All posts in the topic Minneapolis Pension Levies (Short link)
Summary
- There are 17 posts — by 10 authors — in this topic.
- Latest post made by Michael Katch at Apr 02 16:14 UTC
I had a question raised about Minneapolis pensions and pension levies.
Prior to 1978, the City of Minneapolis had three pension: the Minneapolis
Employees Pension Fund (MERF), the Fire Relief Fund and the Police Relief
Fund. Like many public employers, the City promised pensions but hadn't set
aside enough money to actually pay for these pensions.
In 1978, those pension funds were closed. Anyone hired after that date has
had their pension in the state-wide pension fund, PERA. All of the people that
go into PERA kick in a portion of their salaries and the City kicks in money
too. PERA invests these funds so they grow to the point of having enough
money to fund pensions when folks retire. This meant that there is a finite
number of people in each old pension fund.
For the three old pensions however, the City and the state have been playing
catch-up for the last 30 years. The City has been making extra payments out of
its property taxes beyond just what normally gets kicked in to make up for all
those years it did nothing. The State also has culpability in this mess so it
has also been kicking money in to help solve the problem. Eventually it will
get all caught up when investments have grown large enough to pay promised
pensions.
Now these pensions have a couple of features which make them different from
most of today's pensions. First MERF has a 30 and out option, meaning you
work 30 years and can retire with a full pension (I think but am not 100% sure
about the other two pensions if they have this option...) So my friend Nancy,
her dad got her a job at the City when she was 18 and she was able to retire
with a full pension at age 48. Second, they are not integrated with social
security. This means these folks don't pay into social security, which means
that their pensions were commensurately larger to take this into account.
Bottom line, these are very expensive pensions, which is why they were closed
back in 1978.
There have been three major things that have happened in recent memory with
the pensions. One, there have been scandals with investment decisions. MERF
had a director that made shady investments in a whole range of things and both
Police and Fire had shady investments in a faux-granite company. Remember
that ultimately the responsibility for the pensions ultimately fall on the
City so when investment decision makers make poor decisions, it is the
taxpayers that suffer.
Second, there has been the need to issue pension bonds. State law requires
that individual pension accounts be fully funded at the time of a person's
retirement. There were so many people retiring at such early ages, there
wasn't enough money to fill up everyone's account. So the City issued bonds
to be able to meet the state requirements. These then will get aid off over
the coming decades.
Third, Police and Fire pensions have a requirement that if investment returns
are really good, that additional money goes to retirees. If investment
returns are bad, however, that falls to the City to use tax money to make up
the difference. The result is that these funds are always "swinging for the
fences" in terms of their investments knowing that the City will make it up if
they miss. The result is that the pension funds are projected to draw about
$16 M more a year in property taxes in the next five years primarily because
of investment approaches. The City is trying to change this so incentives are
for solid risk-balanced returns over many years rather than a year to year big
win.
Hope that provides folks a base for understanding the world of pensions.
Carol Becker
Longfellow
President, Board of Estimate and Taxation
Carol Becker wrote: "Hope that provides folks a base for understanding the
world of pensions."
One minor correction. That should read "...the world of MINNEAPOLIS pensions."
This kind of insanity doesn't exist with most pension arrangements in the
country.
As usual, Carol explains a complicated topic in easy to understand terms.
Pleased you are one of our 2 directly **Elected** officials on our
independent Board of Estimate and Taxation. It would be a shame for the city
to take over its functions...particularly the independent AUDIT function.
At the last park board meeting it was mentioned that the BET also serves as a
check and balance by establishing limits on property taxes.
Would you clarify another point?
How much pension money is coming from our Legacy(Hilton) fund? Is the
accounting for that separate from the NRP common project transfers to the
Legacy fund? Will the pension payments draw down the Fund balance, decrease
discretionary development funds...then requiring more transfers of
NRP/neighborhood money? Will the city Legacy fund pay back the transfers to
the NRP common project for neighborhood projects? I don't think the state
legislation intended for this use of funds when the Tif's were established for
neighborhood improvement.
Thanks for the posts and for your service on the BET.
best wishes,
cheryl luger
Nokomis East
I never wonder to see men wicked, but I often wonder
to see them not ashamed.
