Fayette County Commission Race Down to Brown Versus Smith

Harold Bost has decided to withdraw from the Fayette County Commission Race.  Bost was running against Incumbent Jack Smith.  Bost will be supporting former Peachtree City Mayor Steve Brown.

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West Fayetteville Bypass Blues

Last Thursday the County Commission approved the West Fayetteville “Bypass”. It was a unanimous vote, 5-0.

[Just a tidbit in case you’re wondering --- the West Fayetteville Bypass (WFB) is not a Bypass. It’s just a road. At some point someone called it a Bypass and the name stuck. It’s not intended to bypass anything.]

It was a foregone conclusion that they were going to approve it, but not for the reasons stated in their various explanations as they voted. I know I have a tendency to be a bit skeptical about the motivation of the Commissioners, but last Thursday’s gnashing of teeth and sackcloth lamenting about being forced to vote for the By-pass was sublime theater.

A few of the Commissioners intimated that their hands were tied... There was a SPLOST (Special Purpose Local Option Sales Tax), which the voters barely passed in 2003, that included the project thus they had to move forward… Those nasty Commissioners before them forced them into this tough position...

Not so.

They do not HAVE to do all the projects in the SPLOST.

The SPLOST the Fayette County voters approved is a five-year SPLOST which can raise up to $115 million. The money collected MUST be used on the projects on the list. They cannot take any of the money and use it to fix or build a road that wasn’t listed in the SPLOST. They can’t build a library or park instead, either.

As said, they don’t have to do every project in the list. In fact, there’s no way they COULD do all the projects on the list as $115 won’t cover the costs.

The Commissioners have to prioritize.

The so-called WFB wasn’t a priority until sometime in the last two years. In fact, the number one priority was the East Fayetteville Bypass which, to the best of my knowledge, is now languishing.

The current Board moved the WFB up from somewhere down the list. If they hadn’t moved it up, chances are many of the folks on Lee Road who are so rightfully upset about losing their property or having a road right out their bedroom window would be long gone from Fayette County before it had made it to the top of the list.

When the voters said yes to the transportation SPLOST the WFB was included, but a specific route was not designated. The engineering, environmental studies, surveying to determine the route are all expenses that must wait until the money from the SPLOST is available.

Many SPLOST projects for roads are adjusted, changed in scope or even dropped completely after all the costs, including public input, are analyzed.

Completing Phase 1 of the Bypass, which is the area around the hospital, was the only part scheduled for completion until the current Board got their hooks into things. That phase alone would use up the majority of the dollars allocated in the SPLOST.

Bottom line – if our Commissioners are voting to proceed with the WFB it is because they WANT to build the road, not because they’re being forced to build it.

NOW for a bit of speculation, observation and conjecture. All mine.

I noticed at least two developers and one developer’s representative in the crowd at the Commission meeting Thursday night who didn’t have any requests on the agenda. They stayed through the WFB vote.

I believe the two Commissioners who said none of the people who contributed to their campaign had property along the newly proposed WFB route. If I remember correctly, the other three didn’t pipe up and say anything, not sure if that means they received contributions or just figured they didn’t want to join in. To my way of thinking, having a contribution from a developer along the route would be horrific given the change in SPLOST priorities. Especially since many agree that there are other projects on the list that should be given higher status.

Campaign contributions or not, that doesn’t mean that developers aren’t interested and that they won’t benefit from the WFB. It also doesn’t mean that the Commissioners are or aren’t developer friendly. I don’t know the Commissioners motivation or rationale. Based on what I’ve seen and heard, they’re not doing a very good job of coming up with real good reasons for changing the priorities and pushing so hard on the WFB.

I also wanted to toss out a thought about the possibility of someday seeing an Industrial Park somewhere along this route. Commissioner Jack Smith has tried to get this one going since being put on the Board, and prior to being elected when he sat on the Fayette County Development Authority.

