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(female announcer) This is a production of WKNO-Memphis.
Production funding for 'Behind the Headlines' is made possible
in part by..
Pensions, union contracts and the county budget tonight on
'Behind the Headlines'.
♪♪♪
I'm Eric Barnes, publisher of The Memphis Daily News.
Thanks for joining us.
We're joined tonight for a conversation about budgets,
contracts, pensions, the schools.
First, Kemp Conrad from the Memphis City Council.
Thank you for being here.
Thanks for having me.
And Mike Williams, president of the Memphis Police Association.
Thank you for joining us.
Thanks for inviting me, as well.
And also, Bill Dries from The Memphis Daily News.
We'll be joined later by Mike Ritz from the County Commission
along with Melvin Burgess from the County Commission.
Let's start.
I'm going to pick up on a conversation we had a couple of
weekd ago with Councilman Conrad and Joe Saino from a watchdog
group, city-county watchdog group about pensions.
And they're concerned but a lot of people have concerns about
the unfunded obligations, some billion dollars by some counts
for pensions and healthcare.
And we were unable to get any union representatives on for
that show.
But let me give you a chance to kind of respond to some of the
concerns people have.
And with a real simple question to start,
are the unfunded obligations too big for the city to handle?
No.
First of all, when you talk about unfunded liability,
it's almost like a house mortgage.
The only time that that would actually come in to play is if
the city went bankrupt or you shut the city down.
Then we would have to come through on your promissary note.
We have over right at two billion dollars in our pension
fund currently.
We also end negotations with the city added approximately $500
million.
All police officers and firemen that had under 10 years,
we use to pay six and a half percent.
We're currently paying eight and a half percent.
So that's going to contribute an additional $500 million to the
pension fund.
So it's going to go up.
And we have to be careful just like we're concerned about the
money just as well as the city.
But you have to be careful what you're taking out of the pension
fund and how you're using that money and how you'll invest that
money as well.
What about on the healthcare side?
I mean, concern there, healthcare costs going up so
greatly.
There's a tremendous obligation to retirees and future retirees.
Are you concerned on that side?
Well, we're definitely concerned.
We want to make sure that we spend the tax payer's money
wisely.
However, the last three years the city as far as our
healthcare system has actually operated and performed in the
black.
So at the end of the year, we actually had additional monies.
In fact, one of the contentions that we have now is they have a
miscellanous fund that the city just put in to our healthcare
fund.
And we're trying to figure out where did that $8 million come
from and they're also adding additional employees wages under
the healthcare fund which when they really should be coming out
of the general fund.
Let me get you in, Councilman Conrad.
You have concerns.
We talked about them a couple of weeks ago on the show.
These are untennable liabilities,
a very different picture that you paint than Micheal Williams
here.
Give me your prespective.
Well, I head Mike say two things.
He said that, you know, the fund was fine and then he said we
need these changes so people had to pay in more.
And the reason why is we did need to put in more.
And I think that we have an annual required contribution.
We're supposed to put in 50 more million dollars each of the last
three years.
Would you agree with that the city was supposed to do that to
make the fun whole?
We have not done that.
Okay?
So that's $150 million the last three years that our said,
"Memphis, you need to put in to the system".
And we didn't do it.
We balanced budgets with it.
And it's not right.
And so, workers are paying in to a retirement system right now
that makes unreal promises.
If we're not putting the money in,
and the city is offering benefits it can't pay.
To new employees and current.
No, to everybody in the system.
And so Mike and I's interest should be aligned on this
especially for our police officers where we need.
I mean, we are not doing..
He just admitted that.
So either we can raise taxes by $50 million a year to do it,
we can reduce the benefits or the employees have to put in
more.
And aren't those the three options?
Which of those do you want of those three?
I assume it's not raising taxes.
I think that our tax rate as high as it is right now is
detrimental to the future growth of Memphis.
I think it's one of the reasons why people leave.
It's one of the reasons why companies are leaving and going
to North Mississippi.
It might be a combination of the three.
I'm most intersted in having a transparent and legitimate
system that is honest to our taxpayers and is honest to our
employees.
And we just agreed that we have shorted it by $50 million each
of the last three years.
That's not right.
Your take on that?
All respect to Councilman Conrad,
I think our pension system is fine.
Like I said, we have over $2 billion in there.
