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Topic: Flint finances and the police contract

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El Supremo

For several years now the City of Flint financial reports have indicated how legacy costs of Flint's pensions could potentially bankrupt the city. At a recent RTAB meeting, the minutes reflect that a state representative told the board the state was asking for a $19 million increase, for a total of $41 million for the Municipal Employees Retirement System (MERS). The Flint pension fund (FERS) was switched to the MERS system under Emergency Manager Brown and new employees were switched to alternative retirement plans. With fewer employees paying in to the fund,the fund required more supplemental funding from taxpayers.

Unfortunately, the state MERS is going underwater and has a $4 billion deficit and healthcare is showing a $11 billion deficit. The Lansing State Journal and Michigan Capital Confidential have written extensively on this problem and the fears of numerous Michigan cities and townships of becoming insolvent. State Rep. Pam Faris has also been vocal in notifying the taxpayers of the upcoming financial storm.
Post Mon Mar 13, 2017 6:48 am 
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El Supremo

For over 20 years the City has promised public safety employees better retirements in lieu of salary increases and other perks. These employees relied on these promises when planning their future retirements. Now the city wants to turn their back once again on the past promises. Police and Fire employees have already suffered financial losses in benefits and compensation throughout the financial emergency situations. Now the contract negotiations are becoming contentious. Will the city continue to ask concessions of employee groups that have already made many sacrifices?

UNder Stanley, there was a series of "early retirements". The Journal carried stories of retirees that had pensions greater than their salaries at retirement. In addition the earlier retirement ages added a strain on the pension system.

When the unions asked Williamson for another round of early retirements, the actuaries stated that proposal was not advisable considering the existing strain on the retirement system. This decision angered the union.
Post Mon Mar 13, 2017 7:04 am 
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El Supremo

The police department has a history of costly lawsuits starting with Middleton, et al which dealt with an improper affirmative action policy which adversely impacted white promotional candidates. Then when Williamson was angered at complaints over an all white Command Structure he created a special unit, the Citizens Service Bureau, without testing and other procedures that had recently been been agreed to with the Department of Justice. That cost the city a lot of money.

A lawsuit involving somewhat arbitrary promotions by former Police Chief Trevor Hampton are still pending as well as claims of retaliation.well as claims of retaliation. Weaver supporters are pointing to pending lawsuits as major contributors to future insolvency issues.

Now lawsuits are ongoing against the current police chief and alleging whistleblower type demotions and retaliation.
Post Mon Mar 13, 2017 7:20 am 
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El Supremo

With all of the Weaver camp diverting attention from other financial issues by focusing only on the water crisis, the current police contract negotiations are being ignored. Other communities facing pension and other pension related benefits, such as healthcare, are cutting services as well as reducing employee compensation.

With Flint's current financial issues, will the city attempt to quietly shaft the police to enable a weak mayor to hide potential pending insolvency. Citizen's are becoming weary of the water battle as evidenced by the low turn out at Weaver's recent Town Hall.

Flin Human Resources Director Charles Mc Clendon recently informed the police bargaining unit that the city was bringing in a labor attorney. Police indicate they have given up enough in previous cuts and the resultant battle could be contentious. What will be the end result for services to citizens?
Post Mon Mar 13, 2017 7:50 am 
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El Supremo

http://flinttalk.com/viewtopic.php?t=12456 These links addresses the potential insolvency matters.

Post Mon Mar 13, 2017 7:54 am 
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El Supremo

Mayor Weaver created a special position of Chief of Staff for Rodney (Steve) Branch for $75,000. Former 33 year GM employee so what benefits are included. Some internet sites still show him and Terrye Sue branch as living in Port St Lucie, Florida.

There is now controversy that Sylvester Jones is not competent in his position as City Administrator for a $90,000 salary.

So if these two positions are effective, why is it that a prominent Pastor went on the air for a talk radio show to demand the council approve a $12,000 position for Weaver's adviser Aonie Gilcreast and strongly implied Gilcreast pushes many of her policies.

What a kick in the azz to our Flint police to keep creating a highly paid and seemingly incompetent administration while demanding they make concessions during the contract.

The Charter only allows Mayor Weaver to have 10 appointed administrative personnel, which includes department heads. Also some one needs to look for nepotism in city hall.
Post Mon Mar 13, 2017 10:49 am 
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El Supremo

Flint's Interim CFO Sabuda at the March 9, 2017 RTAB meeting

"right now coming into July 1 of 2017 pension contribution jumped from18 million to 42 million. We've been working with MERS since July to look at various options to fund the pension without interrupting the city. I can favorably report that we have come up with sound financing plan for that benefit and I'm pretty excited about that . The key here is that we have 50 million going out the door, 30 million coming in. and we have to sop that, okay, and also provide city service. So, we're playing that balancing act between the two drivers there. As of 12-31-15 we were 43 percent funded and that is going to fall as we progress. I want also to point out that we also came up with six scenarios on how to fund and we met with the State Treasurer to help us with various assistance. We've framed out the problems and issues and I'm in the process of reviewing those and getting with his team so that they can help us with our financing issues here.

