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Author Topic: Fight for Knowledge and Understanding of Royal Oak Pension and Benefit System  (Read 131771 times)

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RORooster

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Starting May 15th CITCOM kicked off its first of three scheduled budget meetings for the fiscal year 2019 – 2020. Of course, for some “Bone-headed” last minute questions last year, the third meeting was only a token suggested meeting to enable the administration a chance to admonish the violators from last year and to ensure that the last-minute questions would not be tolerated again this year. The city clearly wanted to revert back to the two session budget meetings.
To kick off the meeting Mr. Johnson announced this was possibly his last budget submittal after 13 years of budgets, 3 as Finance Director and 10 as City Manager. Of course, 10 years ago, he signed an employment contract that he committed his intention to move to Royal Oak, however, that never really came to fruition. Hence, his leaving would have no credence even if it were in writing.

Even with Mr. Johnson’s announcement, there would not have been a dry eye in the house but for the fact, the entire chamber was nearly completely empty. Not even a public comment speaker came forth to bemoan the fact that the city was on notice that the City Manager would be stepping down. Maybe it was the Mayor pointing out, even to the empty chamber, that the three-minute rule was still in effect. Why is it some people love making fools of themselves? 
Still, with surprising skill and a straight face, the City Manager announced the city “Was on solid financial footing” indicating that his feet were firmly embedded on the backs of every present and future resident and taxpayer for decades to come. I still have this old-fashioned idea that each generation should completely pay for the city services that they were provided with, and used, during their life in Royal Oak not deferring and passing these debts on to future generations. Mr. Johnson and the “Johnsonian Era” will have multiplied the massive pass on debt to levels that will be memorialized in new generations for decades with this accomplishment.
 
While Mr. Johnson was able to pat himself on the lower part of his back with some positive platitudes, he again, forgot or redacted, some his very costly bobbles. His attempt as a new Finance Director and advisor to a new City Manager recommended a mileage due to a “6.4 million shortfall facing the city. History shows this attempt failed miserably by a 2 to 1 rejection by the voters. However, in a matter of weeks, by juggling city enterprise funds and “Pea and shell Techniques with other funds” he was able to financially remove the shortfall. The bad news was that the city was in PA 312 arbitration with one of his largest bargaining units as a member of the city bargaining unit and used the shortfall as a large part of the city’s negotiation tools. When the millage failed and the city found funds to cover the shortfall in a short period, the state arbitrator awarded increases that the city has paid and will pay for years. This contract award also set the standard for the other bargaining units to follow. And, as Mr. Johnson will tell you when a bargaining contract is signed it is completely backed by state law.
 
It must also be noted during this period of arbitration that the police bargaining unit bargained away the health care retirement benefits for newly hired employees. This also resulted in resulted in increased employee health care cost and prescription costs. This might explain why the city recently agreed to increase employee health care to 90%. It always seems like the city can give, take away, and give back and the taxpayer, by state law can do nothing! As a side note, I must take a wild guess and assume that the next City Manager will put an emphasis on the restoration of health care to hire and maintain new public safety employees. After all, that’s what the millage is for…right!
Mr. Johnson did mention the financial crisis and its effect on the financials of Royal Oak. He does have and has always had, a perception of Royal Oak being a single entity in the universe and not being part of a much larger world. His microscopic view of the world and seeing this world through accounting “bean counting blinders” has always been his shortcoming. His view of Detroit problems and it's being under a state-directed financial advisor had ramifications for much of the country, not just Royal Oak. Today we have states and a federal government that is well past the measure of sustainability. These “bankruptcies” will have impacts on Royal Oak much greater than the residents and taxpayers understand. Thus, now is the time to strap your city with long-term debt.

While the administration is in a position of “crowing about its financial achievements” especially in the areas of pension and health care funding. It has never ceased to amaze me how a city has been able to create and pass a millage for an embattled Public service for five years, renew the millage prior to its expiration for another 5 years, and now in the new budget indicate that the millage is planned to be renewed for another 5 year period!  Folks that’s 15 years. Why not make it a perpetual millage? The use of this millage has been questioned for some years and will be for more. I will bow to the knowledge of residents like Mr. Miller who has forgotten more about these matters than I know or ever learned. Hopefully, I look forward to his long-term dialogue with the citizens of Royal Oak. Only through this discussion can the people learn and understand their government.

