OPEB: DeKalb’s unfunded liability you’ve probably never heard of

***Updated 12/21, via asterisk, to clarify what’s going on with the fiscal 2016.5 numbers in the narrative, and why these numbers are not in the chart. FYI, the post is probably also easier to read if you distinguish between plan retirees (who are participants and beneficiaries), beneficiaries (who may be retirees or spouses/dependents of retirees), and participants (who may be active employees, retirees, or beneficiaries who are neither).***

I don’t generally gush over DeKalb’s choices of consultants, but I believe EPI was worth every penny – both times – because of their plain talk about our financial situation and the state of city operations.

Too bad DeKalb didn’t take some important advice.

One of the harsh realities was and is the OPEB, which stands for Other Post-Employment Benefits. OPEB is a defined-benefit, comprehensive health insurance plan for City of DeKalb retirees who participate in a pension plan (i.e., full-timers who meet years-of-service requirements). Compared with the pension plans, OPEB is not very highly regulated. There’s no trust fund established, and since the city doesn’t have to pay more than a required annual contribution, it doesn’t. There are no reserves for the future.

This was the picture when EPI came on the scene in 2009:

• Depending on the retirement age of the labor contract/pay plan that applied, some city workers qualified for benefits as early as age 50.
• Employees did not contribute to the OPEB until retirement.
• OPEB covered the retiree for life.
• Some plans had spousal and/or dependent benefits.
• The city at that time was paying approximately 87% of the premium for each retiree.
• DeKalb’s contribution as sole employer of the plan came to about $1 million per year.
• The unfunded liability reported for fiscal 2008 was $29.4 million, which was more than the liability for any city pension fund at the time. Continue reading OPEB: DeKalb’s unfunded liability you’ve probably never heard of

A fresh look at “old” financial advice for DeKalb

At a recent budget meeting, DeKalb city manager Anne Marie Gaura (AMG) stated that she references the “EPI reports” frequently in financial planning.

Because the city’s finance advisory committee might likewise like to revisit EPI findings when it (the committee) reconvenes in 2018, I’d like to introduce EPI to our newer readers (and help refresh memories).

EPI stands for Executive Partners, Inc., which is the former name of an organization of financial consultants who, in 2009 and 2013, tried to help DeKalb think more strategically about its finances.

Here’s EPI’s Larry Kujovich in the spring of 2013, talking about DeKalb’s gigantic financial hole.


Continue reading A fresh look at “old” financial advice for DeKalb

Confronting Reality at Last? We’ll See

From the Daily Chronicle today comes “DeKalb aldermen confront budgeting issues.”

During their Monday discussion of the budget for the fiscal year that starts July 1, DeKalb aldermen were told the city will need to cut services or boost revenue in order to maintain operations in the coming years.

Beginning July 1, alderman were told, the city should shift its structure and look at the way the general fund is used.

“The main thing is the current structure of how everything is put together is not sustainable,” City Manager Anne Marie Gaura said. “Something has to change and that will require policy decisions in the coming months and coming years on how to address this long-term.”

Gee, where have I heard this before? Continue reading Confronting Reality at Last? We’ll See

DeKalb – Firefighter Quid Pro Quo

The City of Springfield is expecting to approve a new contract with its firefighters’ union soon.

Golly, I wish we had that kind of news coverage. Remember the last-minute hoop we had to jump through to find what the 2011 contract with our firefighters was about?

The Springfield story reminded me that the longish closed sessions our council is holding lately have something to do with collective bargaining and not just horse-trading over the appointment of the new city manager. Sure enough, DeKalb’s agreement with International Association of Firefighters Local 1236 expires June 30, 2014.

I meant to look at the contract anyway because during the last council meeting, they were speaking in code while talking about the latest emergency services contract. The code was “7(g)” and turns out “7(g)” is shorthand for, “How much the city is going to pay emergency personnel to attend sporting events.”

But on to the quid pro quo. Continue reading DeKalb – Firefighter Quid Pro Quo

DeKalb’s Financial Hole

As with yesterday’s clip, today’s video comes from a recording of the April 2013 workshop meeting involving DeKalb officials and the financial consultants Executive Partners, Inc. In this one, EPI’s Larry Kujovich explains why the city needs to shift to a more strategic, longer-term approach in allocating its resources.

The clip comes from the first couple minutes of this portion of the workshop video.

What the Financial Consultant Said about DeKalb’s Business Friendliness

The setup: The April 2013 workshop meeting between city officials and their contracted financial consultants, Executive Partners, Inc., was coming to a close. EPI’s Larry Kujovich (on the left) and Rob Oberwise have been talking about the importance of image building to economic development. Alderman Ron Naylor remarks that economic development has been a priority for as long as he’s been involved with the city, so he asks, “Is there something that you’re saying we need to do more of?”

The clip comes from this 10-minute portion of the meeting video. Ald. Naylor’s question starts at 7:50 into it and both consultants respond. Watch to the end and you’ll see what impact Mr. Kujovich had on the discussion.

Latest Response in Review of EPI Report Redactions

During a special meeting held June 11, officials of the City of DeKalb met with their contracted financial consultant team known for short as EPI. EPI presented observations and recommendations in the areas of strategic revenue production and cost containment. The consultants also reviewed progress on strategic financial recommendations made in 2009, a time of deep financial crisis for the city.

Some, including myself, had a problem with the report because parts were redacted without explanation. The redacted information was requested by another resident under the Freedom of Information Act (FOIA), and the requester was inexplicably given the same redacted version of the report as before. The requester interpreted this action as a denial of information and so did the Attorney General’s Public Access Counselor. The PAC asked the city to respond to a complaint about the denial. Today I’ll share that response and more. Continue reading Latest Response in Review of EPI Report Redactions

Need & Recommendations for Medical Cost Containment

A couple weeks ago I mentioned that DeKalb’s financial consultants made recommendations for medical cost containment deserving of their own post.

Here it is, finally. Turns out it’s not just the recommendations after all and it’s very long, so grab a cuppa something and make the jump when you’ve got time to hang out for awhile. Continue reading Need & Recommendations for Medical Cost Containment

City of DeKalb Has Nothing Better to Do Than Play Games with FOIA

Last week I shared with you my observations of the June 11 meeting between the council and the city’s financial consultants. One thing I noted, but hadn’t taken action on, was this:

Some of the recommendations in the report were apparently redacted. (See PDF pp. 108 and 110.) This is inappropriate for a public record unless an exemption to the Freedom of Information Act is claimed.

Well, guess what? A reader picked up on the issue, and requested through the Freedom of Information Act (FOIA) the blacked-out items. Here’s the wording of the specific request:

I am requesting a Listing of Items (recommendations and $ Impact) redacted on the 2013 DeKalb EPI report under Summary of Key recommendations Medical cost containment review items: C3 and C4. Also a listing of Department Efficiencies Analysis and Outsourcing Review: item B1

Now let’s look at the response.* Continue reading City of DeKalb Has Nothing Better to Do Than Play Games with FOIA