--- Jonathan Swift
Forwarded on behalf of Phyllis Kahn:
Carol Becker has her facts wrong on several points:
MERF was closed in 1978; the police and fire plans were closed in 1980.
MERF had a requirement to fully fund their plans at the time a person retired,
the police and fire did not. The city under Sayles Belton instituted an early
retirement program that incented city employees to retire early by giving the
employees paid health insurance until age 65. Many retirees headed for the
door.
This created a situation where the city's general fund appeared to save money,
but the city was then required to fully fund the MERF pension.
The city soon found out that it did not have enough money in the MERF active
fund to transfer to the MERF Post retirement fund. The early retirement
incentive was poorly thought out and compounded the problems the city was
having rather than solving anything. I found out early in my work on pensions
that such plans designed to save the city's general fund dollars take it out
on the pension funds.The MERF requirement of fully funding the pensions at the
time of retirement forced the city to use an old law that allowed the city to
bond for pension fund debt. I believe that Mpls is the only city in the state
and possibly the country using this awful economic plan.
In large part because of the early retirement scheme developed by the Belton
administration and continued by the Rybak administration, the city issued
$25,000,000 in MERF pension obligation bonds in 2002. The city issued another
$36,000,000 in MERF pension bonds in 2003. It also issued another $8.5 million
in police pension bonds in 2003.
It took the city a long time to realize what it had done.
I tried to repeal the pension bonding law in the 2004 legislative session. The
city opposed the repeal of the pension bonding law. The city also sought in
2004 to remove the "MERF liquidity trigger". The MERF liquidity trigger was
enacted into law in the early 1990's and was the provision that required the
city to fully fund an individual's pension.
That same year 2004, I passed a bill to restructure the payments the city was
required to make to the police pension fund. The bill would have eliminated the
need for the city to issue $25,000,000 in pension bonds to meet the city's
obligation to the police pension plan in 2005.
The city council and the mayor rejected the law, which required local approval
to take effect. Instead they saddled the tax payers with $15,000,000 in
pension bond debt in 2004 and another
$26.7 million in pension bonded indebtedness in 2005.
In 2005, after an acrimonious city DFL convention, certain Minneapolis
legislators intervened and forged a solution to the police pension plan that
repassed the bill I had passed the year earlier with only cosmetic changes.
That legislation saved the city from issuing another $25 million in pension
bonds in 2006. The legislature led by the Republican House refused to pass two
Mpls pension bills in one year so the MERF bill was delayed.
Last year, the legislature removed the MERF liquidity trigger. Since
2005 the city has not issued pension obligation bonds. The city still has over
$100 million in pension bonds outstanding.
All of this was unnecessary.
The city should not have created an early retirement incentive to pay the
health insurance for its older workers. It certainly shouldn't have done it
without considering the implications for the MERF pension system. An idea to
achieve payroll savings also resulted in massive pension bond debt.
Ms. Becker is also wrong about the investment performance of the police and
fire pension plans. While it is true there was one failed investment over a
decade ago the investment performance of the two plans has had a direct result
in dramatically lowering the city's pension costs.
In 1987, the police and fire pensions were costing the city taxpayers nearly
$20 million. The two funds accounted for a nearly 20% of the total property tax
levy. By the year 2001, the tax levy for the two funds was $311,000, or less
than .2% of the total property tax levy.
What happened? The economy, stupid! In about a decade the investment
performance of the two plans wiped out nearly a century of fiscal mismanagement
by the city. For over 80 years of the plans history the city set no money
aside for pensions. From 1970 to 2000 the legislature made the city face up to
its obligations. Because of the stock market performance in the late 1980's and
the 1990's, the unfunded liabilities of the plans were nearly eliminated and
the city got to shed hundreds of millions of dollars of liabilities because of
the positive investment performance of both plans.
Ms. Becker is wrong about several other points. State law did not give the
pensioners all the upside of investment performance, nor it the law encourage
the funds to take undue risk. Quite the opposite. In 1989, I worked with other
Minneapolis legislators to craft the legislation that lead to the near full
funding of both plans. In 1989, we crafted a bill that gave a small incentive
to the members of the plan .5% of "excess investment return" in the form of a
one time lump sum 13th check if the plan had a five year history of exceeded
the state established benchmark. The legislation also gave the state .5% of
"excess investment income" in the form of reduced general fund appropriations.
