SAD ballot language on unfunded liabilities tabled

March 29, 2019

 

At least four dozen residents remained in attendance at the end of the Bloomfield Township Board of Trustees meeting on Monday, March 25, to learn details and voice concerns about how the township plans to fund $164 million in legacy retiree benefits that are expected to result in $5 million to $7 million annual budget deficit in future years.

The board, a majority of which has pushed an effort to send the issue to voters in a special election this August, voted 4-3 to table proposed ballot language that would raise more than $9 million annually and free up funds to pay for other post-employment benefits (OPEB) for township retirees.

“Good decisions aren't made after three-hour meetings,” trustee David Buckley said nearing the end of a long and contentious meeting, which started with at least 100 members of the public, as well as several representatives from the city's police and fire departments, lined up throughout and outside the room.

“I think we had a lot of discussion,” trustee Neal Barnett later said. “I don't think additional discussion will change it much, as far as what our individual positions are.”

Trustees Buckley, Dani Walsh, Michael Schostak and clerk Jan Roncelli voted 4-3 to table voting on proposed ballot language that would have asked voters to approve a police/fire special assessment district (SAD) of up to 2.3 mills over the next 15 years.

Buckley, who initially rose from his seat and began to walk out of the meeting in protest after being presented the ballot language at the last minute, returned to cast his vote. He later apologized to the board and those in attendance for his reaction.

Monday's meeting wasn't the first time in the past two months that frustrations have neared a boiling point, as the board has struggled with how best to address the issue, which arose after a state law went into effect last year requiring some municipalities to change the way they fund retirement pensions and other benefits.

Under Public Act 202, known as the Protecting Local Government Retirement and Benefits Act, municipalities must fund at least 40 percent of OPEB liabilities. Prior to the law, municipalities like Bloomfield Township, could pay for those costs as they arose each year, known as “pay-as-you-go.” With those liabilities totaling $164 million in Bloomfield Township, the township must close a $64 million gap over the next 30 years.

To address the issue, the township worked with financial advisors Plante Moran to devise a list of potential cost-cutting and revenue increasing measures. Those measures include, but aren't limited to, eliminating the township's animal welfare division ($170,000 to $200,000); outsourcing police and fire dispatch services ($375,000 to $700,000); reducing police patrols in the township ($1.3 to $1.6 million); ceasing fire services at the township's Fire Station 4 ($800,000 to $900,000); instituting tax administration fees ($1.5 million); contracting out property assessing services to the county ($140,000 to $400,000); cutting general fund support for the township's road division ($1.4 million); eliminating some township programs, such as gypsy moth control and hazardous waste disposal ($300,000 to $340,000); and other reductions in services and/or increased fees ($400,000 to $500,000). Advisors also included the possibility of a bond issue to bring the unfunded OPEB liabilities to the 40-percent funded mark.

In addition to the work with Plante Moran, the township contracted with the Glengariff Group, a professional research firm, to conduct a formal resident survey to gauge the public's desire on how best to move forward. Results from the survey and the Plante Moran study are available on the township's website.

Bloomfield Township Supervisor Leo Savoie said about two-thirds of the township's workforce, as well as its current and legacy costs, are related to public safety staff, which makes up about two-thirds of the township's workforce. He said a public safety SAD would be preferable to selling OPEB bonds, as bonding would provide a one-time payment to the OPEB fund, rather than a long-term fix to fully fund the liabilities. In addition, repayment of bonds would include interest fees, while a SAD wouldn't. Further, a bonding millage would be subject to tax rollbacks tied to home values, making repayment a potential liability if a future recession impacted home prices.

While special assessment districts can be approved by the township board without a vote from residents, Savoie and board members said they wouldn't authorize any version of a SAD without voter approval, which they would like to include in an August special election ballot.

Funding scenarios presented included variations of a Public Safety Special Assessment District (SAD), selling OPEB bonds; and service reductions combined with a SAD. All took into account converting expiring public safety millages to SADs or bonds, the primary reason being that as a charter township, they have a cap of levying 10 mills, which they are near the top of.

The first funding scenario would include different variations of a public safety SAD of 1.05 mills, 2.3 mills or to 8.29 mills, with the lowest amount considered a “bare minimum” solution. The scenario would include the renewal of the township's general millage. None of the three variations included any specific budget cuts.

The second scenario would involve the issuance of $60 million in OPEB bonds, which would be the maximum amount currently permitted by the township under state law. Bonds would require a debt millage of about 1.5 mills over the next 20 years, and the OPEB trust would run out of funds by 2033 without additional funding.

The third scenario includes cutting services by $560,000, as well as a public safety SAD of .9 mills. Cuts would include the elimination of part-time positions from the front reception desk; elimination of the township's gypsy moth program and annual open house; elimination of the township's animal control division; and contracting out assessing services.

The proposed ballot language tabled on March 25  involved a 2.3 mill SAD. The language, which wasn't approved and is still subject to modifications, specifically states:

“Should the Charter Township of Bloomfield raise money to equip, maintain and operate the Township Police/Fire Departments by annual special assessment levies of up to 2.3 mills ($2.30 per $1,000 of taxable value) on all real property in the township that is not exempt from property taxes, for a period of 15 years, with the levies to be from 2019 to 2033 to provide funding for the 2019/2020 to the 2033/2034 fiscal years. If approved and fully levied in December 2019, the revenue from this assessment collected in the first year would be $9,041,317. In the event this ballot proposal is approved by voters, the existing voted general millage due to expire in 2019 will not be renewed by the Township.”

Prior to the vote to table the language, Schostak noted that the resident survey found that at least 87 percent of those phoned said they believe that the township is “on the right track.” He also noted that the overwhelming majority of residents are pleased with their services, but that the township was facing an issue that went back several generations tied to the way benefits had been funded.

“I wish prior boards would have funded it, but we can't turn back time,” he said. “We have to move forward.”

Walsh agreed that the survey found residents were generally pleased, but also noted nearly 90 percent of those surveyed were unaware of the current funding issue.

Walsh and Buckley have pushed for the board to look at implementing some of the cuts proposed in the Plante Moran study, while leaving fees, and police and fire cuts off the table, and have repeatedly pushed for minor items, such as department head vehicles, an employee benefit, to be cut, which led to heated exchanges among trustees and between the board and a few residents. However, Savoie has said the proposed cuts would do little to close the funding gap, and he prefers to give residents the chance to vote on the issue prior to cutting services.

The issue will be taken up again at the board's next meeting on Monday, April 8.

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