Has Bloomfield Township leadership really explained this pension change to the employees? I spoke with someone the other day that had no clue about this provision change.
With no preliminary budget presented by our Supervisor to date and no mention about who is doing the negotiations for the expiring employee contracts on March 31, 2017 how can the employees make an informed decision by December 2, 2016?
"Ignorance is bliss" .. not what I think. That's why I continue to write my blog. See archived blogs.
$11 million class action lawsuit about water and sewer still to be litigated
Leadership continues the "no bid" practice of hiring vendors and contractors: friends/family/favors
Leadership continues to advance interests of developers over residents including changing zoning
Leadership continues to have undisclosed "conflict of interest" issues but vote anyway
Leadership continues to refund bonds/add new bonds and move money around to different accounts
Leadership does NOT promote open and transparent government - behind closed doors works here
FBI has not come to Oakland County, yet
Original blog posted 9/30/16
Hi All,
Bloomfield Township still has 173 or so active employees in the Defined Benefit Pension Plan. This DB Pension Plan was closed to new hires in 2005.
Since 2005, the newly hired employees are in a Defined Contribution Pension Plan 401(A). Currently there are 91 active employees and 16 employees (that terminated employment) that have an ending balance. The entire account balance as of 6/30/16 is:
In 1961, this DB pension plan began with Connecticut General Insurance Company and the Guarantee obligation was taken over by Prudential in 2005. The township offered to the retirees a certificate from Prudential with a guaranteed annuity to pay the pension.
Basically, when an employee retired the township followed this procedure ( as I understand it) to determine the pension. First, take the average of the best 3 years of the last five of the annual salary BASE pay. Then, depending on the union or the contract at the time, there is a % factor number which is not the same for all employees that is then multiplied with the average base pay number. A third factor is the number of years of service. That is then multiplied to the new resulting number from base pay times the % factor #. This new number is then divided by 12 months/ to arrive at the monthly pension figure. Of course, there will be taxes and other costs deducted like always before the check is mailed.
Bloomfield Township notifies Prudential that there is a new retiree from the DB Pension plan and several determining factors such as the actuarial figures, the interest rates, the economy and the investments, etc.... the township makes a cash payment to Prudential for each new employee that retires and Prudential gives the retiree a guaranteed annuity certificate that will make the monthly payments to the retiree. The range of that cash payment by Bl. Township at the retirement date can vary widely as the wages/years of service/ etc. will play an important role. From several hundred thousand to perhaps even a million dollars (don't know the actual figure... but think of Dave Payne as Supervisor with good pay and having 40 years employment at the township).
The part of the DB pension plan that gave the employees SECURITY....was the GUARANTEE from Prudential.... the insurance annuity for the retiree. If for some reason, the township went bankrupt and was unable to make ARC (annual required contributions) payments, the retirees would still receive their monthly pension from Prudential. The insurance company is obligated to make the payments.
AND NOW.... at the Sept. 26, 2016 Board of Trustees meeting..... changes.... a new resolution:
Well, after several closed session meetings over the past 3 Board of Trustees meeting, the Board came back to the table on 9/26/16 and made and passed 2 motions based on agenda #5 and # 6.
The Township E-News wrote this review 9/29/16:
Here's what happened at Monday's Board meeting:
Discussion was held on refunding UTGO Series 2007 Township Campus Bonds and LTGO 2008 A Water Bonds and 2008 B Sewer Bonds.
The Board adjourned into closed session to discuss Memorandum of Agreement for Bloomfield Township Fire Fighters Union, and in open session authorized the supervisor to sign Memorandum of Agreement for the Bloomfield Township Fire Fighters union. In closed session the Board discussed attorney/client opinion regarding the Defined Benefit Plan, and in open session the Board approved a resolution regarding guaranteed annuities for employees who retire after Dec. 2, 2016.
I find it incredible that the Township Board would take such action concerning THIS DB pension plan before the expiration of the current 6 year contract that ends 3/31/17. I also find it incredible that the UNIONS accepted the action plan. However, there are employees at the township that are not represented by a union. Will they now form a union?
My best advice to my readers is to view the very short presentation that is the audio/video recording of the 9/26/16 meeting of the Board of Trustees. I would not want to misstate the action taken by the Board of Trustees. Both motions passed unanimously. https://vimeo.com/184514876 You can drag the time line to 1:04:52 and then watch to end of video approx. 5 minutes
AS I UNDERSTAND what happened.....
Bloomfield Township is notifying Prudential that they are exercising the right to cancel w/ 30 day notice the contract that GUARANTEES payment to any employee that retires and enters the Prudential Pension Plan AFTER December 2, 2016.
The township will continue to fund the Prudential fund for each township employee currently in the DB Pension Plan when they retire after Dec. 2, 2016 but Prudential will basically have a separate account... one that does not purchase a guaranteed annuity for all those retirees after Dec. 2, 2016. The balance in the Prudential DB Guarantee Pension account as of 6/30/16 is:
I don't know what "song and dance" Supervisor Savoie and others negotiated and promised in backdoor memorandums/ other means. Perhaps the pension payout will simply operate as if nothing has happened. However, with the pension payments possibly lasting for decades per person/beneficiary, no one knows how the township will be financially managed over those years and whether or not bankruptcy will ever happen to Bloomfield Township. Those with the Guarantee will be paid by Prudential. If the township goes bankrupt, the "after Dec. 2, 2016 retires" will not be paid/ or perhaps get something negotiated in bankruptcy proceedings. On the positive note, while the guaranteed retirees have the money in fixed safe investments at Prudential, the "after Dec. 2, 2016 retirees" could have Prudential taking more risk with that money and thus have earnings increase.... or perhaps not.