It’s pretty much died on the vine mainly or partially because there aren’t any good truck routes coming into the county aside from the already congested Hwy. 74.

Guess what’s going to change when the WFB is completed? Yup, a very nice route for trucks and commercial traffic to get to a brand spankin’ new County industrial park. I’m going to go back and dig through the recordings I made of the meetings were the proposed locations were discussed to see if anything in that area was mentioned. It won’t mean anything if it wasn’t --- I’ve been told (but haven’t verified for myself) there are some huge parcels of land owned by developers along the route. I’d guess at least one would make a nice industrial park.

After all is said and done, there are still going to be many road projects that need to be addressed in Fayette County. In today’s world, about the only way to afford to fix roads is to have outside-the-county governmental monetary assistance and to have a mechanism for raising money like a SPLOST.

When the money from this SPLOST runs out you’re going to see another pop up for a vote on a ballot. Whether it passes or not is likely to depend in part on how those who’re asking for the dollars have spent the current SPLOST dollars. Here’s another bit of speculation – I’d bet the voters will see some sort of civic or multi-use arts center included in the next SPLOST. That’s going to open up a whole new can of worms.

People have a tendency to wait until something is right on their back doorstep before they get involved or start paying attention. I hope that doesn’t hold true in this county. I hope that people will take the time to watch, complain, encourage and vote. Get involved. Keep up with what’s going on. Don’t wait until a 4-lane bypass is routed through your back yard.

Defined Benefits... Pension Woes...

Across the country governments are having major, major problems with their defined benefit pension plans. They are running from them like they are killer bees swarming. Not so in Fayette County. Our "leaders" voted to implement a plan. Yep, they are building hives to house the bees. The taxpayers are the ones who will someday feel the mighty stings.

Here's some more buzz on defined benefit woes:

Pension Dissension
FASB gets an earful as CFOs protest key details of pension-accounting reform.
Russ Banham, CFO MagazineAugust 1, 2006
Companies generally pride themselves on being forward-looking, but many are balking at the idea of looking ahead to future pension obligations and affixing a firm price tag on today's balance sheet. That has emerged as the biggest, but by no means only, bone of contention as companies, the Financial Accounting Standards Board, Congress, the Securities and Exchange Commission, and others grapple with pension-accounting reform.

Commentary: The Funding Crisis in Municipal Pensions
http://www.contingencies.org/mayjun06/commentary_0506.asp
Excerpt:
"Unfortunately, many municipalities in America face the consequences of underfunded pension plans, escalating benefit costs, and reduced income on investments. It's a situation that must be addressed immediately, before a crisis ensues."

San Diego/city: Little-Known Pension Problem Is Brewing and Will Soon Reach a Boiling Point (column)

$300 BILLION IN UNDERFUNDING – The Pension Benefit Guaranty Corporation reports that underfunding of U.S. pension plans has reached about $300 billion. Falling stock prices have increased the shortfall from the "low $100 billion" just a year ago. The Treasury is expected to issue proposed regulations allowing employers to convert defined benefit pension plans to cash balance plans. The AARP retiree's lobby is keeping a close watch to try to insure older workers don't get short changed in these transactions.

Lifting the Lid: Alaska case may spur more state pensions to sue
BOSTON, Dec 14 (Reuters) - Alaska's $1.8 billion lawsuit against Mercer accusing the consulting firm of pension calculation errors sets the stage for a showdown between U.S. government retirement funds and private service providers.

You really should read the articles if you have an interest in seeing what the future of our county may be. In particular, the last article, "Lifting the Lid" is going to have major repercussions on the future of pension plans depending on the outcome. One "defense" that Mercer touted is that employees retiring earlier than expected caused a shortfall in funds.

Now here in Fayette County, we have a LOT of employees who are looking forward to retirement. In fact, most, if not all, of the employees on the committee studying defined benefits are in spitting distance of retirement.

