Fayette County Commission Takes a Page from Fed's Playbook

We're all aware that the spending spree in Washington D.C. is going to cost our children and grandchildren. Choices being made by the Feds are obligating future generations for unknown amounts.

The Fayette County Commission will potentially be doing something somewhat similar, albeit on a smaller scale, tomorrow night. At the 7 p.m. Commission meeting on Thursday they are going to make a decision that could hit you and I, along with every future Fayette Countian, in the pocket book.

What could our little county be doing that could have such long term repercussions on taxes?

The Commission will probably pass a defined benefit plan tomorrow night for county employees.

Surprised? I bet you thought they wouldn't do something so costly to the taxpayers during these economic times, didn't you? I bet you thought it was a dead issue, too, didn't you?

Not so. It's on the agenda as old business. In case you've missed the history, the Commission actually approved the implementation of a DB plan in a 4-1 vote toward the end of 2007. Herb Frady, Eric Maxwell, Robert Horgan and Jack Smith voted to implement the plan, Peter Pfeifer voted no. Since the vote, the Commission has simply been fiddling around talking to providers, trying to get the best deal, possibly waiting until they thought they could slide it through quietly.

If you go to the meeting tomorrow night, you're going to hear blarney that'll make you think you're listening to the best o' the best. Fayette County is going to need to find a leprechaun's pot o' gold at the end of a rainbow to cover the tab when the bills start coming due, too.

The Commissioners are going to tell you that it isn't going to cost the taxpayers. Their magnificent plan is different than everyone else's plan.

The plan won't cost you --- now. However, across the country without any exceptions that numerous researchers have been able to find, the tax payer inevitably ends up with a huge bill that is impossible to cover. Sorry, no rainbows, no leprechauns, just a bill that requires either a cut back of services or higher taxes, and sometimes both.

DB plans have been huge contributors to the problems of companies like General Motors, Delta and others.

Another surprise to some? The group the Commission would be hiring to manage (benefit, reap the rewards from) the plan is going to be… GEBcorp. You remember don’t you? They're the ones the Commissioners had give them all the data that justified the implementation of the plan. They “volunteered” their services at no cost just to help out our great county. Wow. Such generosity! Yeah, right. Can you say “deals cut, hee hee hee, rub hands in glee at plans coming to fruition”???

If you go back through my blogs and the articles I’ve written over the past years, you’re going to find that I can now say “I told you so.”

What can you do to stop this? Well, I'd say you could fill the Commission Chambers tomorrow night and voice your opposition, but I have low expectations that you would change anyone's votes.

Herb Frady said he'd vote against it during the election (even though he voted for it, then said he didn't, but tapes proved he did). They don't need his vote. Could be it'll be a 3-2 vote for it depending on who's up for election or who thinks they need to be perceived to be on the side of taxpayers. But it appears it’s going to pass.

I won't go into details about why it's bad. I've gone over and over it in previous blogs. There have been letters written, videos made and plenty in the media.

Maybe it's time for a Fayette County Tea Party.

Previous blogs I've written on the Fayette County Commission's DB plans:
Defined Benefits Gets Temporary Government Bailout, Er, Legislation
Defined benefits are a hot topic in Fayette County, GA. Well, it's a hot topic for those responsible citizens who realize what the future holds for the county should our esteemed local commissioners vote to burden the county with it. For those of you who have been following the ongoing debate, I thought you'd be interested to know the Federal government, yep, the Federal government (that would be Congress) has just unanimously passed The Worker, Retiree, and Employer Recovery Act designed to provide temporary relief to retirees and employers sponsoring defined benefit pension plans. President Bush is expected to sign the legislation into law. This Act, among other things, addressed the unanticipated increases in pension funding requirements. Hello, Fayette County! Is anybody seeing the bailout trend? Is anyone listening?

More on Defined Benefits for Fayette County, GA
Last night the committee the County Commission selected to study implementing a Defined Benefits Retirement Plan for county employees asked for more time (Vote on Defined Benefit Plan Vendor Choice Postponed at County Commission Meeting). Since asking for bids in September the group has been reviewing the many, many plans submitted by various companies hoping to get the County's business. It's big business. It's a carrot with a short stick and a lot of companies are vying to be the ones to chomp down on that juicy veggie. (Hey, I'm the queen of bad metaphors... I'm sure before I finish I'll have you rolling your eyes to the heavens.)