That 1989 legislation resulted in over $54 million in general funding saving by
the state of Minnesota. It also resulted in a modest increase in benefits to
retired police and firefighters and their widows who do not receive social
security and those pensions are very modest by any standard. That legislation
also paved the way for the city to have a dramatic reduction in the property
tax levy for pensions.
Ms. Becker and others suggest that this 13th check approach is foolish.
She is wrong. Just last year the highly respected legislative auditor in a
report on public pensions noted that the 13th check approach was a much wiser
course than the permanent benefit increase made by PERA and MERF. In fact, had
those large funds employed the 13th check legislative mechanism that I authored
in 1989, they would have avoided the billions of dollars in short falls they
now face.
Ms. Becker also is mistaken about what is causing the need for additional city
contributions to the plan in the coming years.
Investment return is not the problem. Both funds have met their state
established benchmarks for the last 11 years. In fact, the Minneapolis Fire
pension plan has the best return of all the major plans in the state since 1996
when the state legislature began requiring uniform reports. The fire plan has
outperformed the State SBI by a full percent point each year. Cumulatively
that is over 11 percent in the time period and represents tens of millions of
dollars that went primarily to reducing the city's property tax levy and still
to this day does.
Since the city has stopped the insanity of bonding for pension costs in 2005,
the annual levies for the police and fire plans is as follows;
2006 $3,600,000
2007 $6,701,000
2008 $7,052,000
2009 $5,000,000 estimate based on 2007 actuarial returns.
As a percentage of the city's total property tax levy, these pension costs are
in the neighborhood of 2-3% of the city's total $250,000,000 property tax levy.
It is an even much smaller percentage of the city
$1.3 billion annual budget.
It is true that the legislative commission on pensions and retirement
(LCPR) recently approved a new mortality table for the Minneapolis police
pension fund. By prior agreement with the city, this mortality table will take
effect for the 2010 tax year. The city leadership has known about the need to
make this change for at least five years. The fact is, people are living
longer. The LCPR has adopted new mortality tables for every other major law
enforcement pension plan in the state.
The LCPR makes it a regular practice to up date actuarial assumptions for all
plans on a regular basis. The last time the police table was updated was the
1970's.
This updated table MAY cause the city's contributions to the police plan to
increase. Much will depend on investment performance. In my view over time,
the cost will not nearly be as much as the city claims. I fully expect that
investment performance that exceeds the state benchmarks will greatly reduce
the city's ultimate costs, just as investment performance helped the city out
in the 1990's.
Curiously, the city fought this change at every step, just like they have done
other pension issues.
In my experience as a city legislator and LCPR member, it is the Minneapolis
city council and city hall leadership who mismanage pension issues. Their
inability to understand pensions, pension funding and the legislative process
is well known at the capitol. In fact, I have found that it is good practice
to do exactly the opposite of what the city of Minneapolis suggest on pensions.
Phyllis Kahn State Rep 59B
Cheryl Luger asked:
>How much pension money is coming from our Legacy(Hilton) fund?
Answer: None
>Is the accounting for that separate from the NRP common project transfers to
the Legacy fund?
Answer: They are separate.
>Will the pension payments draw down the Fund balance, decrease discretionary
development funds...then requiring more transfers of NRP/neighborhood money?
Pension funds are not related to the NRP.
>Will the city Legacy fund pay back the transfers to the NRP common project
for neighborhood projects? I don't think the state legislation intended for
this use of funds when the Tif's were established for neighborhood improvement.
The use of the Legacy fund is up to the discretion of the City Council. It is
their decision on how to use it. As far as I know, there are not restrictions
on that money.
Carol Becker
Longfellow
President, Board of Estimate and Taxation
>How much pension money is coming from our Legacy(Hilton) fund?
Answer: None
>Is the accounting for that separate from the NRP common project transfers to
the Legacy fund?
Answer: They are separate
If this was in fact the truth, then CM Clovin Roy was not telling the truth at
the east Nokomis community center last fall, she along with Tara Barenok from
the mayors office told us that the city borrowed $26 million this year from the
Legacy fund leave about $18500000 remaining and that money would probably be
spent to cover a portion of the close ended pension liability this year. Tara
told me that it was better to liquidate the Legacy fund than to bond the
outstanding debt comparing it to paying off one visa card with another. I
realize that the money that the city obtained from the Legacy fund was intended
to be a loan to the city, but I suspect the city may never pay this loan back.
