2018 Fiscal Year Citizens’ Report Submitted by: Dennis Conklin
Plantation Park East resident Dennis Conklin provided his presentation that he has presented to some of the elected officials and some of the individuals running for office to post here on this website.
Explanation From Dennis Conklin
When speaking at the podium (there is no more “rail”) at Plantation City Council Meetings, I always start out “Dennis Conklin, 4581 NW 6th Court.” in order to be in order with the City’s Resolution No. 1 which established the rules for how the meetings are conducted.
One could say that I am to a City Council Meeting the equivalent of a non-athletic “gym rat”. Put another way, there are no letters after my name, and no titles before my name. The “ultimate layman”; praying for a sufficient amount of common sense to understand basic principles, enough analytical capability to realize and track trends, and discover new information.
In “gym rat” terminology that means that although I love the sport, I am not good at it and no team would pick me to play any game. I just “show up”.
Mayor Frank Veltri was our “first” mayor when my wife, Margaret, and I bought our home in, Plantation Park East, in 1983 and began our family. I was in the merchant marine and never attended any City Council Meetings unless there was some issue that our HOA asked for our support and I happened to be ashore. At one of those City Council Meetings there was an agenda item concerning a development which was being represented by Emerson Allsworth, Esq. The exchange between the Mayor and the representative, that had to do with certain monetary fees, seemed not to have raised an eyebrow among the Council or the other attendees of the meeting, but it “struck the spark” in me. Thereafter, I would attend Council Meetings whenever I was ashore and after I retired from the sea, Christmas 1994.
There are two useful reports that are readily available on the City of Plantation’s website; The Citizens’ Report (See PDF Pages 1 for the cover, 2 for the introduction and 3 for the proposed fiscal year budget and General Fund highlights.) and the Comprehensive Annual Financial Report or CAFR. (See PDF Page 4 for the cover and PDF Page 7 for Financial Highlights.) The annual budget is also available online for the real number cruncher residents.
About “The Mountain of Money”
After the “spark” meeting and before I retired, I read and learned about a report that each municipal government had to complete and submit to the State and the public. The Consolidated Annual Financial Report, or CAFR, which described, in a more or less uniform way, what happens to money that the city receives and expends during the year, and retains on September 30th (the last day of the fiscal year) of every year. The Helen B. Hoffman Library received, each year for its reference shelves, the City of Plantation’s version of the CAFR, which back then, were titled “Basic Financial Statements And Other Schedules”. The first actually titled CAFR produced by The City of Plantation was the 2012 report. The City posts the links for these financial reports from 2006 to 2017 on its website at http://www.plantation.org/Financial-Services/audited-financial-statements.html . For earlier copies one has to make a public records request online at http://www.plantation.org/city-of-plantation-about/departments/general-departments/city-clerk-welcome-page/public-records-online-search/ .
When the City Council meets in August to set the ceiling for the property tax millage rate, and, in September to decide on the final millage rate, they are dealing only with the portion of revenue in the General Fund that is generated from the ad valorem property tax. The General Fund is slightly less than half of the total budget for the upcoming fiscal year. (See PDF Pages 2 and 3 for examples: the General Fund projection $104,992,476 while the Total Budget Projection $225,586,262.)
The first CAFR that I read from was the 1992 report and I would take notes and occasionally photocopy some of the pages of interest to me because the report could not be “checked out” of the library. The retained money was the catalyst of my interest in these reports. Under the old report format retained money was titled “Cash and Investments”. The CAFR format labels retained money “Deposits and Investments”. After that amount grew to over $100 Million, I began to call it “The Mountain of Money”. That amount fluctuates and was never less than $73 Million but it has climbed back up to over $100 Million in recent years. (See Page 5 of this PDF for a Table of Contents for the page numbers of the 2017 CAFR and a compilation of the last nineteen years – the large spike of retained money to $210,702,923 for 2017 includes the money from the three bonds just voted for by the residents that added $60 Million to the rest of the $150 Million in the chart and graph.) The source of the PDF Page 5 is the corresponding PDF Page 6 “Deposit and investments”.
See PDF Pages 7 and 8 to identify “unrestricted” assets as a portion of The Mountain of Money and explain that the City Council may make the decision that “unrestricted” assets “may be used to meet the government’s ongoing obligations to citizens and creditors.” See PDF Page 9 which shows the records of the last ten years of “unrestricted assets” which ranged from over $66 Million in 2008 to the $37.5 Million in 2017; money that totaled tens of millions, or scores of millions of dollars.