Defined Benefits in Fayette County Georgia
The letter below is a letter to the editor received for inclusion in the Fayette Front Page. As many of you know, I think it's a travesty that the Fayette County Commission has chosen to implement a Defined Benefit retirement plan for their employees.Like everyone else who has ever implemented a similar plan, the Commission says it won't cost taxpayers... I have searched and searched trying to find a similar plan that IS working somewhere. All I find are horror tales. And not surprisingly, almost every government that implemented a DB plan said, when trying to sell it, that THEIR plan wouldn't come back to bite the taxpayers at some point. It was different than all the others. Guess who told 'em that? Those guys who are selling the plan of course!

Pension Problems
Across the country businesses are failing. In some cases the straw that broke, or is breaking, the proverbial camel's financial back is their defined benefit pension plan. Do a Google search and see how many references pop up regarding pension plans and company failures.

Tough Times
The Fayette County Commission has frozen somewhere in the neighborhood of 20 to 25 jobs this year. I just received a notice from Gwinnett that they've initiated a hiring freeze and expect to save roughly $45 million in a 12 month period. We know Atlanta is having problems, seemingly much of it due to their defined benefit program compounded by the current economic difficulties. The state is in trouble for the first time in quite some time. Not too long ago they had a surplus they were arguing about. Now they're in the hole.

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.

If a tree falls in the forest…
The County Commission held a number of meetings where they discussed the switch to a defined benefit (db) retirement program for county employees. Unfortunately for taxpayers, they held every single discussion during their daytime Wednesday “workshop” meetings. No public comment is allowed during those meeting. And, it is impossible for 99.999% of the public to attend. They may as well have been standing in a forest with no one around.

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.

The Tax Hike Cometh…
Oops, goofed, the tax hike has already cometh… However, if you think the County’s tax increase this year is something, wait until the County Commission votes to implement defined benefits for county employees! The County seems hell bent on doing what every other large business has been forced to dump if they planned to stay in business. Companies across the nation have found it impossible to fund the kind of retirement program the County wants to put in place. They’ve gone into bankruptcy; they’ve run to the government to help, they’ve closed their doors.

Wooten on Defined Benefit Plans, etc. - worth a read
State lawmakers must rid pension plans that bilk taxpayers
By Jim Wooten Monday, August 20, 2007, 09:23 PM
The Atlanta Journal-ConstitutionThe system abused by former Fulton County Superior Court Clerk Juanita Hicks and her hand-picked successor is flawed on so many levels that, but for the self-interest of beneficiaries in elected office, it would have been fixed decades ago.

Seven Fayette County Commission Chairman have spoken out... It's time to wake-up!
Seven, yes SEVEN, former Fayette County Commission Chairman have now voiced their opposition to actions of the current Board of Commissioners. That is unprecedented in the history of this county, and perhaps in any county in Georgia or the United States. They have spoken out against the firing of County Attorney Bill McNally. They have spoken out regarding the current Board’s plan to move employees to a defined benefit plan.

Defined Benefits Gets Temporary Government Bailout, Er, Legislation

Defined benefits are a hot topic in Fayette County, GA. Well, it's a hot topic for those responsible citizens who realize what the future holds for the county should our esteemed local commissioners vote to burden the county with it.

For those of you who have been following the ongoing debate, I thought you'd be interested to know the Federal government, yep, the Federal government (that would be Congress) has just unanimously passed The Worker, Retiree, and Employer Recovery Act designed to provide temporary relief to retirees and employers sponsoring defined benefit pension plans. President Bush is expected to sign the legislation into law.

This Act, among other things, addressed the unanticipated increases in pension funding requirements.

Hello, Fayette County! Is anybody seeing the bailout trend? Is anyone listening?

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More on Defined Benefits for Fayette County, GA

If you're not from Fayette County, GA you probably won't want to read this (unless defined benefits retirement plans are a hot button for you).

Last night the committee the County Commission selected to study implementing a Defined Benefits Retirement Plan for county employees asked for more time (Vote on Defined Benefit Plan Vendor Choice Postponed at County Commission Meeting). Since asking for bids in September the group has been reviewing the many, many plans submitted by various companies hoping to get the County's business.