They wont have to if NRP no longer exists.
Cheryl Luger asked:
>> How much pension money is coming from our Legacy(Hilton) fund?
Carol Becker answered:
> Answer: None
Actually, the City _has_ used the Legacy Fund for pension debt. The details
vary somewhat depending on who you ask at the City, but up to $15 million
was transferred from the Legacy Fund for City pension costs between
2004-2006. The largest chunk was a one-time $12m payment the Council
authorized. BTW, that was the City's first draw against the Legacy's
principle.
Cheryl Luger asked:
>> Will the city Legacy fund pay back the transfers to the NRP common
>> project for neighborhood projects? I don't think the state
>> legislation intended for this use of funds when the Tif's
>> were established for neighborhood improvement.
Carol Becker answered:
> The use of the Legacy fund is up to the discretion of the
> City Council. It is their decision on how to use it. As far
> as I know, there are not restrictions on that money.
I think what Cheryl meant to ask was whether the City will replace the funds
it takes from the Common Project, which funds NRP, to pay back money it has
borrowed from the Legacy Fund. The answer to that is, no.
The Legacy Fund was originally set up as a ~$40m investment so that the City
would have discretionary development funds available. The originating
resolution allowed the City's late MCDA to borrow against interest earned,
but not the principle. Very prudent at the time.
In 2003, the City Council re-ordered the payout structure of the separate
Common Project (pre-1979 TIF districts) to place debt obligations ahead of
NRP, and discretionary development after NRP - the "Lane Ordinance". Twenty
minutes later, they authorized the borrowing of $3.7 million annually from
the Legacy Fund's *principle* for various discretionary development projects
du-jour. That, as they fully intended, created a new debt obligation, which
of course, gets paid back by the Common Project ahead of NRP. That was the
intended consequence.
This has a large part in why several of the past few years have seen zero
dollars to fund NRP (the other part being the State's 2001 swap in the
commercial/residential property tax liability).
Doug Walter
Nokomis East
When Doug Walter writes in the Minneapolis Issues that the City has indeed used
the "Legacy Fund" for pension debt he leaves out that the City Council and
Mayor has also used NRP to cover many other infrastructure problems that have
arisen because of the politicians' mismanagement. Certainly the Neighborhoods
approved those things, but it was out of necessity to provide for the welfare
of the City that had not been properly managed by the City. This includes
Schools, parks, police, public safety, and housing, but the list is larger..
Thank you Representative Phyllis Kahn for clearing the record about the
pension fund mismanagement and the on going debt resulting from it. Indeed the
financial problems of the City and the pension fund bonding can be laid at the
feet of mismanagement on the part of the Council and Mayor. Of course some of
it was done before the present administration, but in their eagerness to rob
Peter to pay Paul the present group has carried on (or accelerated) that
financial problem.
The real problem is one of leadership, and a second one is understanding
finance. A bit like a kid with a credit card running it out of money then
covering for past mistakes by applying for TWO new credit cards. Again, it
seems that the City leadership skipped the class about compounding interest for
savings in grade school, or they are unable to make the logical jump in reverse
to apply the theory to debt.
Is it any wonder that the City's leadership is held in such low regard by the
State legislators? (And that is being far to kind) This is particularly
alarming because that poor regard is the opinion of the Democrats. The
Republicans just laugh at the situation like one would at the drunken
debauchery of an enemy. They say we Democrats in Minneapolis have gotten what
we deserve from our City leaders; after all we elected them more than once. It
makes one wonder how we do so well with electing County Commissioners and State
Senators and Representatives.
The NRP and discussion of Tony Scallon really brought this home to me. I must
admit that Tony is viewed with mixed feelings in my community. After all
because of a fight over the Phillips Pool and Gym, Tony was instrumental
bringing down the neighborhood organization and in creating the "Muddy Waters"
process that saddled the community with the "POP" organization and all the
crazy people associated with that blight on the community. But still, Tony was
head and shoulders above other Council Members in serving the City and my
community. Even when we were fighting with him! We have NOT had such a leader
in Minneapolis since. And Tony has been gone for twenty years! Compared to
today's group even that Republican "General" from the Fertile Crescent looks
amazingly gifted.
