DEFINED BENEFIT PENSION PLAN NOT CLOSED TO ALL UNTIL 12/31/13
Despite what the township leadership has said, the defined benefit pension plan was NOT closed to all since 2005. Apparently, this plan included members of another taxing authority, the Bloomfield Township Public Library. How do I know it was library employees? I asked Mr. Savoie, who was "Division 001" employees at the town hall meeting on June 26, 2013.
In order for the Township to take advantage of the new law to use bonds to cover underfunded pension funds, the township had to go to the library employees and ?negotiate? a pension plan for them in order to REALLY close the defined BENEFIT plan. That final step to really close the plan happened at the April 8, 2013 Board of Trustee meeting with agenda items # 7 & #8. (see Board Packet 4/8/13). But I ask: why is the township involving another taxing authority into the township government pension plans? Are there others?
AT THE SAME 4/8/2013 MEETING, THE TOWNSHIP APPROVED PAY RAISES FOR ALL EMPLOYEES..... 2% in 2013 and 2% in 2014.
After "cleaning up" the details of the pension plan and whether or not the plan is really closed, the township leadership then gave ALL the employees a 2% raise for 2013 and 2% raise for 2014 and approved those raises at the 4/8/13 Board of Trustees meeting.
The contracts were signed in February.... before the 2013-14 Budget was approved. Apparently the leadership knew there was money for the raises in the budget. Why not money for the pensions?
These are the groups that signed the labor agreements:
DPW Association (Dept. of Public Works)
Supervisors Association
Water Department Association
Police Command Union
Police Patrol Union
Fire Department Union, Local 3045
Knowing that they COULD use $85 million in bonds to fund the underfunded portion of the Defined BENEFIT Pension, the township leadership gave all the employees a 2% raise effective 4/1/13 and a 2% raise effective 4/1/14. The six year contract allows for another chance to negotiate wages in 2015. The current six year contract expires in 2017. What is the dollar amount for a 2% raise.... including the amount for benefits?
So, instead of using money collected from the taxpayers to pay down the pension obligation debt, the township gave pay raises, essentially increasing future pension benefits for those employees. There was the OPTION to open wages in 2013 and an OPTION to open wages in 2015. An option by the township leadership could have been to make NO CHANGES to the contract. The township has a very generous six year contract in place with the employees. There is an $80 million UNDERFUNDED pension for those same employees. WHY give more raises? Why not fund the pension? Answer.... free money.... BONDS.... will pay for the pensions. At least that's what the township leadership and the financial advisors are telling us. One problem: there is the possibility that it might not earn the money expected. Then the township TAXPAYERS still owe the pension fund and owe the bondholders.
The majority of the employees are still currently in the defined BENEFIT pension plan. The DB plan is still in effect for over 200 currently retired employee and over 200 current employees. The township leadership is quick to say that the average pension is $34,000. This pension plan began in 1961. Today, there is one person that receives over $130,000 pension plus retiree health benefits. In twenty years, thirty years, ...fifty years.... what will be the average pension obligation debt? This plan is unsustainable....but the township leadership (most in the plan) and the township employees (most in the plan).... are not the ones responsible for the DEBT obligation.... it is YOU, the taxpayer.
This DB pension plan will be an obligation to the taxpayers of Bloomfield Township for at least another 50 years or more. This plan needs to be "frozen" immediately and all employees put into a 401 (k) or some other plan. It needs to be done BEFORE considering the bond issue. If the employees don't wish to negotiate.... I say, don't do the Bonds. Force the township to figure out how to make a balanced budget on the revenue collected.
A balanced budget includes funding the pension fund annually. If that means laying off employees, eliminating vehicle perks, eliminating longevity pay, stop the tuition reimbursement plan, eliminating credit cards for some employees, outsourcing some departments, quit doing work in other communities for small fees, etc... so be it. It is time the township leadership works FOR the residents and spends the money collected wisely and negotiates contracts that can be paid annually...including the costs of the benefits.