August 12, 2016, Mr. Johnson went before the city commission and asked the commission to approve preparation to begin the process of bonding for a proposed bond authorizing resolution. The approval by the commission was a foregone conclusion. At the time the city was faced with a $107,971,334 OPEB UAAL and a pension deficit of $75,440,695. Due to legal restrictions, the city could not bond for closed defined benefit pension plans so only $21,511,637 could be bonded out. Thus, $126,755,000 (bond proceeds and costs) was approved to start the bonding process.

Using the bonding process and legal requirements to publish a public notice and clear all the financial hurdles, left the public approximately 40 days to organize, obtain the legal numbers of signatures, and call for this issue to be placed on a ballot and voted on by the people. In fact, this was an insurmountable task. With the administration selling the short term problem solving and cost savings in refinancing this debt they were never made knowledgeable that all the administration was doing was changing a large present debt for over 20-year debt. In other words, moving debt from one credit card to another. The main benefit was the, again, a transference of debt to future generations to pay and it also removed options for future administrations to seek other solutions due to legal and financial restrictions of repayment of the bond issue. An easy call for the present administration.
No Royal Oak, the Johnson Era is alive and well for many years to come. The financials have been set in concrete and the policies and direction will be continued by a plan and long-term strategy to place the future administration in lockstep with the past and present administrations.
 
See a bright future? For who? Think about it.

More in a few days.

Regards,

Rooster       
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RORooster

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Just as a side note.

Subject:  Good for you Canada and a possible Proclamation for the Mayor of Royal Oak.

 
GO CANADA !

Well Said Mayor Dorval, Quebec mayor.

   
A commercial promoting pork says:   "PUT SOME PORK ON YOUR FORK"     The MAYOR REFUSES TO REMOVE PORK FROM SCHOOL CAFETERIA MENU AND EXPLAINS WHY: 

Muslim parents demanded the abolition of pork in all the school canteens of a Montreal suburb.    The mayor of the Montreal suburb of Dorval has refused,
and the town clerk sent a note to all parents to explain why. 

"Muslims must understand that they have to adapt to Canada and Quebec, its customs, its traditions, and its way of life, because that's where they chose to immigrate. 

"Muslims must understand that they have to integrate and learn to live in Quebec.     "They must understand that it is for them to change their lifestyle, not the Canadians who,
so generously, welcomed them. 

 "Muslims must understand that Canadians are neither racist nor xenophobic. Canada accepted many immigrants before Muslims showed up (whereas the reverse is not true,
in that  Muslim states do not accept non-Muslim immigrants)."


"Just like other nations, Canadians are not willing to give up their identity or their culture.   "

And, if Canada is a land of welcome, it's not the Mayor of Dorval who welcomes foreigners, but the Canadian-Quebecois people as a whole. 

"Finally,  they must understand that in Canada ( Quebec ) with its Judeo-Christian roots, Christmas trees, churches, and religious festivals, religion must remain in the private domain." 
   
The municipality of Dorval was right to refuse any concessions to Islam and Sharia. 

"For Muslims who disagree with secularism and do not feel comfortable in Canada, there are 57 beautiful Muslim countries in the world, most of them under-populated and ready to receive
them with open halal arms in accordance with Sharia. 

"If you left your country for Canada, and not for other Muslim countries, it is because you have considered that life is better in Canada than elsewhere.

We will not let you drag Canada down to the level of those 57 countries. 
 
"Ask   yourself this question - just once: "Why is it better here in Canada than where you came from?"  "A canteen with pork on the menu is part of the
answer." 

If you came to Canada with the idea that you will displace us with your prolific propagation and eventually take over the country, you should pack up and go
back to the country you came from.  We have no room here for you and your ideology. 

 
It may not be "Pork" in Royal Oak but a little Civics 101 wouldn't hurt!!! If you feel the same, forward it on.  If not, hit the delete, and prepare to be displaced.
           
Your Everyday Freedom is Not Free, Your Military Paid For It!

Amen,

Rooster

PS Yes a Vet!
 
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Imissmyhometown

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Sorry Rooster - this is Royal Oak - a Welcoming City who passed a Resolution, the last line of which says appreciate and promote cultural diversity. https://www.romi.gov/DocumentCenter/View/16779/Welcoming-City-Resolution-February-13-2017?bidId=A city who organized a march "Hate has no home here"  when a mentally unstable young man painted graffiti on some fences. A commission who believes they should never let a crisis go to waste whether the response is justified or not. Party politics before all. 

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Too often noble goals serve as a Trojan Horse for political control.

