Archive for the ‘History’ Category
September 8, 2014
Confusion At City Hall
It was interesting to watch the confusion at the committee discussions Tuesday (a week ago) about the budget. The following was in the budget document.
The proposed FY 2015 Operating Budget includes an increase of approximately $15 million to help fund our pension system. Combined with a FY14 contribution of $20 million, pension payments will be approximately $35 million. Since 2008, financial constraints have prevented us from paying the full Actuarially Required Contribution (ARC) needed to maintain solvency long-term. The current ARC is approximately $95 million.
Under newly enacted Tennessee law, the City will be required to ramp up our annual contributions until we reach 100%, no later than 2020.
The FY 2015 Operating Budget includes fundamental changes to medical benefits provided to current and former employees. First, the FY 2015 Budget assumes that the city will no longer pay 70% of the health care premium of retired, Medicare-eligible employees, their spouses and dependents. These retirees will have options: remain on the City’s plan; join plans offered by either their current employers or their spouses’ employers; purchase Medicare supplement plans; or join the new Affordable Care Act’s health insurance exchanges or private exchanges. This change will save approximately $27 million in FY 2015. Also, it will be the first step toward eliminating the $1.3 billion unfunded OPEB (Other Post Employee Benefits Programs) liability. Second, the Budget assumes that we implement long overdue changes to the base health plan that will result in an additional $4 million savings in FY 2015.
The City Council and the Administration are looking for ways to save money to increase the pension fund contribution. The easy target was the health insurance costs for active employees and retirees. However the real problem is the pension structure itself. We have too many retirees from the City when compared to the County. The ratio of retirees to active employees at the City of Memphis is 79 per 100 versus 57 per 100 at the County. This of course means more retirees on the City health care plan. Then consider that the average City pension is $31,000 versus $19,000 at the County. Also the average health care cost for retirees at the City is $10,900 versus $7,100 at the county. The whole pension fund at the City needs an independent study to determine why more people proportionally are retired at the City than the County. This and the past refusal to take needed reforms is the root cause of the current problem.
August 25, 2014
Recently I was scrolling around the City of Memphis website and I clicked on the office of talent and human capital and this is what I found.
I congratulate the Mayor for printing this information and pointing out that we have a long way to go. In looking at the chart, we are 47th out of 51 for people 25 and older who have completed a four year college degree. If you restrict that to 25 to 34 years old, we move from 47th to 46th. We are 51st out of 51 for mathematicians and scientists etc. We are 45th out of 51 as a percentage of metropolitan workers that have a college degree and are employed in private sector businesses but excluding health care and education. Lastly we are 43rd out of 51 as a percentage of metropolitan population 25 and older that have completed a four year college degree and were born outside the United States.
This last number is interesting as Memphis is at 7.7% and the leading city is at 49.6%. I would take a guess that the leading cities are places like San Francisco, San Jose, Dallas or Boston.
The person in charge of the office of talent and human capital is Douglas Scarboro and in a recent news article it was stated the following.
“In March 2010, Wharton hired Douglas Scarboro to serve as the head of the city’s new Office of Talent and Human Capital, designed to attract talented workers. After a staffer said Scarboro’s initial salary of $125,000 a year would be funded by a local nonprofit group, Wharton issued a public apology and said the city was funding the position.”
If Mr. Scarboro can bring these numbers up he is certainly earning his salary. What do you think?
August 18, 2014
Property Developer With Other People’s Money
A recent CA article stated the following “After a delay of several months, Robert Lipscomb said recently that his team is ready to move forward with a long-standing plan to redevelop the Mid-South Fairgrounds into a sports complex and retail center.”
What a remarkable statement. Most professional property developers risk their own money or gather together other investors based on their good track record. However Mr. Lipscomb uses government programs such as TDZs (Tourist Development Zones), TIFs (Tax Incremental Financing) and various State and Federal programs paid for by the general taxpayers. Bonds are issued with the promise of payment from a fund of incremental taxes over and above a predevelopment base tax rate. If the incremental taxes are there to pay off the bonds then everything works out fine. If they are not there, then the local taxpayers pick up the load.
