May 3, 2008

How to save half a mill -- forever

There is a simple way to slice city property taxes by more half a mill without cutting services or laying anyone off, some officials say.
All it would take is a commitment to shift excess pension trust funds into a new account to cover the tab for post-employment health benefits, a move they say would have no impact on city workers or retirees, but would save taxpayers more than $2 million annually.
City Comptroller Glenn Klocko, who has long advocated the change, said that if city leaders decide to do it, he can immediately pare $2.5 million from the spending plan currently on the table.
That would allow a big cut in this year’s property taxes and a permanent reduction in the amount the city budgets to pay its retired workers a decade’s worth of health benefits.
City Councilor Ken Cockayne, who is also championing the move, said it “could save a great deal of tax dollars” if officials would seize the opportunity.
He said he can’t understand why he has met “nothing but a wall in dealing with this from the unions and those beholden to the unions.”
Mayor Art Ward said he’s creating a task force to look into the issue, which he said may prove more complicated than supporters expect.
City union officials have said they’re not against the change, but are looking for the city to negotiate any shifting around of money, angling to get something more for municipal workers and retirees in the process.
But it’s not clear that there’s any downside for city workers.
As it is, the pension trust funds set up to pay Bristol’s retired city workers are so flush with cash that experts say they have enough money to cover all anticipated future costs and to have as much as $200 million extra.
What Klocko is asking to do is to shift $77 million from the overfunded pension funds to fill a newly required post-employment benefits fund.
No matter what the city does, it is obligated to cover the tab for both pension payments and the post-employment benefits, mostly health care for the first 10 years after a worker retires. Those are contractually mandated and even if they were revised down the road, the existing requirement to pay would remain.
The issue is simply whether the city can move some money from one trust fund to the other, a move that Cockayne and Klocko say makes good sense because the cash will wind up benefiting workers one way or the other.
Making the change, though, means taxpayers won’t have to fork over $2.1 million to cover current post-employment benefits in the coming fiscal year – and they won’t need to shell out another $250,000 to kick start the new trust fund.
Best of all, from a city finance point of view, there will never again be a need to include the money in its annual budget because the trust funds should continue growing enough to allow investments to cover rising expenses in the decades to come.
The half a mill property tax cut that the change would produce, Klocko said, would go on forever.
Klocko has another plan to save that half mill for just this year: to put off purchasing any new police cruisers, delay park and fire equipment purchases, slice $500,000 from education, snatch excess cash from the ropes course fund, pare the economic development cash and more.
The trouble with that course, which may be what’s needed to cut the mill rate hike to 4 percent instead of 6.5 percent, is that nearly all of the money Klocko is eyeing will have to be paid next year, or soon after.
Taxpayers may get a little break for a year – and some cost to the schools and to city services – but there’s no real long-term benefit.
What the proposal to shift around excess trust fund money offers, however, is permanent relief, its advocates say.
And failing to seize the moment would be a mistake, Cockayne said.

For more on the post-employment benefits issue, read this story

*******
Copyright 2008. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com

61 comments:

Anonymous said...

Steve, thanks for making this whole issue much more clear. I don't see why anyone would be against doing this.

Anonymous said...

The city of Bristol shoud get rid of the pension going forward after the 2010 election. Most corprate business does not even offer pensions anymore. If the unions want one still let them fund it from the dues they collect.

Anonymous said...

Cockayne for Mayor!

Steve Collins said...

Why would the city want to get rid of its pension plan? It's fully funded -- and then some. Taxpayers never need to put another dime in it.
Whatever else city government has done, the brilliance and success of its pension fund is clear to one and all. To dump it wouldn't do taxpayers any good, but it would make it impossible to attract good people to work for the city.

Anonymous said...

1:35 what sense are you trying to make here? Learn some facts before you start blabbing.

Anonymous said...

Steve - fully funded for how long? Pensions are more for companies and Bristol is not a company. Pensions were made to encounage employees to make the company sucessful and when the company was sucessful you would get money in your pension. To have a pension does not attract better people either. You sound like a brain washed union member?

Steve Collins said...

Unless the city hires significantly more people or improves the pension benefits, the fund should cover expenses forever. That's as good as it gets.
And if you think having a great pension plan doesn't help attract quality personnel, you're simply wrong. Who among us wouldn't want that? I'm hardly a "brainwashed union member" for pointing out that most everyone would rather work for an employer that offered a great pension package than one that didn't - unless the one that didn't paid a lot more. And I doubt you're itching to raise government salaries!

Anonymous said...

