Those of you who are invested in the stock market through your 401K’s and other investment accounts have seen them fall drastically during this year, particularly in the last two months. The Dow industrial average is down 22% since September 15th and down 35% year to date.
Well you might get some comfort (maybe not) that the various pension funds for the City of Memphis, Shelby County and the MLGW are also down. I have asked these three organizations for a report on current values and have received two answers and that from Shelby County and the MLGW. I must say that the openness of Shelby County at the direction of Mayor Wharton and the MLGW at the direction of Jerry Collins has been very good. As usual, the City of Memphis, no doubt at the direction of the Mayor, is slow and difficult and I have received nothing to date.
The County and the MLGW reports are attached. Shelby County is reporting through September 30, 2008 down 17.2% YTD and probably another 10% for the month of October which was a bad month for everyone. Down 27% in this market is not bad compared to 35% for the Dow. Their investments seem well diversified and the management fees seem reasonable considering the size of the portfolio. The MLGW report is even better as they are down 12.4% year to date through September and probably another 9 or 10% in October. I have attached both reports.
The only information I have on the City portfolio at this time comes from the 2007 CAFR (Comprehensive Annual Financial Report). I have attached a copy of that report and there are several things that could cause some concern. They had $117 million in collateralized mortgage obligations, $148 million in mortgage backed pool securities, $110 million in real estate and $15 million in high yield bond funds. All of these investment categories took a real hit in the latest meltdown. Hopefully the fund did not but I will report when I get the information.
While I was talking to several County officials about the retirement in general and particularly about the OPEB (Other Post Employment Benefits) unfunded liability, they said that the County was planning a substantial contribution this year in order to begin a trust fund to fund these promises made to retirees. The MLGW set up such a fund in the past but has made no additional contributions since setting up the fund. The City of Memphis has done little in this area to date.
The County has a policy of requiring employees to purchase Medicare part A so that Medicare becomes their primary health insurance when they retire and this cuts the OPEB costs substantially. However a big problem is that many retirees are under the age of 65 and this is one of the big costs for retiree health care. Pension reform, at a minimum, should address this early retirement rule in order to cut costs. 25% of retirees are under the age of 65. Many retirees who are not eligible for Medicare either due to age or not having contributed to Medicare during their working career are eligible because their spouse has Medicare.
My overall impression is that the County and MLGW (under Jerry Collins) are well run. The City of Memphis and the Memphis School System are the problem and badly need budget, personnel and structural reform and a commitment to transparency and openness.
Click here to see the latest update on the Shelby County pension fund
Click here to see the latest update on the MLGW pension fund
posted by watchdog at
4:44 PM
0 Comments:
Post a Comment
<< Home