Sorry, not only in Templeton.
From the Town of Franklin - Capital Planning
Community Profile:
● No Capital Committee
● Finance Committee, advisory only
● Capital Sub-Committee of the
Town Council members (4 of 9
members)
● Capital Improvement Plan
includes Town & School
Capital Program Policy:
● 100% of Free Cash, Overlay Surplus is
used for capital purchases or small,
one-time purchases.
● A five-year Capital Improvement Plan
(CIP) plan is required annually and shall
be maintained and updated.
● Department Heads are required to
budget operating costs associated with
CIP projects.
Capital Program Policy:
● Delaying maintenance on existing assets
results in higher costs in future years.
Postponing improvements to buildings/
infrastructure results in higher costs.
● Bonds will be used for large capital projects
(over $1,000,000)
● Stabilization accounts for Fields, Fire Trucks/
Ambulance, Facilities
● 10% of Free Cash toward OPEB Trust Fund
So, 100% used for capital purchases, but use 10% for OPEB; must be the new math!
It just may be this is one of the things that make some taxpayers go - WTF????
The lack of consistency in this town government of ours is it's greatest failure. One might ask why the Water Dept OPB account, has not been managed as well as the OPB for the Light Company ? It has been enough years since the "Light Company" took the Water Dept. over. When you take something over, it would seem you would do the same job for one business, as you did for the other. It does seem management has reaped the benefit with out completing the job. Just where does anyone think the money is coming from to pay the freight when all of these people retire ? It could be that there is not any retirement money for the people working for the town in the end. Just my opinion, Bev.
ReplyDeleteJust wait until the pressure the Federal Government is feeling, trickles down to Town Government. How long will it take until our State Government is running in the red, and "sorry boys", the assistance we depend on so much, vanishes. This is the kick in the butt time that we so richly deserve. When we spend every dime, and we, as a town, plan for nothing but how to spend that money when it comes in. So who will get hurt ? Try our Town workers ! Once again they pay for working for a Community that has failed them.
DeleteI'm throwing up some quick and dirty numbers that anyone can look at to see this CANNOT work.
ReplyDeletePresent teachers in MA 90,000
Retired teachers in MA 52,000
Average contributions to pension $6600 yearly
Average pension 2016 $ 40,000
Ability to retire after 20 yrs
In 20 years you pay in $132,000 into the system which amounts to about 3 years of actual funding.
If someone in charge doesn't get real with the benefits government employee through unions get at retirement our system will collapse under the weight.
At a 20 yr payout for benefits it doesn't take a rocket scientist to figure out the system is cooked.
a 20 yr old is hired by the DOC. He works 20 yrs and retires receiving 50% of his pay for life.
The DOC must replace him so they hire #2 who works 20 years and retires receiving 50% of his pay for life.
The DOC hires employee #3.
In this simple example you can see that in any period we are paying for at least 2 employee per position and if just one of those employee lives past 60 yrs old we are paying for 2.5 employees.
Who thinks this works?????
Bob,
ReplyDeleteI may have some insight into the pension fund concept.
That's a straight pay out system without a return on investment but typically pensions are invested. The risk free rate of return would yield 2.44% compounding annually for 10 years if invested right now (US10Y). So if at the very least the Other post-employment benefits (OPEB) which are invested in mutual funds would receive a return rate higher than the 2.44% annually.
If we assumed the constant of 2.44% over 45 years with $6600 annual contribution you would theoretically yield roughly $529,867.04 which would continue to collect interest and be reduced by your $40,000 annually.
If we assumed the same but increased the rate of return to just 3% (typical inflation rate) it becomes $611,951.09 which would provide a little over 20 years of pension fund payouts of $40,000 while collecting a 3% return
When we use an actual rate of return of the state pension fund which was 6.8% (last 10 yearaverage) we get a number of $1,776,819 upon retirement and if the rate of return remained at 6.8% the employee would never run out of pension funds even with a $40,000 withdrawal. In fact that employee could take $120000 a year out of the account and still not have to worry about running out (if the investment firm would allow such a thing)
It does work and it works very well when managed properly. Boston is a prime example of mismanaged pension funds with a return rate of 1% which is the equivalent of parking it into a bank and sitting on it and considered a terrible money management practice for any industry, market, or firm. But when managed properly investments banks who are so keen on offering the service love to take your money and make money off of it with "management fees." Overall, its a good system just need to manage the funds properly and get a start somewhere.
Selectman,
Cameron Fortes
This works only if the money is there to start with. The town voted to start a OPB Account but because there was never enough money to put into it, things were at a stand still for years. When, not if, state aid is cut with out the money to back up this account, we will be in worse shape than before. What I referred to at the start of this discussion is the impact on the State Aid being cut eventually. It has happen before, ironic isn't it. "In 1991 the Local Aid, was cut 5.1% Over the previous year. Naturally the town's free cash from 1990, %554,253. was used to off set the budget. As in the prior year, certain maintenance and projects had to be forgone," Things got better yet. "FY 2003 State Aid was reduced mid- year by $115,737. Town Meeting was called to reduce appropriations by $103,321.15 and to reduce services due to reductions in state aid, and a failed 2 1/2 override attempt. Back then "the Advisory Committee was Concerned that the Town had no savings and no plan to accumulate savings. Stabilization Funds are near zero and free cash is consumed each year as soon as it becomes available, and annual deficit spending is greater than new growth". If you have any doubt about why I feel bad management is our problem, some of you may gather some insight into how we got where we are, but why do we do the same things over and over again ?
DeleteCam,
DeleteFirst, sorry for the quick answer but doing other things........
I do understand interest and compound interest.........The problem is the system isn't based off 45 yrs of employment. The State retirement (maybe not all) start at 20 yr and 50% compensation. My numbers didn't even factor in the 75% insurance coverage, i.e. bennies........
I'd suggest that in theory the system functions, but like many thing in the practical application it fails. It fails because mismanagement always exists on some level. Risks has always been mismanaged otherwise the financial markets wouldn't exist. All you have to do is understand their all always more than one side to a trade.
Just to make something clear. There were some pretty bad results from this management. What did the Town loose as a result of this "money management"? Because State Aid was cut in Feb. 2003, by $115.737, "2004 saw over all reductions of 28% in most budgets". Highway layoffs, Police Department on reduced hours. Override question of $951,367. was defeated, 328 street lights were removed, from town roads, reducing the street Light account by 50%.
ReplyDeleteTempleton was with out a Coordinator for the first nine months of 2004. In FY05, the town missed out on Chapter 90 funding due to failure to comply with conditions of agreement. The Town did not receive anticipated 200,000. of Chapter 90 funding and USDA loan reimbursements (approximately 6000,000) in FY05. It also failed to secure a CDBG grant of approximately 800,000. due to technicality in wording of the grant". The BOS at this time were Dunlavey, B. Columbus, Skelton and Paul Q.
All of this information is available in your Annual Town Reports, In these reports I found the Advisory Committee noted concerns about the lack of savings and lack of a plan to save at all. The Advisory Committee were concerned regarding funding sources for anticipated and necessary capital improvement needs- roads, building repairs or replacements and town Vehicles.
Did you ever wonder why the AC report was edited ? Maybe someone is afraid the past will come back to haunt them. "If it isn't broke, don't fix it !" Well what I want to know is, if it was not broke then, what the hell was it ? Our Government/ Broken then, still broken today. My opinion, as a taxpayer and citizen of Templeton. Bev.
DeleteI see more comments from our young smart ass selectman. who use to work for a fortune 500 company. big deal he still does not know a thing that helps the town.
ReplyDelete