So thank you once again Phyllis, and please help us convince Senators to get
the NRP legislation attached to the Senate omnibus bill. Please do not let the
City's politicians deprive the citizens of Minneapolis of this tool to improve
the lives of their children, their families, and their communities.
We do need all the readers to call, or fax the members of the Senate Finance
Committee to beg them to keep NRP alive. Especially needed is for those who
know people out-state to ask them to urge their Senators to vote this support
of NRP. They need to hear from you TODAY!
Finance Committee Members are:
Chair:Richard J. Cohen
Ranking Minority Member:Dennis R. Frederickson
Member:Ellen R. Anderson
Linda Berglin
Don Betzold
Steve Dille
Michelle L. Fischbach
Leo T. Foley
Linda Higgins
James P. Metzen
Steve Murphy
Gen Olson
Sandra L. Pappas
Pat Pariseau
Claire A. Robling
LeRoy A. Stumpf
David J. Tomassoni
Jim Vickerman
We can always count on the Linda Berglin and Linda Higgins but the others need
to hear from all of us. Google the Minnesota Senate Finance Committee and you
will get their contact info. Please call or fax, it is too late for e-mail to
be effective.
Jim Graham,
Ventura Village
The City that scorns excellence in community infrastructure as a humble
activity and tolerates shoddiness in political philosophy because it is an
exalted activity will have neither good sewers nor good public policy; its
political policies will hold more crap than its pipes. - Gem
Michael Katch said:
"If this was in fact the truth, then CM Clovin Roy was not telling the truth at
the east Nokomis community center last fall, she along with Tara Barenok from
the mayors office told us that the city borrowed $26 million this year from the
Legacy fund..."
I think you misunderstood that, Mike.
$26 million was the amount of City bonds that were sold to finance payments
into the pension funds. It wasn't taken from the Legacy Fund. (Except in the
sense that as a general obligation bond, it is a debt against all City assets,
including that fund,)
Sorry Tim
I just spoke to one my friends who was also at the meeting and Tara Barenok
definatly said that they used Legacy fund money to pay this years closed end
pension obligation and the amount of the payment due from the city was going to
double in 2008 to at that time was supposed to be $74,000,000, and to arrive at
that loss the fund would have to earn 8 1/2% interest. We can only imagine with
the Stock and Bond market being what it has been, that we poor city residents
will be on the hook for far more money this year. There is really no need to
sugar coat how screwed we are. I have torn the city budget apart, and this
administration may not be completely to blame, but I get the feeling that our
city is Enron and its late 2001.
Michael Katch says in his post to the Minneapolis Issues:
- "There is really no need to sugar coat how screwed we are. I have torn the
city budget apart, and this administration may not be completely to blame, but
I get the feeling that our city is Enron and its late 2001."-
Michael Katch is correct we, the taxpayers, are going to be screwed by the
mismanagement of our Citys elected leadership. Just as importantly the attempt
by that leadership to cover this up and steal from Peter to pay Paul
exacerbates the screwing of the citizens of Minneapolis. It creates a
pettiness among that leadership.
Instead of taking real leadership in openly addressing the problem they resort
to the Pawlenty method of hiding regressive taxes on the poor as fees and
additional street improvement assessments. Instead of actual citizen
empowerment they create Communication Departments to do damage control and spin
that would do justice to Karl Rove.
To cover for City Leadership mistakes they seek to undercut Citizen Empowerment
and Citizen Participation by attacking NRP. In an attempt to cover
mismanagement on the Target Center the Council attach it to NRP at the
legislature. Seeing that NRP had momentum they attempted to slide in little
bailout. But make no mistake, this was not support by City Leadership for NRP;
it was a naked attempt to bail out another mismanaged investment.
Of course if that is what is necessary to continue the most successful
investment of tax dollars in Minneapolis history then OK. And I am also glad
they offered it because it gave perspective on the values of the Citys
leadership. They value a sports facility more than they value the improvement
of the neighborhoods of Minneapolis. They value the welfare of a few
multi-millionaires over the welfare of hundreds of thousands of Minneapolis
residents. But if that is what it takes to insure the continued investments in
Minneapolis families and communities then so be it.
