Friday, November 30, 2007

Christmas for some, coal for the taxpayers...

Last night’s County Commission meeting was jam-packed with headline making happenings. Unfortunately (or fortunately….) I was off making money selling my pottery and had to miss the meeting. However, I do have audio from the meeting and have talked to a number of folks who were there, and I asked for and received copies of some of the statements made by concerned citizens.

Three topics caught my attention in particular. Defined benefits, the increased cost of the emergency “bunker” (as it’s been nicknamed) and the Sheriff’s proposed purchase of new guns.

In this blog, I’m going to focus on the defined benefit (db) program and on one of the speakers who addressed the Board last night. It’s Christmas, I don’t want to tax you with a long blog. You’re gonna be taxed enough as it is with all your Christmas shopping, the increase in taxes the current Board dropped on you and the increase in taxes you’ll see once they implement the db program…

Former Senator Rick Price (who’s also a past County Commission Chairman) spoke against the proposed db program at last night’s meeting. He presented a list of ten questions regarding the program. Just as a bit of background on the Senator, he is a financial planner. He knows his stuff. Thus he has the benefit of looking at the idea of the db program from multiple sides. He’s been in the hot seat on the Commission, he’s been in politics at the state level and he has an intimate knowledge of the financial world.

Currently county employees have an award-winning defined contribution retirement program. Some of the Commissioners and the Interim County Manager are pushing hard to switch to a db program. They put together a handpicked committee of employees and an attorney (who doesn’t deal at all with db programs or anything related) to “study” the feasibility of switching to a db program. The committee worked with the group that will get the county’s business if they’re successful in selling the program to enough of the Board to “study” the issue… sure, right, sounds good to me, too.

From what we’ve seen thus far, the program is a shoe in and county employees are going to get a really nice Christmas present. The taxpayers are the ones who’ll be left holding the proverbial stocking full of coal, one we won’t deserve to have foisted on us.

Here are Senator Price’s ten questions. What do you want to bet that we never see a response to them? Or, if we do, they’re answered in rosy gloss-over-the-fact prose by the guys who set the program up for Henry County (huge unfunded liabilities to the tune of millions and millions) who’re now trying to sell the program to the Fayette County commissioners?

Here are his questions:

As a taxpayer of Fayette County, I am requesting the Board to respond to my written questions below as individual Commissioners and/or as a group BEFORE a vote is taken on implementing a Defined Benefit Retirement Plan.

1. Is the board going to vote to implement a benefit plan change of any type before the end of 2007?

2. Will you vote to implement a Defined Benefit Retirement Plan WITHOUT a series of PUBLIC MEETINGS once the board has made a decision to implement a Defined Benefit plan?

3. Can you explain why this Board has not hired an independent pension consultant?
(NOTE: When the Board enhanced the existing Defined Contribution Retirement Plan in 1995, the Board hired an independent consultant to evaluate options for plan design, cost and eventual coordination of the bidding process and finally, the selection of a new Defined Contribution Plan company.)

4. Please explain why this Board has as their stated goal that Fayette County Employees retire with 100% of an employee’s pre-retirement salary. Please name any major private sector employer who has as their stated goal that their employees retire with 100% of their pre-retirement salary.

5. Please explain why this particular board is willing to commit future boards and taxpayers to the unfunded liabilities that are prevalent in most government defined benefit programs. See attached.

6. Is the Board aware that constitutional officers, (Sheriff, Tax Commissioners), firefighters/EMTs and other certain public safety employees have Defined Benefit Plans also have available to participate in, i.e., the Georgia Firefighter’s Pension Fund and the Peace Officers’ Annuity & Benefit Fund of Georgia? These additional pensions are funded by additional surcharges to fines and fees that taxpayers pay. Some are voluntary and some are mandated by the state legislature.

7. In your research, are you aware of Henry County’s Defined Benefit Plan shortfall? Are you aware that Henry County implemented their Defined Benefit Plan 4 years ago and now has a $25 million dollar “unfunded liability” that falls on the Henry County taxpayers? See attachment.

8. Can the Board explain why most major corporations in general, and Delta Airlines in particular, have frozen or cancelled their Defined Benefit Retirement Plans but Fayette County is reversing this trend by planning to add a Defined Benefit Retirement Plan?

9. Is the board aware of the possible negative exposure a county employees spouse or beneficiaries may have by participation in a Defined Benefit Plan versus the current plan?

10. Please review the attachments that show three local governments whose audits show that even though the are funding their annual dollars (at 100%) that actuaries advised, they all have shortfalls that will have to be paid by the taxpayers. Will this board show the true cost of a defined benefit plan?

Rick Price

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