It's big business. It's a carrot with a short stick and a lot of companies are vying to be the ones to chomp down on that juicy veggie. (Hey, I'm the queen of bad metaphors... I'm sure before I finish I'll have you rolling your eyes to the heavens.)

While writing the "official" article for the Fayette Front Page, I went back and reviewed all the times the DB issue has come before the County Commission. They've been looking at it for over a year now. I've been at most of the meetings where it was discussed, or have a tape recording of the meeting. It's boring stuff to listen to and, if you're not in on the committee meetings, it makes not a whole lot of sense without documentation or background details.

However, I've muddled through.

One thing I had thought, but hadn't really researched, was that all the meetings regarding the DB plan were held during business hours. I was right. While there have been a number of presentations to and discussions by the County Commissioners, the public would have had a hard time being at any of the meetings if they weren't willing to take time off from work.

Not only would it be difficult for any member of the public to keep up with all the happenings in regards to the County's DB plan, it's not easy to find out when they're going to discuss it. It's on the agenda, but how many of you go check to see what's on the upcoming agenda? Especially the daytime Workshop agenda?

A lot of people don't even know that it's already a done deal. The Commission voted 4-1 to implement the plan back in December 2007. Commissioner Peter Pfeifer was the ONLY Commissioner to vote no.

During the election Commissioner Herb Frady started saying he had always been opposed to implementing the plan but he voted FOR it... and he said he was for anything that was good for the employees (or something to that affect, I'd have to go back and listen to the tape of the meeting again to give you the EXACT quote, but that's almost exact if not exact). If you go read my story on the Fayette Front Page and wander though the links at the end you'll see a video of Peter Pfeifer and Herb Frady discussing it during the election, the quote is on there.

All that is happening now is that the Committee appointed by the Commission to look into the Plans is trying to decide which company gets the business. Now there is a slim, slim possibility that the Committee will come back and say no, don't do it, but it is so slim you couldn't catch a minnow on the line.

However, while I say it is a slim, slim possibility, it's still possible. There's a group of citizens who've formed a PAC, Fayette Citizens for Open Government (FayCOG), who are fighting implementing the Plan. They don't feel that there have been enough open meetings and public input. They're asking for hearings and citizen involvement. You can get involved with FayCOG, or you can send your own emails and letters. You can come to the next meeting and voice your concerns.

Why, you might ask, should this involve the citizens of this county? Well, I might answer, it's going to cost the taxpayers a bundle in a few years. Your taxes are going to rise and / or some things aren't going to happen that should just to pay for benefits for employees.

The employees have a great retirement plan already. It's one that isn't going to drain the bank and it's not risky.

We're watching the auto bailout fiasco going on right now. A huge part of their financial woes are related to the dream benefits the employees have at the once-big 3. Everyone is running away from DB retirement plans because they are financially back-breaking. Yet here in our county we're embracing the failed plan and going in the opposite direction.

The bill is going to come due at some point. For the first few years things will run smoothly, then it's going to become a growing bubble that will burst when least expected.

I've been writing about this for over a year. It's bad news for the future of our county and it seems that not many are paying attention. At the very least, the County Commission should hold off with this taxpayer hold-up until after the financial crisis passes.

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Vote on Defined Benefit Plan Vendor Choice Postponed at County Commission Meeting
12/12/08 It appeared that County Commissioners were surprised when the newly appointed Fire and Emergency Director, Allen McCullough made his presentation regarding Defined Benefits. McCullough heads up the committee which is studying which company to select to provide and manage the Defined Benefit plan the County voted to implement last year (Dec. 5th, 2007; approved 4 – 1 with Commissioner Peter Pfeifer voting in opposition)... More

Pension Problems

Across the country businesses are failing. In some cases the straw that broke, or is breaking, the proverbial camel's financial back is their defined benefit pension plan. Do a Google search and see how many references pop up regarding pension plans and company failures.

I've written about Fayette County's vote to enact a defined benefit plan for their 600 plus employees before and most are aware of the problems the county is dropping into our laps. At a time when everyone else in the country is scrambling to try and fix their nightmare plans, at a time when tax revenues are down and everyone is trying to figure out how to afford to buy groceries, our "leaders" are giving away our future.

Sure, it'll start out fine, but the guys who are mortgaging the future of our county will have moved on by the time the fiasco hits our pocketbooks. The employees who sat on the committee that studied the feasibility of implementing a defined benefit plan will be retired and living off our tax dollars.