RORooster

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Sorry Rooster - this is Royal Oak - a Welcoming City who passed a Resolution, the last line of which says appreciate and promote cultural diversity. https://www.romi.gov/DocumentCenter/View/16779/Welcoming-City-Resolution-February-13-2017?bidId=A city who organized a march "Hate has no home here"  when a mentally unstable young man painted graffiti on some fences. A commission who believes they should never let a crisis go to waste whether the response is justified or not. Party politics before all.

Imissmyhometown,

I understand your concern and angst. How can you have such a diverse and open city when you can't openly support and protect "Mentally unstable young men" in the Royal Oak community?

Has the city no outpouring of support for these individuals who, obviously, are in need and crying out for mental health care, facilities and assistance? 

As Royal Oak readily knows, unless you have the proper political party, the money required for elected officials, and idiots that excel at  writing proclamations, edicts, and declarations

you will never succeed. I would only point to the present city table of elected officials, and the costs demanded to elect them to make my point. The city now reeds or requires a newly elected

official to step up and defend this diverse group. So, let one of the forerunners declare a stance for this group and were ready to go. Remember, for a few extra bucks, a commissioner can be made

to cry on command for any proclamation!

Please remember and never forget, the graffiti referred to in Ilovemyhometown's post was not written on the walls of Firth Avenue...Coincidence, you figure it out...!!!


Regards,

Rooster         
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RORooster

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What does the saying "penny wise, pound foolish" mean?
It's when you try hard and save small amounts of money (pennies) and then on impulse or unthinkingly spend larger amounts to render the act of saving the pennies quite ineffective. Here's what a website says: A penny is a small amount of money and a pound is a larger amount. "Penny-wise, pound-foolish" is to be cautious (wise) with small amounts of money but wasteful (foolish) with larger amounts.


I believe this saying was created when some thoughtful Royal Oak resident and taxpayer was watching WROK and listened to four lawyers on the city commission discuss the budgeting process. I wonder if these commissioners know, or realize, how their discussions and bantering result in the viewers having profuse eye and ear bleeding. Their attempts at this process does cause severe medical and mental trauma’s.

While these lawyers have a tendency to pontificate and ramble about long-term debt, interest rates, and pre-pay on debts they have a lack of not knowing one iota about what their talking about. If there was some semblance of accounting or economics principles evident in their academic profiles, I feel that their committees and the commission would be a much better tool for the good of the people of Royal Oak. They really should stick to what they know and understand best, proclamations, declarations, and edicts. At least have some semblance of priorities and order. Maybe now that Commissioner Macey has been self-selected to speak for the “group of four” she might contemplate moving into Mr. Dubuc’s seat on the Pension and Health care committees. “What a HOOT!” 

I would agree with Mr. Johnson if we could go back to the great depression and use his greatest financial gimmick “smoothing” you can see why Mr. Johnson was so easily able to steer Royal Oak off on such a deep financial legacy debt that will endure for years after he’s gone. Even during the first budget session, he continues to disagree with the outside management firm, that the ROI assumption from 7.75 to 7.25 is justified. He did mention that others on the committee also agreed. Surely, he jests! Fortunately, the managers do their homework and have been requesting this for some time and Mr. Johnson was more concerned with the short-term financial costs to the city and the monuments that are his priority. Royal Oak, his decisions regarding legacy cost has cost this city millions of dollars. It is quite a stretch for him to state that the State of Michigan is/was (The Nerd) a major cause. Of course, he probably will point to Hoover, Roosevelt, and Trump!

I would still like to read what Mr. Miller thinks about Mr. Johnson's thoughts regarding the General Fund, Public Safety and the manipulation and comingling of these assets to subsidize the city’s legacy costs. This seems to be a complete rewrite of how the millage was “Sold” to the taxpayers. Mr. Miller or any other voices?!

Having worked in the public and private sectors for over thirty years, I thought I had heard everything until the presentation of the Director of Finance regarding her department. Keeping in mind that this is one of the most important departments in the city I cannot explain how almost idiotic this presentation was. I have a great deal of respect for Ms. Rudd but I think the city is wearing her down. Starting with Ms. Macey’s question regarding a new hire, it went in the dumper from there.

My first question was regarding a wage/salary survey. Doesn’t the city have an H.R. Department? They seem to be requesting a new hire position. Maybe it’s a Manager, Wage and Salary Surveys. Maybe the city can outsource another COLBALT study!