My question is who appointed Robert Lipscomb as chief Memphis property developer? If the City of Memphis is his property development company, then we need to study the financial records of his company. The State of Tennessee through the office of (more…)
August 4, 2014
A Smoking Gun
I have a reluctance to throw out old files that I have from 2001. So I decided to start cleaning out and throwing away old files. The first one I came across was an open records reply from 2007. It was a Mercer Health and Benefits report dated July 24, 2006. The title was “City of Memphis Retiree Medical Landscape 2006 and Beyond”.
Take a look at this report. It was a warning of what was coming from GASB (Government Accounting Standards Board 43 and 45) concerning OPEB reporting, Medicare Coordination, Service Based Contributions and Future Hires.
Why was this report Important?
- It will be a required part of the annual audit statement
- This will impact bond rating
- Unfunded liability is potentially 50 times current retiree health-claim cash flow
The report recommended plan changes such as
- Coordination of benefits on medical and surgical coverage with Medicare (Parts A & B) for all post 65 retirees.
- Adopting an age and service based contribution rate structure.
- Plan design changes to the retiree medical plan that will reduce costs to some reasonable level and help manage the liability.
- Medicare coordination will mean the City of Memphis will provide coverage for post-65 retirees only on a secondary basis and all post 65 retirees will be required to buy Medicare coverage.
- The City of Memphis will adopt separate rates for pre-65 and post-65 retirees.
- Retirees will contribute different amounts depending upon their length of service in active employment.
Is it any surprise that the City of Memphis ignored these recommendations and the County took the warnings to heart and adopted a similar recommended plan? This lack of action by the City in 2006 explains the current crisis we have at the City of Memphis.
July 30, 2014
Work Time Versus Time Off
The CA has been on the case of certain judges concerning the amount of time they are working versus their time off. While this criticism seems to be justified it also applies to the City of Memphis, Shelby County and most other public employees.
First look at the salaries of the various officials we are currently voting on.
CHANCERY COURT CLK
CIRCUIT COURT CLERK
CRIMINAL COURT CLERK
GENERAL SESSIONS COURT CLERK
JUVENILE COURT CLERK
PROBATE COURT CLERK
I am conflicted in my opinion about judges. I am very much in favor of term limits. I think the people should elect the judges but it (more…)
July 18, 2014
There is a very important election coming up. Early voting starts today (only
downtown at the election commission). General early voting starts Monday July
21st and early voting ends Saturday August 2nd. The last voting day is Thursday
August 7th but only at your normal local voting site.
The ballot is huge. I have attached the ballot with my selections. I want you to
make your own choices but I want you to get out and vote.
I have been working with Eve and Eddie Settles and they have done a wonderful
job in researching the candidates. Be sure to go to www.backinrivercity.com and
read about the research they have done.
You will have to declare that you want to vote in the democrat or republican
primary. This is for the Governor, United States Senate, United States House of
Representatives, the Tennessee Senate, the Tennessee House of Representatives,
and the State Democrat or Republican executive committee people. This party
declaration will not prevent you from voting on the rest of the ballot which is
The final page of the ballot is interesting. It is to vote to Retain or Replace the
Tennessee Supreme Court judges (3 ea.), Court of Appeals Judges (10 ea.) and
Court of Criminal Appeals judges (10 ea.).
The Tennessee legislature voted recently to let the Judicial Nominating
Commission to expire and in November 2014 we will vote whether to adopt a
constitutional amendment for Tennessee, a system like the one set forth in the US
Constitution. I believe that an 8 year term is sufficient and should be at the end of
a distinguished legal career or the justice should go back to his legal practice to
earn his living, not be a career justice. Therefore I support the REPLACE vote.
I will be glad to answer any questions. 7540699
July 24, 2014
There is a very important election going on. Early voting is going on. General early voting started Monday July 21st and early voting ends Saturday August 2nd. The last voting day is Thursday August 7th but only at your normal local voting site.
The ballot is huge. I have attached the ballot with my selections. I want you to make your own choices but I want you to get out and vote.
I have been working with Eve and Eddie Settles and they have done a wonderful job in researching the candidates. Be sure to go to www.backinriversity.com and read about the research they have done.
You will have to declare that you want to vote in the democrat or republican primary. This is for the Governor, United States Senate, United States House of Representatives, the Tennessee Senate, the Tennessee House of Representatives, and the State Democrat or Republican executive committee people. This party declaration will not prevent you from voting on the rest of the ballot which is open.
The final page of the ballot is interesting. It is to vote to Retain or Replace the Tennessee Supreme Court judges (3 ea.), Court of Appeals Judges (10 ea.) and Court of Criminal Appeals judges (10 ea.).
