Eccentric article/ More Comments on $85 Million Bond

Hi All,
Please take time to read this article on the Township Bond issue:   Bloomfield Township to issue $85 million in bonds   by: Jay M. Grossman,   Birmingham Eccentric Reporter

My Comments and Opinions:
From Eccentric article:  I've put quotes as:   bold/italic/underlined

"Whether they agree or not with the decision is a totally separate issue."  (Savoie)

In my opinion, those 2 newly planned meetings are to quiet the masses.... the decision is NOT going to change. So, if you think the bond decision is going to change by going to those meetings...think again. A referendum was the only way to get a public vote, which I still wish could happen.   Those 2 meetings were only scheduled after the issue became more public and after Savoie held a private meeting with some UHOA members and others.  It was not at a public Board meeting.   I believe the township will just want to focus about their bond decision stressing the word "saving" at those two meetings. 
I would stress the word RISK  and ask WHY  is the pension fund so underfunded and what other options were considered?   There were other options given at the study session.  Let's hear about them.
 
"Savoie said the township will save about $80 million over the next 20 years and still meet all its pension obligations." 

Honestly, the "save" $80 M  is estimating... and will THIS bond meet ALL pension obligations??  I doubt it... as the pension will need to go much beyond 20 years.  What then?  Need to check to see if the other pension plan for post 2005 employee receives any taxpayer contributions.   Are there any
more pension plans on the books?  Are there obligations to those as well?  Are they underfunded?  These issues also need to be discussed at the township "town hall" meetings.  The taxpayers should see the whole picture of township expenses.

What Savoie should have said was that we have an obligation to pay a DEBT..   Our current PENSION debt on one plan is an $80 million obligation.   IF we do a bond there is another  $5 million in upfront fees,  and XXX millions in interest owed.   Remember, this is a DEBT..... not a savings account.  There is money OWED.    There is also around $69 Million in OTHER bond debt already on the books at the township that require payments.    That bond debt number is growing with paving and other unfunded issues.

"...and right now the township is getting back around a 5-percent return on its investments."   (Devine)

Ask Devine and Schwartz, Prudential or other financial advisors with the township :  was any money LOST during the investment periods and how many years did it take to recover the money?
What factors made the pension go from 82% funded 3 years ago....with a good 2 years in the stock market since.... to  DROPPING  IN VALUE   to only  61 % funded today??
If the township was invested properly with (I don't know the amount) of millions of money in the pension fund previously.... and LOST  21%  to become even more UNDERfunded during 3 of the most productive years  ....  maybe we should have different investment advisors.

Or, should we just admit right now that this type of pension is unsustainable?? 
I wonder.... could we get the people expecting a pension from this fund.... to sign off any more financial responsibility from the township taxpayers if we put $80 MILLION "pot of cash" into that pension fund??  Let THEM take the investing RISK permanently!
Have you read the news lately about  Chrysler/GM and others with changes to pension funds?

• I would like to remind all of the Township taxpayers... that back in 2010.... just before the February vote to increase our taxes with a 1.3 mills NEW GENERAL OBLIGATION for 10 years...( which passed by 600+ vote). the S.O.S.  committee that sent out postcards with burning buildings...and suggesting that EMS might not be able to save you... scare tactics in my opinion to get you to vote YES for the new millage ($4 + Million collected/year) ,   that S.O.S. committee was  FUNDED  almost 95% by employees and vendors of the township.  Instead of adjusting the size of government and making cuts.. many on the township payroll or doing work for the township in 2010, actively supported raising your taxes instead.    The contributors to the  S.O.S. committee is public record.  Some with contributions in the 10's of thousands.

• I hear, but cannot confirm at this time, that there are currently 250 retirees collecting a pension now, with 10 past employees vested in the program but not old enough to collect yet, and 213 current employees still employed at the township and in this pension plan.  I have heard that the pension plan is for the employee and their beneficiaries.   That makes 473??? people in this pension plan??  Those numbers should be confirmed at the town hall meeting.

 

This is a DEBT, an obligation.  I understand that.
This debt apparently has not been managed well in the past or it would not be that much underfunded.
Do continual pay raises and perks and/or other factors keep changing the grand total of the obligation?  What changes have been made to the pension language?  The township most likely knew this law was coming to use bonds for underfunded pension plans.  There were certain agenda items over the last year concerning the pension plan. I didn't pay much attention to them.  Perhaps we all should have?  How did the township position themselves with those agenda items in terms of being able to do this bond issue?  One agenda item concerning the pension seemed retroactive to make it valid at an earlier date.   I'm not an investigative reporter. However, there are things that bother me....
 
THIS bond proposal is not refinancing, there is no existing loan...only bills that have not been paid by our township leadership that was to keep the pension fund at an acceptable level.  This is a lot more than just searching for a low interest rate.   THIS IS LOOKING FOR A LOAN...with low interest rates. 

THE BOND... is a loan with RISK and possible benefits.     A bond provides a huge "pot of money" at once...for the township leadership and Schwartz,  and Prudential and /or others to gamble with and HOPE the financial gamble  pays off.  With $5 million allotted for "fees", those financial advisors potentially make a huge pay day whether or not the $80 million along with what is already in the fund to invest (at a  RISK to the township taxpayer)  is successful at the end of 20 years.  I get nervous when a huge fee goes to a person telling us it is good to give them $80 million to  invest...with no risk to them.

If we don't do the bond...we don't have $5Million in fees.  I would like to hear about making PAYMENTS every year over the next 20 years... say, $5 million/year,   taking the money out of the township budget.... to satisfy the $80 million underfunded.  20 years times  (a possible)  $5 million per year is $100 million.   More than what is currently needed.   NO risk/ No fees/   and... if invested yearly in something similar to a savings account/ or low risk... more money would be gained.  Yes, I know there would need to be cuts in township government ....  but those cuts are long overdue in my opinion.  Outsourcing some things would help. 

The township employees are going to get their pensions regardless.

• However, I don't believe past contracts were good for the taxpayers.  I don't think there should have been 2% pay increases this April 2013.... the OPTION... to open the existing six year contract  for wages was there...  however, granting pay increases was not mandatory. 

• I don't think the Township should annually "opt out" of a state law that had the employees paying more...  by "opting out" the taxpayer pays that employee amount instead.  

• I don't think our employees should be hired out to Sylvan Lake, Pontiac, or other municipalities for "FEES".  Also, there are many "interlocal" agreements.  While other nearby municipalities scale down.. our employees are often the ones going elsewhere to help out.  The township taxpayer is responsible for pensions...not the fee payer. Perhaps it is time to scale down the SIZE of OUR government at Bloomfield Township.  It seems as though the only way to do that is to force the issue by voting NO on future millage proposals. 

Many that see the BOND as a DEAL.... are the ones not paying the DEBT.  Those financial advisors and employees that are pushing the bond deal are receiving immediate or future  benefits.  Does it mean don't do a Bond?  Maybe. If we have until Dec. of 2014.... why do it all in one 20 year lump sum? In a rush?   Would it be better to do bonds differently?  Not at all?  What were/are  the OPTIONS? 

I'm back to the %  funded vs % underfunded issue of the PENSION fund question....why did the bond go from 82% funded to only 61 % funded in the last three years?  The stock market RALLIED during those years,  and.... will this  $85 million bond make this fund 100% funded for its lifetime?  I doubt it.
Marcia