What does it mean when you have so many “New Employees” costs will go up due to merit increases? Don’t you have wage increment levels that a manager can use as an employee becomes more versed in their positions? Don’t people do work-related tasks that are above and beyond the call that deserves a “Merit Increase?” What can you say about a department head that has a turnover rate of over 100%! What can you say about a hiring process that loses many employees during their probation or if they fulfill their probation period they immediately proceed to move on to greener pastures? If a situation like this is not of highest priority to the City Manager he should be fired or better yet given a great pension, health care and put to pasture. Not one of his strategic goals for 2018-2019! Another major accomplishment!

The long-term lynchpin of government service has been a livable wage, family health care where, rumor has it some cities pay 90% of your health care costs, and when you retire, except for Public Safety, you qualify for social security. Ask some of the private sector comparable’s if they have as rosy a picture. At least people aren’t suing the city due to inadequate training that is preventing them from passing probation. Not yet!

Good luck with that budget year 2019 – 2020 Status Quo no-hire policy. Seems that what your doing now is working out great!!!

Rooster
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RORooster

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What does the saying "penny wise, pound foolish" mean?
It's when you try hard and save small amounts of money (pennies) and then on impulse or unthinkingly spend larger amounts to render the act of saving the pennies quite ineffective. Here's what a website says: A penny is a small amount of money and a pound is a larger amount. "Penny-wise, pound-foolish" is to be cautious (wise) with small amounts of money but wasteful (foolish) with larger amounts.


I believe this saying was created when some thoughtful Royal Oak resident and taxpayer was watching WROK and listened to four lawyers on the city commission discuss the budgeting process. I wonder if these commissioners know, or realize, how their discussions and bantering result in the viewers having profuse eye and ear bleeding. Their attempts at this process does cause severe medical and mental trauma’s.

While these lawyers have a tendency to pontificate and ramble about long-term debt, interest rates, and pre-pay on debts they have a lack of not knowing one iota about what their talking about. If there was some semblance of accounting or economics principles evident in their academic profiles, I feel that their committees and the commission would be a much better tool for the good of the people of Royal Oak. They really should stick to what they know and understand best, proclamations, declarations, and edicts. At least have some semblance of priorities and order. Maybe now that Commissioner Macey has been self-selected to speak for the “group of four” she might contemplate moving into Mr. Dubuc’s seat on the Pension and Health care committees. “What a HOOT!” 

I would agree with Mr. Johnson if we could go back to the great depression and use his greatest financial gimmick “smoothing” you can see why Mr. Johnson was so easily able to steer Royal Oak off on such a deep financial legacy debt that will endure for years after he’s gone. Even during the first budget session, he continues to disagree with the outside management firm, that the ROI assumption from 7.75 to 7.25 is justified. He did mention that others on the committee also agreed. Surely, he jests! Fortunately, the managers do their homework and have been requesting this for some time and Mr. Johnson was more concerned with the short-term financial costs to the city and the monuments that are his priority. Royal Oak, his decisions regarding legacy cost has cost this city millions of dollars. It is quite a stretch for him to state that the State of Michigan is/was (The Nerd) a major cause. Of course, he probably will point to Hoover, Roosevelt, and Trump!

I would still like to read what Mr. Miller thinks about Mr. Johnson's thoughts regarding the General Fund, Public Safety and the manipulation and comingling of these assets to subsidize the city’s legacy costs. This seems to be a complete rewrite of how the millage was “Sold” to the taxpayers. Mr. Miller or any other voices?!

Having worked in the public and private sectors for over thirty years, I thought I had heard everything until the presentation of the Director of Finance regarding her department. Keeping in mind that this is one of the most important departments in the city I cannot explain how almost idiotic this presentation was. I have a great deal of respect for Ms. Rudd but I think the city is wearing her down. Starting with Ms. Macey’s question regarding a new hire, it went in the dumper from there.

My first question was regarding a wage/salary survey. Doesn’t the city have an H.R. Department? They seem to be requesting a new hire position. Maybe it’s a Manager, Wage and Salary Surveys. Maybe the city can outsource another COLBALT study!

What does it mean when you have so many “New Employees” costs will go up due to merit increases? Don’t you have wage increment levels that a manager can use as an employee becomes more versed in their positions? Don’t people do work-related tasks that are above and beyond the call that deserves a “Merit Increase?” What can you say about a department head that has a turnover rate of over 100%! What can you say about a hiring process that loses many employees during their probation or if they fulfill their probation period they immediately proceed to move on to greener pastures? If a situation like this is not of highest priority to the City Manager he should be fired or better yet given a great pension, health care and put to pasture. Not one of his strategic goals for 2018-2019! Another major accomplishment!