About The City’s Three Pension Funds
The annual report also included reports on something that I knew a little about because the later part of my merchant mariner career included two distinctly different forms of retirement benefits. They were, at first, a Defined Benefit Pension Plan and, later, Defined Contribution Plans with The Vanguard Fund Family and with The Fidelity Fund Family. The difference between the two forms of retirement plans have a greater impact upon the employees than a category 5 hurricane. Employees do not own their Defined Benefit Pension Plan; it is an asset and/or liability of the City, and, they never know the daily value, or future value, of their retirement benefit because it would require actuarial computation to determine. However, employees do own the value of their individual Defined Contribution Plan, and, they can determine, on a daily basis, the daily value of their Defined Contribution Plan by checking the daily newspaper or online. Further, in the Defined Benefit Pension Plan category 5 hurricane impact is the “legal” guarantee payment of a Government Employees’ Defined Benefit Pension Plan by The Taxpayer if the pension fails or the governmental body bankrupts. AKA: The Taxpayer is “on the hook” to pay (again) for the employees’ failed Defined Benefit Pension Plan.
The CAFR presents the Defined Benefit Pension Plan funding status of the City’s three pension funds; the General Employees’ Pension Fund, the Police Officers’ Pension Fund, and the Volunteer Firefighters’ Pension Fund. (See pdf pages 10 and 11 for the total asset information of these three pensions equaling $335,732,663.) (See pages 14 and 15 for a compilation of the Unfunded Actuarial Accrued Liability of the General Employees’ Pension Fund from 1992 to 2017 and see pages 16 and 17 for a compilation of the Unfunded Actuarial Accrued Liability of the Police Officers’ Pension Fund from 1992 to 2017.)
See PDF Page 12 for the 2017 CAFR “Funded Ratio” of each of the three pensions. General Employees’ is only 79.69% funded. Police Officers’ is only 74.03% funded. Volunteer Firefighters’ is 121.81% funded. The Volunteer Firefighters’ plan is funded, from home insurance policy premiums, through the State and as a result of the premium revenues has always been reported over funded.
By federal law, each year my Defined Benefit Pension Plan has to report and explain the status of the plan to the employees and retirees. (See page 13 of this PDF for an excerpt of the annual letter my Defined Benefit Pension Plan sent to me this year, along with the funding percentages so I would know the financial status of my plan. I did not include my percentages for privacy.)
I began REMONSTRATING with City Council many years ago, after experiences with my pension’s annual reports to me and after reading Plantation’s CAFR’s statements with regards to ending the Defined Benefit Pension Plans of the General Employees and Police Officers and replacing them with Defined Contribution Plans, i.e. 401-k or 403-b or other Qualified Plan that would transfer the retirement benefit assets’ ownership to each employee and police officer and take The Taxpayers “off the hook” of further Defined Benefit Pension Fund unfunded liability.
As the City pension funds unfunded liability continued to crater into $100 Million abyss, I continued to urge the City to investigate what and how outside investment firms like Vanguard, Fidelity, Ameriprise, Franklin Templeton, etc. do to accomplish the change from the City’s two failing Defined Benefit Pension Funds to Defined Contribution Plans. Instead, the City went back to the same firm that managed the pension plans and reported that it would cost too much to pay off the unfunded liability.
After many, many years, in October 2010, the City 1) kept the same pension management firm. 2) created a two tier Defined Benefit Pension Plan system for employees and police officers. 3) and some time, in my layman’s terms, “took out a mortgage” through the pension management firm for the $100 Million unfunded liability of the two pension funds (See this PDF’s Pages 25 through 34, which I have labeled “Appendix – Pension Mortgage Information”. Page 25 of the PDF pages begins with page 14998 of the official minutes of the August 27, 2014 City Council Meeting which discloses that the city had entered into thirty-year amortization payment schedules, with FY – 2015’s $9 Million in payments to the employee and police officer pension funds in addition to the required annual pension payments. These official minutes are reinforced by the firm’s presentation documents included the accompanying PDF Pages 26 and 27 of charts and explanations. Kindly look back to my federal law required notice of pension funding status for the definitions of “endangered” and “critical” PDF Page 13 and compare. The PDF Page 26 – The 2013 General Employees’ Pension was $40.2 Million unfunded for an “endangered” funded rating of 78.5%. The PDF Page 27 – The 2013 Police Officers’ Pension was $54.5 Million unfunded for an “endangered” funded rating of 65.1%. That is ONLY 0.2% above the “critical” rating of below 65%!