There are well over 700 employees currently working for the county in some capacity. How can anyone logically calculate how many of those will opt to retire in any given year. I know there are "models," but as I read the articles on DB problems, over and over I see them whining that more people retired than they expected. Take a look at the problems across the country and tell me the sales folks knew what they were talking about as they spouted numbers.

I heard, but don't know for a fact as the final plans haven't been completed, that county employees will be vested after five years of employment with the county. What that means is that someone who works for the county for five years, then moves on, will be collecting retirement from the county when they hit age 55, 60 or 65 depending on how they structure the plan.

As the county grows, taxes are going to become more of a problem. We're a bedroom community. We don't have an interstate running through here to make this a highly attractive place for industry to locate. As the county grows, there will be more people working for the county. Although they've touted the DB plan as something that will help attract and keep employees, most don't really start thinking retirement until they're in their later working years. We're going to have turnover. We're going to be paying out more and more for retirement. We're going to be just like any other county, state or business who is underfunding their retirement. We're going to have huge problems down the road.

The problem is that the guys who are building that bee hive will have filled their jars with honey and moved on. Some of them will be living on the retirement Fayette County taxpayers are funding. Yep, the Commissioners will be eligible for the self-same retirement as county employees if they stick around for a second term. I don't begrudge them a retirement, I don't begrudge any of the county employees a good retirement. They had an award winning plan in place that wasn't going to stick us with a huge bill somewhere down the road.

In every city, county, state and business where the DB plans are in trouble it's not just the taxpayers who hurt, the employees suffer, too. They face reduced benefits or even no benefits in some cases.

I keep coming back to the million dollar question (and the tab will be higher than a million over time): WHY?

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?

Respectfully,
Rick Price

Legal? Personnel? Open Meetings Act? What's the big deal?

I've had a number of conversations with different people about the County Commissioner's violation of the Georgia Open Meetings Act (OMA) since posting the video (see the blog I posted the other day if you scroll down).

So far, all who've talked or emailed me have indicated that it's pretty clear when they watch the video that Commissioner Maxwell, and other members of the Board, were in cover-up mode, so they figure it must be pretty serious stuff if they're willing to go that far... And, they can see that nothing that's said on September 5th matches what actually happened on August 1st. Some have even caught the fact that the Commissioners signed off on talking about a legal matter AFTER they met so it doesn't really matter whether Maxwell's version of history somehow happened despite the video showing it didn't.

However, when it comes to understanding what's so bad about violating the OMA, they're not so clear on why it's such a big deal (aside from the fact that it's the law). A friend of mine (a very astute and much-better-spoken person than yours truly) sent the link for the video to some folks along with an explanation. I thought it was SO good that I asked if I could use it... So, here it is:

"The link to the YouTube video below poses a very important question about the conduct of Fayette County's business. For those who are unfamiliar with the Georgia Open Meetings Act, it requires that our commissioners vote on things in meetings that are open to the public, on the record, and any votes must be based upon a published agenda made available to the public ten days in advance of the meeting. The intent of the Act is to make sure laws aren't changed in the dead of night and to prevent secret backroom deals about which the public doesn't get information or an opportunity to voice their opinion.

There are only 3 exceptions to the Open Meetings requirements: 1) real estate matters (this allows the commissioners to discuss potential real estate purchases in private to keep speculators who might hear about the property from buying it and charging the taxpayers ten times the price); 2) personnel matters (hiring, firing, salary negotiations, workers comp claims, disability claims, etc.); and 3) legal matters (just as people get attorney-client privilege, the county commissioners get to keep their legal advice and strategy private). If there is a need to discuss something that fits within those 3 exceptions, the Commissioners may go into a closed-door (executive) session, away from public scrutiny and discuss the matter. After the executive session, they must vote to execute the affidavit (a sworn legal document) that the discussion was only about something in the 3 exceptions and they must publicly report on what action they decided to take.