Every time I mention a DB plan to a financial planner and even to those who sell the product, they are horrified that our county will soon have that type plan. When I show them the comments made by Interim (still?) County Manager Jack Krakeel and Commissioner Jack Smith, they laugh. Everyone says exactly the same things they've said and everyone of the plans ultimately causes a huge financial burden on those paying for the plan.

The County has a wonderful plan in place that takes good care of the employees, especially those who are wise with their planning.

Why am I ranting about this one again? Well, the County is getting ready to finalize which plan they'll put into place AND I just received the following communication:

Isakson, Chambliss Urge Delta Air Lines, Pilots’ Union to Reconsider Termination of Retired Pilots’ Pensions

U.S. Senators Johnny Isakson, R-Ga., and Saxby Chambliss, R-Ga., today sent
a letter to Delta Air Lines CEO Richard Anderson and Captain Lee Moak, Chairman
of the Delta Air Lines Master Executive Council, urging them to reconsider a
proposal to make a voluntary contribution to the Pension Benefit Guaranty
Corporation for the benefit of retired Delta pilots and to work toward finding a
solution that protects the earned benefits of employees and retirees alike.

The text of the letter is below:

Dear Mr.
Anderson and Captain Moak:

As you know, we worked tirelessly on behalf of the Delta employees, retirees, and their families to pass into law provisions allowing airlines to spread their pension plan funding over a more manageable schedule. We did this to protect the 91,000 Delta Air Lines pensioners and family members in Georgia from losing their pensions and to help protect American taxpayers from having to pay for those airline pensions.

We understand that over 5,500 retired Delta pilots have had their retirement plan terminated and turned over to the Pension Benefit Guaranty Corporation (PBGC). Our understanding is that a majority of retired Delta pilots receive only a small percentage of the monthly retirement benefit they earned while employees of Delta. We are also told that a number of retired pilots receive zero benefit from the PBGC, and many more get a monthly PBGC payment that equals half or less than half of their Social Security benefit check. Finally, we are told that Delta will be assuming the pension liabilities for over 30,000 Northwest employees and retirees.

A group representing thousands of retired pilots recently sent a proposal to you, Mr. Anderson, asking Delta to make a voluntary contribution to the PBGC that would partially correct this issue. They also raised the issue at the September 25, 2008 shareholders meeting. As proponents of legislation designed to save these pensions, we were disappointed to hear that the response from Delta at that meeting was that this was considered a closed issue.

We urge you both to reconsider your positions, and to work towards finding a solution that protects the earned benefits of all employees and retirees. We appreciate your attention to this matter, stand ready to assist you in any way possible, and look forward to your response.

Sincerely,
Johnny Isakson

United States Senator
Saxby Chambliss
United States Senator

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?

If a tree falls in the forest…

The County Commission held a number of meetings where they discussed the switch to a defined benefit (db) retirement program for county employees. Unfortunately for taxpayers, they held every single discussion during their daytime Wednesday “workshop” meetings. No public comment is allowed during those meeting. And, it is impossible for 99.999% of the public to attend. They may as well have been standing in a forest with no one around.

In addition to my formerly expressed concerns regarding the certain tax increases down the road to pay for the db program, I’m very concerned about the process used to arrive at the switch. I mentioned two concerns in my opening paragraph. Here are a few more:

Unbiased Committee?
A committee was appointed by the Commissioners comprised of county employees and one citizen. The lone citizen was an attorney who is friends with and/or has done business with some of the Commissioners and/or Interim County Manager.

Wouldn’t it have been advisable to have a committee that had a few people with expertise in the area being studied? All but one person on the committee stands to benefit when the db plan is implemented. I know all of the folks on the committee, they’re good people overall. I don’t doubt for a minute that most of them went in trying to be objective and they all did their best. But if the commissioners intended to study the issue fairly they could easily have found a few in the community in the insurance and/or financial arena willing to serve on the committee.

Fair Study?
The “retirement study committee” looked at one thing: defined benefit retirement. They didn’t consider any other options. They didn’t study the current system to see if it could be tweaked. If they did look at any of the other options it certainly wasn’t what they were tasked with looking at and they didn’t report on it during the daytime workshop meetings that I attended or taped in absence.

