Thursday, October 19, 2017

Choosing Financial/Investment Advisors with NO TRANSPARENCY

Hi All,
Monday, Oct. 23, 2017   Board of Trustees Meeting @ 7 pm

Once again, Bloomfield Township  Supervisor Savoie and his "gang"  apparently feel that the less they tell the taxpayers, the easier it is for them to "rule".   My opinion.

There is absolutely NOTHING to read in the 275 page Board Packet for the agenda item recommending new financial/investment  advisors.   Agenda #8 on Monday Oct. 23, 2017
https://bloomfieldtwpmi.documents-on-demand.com/


There is basically NOTHING in the minutes from that FSC committee for the public and the Trustees (that are not on that committee) to conclude who might be best to hire for the township funds. https://bloomfieldtwpmi.documents-on-demand.com/

 Financial Sustainability Committee Meeting Minutes September 06, 2017
 Financial Sustainability Committee Meeting Minutes August 17, 2017
 Financial Sustainability Committee Meeting Minutes August 14, 2017
 Financial Sustainability Committee Meeting Minutes July 24, 2017
 Financial Sustainability Committee Meeting Minutes May 08, 2017
 Financial Sustainability Committee Meeting Minutes April 10, 2017
 Financial Sustainability Committee Meeting Minutes March 08, 2017

The last meeting that was held on Thurs. Oct. 12... while using paper secret ballot voting, the committee chose the 2 finalists for the DC and other funds  and the 2 finalists for the DB  and other funds.  Those finalists were to be notified and asked to submit their best and final offers before or by this Monday.
 
WELL,   the FSC committee has not met since that 10-12-17 meeting nor has one been scheduled before this Monday B of T meeting 10-23-17.    Because they have not met again.... there are no minutes for Oct. 12, 2017.  The FSC has not reviewed, in a public meeting,  the "best and final" offers.   I wonder what the FSC chairman  is going to say to the Trustees?  Here are two finalists for DC and DB.  Pick who you want? 

Since this is not a Public Hearing, the public may not speak when the agenda item is presented.   The only public opportunity to speak is during Agenda #1.  How can anyone make a 3 min. comment before agenda #8 when there is absolutely NOTHING in the packet to read/review/reflect/ on the FSC process and selections?

I have attended all the FSC meetings and I have FOIA-ed the audio tapes of the meetings.  I honestly believe  (my opinion)  that a lot of that committee work and discussion was done behind closed doors and via one on one phone conversations.  The 7:30 am meetings did not encourage "public" attendance. 

Three people voting Monday night 10-23-17 are Supervisor Savoie,  Treasurer Kepes and Trustee Barnett  and all three are members of the FSC.  Clerk Jan Roncelli ( another voter Monday night) participated in a mock investment session with some of the companies under consideration and some specifically chosen employees .  This was requested by the FSC to learn which company the employees might want to work with.  This "get-together" was not posted as a meeting.     Based on the above, I see four votes to approve whatever they want.   I honestly don't think they care if you, the taxpayer, or the other three TRUSTEES (Buckley, Walsh, Schostak) have any facts or information concerning this process and selection.  The "gang"  certainly avoided posting anything in the BOARD PACKET.   In my opinion, this is just another township  pre-determined outcome that Supervisor Savoie and his "gang" have decided.  

Previous BLOGS on this topic by me:
http://bloomfieldtwphappenings.blogspot.com/2017/09/financial-sustainability-committee.html
http://bloomfieldtwphappenings.blogspot.com/2017/09/financial-decisions-who-is-making-them.html
http://bloomfieldtwphappenings.blogspot.com/2017/08/bl-twp-interviews-for-investment-advisor.html
http://bloomfieldtwphappenings.blogspot.com/2017/05/bl-twp-posts-rfp-for-investment-adviser.html
http://bloomfieldtwphappenings.blogspot.com/2017/04/hi-all-there-is-financial.html

INCLUDED IN THIS 275 page  BOARD PACKET..for the Board of Trustees meeting of 10/23/17   ....

but not to be discussed as agenda items and verbally shared with the Trustees or the public: 
  •  Annual AUDIT by UHY
  •  QUARTERLY STATEMENTS  for Bl. Twp.  financial and investment funds/accounts

FYI
:   I never saw or heard the FSC review or discuss any of the audit or quarterly reports/ information at their meetings,  although it was available to the township for this discussion to occur.