The long-term lynchpin of government service has been a livable wage, family health care where, rumor has it some cities pay 90% of your health care costs, and when you retire, except for Public Safety, you qualify for social security. Ask some of the private sector comparable’s if they have as rosy a picture. At least people aren’t suing the city due to inadequate training that is preventing them from passing probation. Not yet!

Good luck with that budget year 2019 – 2020 Status Quo no-hire policy. Seems that what your doing now is working out great!!!

Rooster

To lock up the budget discussion the second session one could surely follow the logic, as again, the City Manager put the agenda together. Thus, it was no complete surprise to see the
legacy costs posted as the final item.  Hell, the employees even vacated the chamber by then. Once again there was the same rambling about another 7.7 million with 21.2 million being amortized over 20 years and/or 25 years for public safety.
The chamber emptied before Ms. Rudd began her symposium regarding "smoothing and market correction. " I already have given my thoughts about "smoothing" which are well documented in
this post.  I would forwarn the residents to be quite concerned and aware that a "market correction" could have a considerable impact on the finances of the city. Maybe Mr. Miller, SEI, Commissioners
Dubac or Gibbs could better inform the Commission and residents. At least Commissioner Macey commented "Super Helpful!" We'll see Commissioner, we'll see!!!

The meeting ended with the Mayor putting the wrappings on his "proclamation" to be delivered prior to tonight's meeting.


"Heavy is the head that wears the crown."

 
Thought...Meeting Agenda Item 14. Somebody smells something... wanta guess who???

Rooster
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BuzzBuzz

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The word whispering through the corridor of power (or is it two since the office are on two floors?) is "structural" when applied to budgets and deficits.   Who is getting out of town at an opportune time?

Maybe more important is how they will choose to choose a new city manager.  The police chief was promoted as a manager-in-waiting, a job for which is is untrained.  Or is that a form of managerial no-bid contract? 

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RORooster

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The word whispering through the corridor of power (or is it two since the office are on two floors?) is "structural" when applied to budgets and deficits.   Who is getting out of town at an opportune time?

Maybe more important is how they will choose to choose a new city manager.  The police chief was promoted as a manager-in-waiting, a job for which is is untrained.  Or is that a form of managerial no-bid contract?

Buzz,

This, historically, has been a world where elected officials representing the "all" the people of the city go through a selection process to hire a City Manager as he/she reports to the commission.

The commission hires and can terminate the city manager. This process has become an inbred process and the process to utilize the commission has been circumvented. I can't explain Hoover, but I'm sure

there's a deep dark secret there somewhere. It's not so much no-bid as it is no-vote

Buzz, I understand what you're saying and when it shapes up there will be a lot of red faces to go around.  The plot, when uncovered and whose involved, will shake a lot of peoples faith! They've missed so many clues!

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BuzzBuzz

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Monday was a pretty sad evening.  Now we will have once and future city manager, who can cover this tracks while they hire his successor.  And explain it like Rudd did, we can see the deficit in the future, but it will never come.
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RORooster

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As Buzz so aptly put it, “Monday was a pretty sad evening.” The abject arrogance, manipulation, and outright misinformation generated by this commission will have it go down in history as the worst, if not “the worst” commissions I’ve ever seen in my history with the city and I’ve watched some really bad ones. I would look at some bad points but this session was a total FUBAR!
Starting with Mr. Ashley relating to an incident after a past meeting he made a dire mistake of mentioning a commissioner’s name. He was not directing a question or asking the commissioner for an answer. Remember, questions will be directly to the chair and not at individual members as the Mayor always directs prior to Public Comment. Also recall the Mayor stating that “the commissioners will not respond directly to comments that’s why they take copious (favorite word} notes. That’s why $DuBac$ must demand special exemption on his retort to Mr. Ashley and the admonishment by the Mayor when he attempted return a comment to Mr. $Dubuc$ correction to Mr. Ashley and providing his view of an after-meeting altercation. People must know how to take shots at this commissioner as you will receive some shots back “Especially in the back!” You need only re-watch Mr. Ashley’s comments to see and feel his comments that were loaded with emotion, frustration, and distain over past requests falling on totally deaf ears. Get that vote behind you Mr. Ashley or pass that hat around the Manor and pay for action like the rest of Royal Oak.
 
