Response service from Bloomfield Township Fire Department Station 4 is one of the cuts suggested by consultants to fund retiree benefit liabilities.

Response service from Bloomfield Township Fire Department Station 4 is one of the cuts suggested by consultants to fund retiree benefit liabilities.

Photo by Deb Jacques


Bloomfield Township board grapples over structural deficit solutions

By: Tiffany Esshaki | Birmingham - Bloomfield Eagle | Published April 1, 2019

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BLOOMFIELD TOWNSHIP — Bloomfield Township Board of Trustees members have moved right past civil discourse and on to personal jabs when it comes to debating how they’ll solve the township’s structural deficit.

During a meeting March 25, things got heated as trustees weighed options to fund existing plans for other post-employment benefits, or OPEB obligations — like life and health insurance plans tapped into upon retirement — promised to qualifying full-time employees through 2005, when the program was closed to new hires. The OPEB costs have the township running in the red between $5 million and $7 million annually.

That’s nothing new, though. According to Township Supervisor Leo Savoie, the deficit has existed for many years. Previous boards likely didn’t address the problem because there wasn’t a need — the state of Michigan allowed municipalities to fund OPEB obligations on a “pay-as-you-go” basis.

But that has since changed. In 2017, the Michigan Legislature passed Act 202, or the Protecting Local Government Retirement and Benefits Act. The law requires local governments to come up with a plan to be at least 40 percent funded for OPEB obligations within 30 years. Right now, the township is about 6 percent funded, with an asset balance of $11.7 million. Pensions are nearly completely funded, at 97 percent.


Round one
With their feet to the fire, the board contracted Plante Moran to study the dilemma and come up with options to close the OPEB funding gap. At the same time, the township hired Glengariff Group to conduct a survey of residents to get a feel for how they want the board to move forward.

Township Finance Director Jason Theis summarized the findings from both efforts to the board March 20 during a structural deficit study session. He said that while Plante Moran found savings throughout government — consultants mentioned eliminating the Animal Welfare Division and hazardous waste disposal, and contracting assessing, fire dispatch and police dispatch services, among other cuts — along with bumping up revenue by instituting a 1 percent administrative fee, which would be limited to covering the costs of operating the treasury and assessing departments.

But that doesn’t close the gap.

To satisfy the structural deficit, bigger cuts need to be made, and that means hitting the township’s most expensive departments: police and fire, which make up about two-thirds of current expenditures and, accordingly, legacy costs.

Plante Moran found further cuts to those resources, namely eliminating 10 police positions and eliminating fire response at Fire Station 4, bringing the total savings to $4.9 million and $6 million. But those savings come at a price, Theis said.

“(The study) recognized that if those cuts were made, Bloomfield Township services would not be what they are today,” he told the board. “It would be a drastic change to what residents are used to.”

That’s where the resident survey comes in. A sample of 400 residents in a telephone survey in January showed that most residents aren’t keen on sacrificing police and fire quality to save money.

The survey reported that more than 80 percent of respondents oppose eliminating the police positions, 40.8 percent oppose ceasing fire response at Fire Station 4 and 57.6 percent oppose contracting out dispatch services. Scraping the Animal Welfare Division and contracting out in-house assessing were largely supported by respondents.

Asked whether they’d prefer tax hikes, service cuts or a mix of both to satisfy debts, most respondents said they’d prefer a combination plan. Fewer than 10 percent support a tax-increase-only plan.

The other option is never a favorite with residents: higher taxes.

Theis relayed another Plante Moran suggestion: to implement a special assessment district to fund public safety. The assessment would be due and collected at the same time as other township bills, but it works a little differently than traditional millages. Annual public hearings are held to set the estimated levy needed to fund police and fire operations in a SAD, and the assessment wouldn’t be subject to Headlee Amendment rollbacks nor the 10-mill tax levy limit that applies to townships according to Michigan law. The maximum amount of time for a public safety SAD  is 15 years — though it could of course be levied for less time than that.

It’s not that unusual. Theis explained that Waterford Township has such an arrangement, and Bloomfield Village has utilized a public safety SAD since 1957 to fund its supplemental police and fire services.

Theis ran through different scenarios for the board: a forecast for what 1.05 mills would do to close the deficit — the “bare minimum solution,” he said — along with an SAD of 2.3 mills or 8.29 mills. The 2.3-mill option would include the expiration of a 2010 general fund millage worth 1.25 mills. The 8.29-mill option would do the same, as well as replace existing public safety millages set to expire in 2022 (for 2.3011 mills), 2023 (for 1.0908 mills), 2025 (for 0.6673 mills) and 2026 (for 1.9311 mills), respectively. None of those scenarios include budget cuts.