FYI:   The township took the June 2017 RFP off the website.   Do you know what the RFP was asking the companies to bid ON???  What accounts or funds are are on RFP?   The other 3 Trustees (Buckley, Walsh, Schostak)  may not know either.  The RFP was not presented to the public or to the trustees before or after the posting.   In fact, the exact language of the RFP was not finalized and approved at a FSC meeting either.  Someone wrote it and posted it.



I will say it again and again.... there needs to be TRANSPARENCY  and a forensic audit of the township.    My opinion.

Marcia

PS:  
I know the how the voting went on Oct. 12, 2017  FSC meeting.  Here are some notes, observations and comments I jotted down.  The committee wanted to keep the voting quiet.  I hope the companies read this blog.   The minutes of this meeting won't be posted until the FSC meets again and approves them.  That could be days/weeks/ months/years?
  • There were 3 of the 5 companies in the final running for the DC funds and what other funds is not clear.  The top two that were asked for best and final were:  Schwartz and RPA .  Graystone Consulting was 3rd and out of the running.
  • There were 4 of the 5 companies in the final running for the DB funds and what other funds is not clear.  The top two that were asked for best and final were:  &Co  and RPA in that order with Graystone Consulting in 3rd and Gregory Schwartz in 4th place.
More from me:
  • Both Savoie and Barnett left the room immediately after the voting for the DC funds.  Upon arriving back to the meeting a minute or so later,  they announced that they only voted for two and therefore perhaps the voting needs to be redone.  It was determined that the vote was correct and tabulated correctly.  Did Savoie and Barnett hope for a different outcome? Or was leaving the room and coming back with the same issue just a coincidence?   Just wondering.    Before the vote, the FSC members intentionally did not discuss the FEES as Brian Kepes said the "spread" between the companies was not significant.
  •  Before the voting,  Brian Kepes told the FSC members that he had a long conversation with &CO the day before.  Kepes said he did not contact the other companies and share the same information as they had the opportunity to call him and ask questions, too.  Kepes did not say WHAT was discussed but that he was impressed with &CO.    While &CO appeared to be out of the running at an earlier meeting,  this comment by Kepes gained &CO the top vote for the DB funds with RPA a clear second.   Fees were mentioned before the vote,  reluctantly, but is the fee fixed or level or sliding scale?  I don't know.  Did the FSC members know for sure?   The entire short discussion of fees was not clear...at least to me.    $67,500 ;  $85,000 ;  $105,000  ;  $79,750       Votes and prices in order:  &CO; RPA; Graystone; Schwartz
  • Brian Kepes mentioned that he would ask UHY... our township auditors... to review the candidates and proposals.   Why wasn't that review and discussion part of any FSC  public meeting?
  • The RFP  allowed for all companies to bid the Township financial and investment funds listed in the RFP.    With RPA in the final two for both the DC and DB  accounts,  did the township ask them for a combined all in price?  I doubt it.
  • I FOIA-ed the audio tapes of all the FSC meetings (even though I attended all meetings).  In my opinion,  the 5 companies did not get a in-depth review and discussion and comparison of their proposal vs the others at the PUBLIC meetings.  I'm sure they spent a lot of time and effort preparing the documents.  Too bad the township didn't give the same effort.  My opinion.

Saturday, September 23, 2017

Financial Sustainability Committee -Interviews Finished. What next?