Additionally, unless I missed something, they didn’t invite a variety of experts to advise them on the study. They used so-called experts who could very well end up getting the county’s db program business. Seems kind of like getting a used car salesman to advise you on which car to buy. What are the chances the salesman is going to steer you to a car on another lot? Chances are he’ll point you to the one where he makes the highest commission. Duh.

If you truly want a fair, objective study, you look at all sides. Governments across the country are squirming as they try to find ways to get out of db programs. I wonder if anyone from Henry County (db in the hole), Peachtree City (db in the hole), Atlanta (already moved away from the db program where possible, but in the hole with those that are left)… GM, Delta Air Lines, the list goes on and on and on, stopped by to share their concerns with the study group?

Public Input
I went back and looked at how the defined benefit issue was listed on the agenda. The September 5th daytime meeting lists it as a report from the “Retirement Study Committee.” I doubt that would hit anyone’s radar screen as a topic of critical importance.

On the October 3rd daytime workshop meeting agenda it was listed in this manner, “Steve Vaughn of Government Employee Benefits Corporation of Georgia (GEBCorp) will present the Board with Additional Information regarding the findings of the Retirement Study Group.”

A “Retirement Study Group.” How’s the average citizen to know what that entails by going on-line and looking at agendas? And, even if they do figure it out, are they then expected to take time off from work to come to a meeting? One where they can’t even voice their opinions?

They voted to go forward with the db program in this Wednesday's workshop meeting. How was it listed on the agenda? Try this and see if you thought there would be a vote on the issue: "Further discussion of the retirement study committee decision tree and critical elements for the Board's decision making process with respect to a retirement plan. This items has been addressed at the September 5, 2007 Workshop Meeting, the October 2, 2007 Workshop Meeting and the November 7, 2007 Workshop Meeting."

Anything in that lead you to believe they were going to do anything other than discuss it again?

Lest you waste time scratching your head over that question, here's how it was listed on the Nov. 7th agenda (where it was simply discussed and not voted on): "Presentation of retirement study committee decision tree and critical elements for the Board’s decision making process with respect to a retirement plan. This item has been addressed both at the September 5, 2007 Workshop Meeting and at the October 3, 2007 Workshop Meeting."

An evening meeting with public comment would have gone a long way toward making the process seem open. However, without any of the documentation or access to the findings of the “study committee” there’s not much anyone could say of substance. One former County Commission Chairman went before the Board with questions. He was ignored, then disparaged at this Wednesday’s meeting for not being at previous meetings. You know, the meetings held during business hours where public comment isn’t allowed?

Unbeknownst to the Commissioners, he did have access to some of the material. The Fayette Front Page films and/or audio records meetings and provides it either on-line or will give a copy to anyone requesting it for a nominal fee. He was aware of at least some of the rosy-scenario information provided by the “study committee” and the GEBCorp “consultants”. He asked legitimate questions that taxpayers should have answered since they are, for all practical purposes, being shut out of the process and will be footing the bill.

A lot of things get done in the meetings being held during normal business hours. A lot of critical decisions are made in those daytime meetings --- without the ability for public input and often times without public knowledge until after the fact.

The original intent of a daytime meeting was to allow those who couldn’t make an evening meeting the opportunity to be able to address the Board and to have access to their Commissioners. By mutual consent, past Board’s have avoided making any high priority decisions or discussing controversial issues during the daytime meetings because they WANTED public input. They wanted open government.

Unfortunately, things have changed. The switch was the brainchild of Commissioner Herb Frady. He made it sound good. It’s a workshop, not called a meeting. At the same time they changed the intent of the Wednesday meeting, the commissioners made a few token changes regarding public input during the evening meetings. Then they started making key decisions without listing the item on the agenda. Then they started making decisions during the Wednesday meetings. Then they started setting up handpicked committees which meet behind closed doors, shutting out the press and the public.

If a tree falls in a forest and no one hears, does it make a sound? Our Commissioners are meeting at times when no one can hear. And yes, they are making a huge sound. Unfortunately, it’s a sound that will reverberate for years to come as we dig into our pockets to pay for the decisions they’re making.

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

The Tax Hike Cometh…

Oops, goofed, the tax hike has already cometh… However, if you think the County’s tax increase this year is something, wait until the County Commission votes to implement defined benefits for county employees!