In each scenario, the goal of a net increase of 1.5 milss would be the same.

Theis closed his presentation by noting that, legally, the board can implement an SAD on its own, though it would be highly recommended by consultants to take the proposal to a vote of the people. Some board members agreed that a ballot issue would be the way to go.

Trustees Dani Walsh and David Buckley, however, called an SAD irresponsible unless the township makes major cuts first.

“If there is going to be a tax increase, I think the ballot language should be very clear that this is not a public safety issue,” Walsh said during the study session. “As a salesperson, I get the spin that you’re trying to go with, because you want people to support it and everybody wants great public safety. But this is a retirement issue.”

Buckley agreed. Following a statement from Treasurer Brian Kepes on why a public vote is the right move, Buckley noted a planned 2 percent raise due to township employees this year, as well as vehicles provided to administrators and department heads.

“Not one resident is going to suffer if you don’t have a township vehicle,” he said to Kepes. “Make all the excuses and make your statements, but it’s really scary to me that that’s the attitude, that we’re not cutting first.”

Kepes struck back, suggesting that Buckley was on the attack because of his friendship with former Treasurer Dan Devine, who lost his 2016 bid for re-election to Kepes, before the session was wrapped with intentions to be continued at the next meeting.

“Let’s let the voters decide. Every one of us is a voter and every one of us is a taxpayer,” Savoie said at the close of the session. “If, collectively, we missed our mark, we go back to the drawing board and we start making changes.”


Round two
As the Fire Department and Police Department heads were happy to point out the following Monday, plenty of changes have already been made. At the regular meeting March 25, Fire Chief Mike Morin and Police Chief Scott McCanham appeared before the board and a room packed with residents to make their cases as to why further cuts to their departments should be avoided.

Morin explained that the township has not only been saving money, but actually has been bringing in an extra $1 million annually since 2010 by implementing its own emergency medical services transport. He said they’ve taken advantage of various grant awards, about $1.6 million worth, to purchase equipment at no expense to the township and have faced a 16 percent reduction in manpower, despite an increase in runs. Any upgrades to the stations, like partition walls, were installed by the firefighters themselves voluntarily so the work didn’t need to be contracted out.

McCanham echoed those thoughts, and added some of his own on how over the years, the compensation that’s been chipped away from new hire offers has impacted the quality of candidates.

“I’ve sat on the final oral board for 13 years, which is the final step in our hiring process. We’re one of the few departments in the state of Michigan that requires a four-year degree to become a police officer here. Bloomfield Township is the cream of the crop, as they say,” he explained. “Now, I’ve seen our talent pool drastically reduced from hundreds of applicants to now we’re lucky if we run a testing process to get 30 or 40. That is a direct result of our compensation package.”

Buckley and Walsh insisted that the board first consider pay freezes and cuts before passing the bill to residents.

“This is not your fault,” Walsh said, looking out to police and fire personnel in the hall. “It’s a slap in the face when they say it’s a police and fire issue. Giving raises to employees that are not police and fire when you can’t pay your bills is completely irresponsible.”

Kepes and Savoie argued that the raises are necessary to retain talent and stressed that cost-saving steps have already been taken, from implementing minor efficiencies in individual departments to modifying health care plans, removing longevity pay, working on a furloughed workweek of four days — something Walsh said is an attractive feature to potential hires in lieu of financial compensation — operating with 15 fewer employees than 11 years ago, and implementing a five-year pay freeze in 2009 to weather the recession.

When Trustee NEal Barnett moved to approve a resolution to put language on the August ballot to propose a 2.3-mill public safety SAD, Buckley tossed his papers and stormed away from the board. He turned around and then voted yay on Walsh’s motion to table the matter pending more study. With his vote and that of Trustee Michael Schostak, the topic was tabled for the night.


A tentative draw
Township Clerk Janet Roncelli announced that the municipal website now has a page called Funding the Structural Deficit, where visitors can see all of the associated documents, including Theis’ full study session presentation, the results of the resident survey, the Plante Moran study results and an SAD calculator that allows residents to plug in their address and taxable value to see what their tax increase would likely be.

For a home with a taxable value of $209,000, a 2.3-mill SAD would result in a little more than a $219 increase annually. That’s because the net increase in the millage rate would be 1.05 mills, since a general fund millage of 1.25 mills approved 10 years ago is set to expire this year. All three scenarios would bring in $4.1 million in their first year. The overall millage rate would move from 9.5860 mills to 10.6360 mills.

For more, visit BloomfieldTwp.org and click on the Funding the Structural Deficit tab.

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