even greater OPEB unfunded liability (cost of health care for retirees).
I have attached the report from PWC consultants for your review. Read it at your leisure but here are some highlights.
- Despite better than average asset returns for 2010 and 2011, the plan’s funded status will continue to deteriorate, from $682 million to $740 million.
- Assuming no other changes, it is estimated that it would require an annual asset return of 13% over each of the next 10 years in order to fully fund the plan.
- Conclusion: Based upon the actuarial assumptions used to determine the plan’s liability and ARC, a projection of a workforce similar in size to the current one, and the current funding policy of 6.0% of compensation, the plan is not sustainable in the long-term.
September 12, 2013
As I start reading through this massive document I have to start with the introduction and rationale of the plan. Here are the first 26 pages of the draft plan.
To be a successful urban area, Memphis has to do the following.
- Increase property values
- Decrease poverty
- Ensure government efficiency
- Improve neighborhoods
- Invest in human capital
- Grow the economy
Wow!! What great ideas. Why did I not think of those?
September 5, 2013
I have been reviewing the various parts of the Shelby County Efficiency Report and it has been very interesting and informative. The PFM group has identified a number of areas with a great potential for savings such as health care premiums, OPEB, sick leave carryover and paid time off excesses. All of these are legitimate areas of great savings and the only thing standing in the way is getting seven votes from the County Commission.
Here is another one that makes sense and one that really gets at the heart of the problem with the County Commission and the City Council. Most of these politicians see City and County government as a source of jobs for their constituents. Their first instinct is to (more…)