I will always bow to Mr. Hallock’s wisdom, city history, city service as a commissioner and activism.  When he requested that some commissioners recuse themselves from voting on the Fifth Ave. operations request. Mr. Hallock does not make these requests lightly. He’s quite knowledgeable about these matters. Notice that not one of those mentioned rose to defend themselves. The voter donation receipts on the county system would make a defense laughable. Still, its easy to ignore when there is a total lack of honor and moral conviction. Again, ignorance and contempt for the people of this city is so evident. Re-watch this action item and see what real contempt looks like. Only hard part was the role of the Police Chief/Assistant City Manager. Was he representation Fifth Avenue as their spokesperson, legal advisor, or shill? Not good Chief…or whatever! Public hearings…nah, public doesn’t need to be informed, especially when the decisions been made. Nice try Mr. Lavissuer another day another battle lost. So, few days and so many battles. Fifth Ave. great return on those donations!   

Ms. Rudd, another tough night I only hope they have EMS standing by for your presentations. You about blew out three pairs of dancing shoes. I never knew human feet were able to move that fast. I hope you sent thank-you knots to the Mayor, $Dubac$, and Paruch. Great use of hand, eye, and nods to bail you out. Mayor great job to whittle Levassure out of follow up questions. Paruch, with her great historical knowledge, failed to mention her years on the Retirement Committee and her opportunity to challenge the assumptions esp. 7.75% ROI. She tends to let history and the recession period take the fall. Maybe she can do some “smoothing” over the past 10 years and discuss ROI gains and losses. Yes, Millages and Bonds do play a large part in “Cooking the books!” Really Mr. Johnson the bond just changed the method of repayment?  Will save us 2 million per year! Will there always be enough money in the pot to pay those ridiculous low interest rates? With the principle and interest set in concrete don’t you lose a lot of flexibility? Oh well, the new personnel know how to use smoothing. Johnson can help with that on the way out! Did not hear any discussion on the city Pension and Health care portfolio. I thought $Dubac$ and Johnson, as trustees, would have addressed that at the table.  No SEI reports, money city spends on trade transactions, risks, and financial and actuarial expenditures. Must be just petty cash.
 
More Later,

Rooster

 
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RORooster

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Commissioner LeVasseur,

Randy, I think by now you know informing the public in regard to clarification and transparency of the new public budget is not really easy to do.
I would have suggested you utilize the Annual Local Unit Report for Fiscal Years Ending Between July 1, 2017, and June 30, 2018. This mandatory report
is completed by Ms. Rudd and would have assisted her in her responses to you. This is also a better-organized form than the Royal Oak budget.
Probably used by Mr. Miller. This is Michigan Department of Treasury 3965 Rev. 1/13.

If this had been a comedy hour, and you've had a chance to review the videotape, you know why I'm making what seems harsh remarks somewhat meaningful.
I don't know which parts were more humorous. Probably the Mayor attempting to give you the hook as if you were a Mr. Wolf pretender or his constant looks to
his right for help and support. Finally, in desperation, he had to just make the awkward effort to usurp your time and under the very lame disguised remarks regarding
"Misinformation heard on the streets of Royal Oak." Maybe it was Mr. Dubac launching out and pontificating on financial issues only to be corrected by Mr. Johnson
thus resorting back to his trademark "Bobble Head" maneuver. My two favorites are the blank face of Comm. Marcey seemingly metaphysically trying to beam into
another time and space dimension. However, my best in decades if not forever, Comm. Douglas eating her lipstick for mental strength which she looked like she desperately needed!

It should be mandatory for every voter prior to the next election to have to watch the videotapes of the past two meetings. Might make a huge difference,,,Maybe!!!
 
Definition of Structural Deficit

What is a structural deficit? What is the definition of a structural deficit? What does the term "structural deficit" mean?

A structural deficit occurs when a country (or state, municipality, etc.) posts a deficit even when the economy is operating at its full potential.

This is the opposite of a cyclical deficit in that a cyclical deficit only occurs when an economy is not performing to its full potential (for example,
if an economy is currently struggling through a recession).

-- Finance term definition - Structural Deficit --In the case of a cyclical deficit, any borrowing that is needed during the low point of the economic
cycle will be repaid when the economy turns higher and there is a cyclical surplus.