Hi All,

The Financial Sustainability Committee (FSC) met again on WED.  Sept. 6, 2017

I was anticipating  at the 9/6/17 FSC meeting a lively discussion of the five companies among the FSC members to help narrow down which company may be best to meet the goals requested in the RFP.   That did not happen even though the agenda said they would discuss the interviews.
  • What seemed to be the most important topic at this AM meeting was,  which person from which company would the employees like to work with the most.  Really?  Yes.  That was a main focus of the one hour meeting.  The committee is planning to get a small group of employees to role play an investment advisor one-on-one  or group meeting session with some, not all,  of the companies and their "key person" that would handle those contacts in the future.  The employees would then tell the FSC members which person they liked the best.
  • The other key point that was mentioned was the DB Prudential FIXED pension.  Well, that was intentionally NOT part of the RFP and specifically said so in the RFP.  Yet, that seems now to be a considering factor when finally choosing a company.  Not fair !
  •  I can't express in words how disappointed I was with this meeting, yet several FSC members mentioned out loud several times how "productive" this meeting was.  
FYI:  Interviews were held in August for 5 companies. The FSC minutes approved just mentioned the names of the company and the presenters.  No other facts were in the minutes.  Just 45 minutes for presentation and 15 minutes for questions was given to each company.   Then the committee took a 15 minute "break".  Many FSC members gathered in another office room area.  I believe there was talk about the company just interviewed.   I, of course, was not permitted nor invited to that space and the tape recorder for recording the meeting was in a different room.  Since this was an open meeting,  I believe this separate discussion after each interview was a violation of the Open Meetings Act.

Also, at the interviews, the FSC committee members received a handout from each company.  I, as audience member was not permitted to receive those handouts and subsequently was denied a copy of those handouts in a FOIA request.  During the presentations, not all companies mentioned the pricing and the committee members did not ask.  Therefore, that kind of information is missing in my notes.

The rest of this blog are comments from my notes as I heard and understood them.  Because I could not follow along with any handouts... I may have misunderstood or made some errors in my notes.    I apologize for any misrepresentations.  I will correct this blog upon any verifiable facts of error.    Therefore:  my notes and opinions about the 5 companies that responded to the RFP:

1.
Mentioned by a few at the Sept. 6 morning meeting was that one company, SHERIDAN ROAD,  most likely will not be chosen.  While a reason was not clearly expressed (except perhaps not local)   I personally thought they were the weakest presentation.    I did not hear what the transition plan would look like if they got the job, nor heard about their research group or the pricing plan.  That may have been in the handout that I did not see.

2.
Committee members hinted on 9/6/17 that: &CO,  another company may not be in the running for the complete "all in"  job mainly because they do not do one-on-one or group interactions with the employees.  That job ...&CO said is for an independent record keeper that they would help the township hire.  The cost for the record keeper would be included in &CO fee structure.   In the &CO presentation, their key was that they have freedom from all conflict of interest.   They also gave a service guarantee with money back /conditions.   They do not buy or sell.  I liked this company and the people presenting at the interview.  I did not see their handout that went with the presentation.


FYI:
 RPA, Graystone Consulting, and Gregory Schwartz & Co. were the other 3 companies interviewed.  Again, practically nothing discussed about their interviews and proposals.  RPA did not talk about the DB Pension fixed Prudential funds as it was purposely left out of the RFP by the township.  However, 2 of these companies currently do work with the township in the financial/investment area.  Both Schwartz and Graystone have worked with the fixed Prudential DB Pension Plan with the township.

3.
RPA:   Their claim is that they are an independent firm, are fiduciary for everything, and have unbiased freedom to provide any plan.  They mentioned that the township must have a IPS or better one (an Investment Policy Statement).  The Board of Trustees must know it, understand it, follow it, and RPA is here to help with all that, to select a manager, get the benchmarks to be used, value communication.  They would work on portfolio construction:  actuarial, cash flow, DB, and better policy statements.   No money would be managed by RPA.  I liked this company and the people presenting.   Again, I did not see the handout for their presentation.

4.
Gregory Schwartz & Co.  has been the township financial/investment advisors for a long time.  They were with the township through the recession years.   My notes mention that they will provide training to the Board of Trustees as well as continuing working with the employees on their various fund accounts.  They are advisors and fiduciary. They reportedly have been working with Supervisor Savoie, Treasurer Kepes and Finance Director Theis with making changes since the 2016 local election.  Will  Schwartz & Co have an edge in this RFP process?  TBD.   I did not hear or record the cost/fee to hire.  I did not see the handout that was with the presentation.

