Friday, November 15, 2013

$100,000 of Taxpayer Money is NOT for Donating BUT Personal Checks Accepted

Hi All,
Tonight (11-14-13)  at the Bloomfield Hills School District (BHSD) Board of Education meeting there was an agenda item to approve a donation of $100,000 of our school tax dollars to the Bloomfield Hills School Foundation... a 501(c) (3) organization. 

A check of the school website prior to the meeting brought up a Foundation link,  but a job posting for an executive director was all the information given.  No list of board members and no information  about their mission or goals.  I did request (after the meeting) that someone should put something about the Foundation on the school website.  It will be interesting to see what shows on the site in the near future.

I spoke during "Public Comment"  at the Board of Education meeting about:
why the Board should NOT approve the donation of $100,000 tax dollars to a 501(c)(3)

'Public comment"  is at a strange time on the agenda ... I had to comment BEFORE the agenda item was ever discussed.  I was hoping to learn more and THEN comment.  However, the $100,000 request was the last item on the agenda. 

The discussion among the board members on this last item continued for one hour.  $100,000 is a lot of money.  I was permitted to ask during the discussion who were the Board members of the Foundation and to ask what was the mission statement.

The 11/14/13 meeting can be viewed on the school CABLE channel at 2pm  and 7 pm. for the next few days or... at this link .  The entire meeting took three long hours.  

I learned that the board members of this BHS Foundation are:  BHSD Superintendent Robert Glass; BHSD Board of Education President, Ingrid Day; BHSD Board Treasurer, Cynthia von Oeyen; BHSD Assistant Superintendent and CPA, Tina Kostiak;  48th District Judge, Marc Barron: and active community members: David Fink and Sue Nine. 

I wondered during the discussion if school trustees Day and von Oeyen and at the same time Foundation trustees would state they had a conflict of interest if a vote came up.  It was not an issue because:   The BHS Foundation did NOT get the money from the school board... and in my opinion... rightly so.   In the end, no motion was voted on... and the discussion ended.

The BHS Foundation apparently began in 2007.  It has been inactive for the past two years or so, but according to this meeting agenda request for $100,000 .... the Foundation trustees would like to begin again and need "seed" money. 

Mentioned during discussion, the BHS Foundation has a current balance in the bank of $50,000.  They wanted another $100,000 from the school district.... mainly to hire an executive director for the Foundation and set the goals for future events.

If the Foundation board members thought there was such an overwhelming support from the BHSD community for this Foundation.... why not seek out donations from those supporters for the "seed" money in some other way?

Is it because it is easier to ask for and perhaps approve tax dollar donations while sitting on both boards of directors/trustees?  Same people asking as granting funds?

I heard during the discussion that one of the stated goals of the BHSD school board was to "support their Superintendent".

Apparently Rob Glass had worked hard on this BHS Foundation project for quite some time and some members seemed to feel that giving this $100,000 donation was therefore needed to show that they support Rob Glass.  Yikes.

While the project of a Foundation is a worthy cause ....using tax dollars collected for another purpose ...  to fund any charitable cause... is not right.  Rejecting the $100,000 donation just shows responsible school trustees... and not a lack of support for a person.

The BHSD Board of Education members, I am pleased to say, ...eventually.... took no action on this agenda item.   The $100,000 is still in the school account where it belongs.  However,  I expect this issue to resurface.

For the record:  A Foundation to support EDUCATION is a good idea.  The excitement and leadership should come from the community members... be spontaneous and enthusiastic.... filling a need if there is one.... making sure the children of our community have support and opportunities. School board members should be at arms length... not making monetary requests on behalf of the Foundation charity ... getting the dollars from the school board taxpayer funds they manage.

 IF... anyone in the community agrees with whatever stated needs or goals of the Foundation,  the community member can write a generous personal check and claim the legal charitable deduction at income tax time. 

So how about a challenge to the BHSD community?  If you think the BHS Foundation is a good idea... make a donation to BHS  

If you would like to see this Foundation operate again for the children, the Foundation board of directors need to hire an executive director.  They so happen to have just accepted applications/ resumes and the Foundation Board has apparently identified a good candidate.  The Foundation can't really offer that person a job... with only the $50,000 current bank balance.

