OH BY THE WAY HERE IS ANOTHER $823 MILLION DEBT THEY FORGOT TO TELL YOU ABOUT BEFORE THE ELECTION

On June 5, 2007 (before the October 2007 Mayoral election) I wrote the following open records request to the City of Memphis.

1) I want to inspect the records and documents that show the calculations that document the unfunded liability that the City of Memphis will have to finance to meet the GASB 43 and GASB 45 requirements. These records and documents should show the total unfunded liability and the amount over and above the normal pay as you go annual funding that is required to meet the future unfunded liability.

The City refused to answer the request until yesterday (April 8, 2008) and now I know why. The answer is in a presentation presented to the City Council on November 6, 2007 (after the election). In it you will find the following devastiting news of our unfunded liability for non-pension liability for post employment retiree health care benefits. It amounts to

$823 MILLION DOLLARS(see attached document)

This includes any non-pension, post –employment benefits provided to retirees (i.e. medical, dental, vision, hearing, and related benefits). (By the way, the MLGW and the County have similar problems)

The required annual contribution is $51.1 million whereas they have historically been contributing $20 million annually to cover retiree healthcare costs.

To get around this high cost to fully fund the unfunded liability, the plan is as follows.

• They will set up an investment trust to pre-fund post employment benefits.
  
• Future changes to the retiree health plan are likely.
  
• Other consideration will include possible changes to plan benefits design and cost sharing. (Look out retiress, they will take it out of your hides)
  

For Fiscal Year 2008 they will contribute only $3 million rather than $31 million (the difference between the $51 million real cost to fund this unfunded liability and what they normailly contribute.

WHAT THIS REVEALS IS THAT POLITICIANS HAVE KNOWN ALL ALONG THAT THEY PROMISED MORE THAN THEY WERE WILIING TO PAY FOR AND THEY ARE GOING TO PUT IT OFF INTO THE FUTURE AFTER WHICH THEY WILL BE GONE AND HOPEFULLY RECEIVING THEIR PENSION AND BENEFITS CHECKS FROM A BANKRUPT CITY.

The presentation finishes with a quote from Standard & Poor's (12/01/04). "THE FUNDING OF THESE OBLIGATIONS IS OF AN INCREASING CREDIT CONCERN, EXACERBATED BY THE RAPID COST ACCELERATION IN MANY HEALTH-RELATED AREAS… CLOSE ATTENTION WILL BE PAID TO THE NEWLY QUANTIFIED OPEB UNFUNDED LIABILTIES, GIVEN THEIR EXPECTED MAGNITUDE, AND TO EMPLOYERS' STRATEGIES FOR MANAGING THEM."

THE POLITICIANS KNEW ALL ALONG THAT THEY WERE PROMISING MORE THAN THEY COULD DELIVER, BUT DID IT ANYWAY. NOW THEIR SOLUTIONS IS "PUT IT OFF INTO THE FUTURE" OR "TAKE IT OUT OF THE HIDES OF THE RETIREES".

I have another solution. Get rid of the irresponsible politicians at the next election and cut off the tax increases that are sure to come by the means of a citizenn petition charter change requiring voter approval before any tax increases. Cutting off the money is the only way to get their attention.

Click here to read about the $823 million in extra promises city Hall forgot to tell you about