The County seems hell bent on doing what every other large business has been forced to dump if they planned to stay in business. Companies across the nation have found it impossible to fund the kind of retirement program the County wants to put in place. They’ve gone into bankruptcy; they’ve run to the government to help, they’ve closed their doors.

And it’s not just private companies (like IBM, General Motors, Delta Air Lines, etc.) who’ve had huge problems with trying to pay the bill for defined benefit type retirement. Counties and cities are having to go back to taxpayers to fund bloated defined benefit programs.

At a time when so many are crashing and burning in large part due to defined benefits, the County is looking to grab onto the golden tether and ride the horse straight into our pockets. Yep, that’s where all this is going to end up, with taxpayers having to pony up the funds to cover benefits for employees who’ve long since moved on to other jobs, states, countries...

Right now, it looks like the county is getting ready to commit to a defined benefit system that is raising taxes across the state and beyond.

Who’s giving them advice on this plan? From everything I’ve seen at the meetings and heard from others in the know, the company that will ultimately get the business is providing all the studies, data and info. Oh, and a committee of employees who are getting close to retirement and one outside attorney who has absolutely no knowledge of retirement systems and said so during his first briefing to the Commission.

I’ve talked to umpteen insurance types, financial wizards and the like about defined benefits. Every single one, no exception, basically said “RUN” in the other direction if someone starts talking defined benefits. I’ve been on the Internet searching for someone who says something good about a defined benefit program. The only folks saying they like it either work for or are affiliated with someone who’s also selling benefit programs. Find a think tank who says it’s a good idea… find an independent financial wizard who says it’s a good business decisions… If it’s a bad business decision doesn’t it stand to reason that it’s a bad decision for the government to expect us to fund this type retirement?

Here’s my prediction based on the information that abounds on this issue: We’ll be fine for a few years. All will be rosy and everyone will sing merry songs and give glowing reports. Then the County will have a wave of retirements. They’ll scramble a bit to cover the unfunded liability. It’ll grow. And grow. By the time the next change of command on the Board of Commissioners the county will be in a deep hole with no way to dig itself out. There will be some major scrambling to try and figure out how in the world to pay benefits for those who only worked for the county for five, six and seven years. They’ll do without some recreation, they’ll do without some needed road improvements, they’ll cut back here, cut back there… and raise our taxes ‘cause there ultimately won’t be any other way to cover the tab that will grow exponentially as more and more hit retirement age.

I worked for the government for 14 years. I had both a defined benefit retirement and a 401K plan. I didn’t appreciate it while I was there, but boy I love it now. I understand why everyone would want a defined benefit retirement plan. It’s there for a lifetime if you don’t cash it out. However, my 401K would do the same thing. In fact, I rather like it better. When I die, my husband or my kids will get whatever I didn’t use. The defined benefit? It doesn’t belong to me. It belongs to the government. They’ll give the money I paid into it to someone else.

One of the reasons for moving to a defined benefit system that is touted is that it makes the county government competitive. Well gee, I guess it’ll make ‘em even more attractive now that every other company in the world is ditching their defined benefit. I would argue that for most of us it’s things like salary, health, location, and the job itself that attract us. Until most hit their 40s or 50s they’re not thinking much about retirement. If they are the type that does, many would be happier (or as happy) with a 401K or the system the County currently has. Who wouldn’t like to own their own future? Who doesn’t like the idea of the company matching their contributions? Managed correctly a 457 or 401 can out-perform many retirement systems and it doesn’t go away the day you die.

We need to make sure county employees aren’t stuck out in the cold when they retire. We can’t expect them to live on Social Security alone. A good percentage of county employees are socking money away for their future under the current program. Some aren’t. Some of those are young and aren’t yet thinking of that day in the future when they’ll retire. Some have spouses who are making sufficient money that they’ve opted to take every penny of their salary. Some who aren’t contributing to the current retirement program won’t want to pay their portion of the defined benefit program either if it means a decrease in their take-home pay.

[[[[Just in case you're wondering what the difference is between a defined benefit retirement plan and a defined contribution plan like the County currently offers here's easy to remember definitions: defined benefit: controlled by others and they tell you what you'll get; defined contribution : you own it, and put your own funds into it. Usually companies do a match with a defined contribution plan]]]]]