The Council and Mayor know if they openly kill NRP by cutting off the head of
citizen participation in one fell swoop they will be pilloried politically. So
they have been frightened out of their wits (and their evil designs) by what
they fear would be retribution. Instead they have attempted to surreptitiously
kill Citizen Empowerment by a death of a thousand small cuts.
Michael is also correct; this situation is very much like Enron. The Board of
Directors in this case called the Council and Mayor are seeking to cover up
mismanagement. I think this bothers me more than their mismanagement. The
only way to address this situations problem is to bring it out in the open,
admit past mistakes, and start the process of fixing it. Trust the citizens
and taxpayers of Minneapolis to be partners in solutions for the future,
instead of smiling to their face hypocritically while attempting to stab them
in the back to cover up financial ineptitude.
Jim Graham,
Ventura Village
- The rarest of gems, with the greatest clarity,
and with the greatest brilliance is not the diamond.
The rarest of all gems is the truth.
Yet as scarce as truth is, the supply has always far
exceeded any demand for it. In fact it may well be the
lest desirable commodity in the Universe.
Ask any politician. -
-Gem
Jim Graham: "The Board of Directors in this case called the Council and Mayor
are seeking to cover up mismanagement. I think this bothers me more than their
mismanagement. The only way to address this situations problem is to bring it
out in the open, admit past mistakes, and start the process of fixing it.
Trust the citizens and taxpayers of Minneapolis to be partners in solutions for
the future, instead of smiling to their face hypocritically while attempting to
stab them in the back to cover up financial ineptitude."
Which automatically brings up the question of who is ready, before the next
election, to fill those chairs. Plus, who is ready to deal with the limping
finances.
I think that this may be a rare case of Carol being incorrect, unless there's a technicality in her answer that I'm missing. The Council in 2003 shifted $12.5 million from the Legacy Fund to pay debt service on pension bonds. For the council action, search on "Legacy" at: http://www.ci.minneapolis.mn.us/council/archives/proceedings/2003/20031215-proceedings-adj.pdf Steve Brandt Star Tribune >>> "Carol Becker" <<email obscured>> 3/27/2008 11:23 PM >>> Cheryl Luger asked: >How much pension money is coming from our Legacy(Hilton) fund? Answer: None >Is the accounting for that separate from the NRP common project transfers to the Legacy fund? Answer: They are separate. >Will the pension payments draw down the Fund balance, decrease discretionary development funds...then requiring more transfers of NRP/neighborhood money? Pension funds are not related to the NRP. >Will the city Legacy fund pay back the transfers to the NRP common project for neighborhood projects? I don't think the state legislation intended for this use of funds when the Tif's were established for neighborhood improvement. The use of the Legacy fund is up to the discretion of the City Council. It is their decision on how to use it. As far as I know, there are not restrictions on that money. Carol Becker Longfellow President, Board of Estimate and Taxation Carol Becker Longfellow, Minneapolis Info about Carol Becker: http://forums.e-democracy.org/contacts/carolbecker This topic's messages may be viewed at: http://forums.e-democracy.org/r/topic/4bO4AHHgAHt3MBHiKwHRTA
Steve Brandt said:
"I think that this may be a rare case of Carol being incorrect"
That happened 5 years ago, before Carol was elected to the Board of Estimate &
Taxation. From Cheryl's question: "How much pension money is coming from our
Legacy(Hilton) fund?", I interpreted this as asking about where current money
IS going.
This is becoming very complex...to me, at least. It's not just the pea under
the shell ...it's that the pea keeps moving.
Ms. Becker wasn't on the Board at the time the big chunk of change was
diverted (Lane, Benson, Goodman...resolution). My memory suggests this was at
the same time a million was taken off the top of NRP for safety...without
asking the neighborhood assns if it were okay (came out of their allocations).
If 'asked', I am sure they would have approved that allocation...but it was a
centralized, top-down city 'negotiation'. Was that the intent of the state
legislation that established NRP--to have NRP acting as a __**city
'contingency' fund**__?