The Tennessee legislature voted recently to let the Judicial Nominating Commission to expire and in November 2014 we will vote whether to adopt a constitutional amendment for Tennessee, a system like the one set forth in the US Constitution. I believe that an 8 year term is sufficient and should be at the end of a distinguished legal career or the justice should go back to his legal practice to earn his living, not be a career justice. Therefore I support the REPLACE vote.
July 24, 2014
On The Back of Taxpayers
We hear the constant slogan, “Don’t balance the budget on the backs of
current employees and retirees”. In past years there was a used car lot on
Lamar with the sign saying “We Tote The Note”. As taxpayers, we have
been toting the note for years. Look at the facts.
The annual cost per retiree at the City of Memphis is $32,518 versus
$19,218 at the County.
The unfunded pension liability at the City of Memphis is $709 million versus
$161 million at the County.
The ratio of retirees to active employees at the City of Memphis is 79
per 100 versus 57 per 100 at the County.
In 2012, I calculated the cost of retiree health care cost per retiree
paid by the taxpayers. For Memphis it was $8533, for MLGW it was $7440
and for Shelby County it was $5605.
The inescapable conclusion is that City of Memphis has had a loose
June 30, 2014
Trust The Free Market
I followed Mayor Wharton’s proposals in his state of the City speech and in the PFM group’s 5 Year Strategic Fiscal And Management Plan for the City of Memphis. I congratulate the Mayor for hiring this group and for the well written and realistic facts in the plan. Now that part of the plan has been voted on and passed (OPEB reform of health care) I would like to propose an alternative plan for pension reform, another major part of getting the City’s fiscal house in order.
PFM recommends various pension plans for non vested (less than 10 years of service) and future new employees. The recommendations include a defined contribution plan or a combination of a defined contribution plan and a limited defined benefit plan similar to what the state of Tennessee has done for teachers and state employees.
Several years ago I participated in a pension reform study for Shelby County which ended up in Plan D for the county for new employees. The City adopted a similar plan for new employees only basically doing away with the disastrous 25 year retirement formula (regardless of age). At that time I recommended a Hybrid plan which would put public employees on an equal footing with private sector employees promising a minimum of social security return but possibly a much better return from the free market.
Social security promises a lousy return by sending your money to the Washington DC lockbox which is empty due to the politicians spending all the social security money. What this proposal would do is have the same 6.2% contribution from the City and the 6.2% from the employee and let it grow at the market rate until retirement. The market has returned over 9% at the City and the MLGW since inception even including 2008. The social security return is -.95%.
Of course the IRS would probably have to bless such a plan but that should be no problem since the City has good relations with the current administration. We should consider all options and the employees should get on board with the free market and take the same risks that all private sector taxpayers take, market return. You can hardly do worse than putting your faith in social security.
June 24, 2014
IMPORTANT ELECTION INFORMATION
There is a very important and complicated election coming up on August 7, 2014. (WOW, WHAT A BALLOT) (Countywide early voting starts Monday, July 21st). You will be electing the primary candidates for Tennessee Governor, one Tennessee US Senator, Two US Representatives (8th and 9th districts), Three State Senators, Thirteen State Representatives and Ten State Executive Committee members. These are primary elections and the final vote will be in November of this year.
As if that was not enough, we will also be electing the following.
9 circuit court judges, 3 chancery court judges, 2 probate court judges and 10 criminal court judges. NOTE (Chancellor Kenny Armstrong, Chancery Court Part 3, has just been appointed by Governor Haslam to the Appeals Court. Since it’s way after time for filing a qualifying petition, he either won’t be on the final ballot in August, or, if it’s too late to take him off, any votes for him or that office will be ineffective. We assume Haslam set it up this way so he gets to appoint his own choice until the next election IN 2016.)
Also (very important) we will be electing the District Attorney General, the County Mayor and 13 members of the County Commission.
Will it never end?
Then we will select the Assessor of Property and the County Trustee, the Probate Court Clerk, the County Clerk and the Register of Deeds.
I bet you thought I was finished but OH NO. You will select 15 general session court judges (1 is an environmental court judge) and the juvenile court judge. Also THE SHERIFF, THE CIRCUIT COURT CLERK, THE CRIMINAL COURT CLERK AND THE JUVENILE COURT CLERK.