Maybe we should offer bigger pensions, because we definitely don't attract good workers to city jobs. Connections are what matter most. Over half of the city workers I have encountered in my lifetime are rude and barely competent, and don't seem to care about doing a good job, they only want to make things easier for themselves. If you've ever been to the city clerk, tax office, or public works office, you know what I am talking about.

Anonymous said...

I have to agree pensions do not attract better people - giving the fact that other then state or city pensions you are only making about a quarter of what you were making when you were working. I work for a major health insurance company in Hartford and we do not offer pensions anymore to new employees. I would like to know that given the state of economy how in world could those funds last for the next say 30 or 40 years without adding to that fund? Didn't the city invest wisely to make the fund they way it is today? Well, the economy is not looking good now or a long time to come. So am I missing something how that fund is working? How will the fund sustain its self in the coming years?

Anonymous said...

Steve Collins said...

I'm hardly a "brainwashed union member" for pointing out that most everyone would rather work for an employer that offered a
most everyone would rather work for an employer that offered a great pension package
May 3, 2008 2:53 PM
``````````````````````

Steve ..... I think the issue might be using union member and work in the same sentence .

Unfortunately , too many union 'workers' are merely rejects from the welfare roles , and do as much work now as they did then .

Anonymous said...

The problem is that if this is negotiated with the unions, they want an INCREASE in benefits, and that would be FOREVER.

ALL the facts need to be on the table, and they aren't.

Glen Klocko, who does not live in Bristol, just wants to look good with his Finance Officers Association.

We need ALL the facts, not just his side.

Steve Collins said...

Let's put it this way: as long as the city's pension fund makes the sort of returns that have been normal for most funds in years past, it will be fine. And if it doesn't? Well, that probably means the economy of the future sucks, and then all bets are off, including perhaps the guarantees that retired city workers are counting on.
As for the comments about union members.... I have seen plenty of union workers who work hard. And I've seen some who don't.
I've also seen non-union workers who work hard. And some who don't.

Anonymous said...

Has Ward selected this committee yet?
If not, what is he waiting for?

Anonymous said...

Doesn't Klocko have a conflict of interest?

Won't he eventually get all the benefits that are negotiated and locked in?

Think about it!!!

Steve Collins said...

I've been told, but haven't heard with my own ears, that the city's pension attorney, Bruce Barth, has said the issue doesn't need to be negotiated.

Anonymous said...

Cocayne for Village Idiot!

Anonymous said...

Does anyone believe that if the 2.5 is taken out of this budget, and subsequent budgets, that it won't be replaced with other expenditures, most of which should not even be considered?

What ever the rationale for the GASB effort it will not result is any cost cutting and will actualy make additional expenditures easier.

Anonymous said...

What Klocko doesn't know or isn't telling us is that under federal law, there are consequences to using pension funds to pay for health benefits. Consequence #1: whatever long term health benefits retirees are eligible for now will be locked in for ten year and can't be changed in future contracts unlike other labor contract benefits; #2: every employee would immediately become "vested" in his retirement benefits, as opposed to the current case where they aren't vested until after ten years. There are pro's and con's to using the excess pension funds. There is no need to rush into this. Barth is the legal expert and he's probably right that the City doesn't HAVE to negotiate with the unions over using these excess funds, but why not? Why not show a little courtesy to the unions for a change, instead of treating them like the enemy? What a concept!

Anonymous said...

"Why not show a little courtesy to the unions for a change, instead of treating them like the enemy?" What a concept!

Your an idiot!

Anonymous said...

poster 4:53

get your facts right before you post. Retirement health isnt frozen for 10 years. Do your homework on this and then get back to me!

Second, Why should the City negotiate with the unions? Do they care about the tax payers? Do they worry about how much taxes people are paying? Thank god for Cockayne, its about time someone is working for the us!

Anonymous said...

Cockayne for Mayor!

Tim Gamache said...

Giving elected officials the authority to manipulate pension funds without any negotiation is setting a very dangerous precedent.

Anonymous said...

Uh oh Tim, you might want to check in with your buddy the mayor when he stumbles back into the office after his Legion trip - that is EXACTLY what he is doing.

Anonymous said...

Give it a rest, Tim. Elected officials are supposed to look out for the interests of the taxpayers, not the unions.

Anonymous said...

I hate to admit it, but it seems like Miss Know-it-all Zoppo might have been on to something with her elderly tax freeze. At least the seniors would have been insulated from the reval tax increase. Whether she had a crystal ball or just got lucky, who knows but I bet some of the old folks who didn't want to agree to some of the conditions last year might be kicking themselves now.

