The following is a copy of the memo presented Feb. 2, 2012, to members of the Older Persons' Commission Governing Board from board member and Rochester Hills City Council Vice President Michael Webber.
"I believe that in order to understand where all sides are coming from regarding the 2012 Fiscal Year OPC Budget, we must have an understanding of the budget numbers being used during this public discussion.
"After reading media reports of this ongoing budget dispute and also reading the minutes of the January 9th, 2012 Rochester City Council Meeting, I e-mailed Board Member Bikson and asked him to detail the numbers that he is using. He responded with the following:
- Step Increases $25,658
- 1% Pay Raise $15,097
- 401k pension $39,247
- Health Insurance Plan Increase $61,220
- Payment in Lieu $ 25,200
- Total $166,422
"The Health Insurance Plan Increase is derived by taking the increase in Benefit Costs from the 2011 budget to the 2012 budget and subtracting the 25,200 Payment in Lieu expense.
"It has been stated in public that $166,422 represents additional expenditures within the Fiscal Year 2012 budget that were absent in the Fiscal Year 2011 budget.
"I sent these numbers to Rochester Hills Finance Director Keith Sawdon because he works with the OPC on the budget that is presented to the board and the three communities. Here are my findings:
"Regarding Health Insurance, we are on course to pay less in 2012 than we paid in 2011. We paid Blue Cross $98,401.67 in 2011. Based on the January Blue Cross invoice we are on course to pay $94,089 (11 participants at $712.80/mo). This figure includes one less participant than in 2011. All told, we are saving roughly $4,000 instead of increasing the budget by $61,220 as Board Member Biskon claims.
"Regarding the 401k Pension (which is a Defined Contribution plan); we budgeted for this expenditure in 2011. This does not represent a new expenditure in 2012. In 2011 the employer part of the contribution amounted to $33,415. Based on the first deposit made in 2012, we are on pace for a total contribution of $36,244. Again this is not a new expenditure for 2012, meaning that the $39,247 should not be stated as such.
"Regarding the Payment in Lieu of health care, the OPC Board has offered $1,500 for a number of years now. That number was increased to $8,400 for the 2012 Fiscal Year Budget. It should be noted that if employees who take the Payment in Lieu of took the Health Care instead, we would be paying $8,553.60 (based on the $712.80 a month figure used). Regardless, $4,500 of the stated $25,200 is not new for Fiscal Year 2012.
"Regarding the 1% Pay Raise and the Step Increase; those do represent true new expenditures for 2012. It should be noted that they are new expenditures because of a three year pay and step increase freeze for all OPC employees. The 1% increase equals $18,716 (which is a higher number than what is used by Board Member Bikson) and the Step Increase is estimated at $25,658 (the same number used by Board Member Biskon). All told, this represents an expenditure increase of $44,374 to the 2012 Fiscal Year Budget.
"The correct number to use regarding new Fiscal Year 2012 budget expenditures related to salaries and benefits is roughly $65,000. It is important to note that these expenditure increases are a part of an overall budget that decreased the bottom line total from Fiscal Year 2011 to Fiscal Year 2012.
"I am hoping that this document will be used as a clarifying document as we continue to discuss the OPC Fiscal Year 2012 Budget."
In This local fact
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Older Persons' Commission
650 Letica Dr, Rochester, MI
Ben Giovanelli, CPA
2:39 pm on Friday, February 3, 2012
I've forwarded same to our City Manager and Finance Director for clarification since that's where we got "our numbers" from. My cursory take is there's some playing of hide and go seek over two different fiscal years. The initial question of changing appropriations and instituting a new pension plan without a formal budget amendment for re-ratification remains unanswered.
I wasn’t there so can’t speak with firsthand knowledge. I'm told Mr. Webber dropped this on the board without an opportunity to review. I’ve been down this path before when I tried to do an analysis of the DDA’s numbers but was soundly chastised for them being “Ben’s numbers” so I sort of feel for Mike. But at the end of the day, when you are expecting any governing board of any entity to review, discuss and take action on your report, it is just common courtesy that you give the board an opportunity to review and make informed decisions.
Bottom line is that there is a giant disconnect between what those that control the Board see as reality and what we in the City of Rochester see as reality. Same numbers, presented differently. The problem is those that control the Board are unwilling to undertake an honest dialog as to the merits of the questions posited by us. General Eisenhower’s famous quote seems apropos here: “"You do not lead by hitting people over the head...that's assault, not leadership."
Terry
4:14 pm on Friday, February 3, 2012
Mr. Webber:
Let me offer you a private sector view from someone who has managed large budgets.
1. The fact you are debating the OPC budget numbers at this point would probably get someone fired in the private sector. How could you have personally approved a budget as a Board Member with the numbers so unclear?
2. All companies assume some % of employees will not take their healthcare. Virtually nobody pays "payment in lieu. Using that as justification is laughable. Increasing it from $1500 to $8400 in one year is obscene. .
3. Last years budget is irrelvent. Have you heard of zero cost budgeting? Everything needs to be justified every year, except in governement.
4. Simple question: Will the Director's W2 be 16% higher in 2012?
Why should we be surprised. The Rochester Hills budget isn't any better. A dwindling general fund, setting up voters for big millage proposals this fall, 14% pension contributions for employees, etc.... That Council lost any financial credibility when they stood in front of the public saying the Water Towers were cost justified.
The saddest part is that the OPC is a great asset to the community. This debate and the issues that created it will come back to hurt them with voters. My advice is to compromise on something quickly and fix this for next year.
Scot Beaton
3:25 pm on Saturday, February 4, 2012
Still don't understand why we cannot present to our tax paying public the numbers correctly? Example if you increase salaries you increase social security, unemployment insurance etc.? Why are these increases not in the memo from Mr. Webber?
Page 219 Older Persons Commission Expenditures: Adiministration
Salaries & Wages FY 2011 $464,076 FY 2012 $539,554 +16.3%
HAS Administration & Savings Plan FY 2011 $3,750 FY 2012 $4500 +20.0%
Employers: Medicare FY 2011 $6,729 FY 2012 $7,824 +16.3%
Employers: Social Security FY 2011 $28,773 FY 2012 $33,938 +18.0%
Health & Optical Insurance FY 2011 $13,440 FY 2012 $51,990 +286.8%
Life/AD & D Insurance FY 2011 $1,248 FY 2012 $1,500 +20.2%
Disability Insurance FY 2011 $8,055 FY 2012 $7,600 -5.6%
Unemployment Insurance FY $5,000 FY 2012 $15,000 +200.0
Workers Compensation FY 2011 $7,060 FY 2012 $7,000 -0.8%
Total Personnel Services FY 2011 $538,131 FY 2012 $668,906 +24.3%
I'm not quite sure why we are not presenting "total numbers". This is just one department in our OPC. If you go thru all 16 departments the "number" is $212,762 increase in Personnel Services. Kristin Bull I'm going to send of to your email within the hour a letter please post...thanks.