IS CONSOLIDATION A GOOD IDEA? A PRELIMINARY STUDY!!
With all the talk about possible consolidation in Shelby County and the formation of a consolidation study panel, I decided that the first thing that should be done was to gather information about Metro Shelby, Metro Davidson (Nashville) and Metro Jefferson (Louisville). Little did I know that this would be easier said than done.
I started with the CAFRs (Comprehensive Annual Financial Reports) for Memphis and Shelby County and all the incorporated cities in Shelby County and then attempted to compare them to Metro Davidson (plus their incorporated cities) and Metro Jefferson (plus their incorporated cities). The purpose was to take a broad view and comparison of the three counties and see if there were any possibilities of savings before going down this study path.
I admit that I am not a financial expert but I can read a CAFR. I wanted to concentrate on the broad numbers without getting into the details. I am interested in the population, the overall spending and the major spending items such as police, fire, education and debt payments. If there are areas that stand out as red flags of possible savings, then I would point them out.
What I found was that it is very difficult to get all the information but most of the CAFRs are on line. Metro Jefferson has a very different organization with the state involved in some of the major areas such as courts. I have no doubt made mistakes or left out important points but I would appreciate public comments and corrections. This would be done much better by an independent financial panel and the consolidation panel should consider doing this. Here are my major findings from the CAFRs ending June 30, 2008.
- The population of Metro Shelby (MS) is 906825, Metro Davidson (MD) is626144, Metro Jefferson (MJ) is 713877
- Total government spending MS ($3.41 billion), MD ($2.11 billion), MJ ($1.85 billion)
- Government and public school employees, MS (38399), MD (19666), MJ (15166)
- Annual expenditures per resident MS ($3765), MD ($3380), MJ ($2601)
- Public school employees MS (22638), MD (10013), MJ (8048)
- Public school students MS (151000), MD (74733), MJ (79931)
- Total education expenditures MS ($1.61 billion), MD ($780 million), MJ ($739 million)
- Total cost education/student MS ($10704), MD ($10446), MJ ($8777)
- Police/Sheriff employees MS (5239), MD (2715), MJ (1680)
- Police/Sheriff employees/1000 residents MS (5.77), MD (4.33), MJ (2.35)
- Fire Employees MS (1843), MD (1182), MJ (1493)
- Fire Employees/1000 residents MS 2.03), MD (1.89), MJ (2.09)
- Annual interest on debt MS (125 million), MD ($77 million), MJ ($52 million)
The red flags for Metro Shelby are City of Memphis employees which have gone up in ten years while population has gone down. The increase is 1204 employees (6560 to 7774). This is somewhere around $60 to $100 million extra expense. The figures in the Memphis School system are even worse with an increase as shown below.
Memphis City Schools
number of students K12
number of employees
general fund budget
CPI up over 10 years
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Here we are talking about $200 to $300 million dollars extra.
Another critical item is our OPEB (Other Post Employment Benefits, mainly retiree health care) unfunded liability. It is currently over $3.5 billion dollars for Memphis, Shelby County, MLGW, City and County schools.
Until we address these three big red flags, no consolidation plan will lower our cost of government. Here is a statement in the 2008 Metro Davidson CAFR report.
"Long term liabilities increased by 20.4% due to the issuance of new general obligation debt in excess of principal payments and due to the inclusion of the Government's liability of $137 million for other post employment benefits (OPEB), discussed further under Other Matters below. " The City of Memphis unfunded liability is over $800 million and the Memphis city Schools is over $1.25 billion.
I have attached my spreadsheet mentioned in this report.
Click here to see a preliminary spreadsheet comparison of Metro Shelby, Metro Davidson and Metro Jefferson