Anonymous said...

Cockayne, your village called...they're missing you!

Anonymous said...

"City union officials have said they’re not against the change, but are looking for the city to negotiate any shifting around of money, angling to get something more for municipal workers and retirees in the process."
What? The union uses their stanglehold to make the city negotiate anything - it shouldn't be any of their business. If the pension is still there, they aren't giving anything up - why should they want more in return? THAT is the problem in this town, the unions have way too much say in the day to day to business.

Anonymous said...

Mr. Gamache,
You are exactly right - all the unions want are a seat at the table. They have had one for all previous issues involving the Fund, including letting the city off the hook with making contributions, which saved the taxpayers mucho cash a few years ago, and how the funds are invested, transfered or spent. Unfotunately, Mayor Ward is allowing himself to be led by dept heads like the Controller & Personnel Director who were very happy to see him elected because they knew it would it be more of the same - them in charge. rest assured that this would not have been handled this way if Ken Johnson had been elected, or even Zoppo. And that, my friend, is why the dept. heads were all dancing a jig after the primary and in November. Art Ward meant more of the same - no accountability. The only funny thing is how p-ed off the unions are that their guy became a "company management guy" so fast because these two and others are pulling his strings. Ask any firemen there opinion of the mayor and you might be very surprised at their answer.

Anonymous said...

Uh oh 9:43, You might want to recheck that crystal ball of yours (you know, the one that lets you see EXACTLY what the mayor is doing). I think there's a problem with it/you.

Anonymous said...

Tim giving the union control over the residents tax situation is setting a very dangerous precident also.

The union keeps asking what they get in return for this....

My question back at them: When is the union going to do something for the residents of this town without asking what they get in return? How about the ability to keep your job?

It doesn't hurt them to move the money so why can't they just do the right thing and let it go without asking what they are getting in return?

AND DON'T YOU EVEN THINK ABOUT ASKING FOR LIFETIME HEALTH BENEFITS!!! NOT GONNA HAPPEN!

Anonymous said...

The city has an agreed upon obligation to provide retirement funds for those eligible.

How they do that should be up to the city, and because the city invested wiselky should not mean that the unions get even more benefits than they do now.

Currently, benefits average about 50% of salary. Quite high compared to the rest of the working world.

Anonymous said...

Since when does Klocko speak for the city?
Or is that just Wards way of keeping off the hot seat?

Steve Collins said...

Klocko isn't speaking for the city. He is merely giving his best advice. He's well aware that the City Council and Board of Finance make policy. They can accept his recommendations or not.
Ward has taken the position that a a new committee needs to investigate this issue -- which may be more complicated than it appears -- before a decision can be made one way or another.

Anonymous said...

"attract good people to work for Bristol. " We have to get rid of the dead weight we have now. As for the budget. Government should not pander to the unions.

Anonymous said...

THIS SO CALLED COMMITTEE IS A JOKE! IF AND WHEN IT IS EVER FORMED THE UNION WILL DEFINITELY GET REPRESENTATION THERE. THIS IS WARD'S WAY OF INVITING THEM TO THE TABLE.

IN FACT THEY WILL LIKELY GET OVER REPRESENTATION B/C THERE WILL LIKELY BE UNION REPS AS WELL AS MCCAULEY THE FIREMAN, NICASTRO THE RETIRED CITY WORKER AND WARD HIMSELF OVER SEEING IT.

COCKAYNE WAS 100% CORRECT WITH QUESTIONING ETHICS HERE.

THE UNIONS ARE ROBBING THIS CITY BLIND!

Anonymous said...

Why is Glen Klocko speaking out at all? He clarly is setting a tone that the committee might have to challenge.

Does Klocko have a conflict?

When does your friend Ward plan to name this committee?

Anonymous said...

wait a minute here. we have ex-union employees on the board ??? THIS IS A CONFLICT OF INTEREST!!!!!! Don't you think ?? This is a great game their playing with mine and all other NON-UNION bristol citizens money.

Anonymous said...

Steve your very miss informed on this issue. How or why would it be difficult to attract good people to work for the city? Most corporations don’t even carry pensions anymore or are on there way of phaseing them out due to the high cost and drag it puts on them. Call me crazy put I don’t see compines going out of bussiness because they can’t get good workers. Are all the major health insurance compaines in the sate that no longer give pensions hiring people unfit to do their jobs?

Fine we can fund union members that are on the books aS of now, so lets stop going forward and take that huge windfall and put it towards the citys needs instead of pension increses like the one they got last year.. WHAT A JOKE

Why don’t you do your due diligence and see how many compaines gave pensions in 1990 and how many do today. You might be very serpriesd.

Anonymous said...