5.
Graystone Consulting was brought in to township "vendor" status by Savoie and Kepes ( and Board of Trustee vote based on FSC recommendation)  during that same time period of campaigning for the 2016 local election.   I did not agree with the hire.   I felt there was a better company at that time.   With Graystone, the township ended the "guarantee" part of the fixed DB Prudential Pension on Dec. 3, 2016.  That is an entire blog itself.
 
Graystone Consulting is a division of Morgan Stanley. They claim global reach and research second to none.  They are a financial services firm.  My notes mention the portfolio construction would focus on cost effectiveness, mix of managers, risk allocation and thematic views.  I did not see or receive any handout from this company to review.

I also recorded in my notes that this interview with Graystone was different from the others in that the FSC members continually interrupted the "presentation" with questions, where the other 4 interviews had questions only in the last 15 minutes.  It seemed as though the committee wanted to make sure certain points were made at this interview.  Just an observation and gut feeling.

It has been reported that Graystone continues to be of "assistance"  to Savoie and Kepes.  Whether or not it is paid work is not verified by me.

It will be the Board of Trustees that make the final vote to hire, but what information will the FSC bring to the Board?  Where is the discussion of the choices?

 I wonder how close the RFP information that these companies prepared their presentations on is to the reality of the accounts 3 months later?  Will dollar figures be updated and relayed to the companies before the hire?   Will the companies CHANGE their proposed PRICE to do business with the township?

FINAL THOUGHT:
I still think there should be a FORENSIC AUDIT of the township.   I've been requesting this for years.  I'm not accusing anyone of criminal activity, but that kind of audit seems to be the only route left to get this township to open up the books on ALL the accounts.  Even  in UHY, Inc. 's  2015 annual audit (found in the Oct. 10, 2016 BOARD PACKET of the Board of Trustees : item #4) they report they audit only the 4 major funds.  Well,  there are at least 17 to 20 funds at the township.  I want a complete audit.  The company that is hired to help create the best financial and investment advice and portfolios deserves the complete truth of township revenues, expenditures, accounts, funds and debt.   My opinion.


Marcia






Thursday, September 7, 2017

Financial Decisions- Who is making them in Bl. Twp. and Why?

Wow... I wrote this blog on April 7, 2017 and apparently never hit publish.   I am not editing it to make it current... just realize the meetings have long passed.  Sorry.  However, there is information in this blog about the FINANCIAL SUSTAINABILITY COMMITTEE  that I wish to share.  Thank you.   Marcia

Hi All,
Today's blog is about a FINANCIAL SUSTAINABILITY COMMITTEE (FSC)  formed by the Bloomfield Township Board of Trustees and approved on January 12, 2015  (read the legal language when formed as to purpose and function : in item #13 in the minutes from that date for this committee).

The committee met 5 times in 2015, one time in 2016 ,  and one time so far in 2017.  The second meeting in 2017 is scheduled for  MONDAY, APRIL 10, 2017 @ 7:30 AM.   NO agenda or minutes from the March 8 meeting is posted as of the writing of this blog.  However, I heard that the FSC will be discussing the language for an RFP  to bid out who will be the investment company and looking for other ways to make money on the township cash deposits and fiduciary funds.  This meeting is open to the public.

Since the formation of this committee I have written other blogs and have spoken at Board of Trustees meetings during public comment concerning action taken by the Board based on recommendations by this committee.  I am not a fan of this FSC.   While the legal language of this committee stated that the members shall meet quarterly, they have not.
 
 The FSC seem to be only engaged in certain snapshots of Township financial issues as Supervisor Savoie deems appropriate or needed. 
 

At the only meeting in 2016 (6/1/16),  the minutes show that the committee recommended to end the "guarantee" of the employee DB pension as a choice that was presented in a $50,000  Graystone Consulting study.  On Sept. 12 and 26, 2016 the Board went into closed session to discuss the DB Pension Plan.   The taxpayers were left out of the discussion.  The Board did vote to end the "guarantee" of the pension to those employees in this DB Pension Prudential plan that are retiring after 12/3/16.

