INSIST ON FACTS
Katherine Heerbrandt stated in her October 30th column that Alan Imhoff’s and my support of the buyout was a “blunder that will burden city coffers for years to come.” Her condemnation of Alan and me is unmistakable, but she gives neither facts nor reasons to support her opinions.
The Aldermen attending and voting in 2008 were unanimous in support of the buyout because they believed the recommendation of the City Budget Director that it would bring substantial savings. The City’s retirement benefits counsel (from Whiteford, Taylor & Preston) was present during our deliberations and did not dispute Mr. Angel’s projections. No one presented arguments that identified any flaws in the facts and rationale offered by Mr. Angel. Two Democrats and one Republican voted unanimously for the Buyout. If we were to do it again, it is true that I would vote for a one-year salary payment, rather than the overly generous, two-year payment. However, just because I would have done it differently, does not mean that the buyout is a “blunder that will burden city coffers.”
Ms. Heerbrandt does not mention the primary benefit from the buyout—that is the difference between what the salaries would have been, and the new, lower salaries. Now that 67 employees have accepted the buyout, and 60 employees have taken their places at reduced salaries, the City is in a better position to project what the actual financial benefits of the buyout might be. The salary savings to the City is now ascertainable–$1.6 million for FY2009, $1.36 million in FY2010 and $1.22 million in FY 2011. The new Budget Director’s current projections (including the adjustments identified by the MKSH audit) are that the City is on track to have net savings of $4.5 million in 30 years.
It is true, as Ms. Heerbrandt says, that “most voters don’t have the patience for the gritty details of pension liabilities, actuarial evaluations and bond ratings.” But Ms. Heerbrandt clearly is among those without the patience to get such details. If she had obtained these details, she would know that the City improved its bond rating after passing the buyout.
Ms. Heerbrandt’s impatience in seeking out details apparently gets worse after she finds a few details that support her pre-disposed views. She has no patience whatsoever for details that might qualify or undermine her views. For example, she points out that the City’s contribution to the buyout pensions is $456,472/year (for the 30-year plan) and $704,891/year (for the 25-year plan). But Ms. Heerbrandt ignores the other side of the leger, which is the savings to the City on the salary reductions—e.g., $1.36 million for 2010. Because Ms. Heerbrandt’s analysis totally ignores the buyout benefits, her conclusions and incomplete analysis are of no value.
The buyout may save the City $4.5 million over 30 years, or it could bring some losses, or something in between—but the City still has the opportunity to obtain the maximum savings. It is not accurate to say that the buyout will cost the City $10 million or any other amount. The buyout is on track to save the City money.
The next time someone asserts that the buyout was a terrible financial mistake, that person should be challenged to state the dollar figure that he/she projects for such a mistake, and then explain how that figure was determined. Failing to do this, such opinions are of little value.
Alderman C. Paul Smith