I have reviewed The City of Memphis 2010 proposed operating budget which is now on line. I would like to point out some facts

• The FY 2010 projected budget is $577 million with a funded staffing level of 6215. Compare this to FY 2006 Actual budget of $479 million and a funded staffing level of 5162. Both of these are up 20%. And also consider that the City Council took $57 million out of the budget in 2009 (School Funding) and it is still up 20% from 2006.
  
• In the budget summary there is this ridiculous statement. "The largest cost impact across divisions is the 3% salary increase for all employees over FY2009 budgeted at $11 million. To balance this increase, we have eliminated funding for over 130 vacant positions (without laying off any employees).
  
• GASB 45 requires the City to value the cost of providing post employment health care benefits (OPEB). In FY 2008, we established an investment trust to pre-fund $3 million in future OPEB obligations. For FY 2010, $6 million has been budgeted for post employment benefits. GUESS WHAT THE UNFUNDED LIABILITY WAS IN 2007? $823 MILLION DOLLARS.
  

It is time to bite the bullet and reform and cut the budget.

My recommendations for the 2010 budget year is the following.

1. A 10% personnel cut in the City of Memphis. The cuts should be actual jobs, not phony ghost jobs.The actual funded staffing level for 2007 was 5534. The adopted 2009 funded staffing level was 6309, an increase of 14%. A 10% cut is not unreasonable. It should be across the board from the top to the bottom. For instance, we do not need a deputy director in each department. This is a layer of bureaucracy that we can do without.
   
2. We need a fundamental change in our personnel policy to bring it more in line with the "for profit" world where all the tax money originates. We now have at the top end of years in service (15 years or more) 5 weeks vacation, 6 weeks of sick days, 11 holidays, 4 bonus days and three days death in family leave. This amounts to over ¼ of the year. On top of this we have the federal FLMA (Family Leave Medical Act) which allows up to 12 weeks of unpaid leave for various reasons. Private for profit companies do not have anywhere near this level of days off. We could cut our work force by 15 to 20% by bringing days off down to private levels.
   
3. We have over $800 million of unfunded liability in OPEB costs (other post employment benefits) that represent promises made by politicians for retiree health care costs but without the money set aside to pay for them. We are now promising to pay 70 to 75 percent of these costs. We need to reduce this promise by 5% a year for the next 14 years so that the retirees can prepare for this reduction and to not make this promise to future employees.
   
4. We need to move to a defined contribution pension plan similar to a 401K used in the for profit world of companies for all new employees. The present plan for existing qualified employees would be maintained.
   
5. We need to look at changing the retirement age of employees which currently is after 25 years of service regardless of age. The highest cost of retiree medical insurance is for retirees at ages before they become eligible for Medicare. I have recently gotten current financial reports for the MLGW and have asked for the same from the City and the County. It is not a pretty picture. The MLGW is increasing their contribution by $18 million dollars because of losses in the market.
   

The guiding principle of these recommendations is that public employees' salaries and benefits should be no greater than the salaries and benefits of the taxpayers (the people who work in "for profit" businesses). Fairness and equity demand this.