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.

Latest Porkulus List in S.1 from Heritage (via #TCOT)

* $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Dept. of Energy defunded last year because the project was inefficient

* $650 million for the digital television (DTV) converter box coupon program

* $88 million for the Coast Guard to design a new polar icebreaker (arctic ship)

* $448 million for constructing the Dept. of Homeland Security headquarters

* $248 million for furniture at the new Dept. of Homeland Security headquarters

* $600 million to buy hybrid vehicles for federal employees

* $400 million for the CDC to screen and prevent STD's

* $1.4 billion for a rural waste disposal programs

* $125 million for the Washington, D.C. sewer system

* $150 million for Smithsonian museum facilities

* $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion

* $200 million for public computer centers at community colleges

* $75 million for salaries of employees at the FBI

* $25 million for tribal alcohol and substance abuse reduction

* $500 million for flood reduction projects on the Mississippi River

* $10 million to inspect canals in urban areas

* $6 billion to turn federal buildings into "green" buildings

* $500 million for state and local fire stations

* $650 million for wildland fire management on Forest Service lands

* $150 million for Smithsonian museum facilities

* $1.2 billion for "youth activities," including youth summer job programs

* $88 million for renovating the headquarters of the Public Health Service

* $412 million for CDC buildings and property

* $500 million for building and repairing NIH facilities in Bethesda, MD

* $160 million for "paid volunteers" at the Corporation for National and Community Service

* $5.5 million for "energy efficiency initiatives" at the VA "National Cemetery Administration"

* $60 million for Arlington National Cemetery

* $850 million for Amtrak

* $100 million for reducing the hazard of lead-based paint

* $75M to construct a new "security training" facility for State

Dept Security officers when they can be trained at existing facilities of other agencies.

* $110 million to the Farm Service Agency to upgrade computer systems

* $200 million in funding for the lease of alternative energy vehicles for use on military installations.

* $275 million for "watershed and flood prevention operations"

* Unspecified assistance for "nonambulatory cattle"

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?