And we put additional monies in there because..
See, timing is everything.
And when they kind of started wanting to talk about the
pension system, yeah, it was down.
The unfunded liability was, I believe,
$500 million.
However, the stock market was the worst that it had ever been.
In the past, we have been 100 percent funded.
During that time, unfortunately, the city didn't fulfill it's
obligation and putting the required money which would not
have been $50 million.
So it kind of put us behind the power curve.
So for us to leave the pension system the way that it was,
we came to te table and said the employees,
"Leave it alone".
We will contribute additional monies to sure up the pension
system.
Now, if the city has never really put what was required as
far as what was their recommended contribution.
They've never done that.
But like I said, it's like a house note.
You're never going to have to really as long as this city is
moving forward, you're never going to have to really just pay
that balloon note to pay the system out.
And what about in a lot of cities,
states or counties around the country?
A lot of them tlaking about going away to fine benefit
pension plans that guarantee a certain amount to 401k type
plans.
In the private sector, that's, you know,
all the rage and has been for some time.
What about that possibility for changing retirement benefits
into a 401k type plan going forward?
And I know everybody wants to compare private industry with
public entities.
At some point we're going to have to.
That's not why we took these jobs.
In the private sector, I probably could have made a lot
more money.
I took this job for benefits.
I took this job because I wanted to provide a service to my city.
I took this job knowing that at the end of 25 years because I'm
not being paid as much, that I would have benefits available to
me.
A lot fo time in private sector, you move from company to
company, corporation to corporation.
So, a defined contribution plan may be a lot better where as we
don't plan on going anywhere because this is a profession for
me.
Bill?
Mike, your side of the bargaining talks with the city
in terms of a new contract.
I believe you're getting ready to go to a council and the city
is as well to say we're at an end pass.
We can't resolve this at this point.
Yes, yes.
What are the issues that are on the table that a council
committee is going to have to decide on this?
Well, they're in the process.
We're in federal court right now dealing with a lawsuit.
And the judge has said that they have.
There are possibilities that they violated our 14th
amendment rights when they took the 4.6 from us.
The mayor has said he was going to give the 4.6 back.
Me personally, the police association,
we're not going to bargain the 4.6.
You can give it, not give it.
We're more concerned about the benefits.
They were talking about taking away vacation days,
holidays, sick days, different things like that.
That's what we were more concerned about.
But part of the problem is I think the legal part of the city
has found out that they may not win the lawsuits so now what
they're doing is attacking the in pass ordinance which the
citizens in 1978 gave through referendum to the employees of
the city because they did not want us to go on strike.
But now they're trying to change the language of the in pass
ordinance so that they can circumvent it and regardless of
what contracts we've come to in agreement with the city,
then they still have an out adn they can actually do away with
those.
And the impass ordinance is just for people who aren't familiar
with that.
That's actually a form of negotiation of arbitration other
than..
I think the key issue..
I mean, we change ordinances all the time.
One of the things, all we're trying to clarify..
The main power the council has is the power of the purse.
And one of the things we're trying to do with this ordinance
is make all these things that Mikes talking about,
they're ecnomic items.
Holidays, paid time off, the number of times people are out,
vacation days, all those impacts head count,
impacts overtime.
Those are all economic items.
And so basically that is our main power that the council has
in city government.
And those have been advocated to the union process and to the
administration.
So when things come to us, you know,
we can't.
There's only so much we can change.
Another example, paid holidays.
City employees have, I think, 13 or 14.
13 paid holidays.
How many do you have here or your company at The Daily News?
Eight, nine, ten probably?
I'd have to do the math.
Maybe?
I bet it's single digits.
Okay so there's a 40 percent delta between what the city does
and what your company does.
I think that's something that should be changed.
I think that's reasonable.
I think it's not draconian.
Sick days, paid time off, all these things when city employees
didn't get raises every year and it doesn't happen every year,
other things got negotiated.
And over 20 years, it's a mass and it's simply unsustainable.
And that's why we have this continual problem.
I think there's a way.
There should be a way where people can come together,
we can do right by our city employees and do right by the
tax payers and by our city.
Let me tell you something.
Our paving cycle, the average is 25 years in this city.
Do you know what we're on a paving cycle right now on the
city of Memphis?
Take a guess.