The reason the alleged "legal matter" Commissioner Maxwell proposed to discuss is a problem, is that the County had no county attorney at the time of that discussion. So, an affidavit to discuss a legal matter is troublesome; they couldn't have been discussing legal strategy or getting attorney-client privileged advice because there was no county attorney to give that privileged advice or strategy.

Now, no doubt, there will be some people who say this is a mere technicality and that the video maker is trying to make a mountain out of a molehill. I can only reply that video doesn't lie. "

Is that clearer than what I've written thus far? Yep, I definitely think so! Just in case the blog has dropped off for some reason, here's a link to the video: http://www.youtube.com/watch?v=s8JrYS0Hkpw

Purchasing Cards... Again????

The Fayette County Commission is once again looking at instituting a purchasing card program. They tried this back in late 2001 or early 2002, finally ending the program in 2006 due to serious misuse of the cards.

I went back and read the minutes from the 2001 meetings when the Commissioners cross-examined Wachovia representatives and the then County Finance Director, Mark Pulliam.* They had a lot of questions. Many more than I heard in the August 2nd meeting. I’m expecting there will be a more intensive questioning process at Thursday night’s Commission meeting.

A number of problems were mentioned and addressed during this past Wednesday’s discussion of the program. One was how labor intensive the review process had been. One of the solutions given to the problem was that one card, rather than all as in the past, would be reviewed by the staff each period. [Note: we “assume” a period is one billing cycle of a month.] Also, individual directors would be responsible for monitoring their respective departments.

Toward the end of the discussion the abuse of the P-Cards is brought up as another problem.

I worked for the Federal Home Loan Bank and the Office of Thrift Supervision for close to 14 years. At one point I managed the department that had the responsibility of reviewing the purchases made by roughly 250 – 300 employees on their government-issued credit cards.

The staff reviewed every single card statement every single month. I randomly selected some statements to review as a check and balance. Even knowing that the cards were being scrutinized and that unauthorized purchases were verboten, the staff abused them. My favorite was the guy who put his fiancé’s engagement ring purchase on the card. I also loved the one where the guy decided to go for a balloon ride in Hawaii.

Those are the abuses that stand out. There were lots of little violations that weren’t quite so blatant. Groceries on the way home from work, gas purchases that far exceeded the amount of travel, plane tickets to places we didn’t travel and so on and so on. Depending upon the severity of the abuse the employee could lose the use of the card or even their job.

One difference between the government card system I monitored and the one the County is contemplating is that there the employee paid the bill. They claimed their expenses, received a check from the government and then paid the credit card. The County will get the bill in this instance and have to pay it. If they’re not reviewing all the purchases, how easy is it going to be to think you’ll be able to get away with sliding something onto the P-Card? Hate to say it, but it’s human nature. When we’re in a pinch, or when we’re angry at our boss, or we didn’t get the raise we felt we deserved, it’s easy to justify pushing the envelope a bit.

The previous Commission put part of the onus for monitoring the cards on the department heads also. Some department heads violated the P-Cards. Although interim County Manager Jack Krakeel stated that there weren’t any consequences for misuse during last Wednesday’s discussion, one high-ranking employee lost his job partially as a result of misuse of the P-Card. Another left when his P-Card purchases came under scrutiny. When the Commission really looked at what was going on with the cards with all the stringent check and balances they thought were in place, they pulled the plug on the program.

The previous Commission had strict budget guidelines and constraints to help keep a check on card abuse, as is being currently suggested.

The only differences I could see what is currently being proposed and the previous program is that fewer cards will be audited and the county will be able to balance automatically via computer with the bank. That’s nice, it will save time, but it doesn’t stop abuse. To use an old cliché, this is, to my way of thinking, a recipe for disaster. I think this thing may not fly ultimately when they look at it again at Thursday’s meeting. We’ll see.

*http://www.admin.co.fayette.ga.us/administration/boc/archives/commission_meeting/2001-2002/Oct3.pdf