Archive for the ‘Policy Proposals’ Category
October 21, 2014
A Change In Pension Changes
Just when I thought things were moving in a fiscally responsible direction, here comes another pension change proposal. I do not want to prejudge the proposal but just by reading a description of the plan, it sounds more expensive than what was previously proposed by the Administration. I hope that City elections being less than a year away are not a part of this change but we will see. Here is the information on the proposed new plan that I have to date.
- A letter to employees
- Plan for unvested employees to be sent to a cash balance plan
- Plan for a cash balance plan and a defined contribution plan
What we need is a look at the detailed cost analysis by Segal Consulting, the actuary consulting firm hired by the council. This will be given to the City Council at the private executive meeting today.
Stay tuned as this is only the beginning of a fight to save Memphis and don’t be surprised if the taxpayers are called upon to fill any fiscal gaps caused by coming election thoughts.
October 13, 2014
The Upcoming Election on Tuesday, November 4, 2014
You are probably aware that a very important election occurs on the first Tuesday in November this year. The composition of the US Senate and House is a critical issue as we struggle to restore the constitutional balance between the executive and legislative branches. Early Voting begins October 15, 2014 at ALL 21 Satellite Sites and continues through October 30, 2014. Please get out and vote.
I will be publishing my thoughts on the local and state issues by next Monday, October 20th. There are four proposed Tennessee constitutional amendments involving abortion (#1), electing or appointing Tennessee Supreme Court Judges and Appellate Court Judges (#2), income taxes in Tennessee (#3) and lotteries (#4).
But today I am curious about another item on the ballot and that is Memphis Ordinance No. 5512. This proposed ordinance would increase the number of civil service commission members from 7 to 14. Brian Collins (City Director of Finance) certifies that the net cost to the City of Memphis will be $0.
Here is what channel 3 said about this proposed change in 2013.
(Memphis) With a back log of more than 70 cases, Memphis City administration and employee unions said they have come up with changes to the Civil Service Commission that will make the system more efficient. (more…)
October 7, 2014
Finally A Defined Contribution Pension Plan
Today the City Council will consider a defined contribution pension plan for City employees with less than 10 years of service (as of July 1, 2015) and new employees hired after that date. I have been recommending this for years and finally the City Council will consider this reasonable plan. Here are the proposed ordinances.
I have been recommending a defined contribution pension plan for years ever since I was on the Shelby County pension revision committee. This is fair for the private sector taxpayers who generally have no defined benefit retirement plan. It will probably be better for those City of Memphis employees in the future if the City’s pension investments perform as they have over the last 25 years (over 9% return).
Will the City Council and the Administration follow through and pass these ordinances? We will see but you have to consider that a year from now there will be an election for the new City Council and the city Mayor. What do politicians do when faced with an upcoming election? You have to look no further than the upcoming November 2014 national election. These changes are needed and should also apply eventually to the MLGW. Shelby County should adopt a similar plan but only for new employees, not those currently employed but not vested. This exception is in recognition of their past good fiscal responsibility as compared to the City of Memphis.
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 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 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
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 5, 2014
More Talk, Delays And No Answers
The clock is ticking and all we get is more delays and can kicking down the road from the city Council. Positions seem to have hardened. Janice Fullilove and Joe Brown are in the “over my dead body” camp. Bill Boyd has ruled out any retiree OPEB reductions for health care. Jim Strickland and Shea Flinn want to pay up in 2 years instead of 5 but don’t come up with where the money is coming from.
The most clear eyed vision seems to come from the PFM January 2014 City of Memphis Fiscal and Management Plan. For instance on page 46 while employees were supposed to pay 30% of the cost of health insurance, the City only collected 24.2%, leaving the taxpayers to pick up nearly $4 million in cost left on the table. This under billing has been going on for a number of years. Then on page 43, we see that we pay employees (Fire and Police Services) college incentive pay amounting to $6 million per year.
NEWS FLASH FROM THE BAT CAVE. IT IS REPORTED IN THE MORNING PAPER THAT THE CITY HAS A NEW POT HOLE BAT TRUCK REPORTED TO FILL HOLES FASTER AND CHEAPER. THE MAYOR ASKS ALL CITIZENS TO REPORT ALL HOLES DEEPER THAN KNEE HIGH.
Then on page 130 we see that one of the biggest problems we have in Memphis (potholes) is reported. According to the Division, the number of lane miles pavedl has dropped from 236 in 2007 to 105 in 2011, a decline of 56%. “WATCH OUT, HOLY POT HOLE BATMAN”.
As to the proposed health care cost reductions, this is where the real money is. According to the Affordable Care Act, costs will be reduced by $2500 dollars per family, you can keep your doctor and you can keep your plan. PERIOD. Let us take them up on this promise.
June 2 2014
Paying For Pension Reform In 2 Years
A good friend sent me a copy of Councilman Jim Strickland’s thoughts in paying this unfunded liability off in 2 years rather than 5. Jim is a good guy and a responsible city council member. He is correct in that paying it off in two years rather than five will save in the long run. Last year we added $68 million to the unfunded liability due to the small payment to the pension fund rather than the recommended ARC payment.
What is missing from him is the specific details of how we are going to pay for this pension load without raising property taxes. He needs to detail the immediate dollar savings for 2015 such as health care reform for active employees and retirees, sick pay, vacation reform, college education benefit reduction or elimination, line of duty reform and salary reductions to bring salaries in line with private sector. Also while going to the proposed defined contribution will not give immediate relief, it will change the future projections of the pension auditors reducing the unfunded liability projections.
Also concerning the health care proposed changes, I believe that those retirees under age 65 who are not eligible for medicare (or their spouse is not on medicare) can pay for back medicare eligibility to make them eligible.
I would agree with paying in two years rather than 5 but only if it is accompanied with passed and agreed on reforms like the above detailing where the money is coming from. We do not need more property tax increases. Look at the county and their proposed (more…)
May 22, 2014
A Heartbreaking Story About Education And Opportunity!
I have known a lot of great teachers. They are very important in improving the education of our children. However politicians and heads of teacher unions do not always act like their slogan, “Put The Children First”.
Take a few minutes to watch this video. It is heartbreaking.
It tells the true story of an actual ongoing event in New York City. Here you have the new mayor of New York, Bill de Blazio, acting to close down three charter schools in Jamaica, Lower Manhatten and Harlem. It is tragic. Watch this true story about a mother of a young girl who won the lottery for Success Academy. http://www.glennbeck.com/2014/05/08/will-cain-exposes-nyc-mayor-bill-de-blasios-war-on-charter-schools-in-new-docuseries/
These parents pray for a miracle (a lucky draw from a parent lottery for limited positions in these prized schools). Watch her tell her story about winning and then her reaction to the Mayor and his plan to block three of these charter schools.
Mayor de Blazio, who is Mayor due to the full support of the NY City teachers union, is closing 3 of these great schools. Look at the contrast. The math proficiency of the school that her daughter would have to go to, if the charter school she won is closed, is 3%. Her selected charter school has a math proficiency is 82%. 105 NY City schools have a math proficiency of less than 5%. It makes me mad to see such actions. Why do they do this? They cannot stand the competition and the exposure of their education failure.
What do you think?