The 6/1/16 FSC also basically tabled a non-agenda item that was a requested discussion (by then Treasurer Dan Devine) to be held on the minimum fund liability set by Prudential.   Why wasn't the committee interested in that discussion?  I believe the pension liability was to be deposited with Prudential before 12/31/16.  Was the payment made?  Apparently not.  This committee did not meet again until March 8, 2017.  


FYI:  Dan Devine is no longer Treasurer.  Brian Kepes was voted in as Treasurer as of November 2016.  Trustee Neal Barnett was appointed to this FS committee.  Other members are:  Supervisor, Leo Savoie; Financial Director Jason Theis; citizen appointees:  David Petoskey, Don Katz and Ken Hudson (3 year terms).

Finally, nine months later , the FSC meets again on March 8, 2017


Misleading agenda item:   The township asked for the partial deferral in April 2016.  No discussion was permitted at the only 2016 FSC meeting.  At the FSC meeting of March 8, 2017 this Pension account liability with Prudential was finally discussed.  A Feb. 27, 2017 letter from Prudential to now Treasurer Brian Kepes:






No minutes to read yet from 3/8/17... however:
Apparently the township chose the partial payment of $5,384,518.00 by March 15, 2017.   Another half million is still overdue but was deferred by Prudential at the request of the township.

I think the shocking statement in that 2/27/17 letter from Prudential was how much money the "extra" cost of living provision adds to the DB Pension funds needed monthly:


Any funds going to the DB Pension  GDA at Prudential MUST come from the $80 plus million  BOND money secured in 2013 to "fully fund" the DB Pension account.   The majority of that bond money was deposited into an account with Gregory Schwartz and Co.  in the assumption that the money will earn the township more money.   Well, that decision and assumptions did not quite work as planned.  While the township always approved unanimously the investment plans proposed by Schwartz, the years 2007-2012  hit every one hard.  Another factor was the number of employees choosing to retire during those years with a required monetary deposit into the Prudential account for each new retiree.  That money was required to be taken from the Schwartz accounts from the 2013 bond money.

I read in the approved 2017-2018 Budget that the Pension Obligation Bond Debt outstanding principal as of 3/31/17  is $ 69,415,000  with the principal payment of $ 3,335,000 and $2,888,104 in interest is the expected payment by end of fiscal year 3/31/18.  This payment is for the BONDS not for the pension payment.

I also saw via a FOIA document that the snapshot of balances as of 3/6/17  for Prudential DB Pension is    $ 152.7 million  and the Schwartz & Co. account for the DB Pension bond money is only at $60.7 million. Remember, the 3/8/17  FSC meeting came after this date and a payment of approximately     $ 5.4 million was due by March 15, 2017.  That should suggest that the 3/6/17 Schwartz & Co. reported account balance is reduced to just $ 55 million.   Another $ 5 million  is also due to Prudential according to the letter of 2/27/2017 by 12/31/17.  That money will also need to come from the Schwartz & Co.  DB Pension account.  Down to $ 50 million give or take due to investment profit or loss.   I did hear that the Police Chief is retiring in May, and who knows who else may retire this year.   As the pension " equity account " deposited with Schwartz & Co.  decreases,  with interest rates still low,  it is difficult to earn enough interest on the money that the township leaders had hoped to attain.  
  
With the 2 % raises given to ALL employees starting in 2013 and again given each year:  2014, 2015, 2016, 2017, 2018 , 2019  plus the cost of living still in the contracts,  this township appears to have continued the unsustainable costs associated with employee pensions.  