WHAT IS PUZZLING.... is the behind closed door agreements with the Unions.
NOW.... if I were an employee in the Township ... and eligible to retire.... I would think long and hard about all the consequences of retiring on or before 12/2/16 vs staying employed. Unless there is some secret deal, this decision can not be changed after Dec. 2, 2016. You need to accept and live with the deal you choose for yourself and your family. Unfortunately, you do not have a new contract yet. The contract you are working under expires 3/31/17. What will the new contract say? Would the language and terms of the new contract sway you to stay? You have a deadline to decide: retire or work.
WHAT IS SCARY.... is the possible run on the retirement and many people choosing to accept the guarantee certificates on or before 12/2/16. How many of the 173 are eligible to retire and how many will? How much cash would need to be deposited into the Prudential Fund to satisfy the actuarial figures? What if 30 people choose to retire? That could be a potential $15 million (more or less) that must be taken out of the DB Pension Equity Fund (from the original $80 million in bonds) and sent to Prudential. The $80 million that Savoie, et al, promoted to fully fund the defined benefit pension plan several years ago is not functioning as planned. More people have retired than expected at this point in time. The money was partly invested in an equity fund with the goal of raising revenue. However, each time an employee retires, funds must be withdrawn from the equity fund and deposited into the Prudential Fund. The more that retire, the less cash in the equity fund to invest. Thus having less chance of gaining significant revenue. Last figure I found 6/30/16 for the balance in that Equity Fund for the DB Pensions is:
See financial statements in the August 8, 2016 Board of Trustees... Board Packet
On March 10, 2015 in the Bloomfield Township Board of Trustees BOARD PACKET for the study session ...... the current (as of above date) retired employees are listed (not by name) and their monthly pension amount.
QUESTION?
WHEN are those BOND HOLDERS from the $80 million bond sale due their invested money returned? There is a limit to how much the citizens can afford to pay in taxes without jeopardizing their own budgets and way of life.
THE NEXT SIX MONTHS :
- Supervisor Savoie and Clerk Roncelli must deal with the Secretary of State and/or the Attorney General's office with the complaints filed against them.
- Clerk Roncelli will be busy with a general election on November 8, 2016.
- The township will have to accept whatever number of employees choose to retire and accept the guaranteed pension certificate on or before Dec. 2, 2016. That could involve a huge cash withdrawal from the Pension Equity Fund current managed by Schwartz & Co. to be deposited into the Prudential Pension Fund.
- The Departments will need to re-evaluate their staffing needs depending on the number of retirees before Dec. 2, 2016 deadline. Will the budget be able to afford to replace /hire new people? I think downsizing the number of employees should be good for the budget.
- Where is a strategic plan for our community for the years going forward? The last strategic plan ended with the final report given in February 2014. Since that report, employees have received raises for the last 4 years. What is the debt for the township now? Are property values back to pre-recession figures? What are the predictions for the future? What is needed? Will we still be AAA rated? What is the township doing to protect that rating?
- Supervisor Savoie needs to present a preliminary balanced budget before the end of 2016/ and approved before April 1, 2017.
- The township must negotiate contracts with the various unions/ and employee groups. Current contracts expire 3/31/17. WHO is doing the negotiating for the taxpayers? We need experienced negotiators and we need the Trustees to weigh in on what is and is not negotiable as far as protecting the interests of the taxpayers. Has anything already been completed? By whom? When? Egads.
- The township must deal with a class action lawsuit @ $11 M possible payout concerning the Water and Sewer department.
- Trustee Brian Kepes becomes Treasurer Kepes on November 21, 2016 for the next 4 years. Is he prepared to do the work? He does not have the same investing background and certificates/ degrees as current Treasurer Dan Devine. Who will he and the township go to for advice? Will there be competitive bids and companies to compare? Will he do this job full time? He wanted to make it a part time job with part time pay for Dan Devine. What is his position now? Will someone monitor his hours at his desk at the township?
- Will the refunding of the $20 million plus Campus Construction Debt Bonds and the refunding of the $7- 8 million in Water and Sewer Bonds be transacted? So far, Savoie and Kepes have suggested Fifth Third Bank as the Underwriters... with no bids from others... and they have not recused themselves because of conflicts of interest. The other parties to the refunding of the bonds issue are long term vendors... perhaps had a contract at some point... but in my opinion are NO BID vendors at this point. Bendzinski & Co., Dickenson Wright, Fifth Third Bank and ?? others?
- For the past six years, the township was able to legally "opt out" of a state law concerning employee health care. There has been NO STUDY SESSIONS to date that seem to be dealing with this issue or any of the other issues mentioned above. Why not? This year, with a new contract, the opportunity to "opt out" have ended. The township must follow the law. Who is advising them on this change?
- The TRUSTEES should be involved to protect the interests of the taxpayers of this township. Too many suspicious deals and hiring of consultants and legal firms by Savoie /others without Board approval. Savoie claimed transparency in his re-election literature. In my opinion, that is just one lie of many he made to get re-elected.
- Now, the next six months will be critical to the future of this township. This AAA rated township needs ethical leadership, a strategic plan, policies that are relevant and adhered to, transparency at all levels of doing business with competitive bidding, and a Board of Trustees that the citizens can respect for their due diligence on all issues and their vote on all issues that are in the best interests of the township.
Marcia
FYI:
http://bloomfieldtwpmi.minutesondemand.com/
See the Board of Trustees BOARD PACKETS for related data
November 23, 2015 reg. meeting
March 10, 2015 study session packet THIS one lists the retirees (not by name) and the monthly pension they receive ....among other data
See archived blog for more data:
http://bloomfieldtwphappenings.blogspot.com/2016/05/50000-report-whats-new-defined-benefit.html