So, are you willing to make a donation to the BHS Foundation?  We're nearing the end of the year.  Good time to make those charitable gifts. You can surely contact the school Superintendent, or others on the Foundation Board.   There are many different ways one can donate.  Are you interested in serving on this Foundation board?  Give them a call.

As for me, I'm very happy that the BHSD still has the taxpayers'  $100,000 dollars for education in the right bank account.    
The BHS Foundation did NOT get the money from the school board... and in my opinion... rightly so.

This is not the first time taxpayer money has been requested for charities by elected officials:   It may be the first time it didn't get approved.

The seemingly common practice in the Bloomfield communities... both municipal and schools...   of our elected leaders.... serving not only their constituents but also serving charitable causes.....  should realize....   that tax dollars collected for a certain legal and specified purpose.... should not be donated to the various charities they help manage/lead. 

Are you listening Bloomfield Township Trustees?

My opinion.
Marcia Robovitsky

Wednesday, November 13, 2013

WHAT? Borrow $85 Million to pay a DEBT but NOW OWE $165 Million Plus Interest?

Hi All,

Question:  What happens when you borrow money to pay one bill, but instead of instantly paying the bill you make a promise to pay?   Instead, you use that borrowed money by depositing the money in another account and then use it to invest in the stock market and other investments.

Answer:  You now have two bills to pay.  

Bloomfield Township took advantage of the state and Gov. Snyder’s recent law (Public Act 329 of 2012) that permits AA or higher rated municipalities to solve the underfunded pension debt with new bonds.

With no vote from the citizens, the 7 Board of Trustees authorized a $85 million bond sale..which was recently completed.   The necessary fees were paid out of the bond sale.    

The township has placed the $80 million remaining proceeds from the bond sale into an EQUITY TRUST Fund and all $80 million is to be immediately invested into the stock market and other investments facilitated by Gregory Schwartz and Co…. none of it in cash.  This investment program was approved at the Board of Trustees meeting on 11/12/13.

The new found borrowed remaining  $80 million money represents about 38% of the pension obligation that was the underfunded part of the pension plan that the bond sale was intended to pay.

There is  $130 million representing the other 62 % of the pension obligation that is already paid by the taxpayers and deposited (in past years) with Prudential … the company that will actually pay the pension benefits. 

The way I look at this is:
  • The company that needs the money in their account to actually pay 100% of the pensions, Prudential, does not have the money in their account.  However, on paper, the township has the pension funded 100%  by establishing a new account: an Equity Fund account for the pensions. 
  • The township is choosing to risk  $80 million that was borrowed to pay the underfunded pension debt.   
  • All that money is now invested in the stock market and other investments, not through Prudential, but from an Equity Trust Fund set up by the Township and Gregory Schwartz and Co. is advising.
What if we have another 2000 or 2008 economy?
  • The $85 million  borrowed via selling bonds to pay the pensions is already down millions to pay the costs for selling bonds.  
  • The $80 million invested in the Equity Trust Fund  MAY experience losses in any potential economic downturn.  
  • Whatever happens in the stock market and investments, the public still has the obligation to pay the entire sum borrowed plus interest to the bond holders.
  • The same is true of the entire 38% currently underfunded pension amount owed to the retirees.
  • This Equity Trust Fund account will need to regularly make payments to Prudential as employees retire. There are many employees close to retirement now.  The investment climate is risky at this time.  Eventually, the payments may reduce the amount in the Equity Trust Fund to or near zero.  What if that happens too soon? What if there is not enough equity to recover from losses from bad years?  
Did we really pay the debt to the underfunded pension with the borrowed $85 million dollars from the bond sale?

  • NOT REALLY !   Not until the money is deposited in Prudential that actually guarantees the pension payouts.
  • As of 11/13/13,  until that money is actually deposited into the Prudential account the township taxpayers still owe that $80 million to the pension fund. 
  • As of 11/13/13,  the taxpayers also owe the bond holders $85 million plus interest.
  • That total amount as of 11/13/13 is:   $ 165,000,000  plus interest.
Investment Return Assumption "Over the years.... the township will have saved over $60 million dollars in payments."

From May 13, 2012 Board of Trustees Study Session Minutes:

from July 22, 2013  Regular meeting minutes of the Board of Trustees

Link to the Township minutes