65 years, that's a paving cycle we're on.
That's deplorable.
So, I mean, I could go on and on.
We have got to solve this issue.
So your point in saying that is that we're not getting enough
for the money we're spending, that these benefits have gone
up.
But let's talk about public safety.
And people make a different distinction.
When you've got police officers and you've got,
you know, firefighters and first responders of those type,
to what Mister Williams is saying,
isn't there a different consideration for those folks,
for those people who risk their lives who make less than they
could?
Absolutely, I don't think we should treat everyone in city
government the same.
What if I put a proposal on the table that we should give the
police department 10 percent more and not everybody else?
Would you support that?
Well, I'd have to take that back to my boss.
But just, I mean, if we had a deal that we were going to pay
police officers 10 percent more next year and not the rest of
the city employees, would you support that?
What I am finding is I'm not going to sit here and agree to
anything on face value.
For instance, just like when the city was talking about giving
back the 4.6 but then they were talking about cutting our
benefits.
I would have to see the total package.
I'm not disagreeing wtih you and I'm not saying that I woudln't
do that.
I'm saying that, you know, in the past and I'm not saying the
council, there has not been true transparency in our
negotiations.
For instance, you know, when we did the deal about adding the
additional money to the pension fund.
And now they come back around and they want to deal with the
pension fund again already.
Because it's not sound.
But I tend to disagree that it's not sound.
And when we say like paving.
We used to own our own asphalt company.
We uses to do our own paving.
We still do on the asphalt plant.
We own the asphalt plant but we're outsourcing,
okay, all of the work.
So I'm saying when government was set up,
it was set up to serve the citizens.
We're doing more.
Everytime we say we don't have money,
I just find out they want to give 10 more million dollars to
the riverfront boat dock.
They want to give $12.5 million to the fairgrounds.
They want to give and they want to start giving away all of
these public property, you know, property that's owned by the
citizens to private industry to bill.
Now, I'm for economic development.
I don't want anybody to ever think that I'm not.
But at the same time, I think it has to be done in a manner to
where it's just going to be condusive to the citizens and
also to the business community.
Alright, just last 30 seconds respond if you need to respond
to some of that.
I think we need to be as concerned about the next 46
years as we are the 4.6 percent.
We need more people who are focused on the long term.
When you can't argue the facts, folks tend to pound the table.
And I'm not saying that's what's going on here today.
But the facts don't lie and, you know,
you're entitled to your own arguments but not your own
facts.
And our actuaries tell us this is the future liability you're
going to have to pay out for workers.
This is what's in the fund.
They use reasonable return rates and it's not going to be there
for people unless we change course.
We're going to leave you the last word there.
Thank you Mike Williams for being here.
Kemp Conrad, thank you.
Next stop for conversation with members of the County Commission
and the daunting task of funding the unified school district.
♪♪♪
We're joined now by County Commissioner Melvin Burgess.
Thank you for being here.
Thanks for having me.
And also Mike Ritz, chairman of the County Commission.
Thank you.
Thank you.
Let's start with the budget and Chairman Ritz,
you have outline on this show and you've been saying it for I
think some months now but now it's getting serious because
we're in budget season.
The mayor, county mayor was making a presentation this week.
It's a dire situation from some perspectives.
There's not a lot of money laying around in the county
budget.
No because of the reappraisal, we're about $53 million short of
just being even because the values of the property.
So we're going to have to raise the rate 33 cents just to get
back to even.
Now that doesn't mean everybody's property taxes are
going up but it does mean the rates going to go up.
And that's not a pretty circumstance to start with.
Then you have the challenges that we're faced with this year,
the biggest one being the school financing because the city's no
longer funding the schools.
There's, you know, the schools are in pretty dire circumstance
and the only other place to look is Shelby County.
Well and forgive me quick math here but the shortcut is once if
the adjustment based on the reappraisal happens,
that's that 33 cents, there's a little more maybe,
you know, there's maybe five to ten million dollars in quote new
revenue available.
And yet, the unified school board has talked about the short
fall in the 50 to 100 million dollar range.
That's exactly right.
If we were to fund..
The reason the $5 million for school number is out there is I
believe on the County Commission at the moment we have enough
votes to raise the property tax by 9.99 percent.
To raise it 10, you need another vote.
You need nine votes.