WE COULD SAVE AT LEAST SIX MILLS IF WE LAID OFF ALL THE BUDDY SYSTEM JOBS.IT WONT TAKE LONG TO SEE CHANGE. WE NEED MAJOR LAYOFFS.WE MUST START.

Anonymous said...

What seems to be missing from this discussion is the fact that the City makes NO contribution to at least two of the pension funds (Fire & Police)but the union workers contribute 6% of their salaries to the fund. This contribution along with returns on investment are what sustain the funds. That is also what makes the unions a party to how the City manages the funds.

Anonymous said...

You are also leaving out the fact that the city started this fund with $30 million through bonding and contricuted up unto about 10 years ago.

Also, you are leaving out the fact that retirees from this fund contributed for the life of their employment and that it would be completely unfair for them if the current employees stopped contributing b/c the current fund , which was fund primarily from prior employees, is so over funded.

Following your logic, have the city just do a formula on how much was contributed from the city, and how much was contributed from the workers, then transfer funds only from what the city contributed.

Anonymous said...

May 4, 2008 6:43 PM:

"...your very miss informed..."
-You're very grammatically challanged.

Ward: wanna lose in 2009? Appoint Tim Gamache to the BOF.

LMAO!!!!

Anonymous said...

In today's Hartford Courant (sorry Steve) there are various articles about what other cities are doing to save their budgets. In B-Port, Mayor Finch is cutting 110 jobs. Farmington just met to further slash their budget $775,000 which includes positions, and there is also an editorial about the state sticking it to the towns. It will be interesting to see how Mayor Ward thinks he can have cuts to lower the budget without making cuts to personnel. I don't think he is gonna get to have his cake and eat it too on this one.

Anonymous said...

Too bad Ward didn't start looking at the budget sooner.

He did have fair warning.

Anonymous said...

Revamp the Board of Finance.

Anonymous said...

kenny the 30 million never happened so get your facts straight or tell KLOCKO to stop making up stories

Anonymous said...

May 5, 2008 2:38 AM:

Steve Collins is a card-carrying liberal (check his pocket for his american socialist party card).

He doesn't believe in cutting gov't jobs, and it's hard for me to believe that many at the Courant do either (ask John Rowland).

Cockayne Addict said...

Clearly Cockayne and Glen Klocko are looking out for the tax-payers.

They obviously are trying to make the city government more cost effective and efficient.

Good job men!

Steve Collins said...

Is there an American Socialist Party? I looked in my wallet to sure and all I found was a driver's license, credit card, library card, Red Sox Nation card, BJ's Wholesale Club card and a couple of insurance cards. I'm a little suspicious that perhaps that "Red" Sox card might be something questionable, especially to Yankees fans.
Anyway, please check out my post Monday morning to see the historical breakdown of contributions to the city's various retirement accounts. It answers many of the questions people have raised about who's paid into the funds.

Anonymous said...

c'mon Steve, we know you're an honorary member.

Anonymous said...

This still dosen't say anything for what the unions will want going forward. What people are posting is that their is money there now so stop the penisons while we are ahead of the game and take any money made from these accounts and put the money back into the city.

There is no need for a city funded pension or 100% insurance any more

Anonymous said...

Questions:
HOw much will be taken out of the Pension Fund?
Is this one time forever?
Will that fund be invested as the pension fund is or will it be invested as the city invests their excess cash flow?

If this is for current obligations, where will subsequent funding for subsequent obligations come from?


I would hope legitimate answers are forthcoming.

Anonymous said...

The city's obligation is to cover this and as it stands now it will be done incrementally over the next 30 years, increasing each year. If we transfer funds now in one lump sum we will never have to worry about it again, saving us significant money from our budget.

Anonymous said...

Too bad the city doesn't have a competent Personnel Director who would have advised the mayor to bring in the unions at the beginning to have a discussion - there would not have been the need for this so-called study committee or even all the headlines.

Anonymous said...

Talk to the people in Southington: they have no use for him, except for a few politicians that he fronts for.
Maybe he can replace Weischel and get out of Bristol.

Anonymous said...

Glenns approach could be expensive, but he doesn't pay taxes in this town.

Anonymous said...

Doesn't Klocko get the same benefits as everyone else, even when the others go up?

Anonymous said...

Hey Klocko where does the 2.5 Million come from then? The dollar store?

Anonymous said...

Funny how quiet Klocko is when it comes to providing factual information.

Actually, not funny, but sad for us taxpayers.

Anonymous said...

Don't Unions make decent money that is taxed ? Or do you naysayers pay taxes all by yourselves? If so how about a break on our taxes?

Anonymous said...

Chatter is that Klocko has been muzzled: looks like we won't be getting any information, good or bad.

Great Administration we have here in Bristol.