Keep in mind,  the GDA Prudential DB Pension plan was ended ONLY for all those hired starting in  2005 and after.  That Prudential DB pension will continue until all those enrolled employees and their beneficiaries have passed.  This plan could go on easily for 50 or more years.   However, there is another costly DC Pension plan whereby the township (at last look), contributes either 10% or 14%  of the base pay of those employees hired after 2005 into a 401 (A) type account.  With close to 100 +/-  employees in THAT pension there is approximately $5.1 million dollars  already deposited.  Supervisor Savoie and new Treasurer Brian Kepes are in that DC plan.  They were also the ones presumably negotiating the new 3 year employee contracts....that include themselves.  Can you say:  Conflict of interest?  Who was representing the TAXPAYERS?  How much per year of township money goes into THOSE pension 401 accounts?  Are the employees required to deposit money into that 401(A)?

With the township having the opportunity and the ability to negotiate new employee contracts as the 6 year existing contract was expiring 3/31/17,  Supervisor Savoie and the entire Board of Directors made little, if any (in my opinion),  attempt to control spending and costs in the new 3 year contract they approved on March 13, 2017.   Basically,  2 percent raises for all employees for each of the 3 years of the contract.  Cost of living not eliminated: a monthly cost at present is almost $100,000 a month into just the DB pension account.  There are other employees in a DB Pension program.  Is cost of living in the contracts?   What language stayed the same in the contract?   What changed?   Are the contracts different for the various unions and non-union employees?   No exact contract language was shown in the Board Packet to the Trustees and the public before the vote to approve the 3 year contract to my knowledge.

Recently, fire and police retired employees spoke up during Public Comment about the changes made to their health care policy.  None of that was mentioned before approving the new 3 yr. contracts.  Now,  the Board is considering making changes to the new 3 year contract and that will be discussed on the WEDNESDAY,  APRIL 12, 2017 @ 7 pm  meeting.

Big Question: So, was there FSC input or suggestions for the new contracts?  If there was input by any of the FSC members, it was done without any scheduled public meetings.  Behind closed doors?  Or not consulted at all? 

Is this just a Supervisor Savoie, Treasurer Kepes and Finance Director Theis  financial decision making process?    Kepes and Theis  have looked to friend Treasurer A. Meisner at Oakland County and have authorized transfers of township money into Oakland County managed funds. It started with approximately $1 million but as of 3/6/17 the OC local government investment pool for the township is at $18.0 million.   Where did the township money come from that was deposited in the CD's or other short term holdings that eventually were transferred into the OC investment pool?

I want to see the Safety Path millage account.  I want to see the Senior Center millage account.  I want to see the Road millage account.  I don't want that money commingled into a gigantic pool of money whereby the township could possibly withdraw that money for any purpose.  The MILLAGE money is DEDICATED.  However, how can the public know where the millage funds end up?

This is where I repeatedly urge a financial AUDIT of EVERY account at Bloomfield Township.   There may be no funny business going on but since the ANNUAL audits NEVER  discuss ALL the accounts and funds in the township,  how can the trustees and the public ever figure out how and where our money is spent?   How can the Trustees conclude that the projects approved are completed at, over or under budget?  

Payroll and vouchers statements included in the Board of Trustees BOARD PACKETS do not identify from what account the money is debited.  The list of checks includes employees who are given checks for "reimbursement"  listed as petty cash payments.  Can every employee spend money in/for their job and get reimbursed?  This payroll and voucher list is given only as dollars and names listed numerically without regard to which account the check represents. Everything seems to be commingled.  Even water and sewer payments from the Enterprise Fund that is NOT to be commingled are listed in payroll and vouchers in the numerical format.  That form of reporting payroll and vouchers seems illegal but if nothing else,  misleading to the taxpayers.

Speaking of water and sewer department:   the 2017-2018  approved budget did NOT MENTION the water and sewer department costs and revenues.  We're talking millions of dollars left out of the budget approval process.

Apparently water and sewer issue is on the WEDNESDAY, APRIL 12, 2017 Board of Trustees meeting at 7 PM.    Note:  The meeting is scheduled for Wednesday,  not the usual Monday,  because of a religious holiday.  As of this writing, there is NOTHING in the board packet to give any hint as to what will be said or revealed as to water and sewer.  I wonder how the $11 M lawsuit against the township is fairing?


  https://bloomfieldtwpmi.documents-on-demand.com/