And if we were to raise it 40 cents which is 10 percent,
then in that extra amount between 40 cents and 33 cents
just to stay even, that seven cents could produce five million
dollars for schools plus a couple million dollars to the
juvenile court.
Commissioner Burgess, you're also,
I should say, a member of the cabinet of the unified school
board director of audit, internal audit.
Two hats in this conversation.
It's a really difficult situation.
I mean, or maybe you see the math differently but there isn't
a whole lot of money sitting there and the unified school
board has talked about needing tens of millions of dollars
given that lack of city funding.
Well you know, there's a lot of components that's going to be on
file with this merger.
And I think people don't realize that,
you know, education is a big task.
And for the most part, you know, it's going to be a lot of
unforseen even though we have a plan,
a TPC plan that we're trying to go by,
there's still going to be some unforseen expenses that's going
to come out of this.
I mean, it's a big task.
I know there were some incidents about closing the schools but
there again, we still got to get the kids to school.
But right now, the major focus is right now,
our number one goal on that school board,
on the cabinet is to make sure that we open those schools on
the first week of August and make sure kids are prepared and
those schools are ready to open on August.
Are you confident though that the funding will be there at the
level?
I mean, so many people particularly from the suburbs,
the suburban oriented members of the board,
suburban parents have said, "Look,
just don't change anything for this first year."
"Don't change the class sizes."
"Don't change my teacher."
Is the funding going to be there to keep the amount of change in
the classroom at a minimum?
I think talking with the superintendant Dorsey Hopson,
I think there is no worry.
I think what it happening is I think we're just getting a lot
of communication that is not just correct.
I think in all the schools that have been staffed,
a teacher-pupil ratio as per the state and I think the schools or
any kind of communication that, you know,
people don't understand, they need to just maybe get the right
information.
But right now, you know, people are panicking and they're
concerned and there are a lot of things on the street that are
just not correct.
So, we're trying to get together with super Hopson and our staff,
the cabinet, to go out and do some of these town hall meetings
and let people know, you know, what the,
you know, the correct verbage is when it comes to your school.
A lot of schools are concerned they're going to be losing some
of the staff but, you know, we had to take some cuts but we're
going to still make sure that every child education is where
it needs to be.
Bill?
Chairman Ritz, you all got the budget presentation from Mayor
Luttrel this week and it included I believe the four
million or so that we've been talking about if Sheriffs
Deputies become the resource officers in what are now Memphis
schools.
So does that free up $4 million.
Are we talking about $9 million?
Very good, Mr. Dries.
We need to put you on the staff for the County Commission.
You're exactly right.
The mayor's inclusion of the four in the county's budget math
and all that gives us essentially about $9 million for
schools if the math we just shared stays in place.
And I'm pretty confident it will.
Now that doesn't mean there couldn't be some other things
happening but I think frankly the amount of money we now voted
for schools has grown from about five to about nine.
Alright, Commissioner Burgess, as chairman of the commission's
buget committee and also someone who's working on the budget at
the school's level as one of the players in that,
are you working on the schools' budget under the assumption that
there's five million in extra funding or does that change with
the budget that's not before your committee?
Well, for the most part, you know,
internal audit, we pretty much oversee not just the budget but
also as a cabinet member, we're just looking at the process.
And when I sit in to see what expenses are going to hit the
table and what can be paid for, what's realistic.
So right now, I mean, you know, as a cabinet,
we're pretyy much going forward on what we think we're going to
get, as what the school systems going to get.
So that's how we plan.
But like I said earlier is the major focus is we just want to
make sure that we open those schools the first week of August
and let parents know that things will not change.
The buses will be there on time and ready for kids to get ready
to learn.
All 13 commissioners obviously count heads when it comes to
some kind of tax increase or the recertified rate.
What do you think the head count it like on the county commission
for a 40 cent tax hike tax 33 cents of it being the certified
rate?
You know, that's kind of hard to say because a lot of mixed
emotions and we all got personalities.
But I can say for myself, one thing I do know and I hear the
word economic development, I think our children in this
county in Memphis should be our economic development.
I think until we invest in our children,
you know, we're going to always see that budget picture like the
mayor presented on Wednesday that the top two expense items
on that budget is jail and education.
If you don't invest in the one, the other will go up and vice
versa.
