Health Care For Public Retirees

Posted by jsaino on Feb 20, 2014

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
Continue reading the full article…

  • No Comments »

Line Of Duty Disability Reform

Posted by jsaino on Feb 13, 2014

February 13, 2014

There are lots of things that need reform in the Memphis pension system and we have talked about the need for going to a defined contribution system rather than the current defined benefit system. Hopefully we will get there if the Mayor and the City Council do the right thing.

However I have often spoken about the need for line of duty disability reform. The Memphis pension board regularly approves applications for line of duty disability applications and has ten times more former employees on line of duty disability than Shelby County government or the MLGW. (These people on line of duty disability get 60% of their final average salary for their lifetime tax free).

Now I find out from Jeni Diprizio (a great reporter for Channel 24) that last month (January 30, 2014) Jason Webb applied for and
Continue reading the full article…

  • 1 Comment »

Health Care! What Does It Cost?

Posted by jsaino on Feb 11, 2014

February 11, 2014

 

As if Obamacare is not bad enough, trying to compare local health care rates is not easy. But I will make an attempt to compare the active employee rates and the cost to you the taxpayers for the City of Memphis, the County and the MLGW. Here we go.

First you have to look at the plans available in 2014.

The City of Memphis has three options: Premier, Basic and Value plans. Attached is a brief overview. The prices shown in red are what the employee pays twice a month or 24 times per year. This is the 30%. You, the taxpayer, pays the 70%.

The Basic family plan costs the employee $4127 per year. It costs you the taxpayer (70% of total cost) $9630 per year. It’s total cost is $13757 per year.

The Basic plan covering the employee only costs the employee $1944 per year. It costs you the taxpayer (70% of total cost) $4536 per year. It’s total cost is $6480 per year.


Continue reading the full article…

  • 1 Comment »

$9 Million Blown Over Three Years

Posted by jsaino on Feb 06, 2014

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
Continue reading the full article…

  • 1 Comment »

A New Idea, Trust Free Enterprise

Posted by jsaino on Feb 05, 2014

February 3,2014

A Hybrid Pension Plan Proposal

I have been following 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. I will be commenting on the plan over the next months as the debate rages in the City and the city council.

I have attached here part of the 182 page plan that concerns pension reform. They are recommending various pension plans for unvested (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
Continue reading the full article…

  • No Comments »

DROP, The Pension Bomb

Posted by jsaino on Jan 28, 2014

January 28, 2014

 

For a number of years I have received the agenda for the monthly meeting of the City of Memphis Pension Board. I have attended a number of these meetings. Here are a few things that you need to know.

1)    The board consists of the Mayor, the Comptroller and five employees with at least ten years of service, a retiree and only one citizen member. So it is obvious that this is rigged to approve whatever the employees want within the pension ordinance. Temporary Mayor Myron Lowery tried to appoint me to the board a few years ago and the Council voted it down.

Being familiar with meetings and agendas, I noted the agenda for the next meeting this Thursday, January 30. There were listed 30 DROP applications which will cost the City $1.62 million dollars per year in pension payments over the next three years while the DROP applicant is still working. Then I remembered that there were four periods during the year for DROP applications and January was one of the four. I went back to January, April, July and October 2013 and looked at those agendas and there were a total of 116 DROP applications amounting to $4.8 million dollars per year.

I need to explain the DROP (Deferred Retirement Option Plan) provision of the pension system. This provision allows an employee to continue working for one, two or three additional years (most if not all choose 3 years), and to receive salary and pension at the same time. The pension payment goes into a special account and at the end of the drop period the employee will receive a lump sum payment which can be rolled over into a retirement account. The pension is frozen at the level that the employee starts his final retirement years (1, 2 or 3). The employee’s and the City’s pension contribution cease as of the start date of the DROP program.

The County does not have a similar program.


Continue reading the full article…

  • 2 Comments »

Chickens Coming Home To Roost

Posted by jsaino on Jan 23, 2014

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.


Continue reading the full article…

  • No Comments »

Paying For Memphis Pension Reform

Posted by jsaino on Jan 16, 2014

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)
Continue reading the full article…

  • No Comments »

Decreasing Net Assets Of The City Of Memphis

Posted by jsaino on Jan 13, 2014

January 13, 2014

 

In recent days, the City of Memphis finally published their Comprehensive Annual Financial Report (CAFR) on line. In between watching the NFL playoff games and Tiger basketball, I have been reading this important document. It will never outsell “Gone With The Wind” or the Bible in popularity but to me it makes fascinating reading. It is like reading a diary as the Administration tries to put the best face on things but the public auditors (Banks, Finley White and Co) have to publish the facts as presented to them by the administration while at the same time going over the books for verification of what they are told.

 

One of the most interesting and important statements is the following one found in the section entitled “Management’s Discussion and Analysis”. It reads as follows.

 

“Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.”

 


Continue reading the full article…

  • No Comments »

Compare Memphis Pensions Versus Shelby County

Posted by jsaino on Jan 09, 2014

January 9, 2014

Compare Memphis Pensions Versus Shelby County

I could and probably will write for weeks about needed reforms at the City of Memphis. But I like to keep it simple and understandable. Let us look at some comparisons between the City of Memphis and Shelby County governments.

How many active employees do they have?

Memphis      6020                          Shelby County         5668

How many pensioners do they have?

Memphis      4782                          Shelby County         3260

What is the average annual pension payment per pensioner?

Memphis      $32,518                    Shelby County         $19,218

The problem is obvious. Memphis has 79 retirees for every 100 active employees. Shelby County has 57 retirees for every 100 active employees.

Memphis pension payout is 69% higher per retiree than Shelby County.

There are some obvious reasons.

1)    The January 2001 pension resolution allowing elected and appointed people to retire after 12 years regardless of age.

2)    The number of line of duty disability retirees is 10 times higher than the county costing Memphis $12 million dollars per year.

Rather than hire a third pension consultant, I recommend that we get some retired County pension experts and have them compare the County’s pension ordinance and practices with the obviously loosey goosey City system. I am open to other suggestions from the public. After all, you are paying for this expensive   underfunded system.

  • No Comments »