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/












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