So I think until we invest in education..
And this is our time to get education right as a city.
Chairman, where do you think the votes are on this?
I think like I said.
I think we have probably enough votes to go right to about 40
cents and I don't think it will go past that.
It could fail.
It could fail a little bit.
But I think that's about where we are.
I don't think there will be any grants this year.
There are some other additional requests.
This is the worst year ever for making tough decisions.
We got to make some tough decisions that a lot of people
aren't going to be happy about.
Some of those tough decisions..
I mean, you hear people say, "Look,
if the property rate, you know, if the property values have gone
down, the spending should go down."
"It should go down dramatically."
I mean, is that under discussion?
Just a little bit.
I think frankly next Wednesday or soon there after one or more
of the commissioners are going to request administration to
come back with a budget that essentially eats that $53
million.
Now, what that means is essentially what will happen is
that that budget then will reflect,
would have to reflect because 70 percent of our costs are people.
Probably a significant cut in the number of sheriff's deputies
and jailers and people at the health department because that's
where most of our people are.
Commissioner Burgess, do you want to see a budget like that?
Just even whether or not you vote for it,
is that an important thing to see like this is what we'd have
to cut if we and these are the people.
These are the expenses we'd have to cut if we didn't do this tax
increase.
I mean, it is what it is.
I mean, everybody now got to put in the game.
It's going to be hard decisions.
And those are some of the decisions that,
you know, that we're making on both sides.
On the commission side as far as and on the cabinet side.
So you know, we got to make these decisions and we got to
move forward.
The moneys just not there.
The sales tax is flat.
The revenues from the state has decreased.
I mean, we got to make hard decisions but still remain at a
point to where our school system is still,
these kids are still learning, academic achievement and we're
still doing what we have to do and security.
That's also an issue also.
When you look at this both from a commissioners perspective and
someone in the school system, you've got so much uncertainty.
You know, there's a realistic scenario.
There's a municipal school bill that's moving through Nashville,
the state right now, moving pretty quickly which would allow
the suburban schools to break off a year plus from now.
How do you plan for that from a spending point of view,
from a staffing point of view, from a every point of view when
there's so much uncertianty a year out?
Well, you know, in the feel of accounting,
I worked at a couple of accounting firms and I worked on
a team, you know, where there was some acquisition mergers
going on.
And it's totally different.
The difference you have is you have a big entity like Memphis
City Schools thats dwindling down to a small entity.
So you're talking about the second largest employer in
Memphis.
Memphis City Schools, over 107,000 students,
12,000 employees trying to merge over to one small system.
So it's very different.
It is very different and it's very challenging.
So you know, I think Chairman Ritz said earlier,
that's going to be a lot unforseen costs thats going to
happen that we won't know about right now.
I mean, it's just going to be unforseen.
You just don't know what's going to happen.
And your perspective on that?
I mean, all the unknowns about this merger but the one that
seems msot likely si this bill passing that gives the suburbs
the chance to break off.
How do you plan for that?
You're talking about big tax inreases.
How does the county pull in for that?
Interestingly enough, the suburbs probably have more
interested in this matter than they think they have.
I think they think they're going to paying for their own schools
but they are going to be paying for the additional costs of
their own schools.
But they're also going to be paying for the county schools.
Right.
And they don't lose that opportunity.
Adn they have an interest in the school funding going up because
to the extent that the school funding goes up this year,
it perpetuates itself.
We can't cut it.
And the amount we give to schools like it used to be in
the old days, the city got their piece,
the county got their piece.
In the future, a good possibility the county schools
will get theirs and each suburban piece will get their
piece based on average daily attendance.
They have a cat in this game but I don't think they'll want to
admit it.
I don't want to appear to be supporting them in the unifed
school district when they're doing what they can to create
municipal school districts.
But the issue of financing, they ought to recognize they're all
in the same boat.
And at this point, just 10 seconds left,
any negotiation continuing with the suburbs between the county?
Any conversation?
Not talking to us about anything.
And would you like to speak to them about anything?
Well, frankly they're the ones.
We don't have any.
We're just the funders of schools.
I mean, it's not like we make any decisions.
Okay, okay, alright.
We're going to leave it there.
Thank you for being here.
Thank you for joining us.
Thank you.
Join us again next week.
Goodnight.
♪♪♪