..."Council, the Mayor, and the leadership of the Council and the Mayor have selected an option to fund the pension system, which is before the Council this evening, the entire Council this evening. Basically what you see before you on Page 4 of the table shows the required transfers of employer contributions, where we were and where we're going. So, when yo see column 2, the revised retiree transfers employer contribution we're looking at going from 42 to 33 million. Now what we're seeing it's 42 to 33. We're going from 42 to 20.6. And then each year thereafter what we're looking at as far as funding for employer defined contributions , Council will take this up tonight at their study session and then look at it at their Monday meeting of, that would be, today's the 8th, the 13th, you can see where we're going with this, the increased contributions as we progress through life through year '20, '21, '22, and '23. What this does is give us room to build back the fund, the water fund and the various funds back up. This also allows the City to provide city service. Any other scenario would have drained all reserves within a two-year period and we would not be making a 33.7 million-dollar pension contribution that you see on the left."
Post Thu Mar 30, 2017 10:26 am 
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El Supremo

Along with this pension installment plan adjustment, will the City be once again trying to implement adjustments to pension payments?

The importance of hiring the right staff in the administration is obvious when you look at the he ee history of Marc Puckett , CFO under Stanley. Sabuda was selected by the state and he had a PSA that exceeded current limitations. This is the first budget under council supervision and Kincaid assured the RTAB the council made sure budget adjustments were in place to ensure his payment until June. The administration is searching for a new CFO. The public needs to watch as this position is critical to the success of Flint.
Post Thu Mar 30, 2017 10:37 am 
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El Supremo

RTAB continued

Chairman Headen:
...do I understand correctly, that for the first three years, fiscal "17,'18 & '19, your'e basically, for lack of a better term, backloading the annual contribution by and it looks like, a total of $226 million, so the contributions over those three years would be 22.6 million less under the selected column 4 than it would be under column 2.

Sabuda: Correct.

Headen: And you're dong the reverse beginning in, it would be fiscal year '20 to '23. You're paying more in than you would have, but in the bottom line, when you consider all seven years you're talking about, what, $6 million being contributed less overall, which gets you to an estimated funding ration of 27 percent?

Correct. You're right on target. Know this, too. We're also recommending to the Council is that if we have certain funds left over, let's appropriate those and put them into the system as a contribution at the back end in addition to that. That's part of the recommendation that's coming out to them tonight and that they're going to consider.

But,yes what this allows us to do is make a pension contribution. It's not what the actuary would like, but balancing city services with pension itself, helps us make payments and then provide the service. After this you either drain the reserves or you start cutting services.

And hasn't MERs actually made the decision to change the investment assumption down to 7.75 or is that just a consideration at this time?

Absolutely. There were assumptions, Mr. Chair. There were four assumptions that they had changed, the investment return assumption. On page 38 of the report you can see the actuarial changes. There's a change in investment return. There's a change in mortality table t reflect retirees living longer. And then the unfunded accrued liability was moved to a fixed period versus a floating period. Also, the smoothing of the assets, which will be the fourth one. That's not listed here, went from ten years to five years.

Overall here, the key here, guys, I can't stress enough, you have 50 million going out the door and another 30 million coming in, and that's the amount we had to conquer. S as we go through, we make the pension contributions that are outlined on page 4 in the table, but also as the City can afford it, we start making additional contributions above what the actuary has outlined here in this table.

Please know that the actuary is with the selection, if the City doesn't make those additional contributions the actuary would have an adverse opinion on the report. They would like to see the 14 (?41?) million dollar contribution. So as we go through life I want to make this very clear that the actuary would like to close that spending gap now, and not later, and we need to to do everything we can to get more into the system as we progress in life.

That's all I have.

Mr Finney requests the Chair grant him some question.

Finney; So on the investment return assumption, is that a market number? Is it less than market? Is it better than market? Do you know what selection was made?

Sabuda responded the assumption was based on what the fund would earn. He added the last period earnings were between 10 and 11%, but he current assumption in earnings is 7.75%. The february report will provide have the earnings for the last 4 years.

Finney asks how much of an increase in life span did the make to the mortality table. He is curios because his own personal advisor is pushing his out to age 93. Finney would like to know the they originally planning.

Sabuda promises on the next report.

Finney then asks Sabuda if there is any development on a long term solution as he views this as a short term plan.

Sabuda indicates the administration is working with the State of Michigan Treasurer and his team to review.

Townsend notes that while Sabuda is wanting to alleviate the next three years, he would like to understand what is anticipated along general fund contributions, and the other fund contributions. "What do you anticipate say in 2020 and beyond being able to make those contributions?"