On the other hand, a structural deficit means that a deficit will be posted regardless of how well the economy is functioning - recession, boom or anything in between.
A deficit occurs when a country spends more than what they take in. So: Expenses > Revenues = Deficit

In a structural deficit, things are so out of balance that a country (or state, or municipality, etc.) will post a deficit regardless of how well the economy is doing.
In a strong economy, revenues (tax receipts, etc.) rise due to increased economic activity (more jobs, more spending, etc.). With a structural deficit, the strength
of the economy is irrelevant - a deficit will be posted regardless.

How do municipalities get rid of structural deficits?

1. Cut spending.

2. Raise revenues (usually through tax increases).

Neither of these options are too appealing for politicians, which is why many structural deficits continue to linger.

Deficits lead to increased debt loads, which in turn lead to even higher deficits (due to the interest paid on debt outstanding).
Having been part of a study group formed by then-City Manager Hoover and Finance Director Johnson to study finance problems
associated with the Dot Com economy turndown and the following recession some of the following suggestions were presented to the city:

1.   Freeze on new hire employment.

2.   New hire positions that had been approved and budgeted were halted and removed from the budgeted. This accounted for Comm. Paruch’s
misuse of historical information when she pointed out “Drastic employee reductions” during the recession. Employees were not removed but budgeted positions were.

3.   Study requested to look into privatizing city services. While totally ignored this suggestion was included in the city commissioned Public Safety study by the
Michigan Municipal League prior to the Public Safety Millage. The study recommended prioritizing some services which, again, was totally ignored.

4.   Strongly recommended a study to reform the City of Royal Oak Pension and Health care system. Again, totally ignored. This alone, resulted in
millions of dollars of ongoing costs. I’ve said for decades, adjusting the “Assumptions” alone is just a drop in the bucket needed unless reform is brought to bear.
This system, without reform, is still on a course to implode. This is a taxpayer, employee, and retiree issue that begs attention.

I still, look for Mr. Miller to inject some logic and reality into the accounting “Gimmicks” that have been used for years to misinform and cloud the financial issues.

City Commission should really consider having a retirement party for Mr. Johnson, thank him for his service, and see him out the door to prevent infecting new “Outside” replacement.
Enough is enough! Prevent history from repeating itself!!!

More Later,

Rooster

 

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RandyLV

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Thanks Rooster.  Well said!

It should be very alarming - to taxpayers and people serving in city government - that we expect to run a deficit between $2.1 million and $3.5 million, per year, for the next several years.  This all during good economic times, and after raising our millage rate by over 50% in the last seven years.

I get the sense that some of my colleagues on the Commission would rather not talk about this problem.  Understandable as it doesn’t fit their “everything is wonderful” mantra, which they want to push during an election year.

Rooster, you are correct in identifying tax increases and spending cuts as ways to address deficits.  Unfortunately Royal Oak elected officials for years have used a third technique - kick the can down the road and let someone else in the future deal with the financial ramifications.  The result of that approach - about $14.5 million of the coming year’s budget is needed just to cover operating expenses incurred years ago (pensions and health care owed to our employees).  That’s roughly 25% of our overall budget.

Per our State Constitution, those expenses should have been paid for at that time they were incurred.  Of course why should we be surprised that Commissions ignore the State Constitution when they blatantly choose not to follow our City Charter on borrowing limits?

Unfortunately this Commission has no desire to get expenses in check.  If it did, it wouldn’t be giving away millions to developers and increasing our overhead by $2.2 million by building new government buildings.

At least City Government is working hard at getting people to feel good about their city.  The PR firm pushing the “Rethink RO” message will have been paid close to $100,000 before it is all said and done! 



Sent from my iPhone using Tapatalk
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RORooster

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Randy,

Thank you for your response. Yes, kicking the can is an adage that Rotal Oak knows well!

Some commissioners must realize that when you're looking at a ten-year cycle and the 2018/2019 cycle looks pretty good, however, if your dropping from
your ten-year averages, the  2008/2009 cycle on the back end which was a disaster, this will make 2018/2019 go from good to fantastic! This is the
"Gimmick of smoothing"  which the present administration knows so well! While you work so hard to make "people feel good about their city" it cannot be
done with gimmicks and a city built on a false sense of security.

You would do the people well if you whispered to some of your fellow commissioners, some very close to your chair, "Remember, its not your money!"

If your financial advisors have a tough time explaining the difference between a forecast and a projection you got trouble in River City. If commissioners and
Mayor doesn't understand the concept ...  You got trouble in Royal Oak!!!

Good Luck,

Rooster

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RORooster

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Forum,

The City of Royal Oak, due to ongoing processes, will in the next few months be faced with a challenge that is one of the largest, most critical, and will have an impact on Royal Oak for decades to come.