The various PDF Pages 29 through 34 are a few pages of the 61-page report from the “2013 GRS Actuarial Valuation Report as of October 1, 2013 for the General Employees’ Retirement System” that noted the same amounts as in the CAFR. The report’s graph on PDF Page 33, displays cumulative loss of the General Employees’ Pension Fund, is not the same but is relational to the graph on PDF Page 14 Accrued Liability of the General Employees’ Pension Fund.
A Few Observations
***I never understood why there was neither General Employee nor Police Officer that would REMONSTRATE with the Council after I would, year in and year out, report my readings of the CAFR. The only reason that I could think of was that the City’s pension management firm was not giving the Employees and Police Officers the notification letter required by federal law, or that the Employees and Police Officers were not reading the required annual notifications. The General Employees’ Pension would have been rated “endangered” for six of the last seven years. The Police Officers’ Pension would have been rated “endangered” for fourteen of the last fifteen years. To repeat, very nearly “critical” in 2013.***
*** The other thing I never understood is why the City would continue to say that it would “cost too much” to end the General Employees’ and Police Officers’ Defined Benefit Pension Plans and begin Defined Contribution Plans instead…when the City ALREADY “took out a mortgage” to CONTINUE the Defined Benefit Pension Plans, with the SAME management firm!***
***Over all of these years, comparing same sections of the CAFR’s, not only have trends been revealed, charted, and graphed but the “where” and in “what form” The Mountain of Money has been husbanded has been tracked. For five years, 2010 to 2014, the corresponding pdf page 6 “Deposits and investments” section reported $40 to $44 Million in bank money market funds earning about 0.1%,***
A Goal To Strive For
***In a similar way, examining the CAFR pages that report the annual General Fund and Total Government Funds, often reveal millions of dollars of revenue more than the year’s expenditures , and an incrementally growing year “Fund Balance, Ending”. (See the last six years CAFR pdf 120930 excess revenues over expenditures $2,052,090, pdf 130930 excess revenues over expenditures $10,417,835, pdf 140930 excess revenues over expenditures $9,707,956, pdf 150930 excess revenues over expenditures $4,751,235, pdf 160930 excess revenues over expenditures $8,123,854, and pdf 170930 excess revenues over expenditures $1,056,097. The total of excess revenues over expenditures for the last six years = $36,109,067.) That $36 Million added to the “unrestricted” $37,574,247 (See pdf pages 7, 8, and 9.) with the unfunded pension liability annual amortization payments, one might see the way to pay off and close both General Employees’ and Police Officers’ Defined Benefit Pension Plans and roll the assets over into a new Employee and Police Officer owned Defined Contribution Plan; with the Tax Payers finally “off the hook.”)***
Truth Of What The City Owes; On and “Off” The Books
There were also a couple acronyms for two more governmental employee benefits that I had never heard of before reading a CAFR: DROP and OPEB. DROP stands for Deferred Retirement Option Plan. OPEB stands for Other Post-Employment Benefits. OPEB was not required to be included in the Plantation CAFR until 2009.
Although the CAFR includes a description of the City’s long term debt as $109,984,924 (See PDF Page 24.), the CAFR includes two other sources (DROP and OPEB) of multi-million dollar unfunded liabilities: DROP for the General Employees = negative $8,471,181 (See pdf page 20.), and DROP for the Police Officers = negative $24,053,619. (See PDF Page 21.) OPEB = negative $31,315,195. (See PDF Pages 22 and 23.)
Looking at this another way:
Fund Amount PDF Page General Employees’ Pension Unfunded Liability $37,696,877 15 Police Officers’ Pension Unfunded Liability $46,767,014 17 General Employees’ DROP $8,471,181 20 Police Officers’ DROP $24,053,619 21 OPEB + $31,315,195 22 and 23 Total Unfunded Retirement Related Money $148,303,886 Definitely Long Term and Definitely Owed Long Term Debt + $109,984,924 24 Total Money Owed $258,288,810
DROP and OPEB require their own discussion, perhaps at a later time, as they have a gigantic impact upon the Tax Payers as well as government employment, wages, promotion, and retirement.