Sabuda states that everything is going to come down to property taxes, expenditures and revenues as well as the population and the water fund. If these economic issues turn around around, we can continue to build, said Sabuda. "We're buying ourselves 3 years"
Post Fri Mar 31, 2017 12:06 pm 
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El Supremo

[PDF]FY16-17 Proposed Budget - City of Flint
CITY OF FLINT, MICHIGAN. Setting a Sustainable Course for the City of Flint. Five Year Financial Plan 20162020. Proposed Budgets for FY16 and FY17.
Post Fri Mar 31, 2017 3:11 pm 
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El Supremo

page 4- (6 of 70)
FY 16
The actions taken to restructure healthcare benefits for current employees and retires have also had a significant impact on reducing both current costs and long term liabilities. The 20% reduction in the workforce required significant reorganizational activities focused on reducing current costs. Long term liabilities were reduced by eliminating the promise of retiree health care for new employees in favor of providing retiree medical savings accounts. This restructuring which was implemented during the course of FY12, has reduced the citys liabilities from $850 million to $240 million at the end of FY14.
Post Fri Mar 31, 2017 3:22 pm 
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El Supremo

Legacy costs and legal challenges

The steps taken to begin to restore the City to financial solvency have not been without conflict and changing circumstances. A significant legal challenge has been made to the decision to move retirees from the historic health insurance plans into the same plans offered current employees. This action resulted in an initial cost reduction of $3.5 million in FY13 of $3.5 million to the city and imposed deductibles and copays on retirees. Because of a stay initially imposed by the federal court in FY 14 the city was required to increase its budget for healthcare costs in the FY 15 by $5 million. However, the injunction was subsequently modified, and the city was permitted to implement a significant portion of the initial changes. This action provided some financial relief to the city, but the risk remains that the budgeted health care costs will increase significantly should the lawsuit results turn out to be unfavorable to the city.
Post Fri Mar 31, 2017 3:37 pm 
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El Supremo

Legacy costs in total will continue to be a cost burden to the City of Flint in FY16, pension and retiree health care is now projected to cost $31.7 million or approximately 20% of total projected expenses. $173 million is borne by the General Fund which equates to 33% of General fund expenses, $8.5 million is borne by Utilities Fund which equates to 13% of expenses. These amounts whle still significant are are less than the $38.6 million originally budgeted for FY16. By 2020, the obligation for these expenses are projected to increase to nearly $39.6 million, or some 23% of projected total expenses.
Post Fri Mar 31, 2017 3:46 pm 
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El Supremo

Meeting Minutes
Final March 13, 2017

Amended Resolution/Reallocation
Request/Michigan Employee Retirement System/Employer Pension Reserve
Amended resolution resolving that the governing body of the City of
Flint, a participating municipality as defined in the Municipal Employees'
Retirement Act as recodified by Act No. 427 of the Public Acts of 1984,
as amended, and as the employer, hereby requests the Michigan Employee
Retirement System (MERS) to reallocate the total market value of assets
as of October 1, 2016, as listed in the below chart,
be it further resolved that the City acknowledges that the estimated, employer defined benefit contributions at 1 /23/17 for FY2017 /FY2018,
and future funding years are listed in the chart below and are subject
to annual actuarial review, valuation and employer contribution change,
in the near future (12/31/16) the actuary may issue a qualified annual
valuation report if contributions in the near term don't come closer to
actual payments being made to retirees,
resolving that the City Clerk is hereby directed to send a certified copy of
this resolution to MERS-Finance, ATTN; Reallocations, 1134 Municipal Way,
Lansing, Ml 48917.
[NOTE; The City of Flint is a member of MERS. The MERS funding scenario
chosen calls for a smoothing of employer contributions among all defined
benefit retiree divisions with the exception of the Hybrid pension plan.
This action could bring down proposed first-year employer contributions
from $33. 7 million to $20.6 million.
The reallocation involves increasing employer reserve assets in two AFSCME
1600 union groups, one AFSCME 1799 union group, exempt employees
and fire. Decreases in employer reserve assets will come from one AFSCME
1600 union group,one AFSCME 1799 union group, two police union groups,
two lieutenants & captains union groups and three sergeants union groups.]
[NOTE: Resolution amended to say that "the city acknowledges" not "the
City Council acknowledges."]
[Administralion Submission No. CA3662017.]
A motion was made by Councilperson Kincaid, seconded by Councilperson
Mays, that this matter be TABLED. The motion carried by the following vote:
7 -Councilperson Mays,
Councilperson Poplar,
President Nelson,
Councilperson Davis,
Councilperson Galloway,
Vice President VanBuren
Councilperson Kincaid
2 -
Councilperson Winfrey
Councilperson Fields
Post Mon Apr 24, 2017 3:02 am 
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