This task will be the selection of a new city manager to replace the present City Manager who has a two-year background as the city Finance Director and an eight-year stint as the City Manager.
The suggestion was made by Comm. Paruch to create a City Manager search committee to develop a plan and direct a city Request for Proposal (RFP) for search firms to submit proposals, based
on the city’s needs, and the firm’s ability to meet the requests of the city.  As requested by Commissioner Paruch, the three-member group should be the three commissioners not running for reelection
and make the process as “apolitical as possible.” I heard the words and saw her lips moving but had to burst out in side-splitting laughter. Sorry, Commissioner, you don’t hear something that silly that often.
On June 19, the committee, after working with the administration, developed a SOW and will present their recommendation to the full commission for approval June 24th.

The committee has prepared and will submit a Scope of Work (SOW), for bidders to understand what the city expectations are. The SOW to be presented Monday is easily one of the easiest and most basic templets
you can find in any Human Resource guide books. This is what you compile when you don’t want to do a lot of work and usually results in wrong and disastrous decisions. Do you just want to keep repeating the past?
Doesn’t it make sense to document the major needs that the city has and direct search firms to hone their efforts on the individuals who have the background and experience the city needs? If this is not
well defined the search firms will be frustrated, the candidates will be frustrated, and the selection process will be delayed and end results will be disappointing.

The Sow begins with the following item:

1.   To conduct an on-site needs assessment for the position of City Manager, meeting with the city commission as a group and individually, as well as meetings with key city individuals.
Folks, this is the same asinine process the city executed every year for the last 15 years. It’s called a Strategic Plan and has been as meaningless a process as this item suggests. 
   
Remark: Please try something never tried in the past. Please try listing the “City of Royal Oak Needs” in prioritized order of importance. Why go to people who are not aware of the problems and/or just
prefer the “Status Quo.”  Once established, this should establish the filters you will use for your search. Yes, Comm. Paruch, this will even determine the area of your search. Wouldn’t it be easier to match needs with candidates?

I would suggest consideration of the following:

Consider the fact that the biggest and most awe consuming problem on the City of Royal Oak’s plate right now is its Legacy costs and debt incurred primarily caused by this system. The system is well
past the time that it should be reformed and if left unchanged will continue to consume city resources. The considered preferred candidates should have a demonstrated and proven record in Legacy system administration.

The City Manager position includes being on the city collective bargaining team and the city pension and health care committees. Demonstrated capabilities in these areas would be a plus.

Demonstrated ability to develop and implement 1,3, and 5-year strategic plans. Provide plans and show success’.

Record of employee performance measurement and career paths in the organizations they’ve come from. Show plans and results such as employee retention and turnover. Based on the budget planning
sessions it would seem that this, presently, is a very serious internal city problem.

Type of background. Does the city need, or require a person with a strong business background, financial, public safety, or legal? My present sense is a strong business based on present and ongoing projects.
The city, for the last decade, has been a financial orientated and concentrated individual that was constrained by the financial numbers and the city has paid dearly. The next City administrator must
be much more flexible and well-rounded. Ability to politically and socially intermix with all social and business groups.

Good communicator, especially with the citizens. A proven record of transparency and openness with the organization. Realize that this is a Mayor/City Manager type of government. The Mayor is
considered either a weak or a strong Mayor. Presently the city has a weak Mayor. A record of having worked with both styles would be a plus. Royal Oak is a very diverse and constantly changing environment.

Proven “Team Builder and Influencer” who has the ability to hire and field a team with a can-do, very citizen-focused agenda. Must build and create an achievement-oriented service related and directed
organization. Show the ability to “Think out of the box.”

Demonstrated financial skills and ability.

As a board member of the Downtown Development Authority (DDA) must have a commanding knowledge of the business-related city that heavily depends on downtown area business, retail, and food and beverage.

Important to understand Royal Oak has a large and ever-growing senior population and needs and demands growing solutions to this group’s needs.

Sound like a lot, that’s because the City of Royal Oak needs a lot! Some very critical and important areas have been ignored for decades.

Only the goal-driven, can-do individuals, who can “Make Royal Oak Great Again!, need to apply!!!

Respectfully,

Rooster 
 

       
 
   



     

 
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Cmh231

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Rooster aka Steve Miller,
     Why do you keep referring to yourself as if you were someone else? If you think you are so right, why are you ashamed of your comments?
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Lauren
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