In 2009-2010 , some of our township employees and many vendors doing business in the township formed a political action committee : SOS, Save Our Services, and collected over $85,000 to send out literature to convince the taxpayers to approve a new 1.3 millage for 10 years collecting over $4 million a year. At the Feb. 2010 ballot, the measure narrowly passed. That $4 million collected went to the pension funds in 2011. 98% of that $4M each year goes where? For services? Or for pension payments and other contractual debt?
Gregory J. Schwartz & Co., a township financial advisor, donated $20,000 to that campaign. David Fischer, (autos) donated $30,000. Oakland Hills CC donated $5000 (Leo Savoie is a past president of OHCC). The Firefighter Union donated $2000. Department Heads and other employees donated other amounts, including Ray Perkins, Finance. Developers/ Insurance Co./ Lawn Service, etc.... you get the point, all made donations to the Save Our Services committee. See the public record of the donations. Public Records # 95805 Save Our Services
The public records also show a new treasurer for the SOS committee, and a balance of over $22,000 to spend on the next ballot question. What's up for renewal? Public Safety, Senior Services, and Safety Paths. Remember, renewal of a millage is an OPTION. You can always vote NO... and force the township to pay the bills without doing bonds. The township already has $69 million in current bond debt....and growing. If the township does the $85 million ...add to the $69 million.... that's over $150 million in bond debt, an awful lot of debt for 17,000+ homes in the next 20 years. By doing BONDS... the township can keep the AAA rating.... and have the opportunity to keep borrowing even more. This borrowing must STOP....NOW.
Gregory J. Schwartz & Co. have been financial advisors at the township for years. They also hold group financial advising with township employees as well as one on one financial advising with the employees. I believe your tax dollars are paying for that service or perk. I also understand that Schwartz & Co. handle the investing and bonds at the library.... a different taxing authority... but somehow... blended into the pension funds. I believe that Schwartz will also be involved in the investing of all or part of the $85 million bond money added to the current fund balance money. Will other companies be included or able to present investment plans?
The township is supposed to have quarterly PUBLIC review of fudiciary review. That has not happened ... to my knowledge... as I could not find 4 reviews a year in the minutes or study session minutes for many years. I think it is important to SEE the reports of all the different accounts and plans. Where are they?
Prudential handles some other assets. Where are those reports? This is OUR taxpayer money being invested to meet OUR financial obligations. We have a right to see the actions taken and results achieved.
I think we should ask... What vendors/businesses will benefit financially from a bond sale? What amount? I believe there is $2-5 million set aside for those fees. Will they donate money to a political action group for the purposes stated to raise your taxes at the next ballot question?
The current $85 million pension obligation bond analysis can be found on the township website....Board of Trustees... STUDY SESSION MINUTES... choose: MAY 13, 2013. I highly recommend you read these minutes. There were three Scenario's presented. All were forecast for 20 years.... even the 30 yr. plan only showed 20 years. Why? Debt service schedule was provided by Bendzinski & Co. Could there been other scenario's presented that were not based on 20 years?
Who says this underfunded portion must be 100 % funded in a twenty year time frame... when the fund will be in existence for 50 + years?
A portion of the "disclosures" in the Pension Obligation Bond Analysis II by David V. Pappalardo, FSA,EA , May 2013 states: ..... ".....the future is uncertain and a range of outcomes can reasonably be expected to occur. Future measurements may differ significantly from the current measurements presented in this document."......
Adding more debt with the hopes of making money to pay that debt is a RISK that I'm not sure the township should take at the $85 Million level.
Just because a new state law says we CAN borrow....doesn't mean we SHOULD.
The first Town Hall meeting was poorly attended. However, it was recorded by the township. When will that tape of the meeting be shown on cable? Don't know. A second town hall meeting is scheduled for Tuesday, July 9, 2013, from 1-3 PM in the auditorium.
This is your last chance to ask questions/ state your opinion. The township often justifies it's actions by saying "no one came to speak on the issue".... Much of the time... no one knows what is happening at the township. I'm glad I spoke up about this bond issue. Too bad the only way the public really had a chance to influence the decision was by referendum.
Marcia
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