I am concerned about the state of the Legacy fund. Legacy means Legacy and
should have "Trustees". I am pleased that its investments manage risk better
than when the city transfered the investment decision to the old MCDA at the
height of the dot-com boom avoiding a prohibition on high risk/return
investments (and we know how that turned out). The has continual draws against
this fund...exceeding the income produced?...and needing continual infusion
from NRP's Common Project fund (neighborhood investment money at ++$3M/year).
From what I understand, even more money was diverted this year. And they don't
have to pay it back to NRP? Oy vey.
NRP is generating its own income (revolving loans as an example). I remember
a few years ago the city wanted control over that income. And what about
interest income on the NRP money before it goes to the neighborhoods...if any,
who gets that? Then the city tried to get early decertification...and then
'double-dipping' by charging 'excess' administration fees for NRP projects
contracted out to non- NRP aministration groups in violation of the city's own
cost recovery fees?
After feeding at the NRP trough, the city should be **grateful**. Instead it
has it's final solution...skuttle NRP for the Framework for the Future. For
the tiny 7/10 of one percent of the city budget, looks like neighborhood
investments have produced a pretty good return on investment.
These pensions are an ethical and legal obligation. Bonding, creative
transfers, the city fighting mortality table and other fiscally responsible
changes (per Rep. Kahn) concern me...and I would guess, taxpayers...and those
believing in the original intent of the NRP legislation.
If any legislation comes out of this session, I would hope the state would
put controls on it protecting the intent (and vision) of NRP.
Best wishes,
cheryl luger
nokomis east
I never wonder to see men wicked, but I often wonder
to see them not ashamed.
--- Jonathan Swift
Steve Brandt <<email obscured>> said: > I think that this may be a rare case of Carol being incorrect, unless there's a technicality in her answer that I'm missing. The Council in 2003 shifted $12.5 million from the Legacy Fund to pay debt service on pension bonds. For the council action, search on "Legacy" at: http://www.ci.minneapolis.mn.us/council/archives/proceedings/2003/20031215-proceedings-adj.pdf Let me clarify myself here as I see that I was not clear enough in my original post. I was asked if there is any relationship between pensions and the Legacy funding. They are two separate pots of money generated from two completely separate sources. The pensions are primarily from investments, contributions, and state aid. The Hilton (Legacy) money is payback from the hotel of a loan made by the Council to be sure there was a flagship hotel for the new (at the time) Convention Center. The two funding sources are completely separate, which is what I meant in my original post. (obviously not clearly now that I see people's responses). The Hilton (Legacy) money is unrestricted money, available to be used for anything. The City has used some of it for one-time pension payments. It could be used for that again. It could use it to fill potholes or buy cop cars or do another development deal. It could fund NRP (not on an on-going basis but one-time money). Having used it for pensions doesn't mean that there is less money for NRP except in the sense that you have to make trade-offs with unrestricted money among many high priority items. I'm sorry if I wasn't clear enough in my original post. Thanks to Steve Brandt and the other folks who chimed in on this question. Carol Becker Longfellow Board of Estimate and Taxation
This is where I may have been confused, I was originally told that the Legacy
fund was dedicated to NRP and was not an unregulated pool of money. I was also
told that this fund was set up to be used on an interest only basis, thus the
term Legacy. I was foolish enough to ask, when Minneapolis murder rates were
escalating, and we were in dire need of more policemen, why the city insisted
in paying off roughly $90,000,000 in principle a year on our general obligation
debt instead of re bonding this amount of money at 1 1/2% interest to pay for
the police force until such time as the tax base increased. How can it be good
fiscal policy to give away $225,000,000 worth of books and another $200,000,000
worth of property to Hennipen county while retaining $150,000,000 in general
obligation bonds and incuring fee's of $7,500,000 a year,give or take, to
incorporate our libraries in the the county. I almost forgot to mention that it
would have cost the city only an additional $5,500,000 a year to retain
$425,000,000 in assests. My thoughts after reading the budget and attending
many Ways and Means committee meetings were that the accounting irregularities
were so gross that the city did not want to expose what items were posted to
what ledger. A good example of this type of accounting is when a $120,000 study
of a rail line between our city and Duluth Superior was debited from the
parking fund ledger this year. I have always ben a fan of Ms Becker and have
read her post with great enthusiasm, the the line that comes foremost to my
mind when I review this sort of creative accounting ledger post is that you
have the right to remain silent, anything you say or post can be used against
you. ect.