Hi All,
Bloomfield Township is rated AAA. We have a current $69 MILLION BOND Debt and growing with more water bonds.....and soon to have $85 Million Bond Debt for the underfunded pension fund..... that's over 150 million in bond debt for 17,000 homesteads over the next 20 years. IT bothers me that the anticipation is that Bloomfield Township will retain the AAA rating. WHY? Answer, so we can borrow more? Bond debt "looks good" on the financial reports? At some point in time, this township needs to pay for services and contracted debt ANNUALLY with revenues collected each year. It is time to quit borrowing more and more money.
The bonds for the pension obligation....MAY.... be a financially responsible move with low interest rates... in theory to many in the financial community.... but those financial people collect their fee no matter what happens in the economy. The township taxpayer has to rely on PROFITS gained from the investments... or if no profit or good returns, we just have extra debt....pensions and bondholders and interest/fees. This pension fund will last much longer than the 20 years of this pension obligation bond. What then? Stating to the public that this will 100 % fund this obligation.... is not exactly true. There is RISK involved and many more decades past this 20 year bond for this defined benefit pension plan..... it will be finally "closed" when all 400 + current retirees and current employees hired before 2005 (except the library, 2012) are gone. I most likely won't live to see that day... I'm 65.
However, by allowing bonds, the taxpayers now have NO leverage to get the leadership to make cuts to meet costs except voting NO on any new or renewed millages. In fact, after learning of the bond opportunity, the Township gave ALL employees a 2 % raise for 2013 and a 2% raise for 2014.... with the six year contract having another wage opener in 2015. The six year contract was a "gift" from the outgoing Supervisor who QUIT... aka as retired.... in the middle of his elected term... so the township could APPOINT his successor. The township also "OPTS OUT" of the requirements of PA 152 (and will for a total of 6 years) because of the 6 year contract signed in 2011. Again, the township KNEW what was coming out of Lansing and has been able to "game" the system. FYI: The existing contracts were NOT about to expire when the 6 year contract deal was made.
If there was 2% money for pay raises... WHY NOT put that money into their UNDERFUNDED PENSION PLAN? Was it because the government in Lansing gave them an EASY BUTTON ? Our township leadership is making this bond opportunity sound like a "get out of debt free" opportunity.... in fact... they say we will SAVE $60 million dollars over the 20 years. I'll believe it when I see it happen. Unfortunately.... we won't really SAVE $60 million..... our township leadership will find another way to give it to the employees. My opinion.
I would really like to hear from any one of you.... as to why a DEFINED BENEFIT PENSION PLAN..... is considered CLOSED... when it is open and thriving for at least 230 + current employees in Bloomfield Township STILL IN THE PLAN and STILL ACCRUING BENEFITS under the conditions of that plan. There are over 200 retirees already collecting from this pension plan. Some of the employees may have another 20 + years of employment in the township. This existing "CLOSED" plan is unsustainable and I do not believe this $80-85 million bond deal will be the END of the funding stream needed from the township taxpayers. Why didn't LANSING define CLOSED..... as FROZEN.... or STOPPED ACCRUING.... something? I still believe this defined benefit plan is unsustainable ... for many decades to come.
In fact, the township leadership had to go to another taxing authority ( our public library) .... which has people in the township pension plan.... unbelievable.... and negotiate them OUT of this pension plan... to really have the word "closed" associated with this pension plan. Why?... to be able to take advantage of this bond opportunity. Our township has been telling us and the media that this pension plan was closed to new hires since 2005..... never telling us that another taxing authority had their employees in the township defined benefit pension plan. How is that taxing authority contributing funds for their employees?
This pension plan is not the only obligation for retirees that the township is responsible to fund. There is also retiree health benefit plans.... costing $4 million yearly and growing. That plan didn't change...except for new hires in 2011??? The list goes on... How much is the township paying for BENEFITS.... for RETIREES? MILLIONS and growing....
Our Supervisor, Leo Savoie, sent this to me via email CC in response to another Bl. Twp. Taxpayer 's question. Read Savoie's comment to another:
"We have taken steps to overhaul the system. Bloomfield Township ended the defined benefit plan for all new hires in 2005. We were forced to go to binding arbitration to get that done. 82% of the benefit has already been earned. The average pension in Bloomfield Township is $34,000. Dave Payne is an anomaly. He worked at Bloomfield Township for 42 years. He came up through the ranks and attained the highest position. Dave could have retired approximately 8 years earlier, collected his maximum pension and go to work for someone else. He easily left in excess of a half a million dollars on the table.
"I have seen emails where you have issues with the pension obligation bonds. We realize we have a problem. These bonds are the most fiscally prudent way to manage the problem. The liability already exists to the Township. These bonds will allow us to properly weight the pension plan to meet a return assumption of 6.25%. We realize there are risks involved however we have plans to mitigate the risks. Over the last 9 years the plan returned on average 5.95%. This includes 2008/2009 which saw a loss in principal of 4%.
"We have another town hall meeting set up tomorrow 7/9 at 1 pm. I would encourage you to come or we can get together individually and I can go over everything with you. If you would like I am available 7/11 or 7/16 around noon. Please let me know."
Leo Savoie
Bloomfield Township Supervisor
4200 Telegraph Road
P.O. Box 489
Bloomfield Twp., MI 48303
(248) 433-7708
MY COMMENT: FYI: Dave Payne, our recently "retired" supervisor (2011) earns a pension over $130,000/yr plus retiree health benefits. The employees... named the new public works building after him and gave him a "surprise" afternoon event showing his name on the building. The township leadership did not approve of this naming of the building at a public Board Meeting until after the event was held. I wish Payne had retired 8 years earlier.... maybe we could have elected someone at that time that could have brought the contracts and other issues to a manageable level instead of the six year "gift".
The Savoie paragraph above states he knows there is a problem. Yet, he gave raises to all employees and continues to "OPT OUT" of a state law which would require more employee payment into a health plan. His comment about the bond for pensions.... does not give me comfort. What are the township's plans to mitigate the risk? Tell us now. WE, the taxpayers, need to realize 6.25% in the future 20 years on these bonds..... but have NOT averaged that in the last 9 years.... even though the market has rebounded to record high levels. What bubble is next to burst? Tell me why this $85 million bond proposal to fund the underfunded defined benefit plan is a good idea?
View on your computer:
Town Hall meetings: http://vimeo.com/69538409 and http://vimeo.com/70036772
The Township video BEFORE the town hall meetings but AFTER already approving the bond at a Board of Trustee meeting: http://vimeo.com/68534211
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