I’m as lefty as most …

… but am I correct that the City Council agreed to forgive $305,000 in overpayments to retirees, then agreed to a 2.82 percent tax levy increase?

Yes, these folks are on fixed incomes, etc., but how have I become responsible for this clerical error?  I wouldn’t care if each of these retirees had a 30-year, 0 percent loan payable only from their estate after their death (because they are on fixed incomes now and can’t afford repayment now…), enacting these two initiatives at the same meeting tells me that this clerical error is somehow my responsibility.

Sigh.  The vote was unanimous, so I must be missing something.

32 Comments

Danny

about 9 years ago

You are responsible because the city council that you vote for made the decision.

Joel

about 9 years ago

Funny, the few times that I received an overpayment, either from the bank, my employer, and once from the IRS, they had no issues in asking for the money back. How about the City Council pay it back out of their own pockets instead of reaching into mine!

Jadiaz

about 9 years ago

Because when the government wants money from you and you are late/don't pay it demands more money, can seize your property, put you in prison or all three and it knows you can't do anything about it even if it was its mistake to begin with. It also knows when it screws up all it has to do is take our money by raising taxes and we can't do anything but bitch. It's the American government way! 

Hell, in Duluth here they tricked people into raising their own taxes by threatening a shut down of parks and libraries when the city was too inept to properly handle the income it was already getting.

This problem with the retirees is another example of the city showing its incompetence and forcing its citizens to pay because the citizens have no recourse.

TimK

about 9 years ago

The fund that manages city employee retirement accounts (PERA) is the entity that originally made the error of overpayments. They've agreed to reimburse the city for most, if not all of it. Everybody just calm the hell down.

Jadiaz

about 9 years ago

If it's all there is no problem. If it id only most, then we do not need to "calm the hell down."

[email protected]

about 9 years ago

TimK, they will reimburse $90K of $395K -- isn't that the current decision?  Or do I misunderstand?

TimK

about 9 years ago

My understanding was that's a payment, not a settlement. I could be wrong. You know what I love about all of you?  This willingness to assume the worst in every goddammned fucking situation that comes up on PDD. Especially if not all of the information is at hand.

[email protected]

about 9 years ago

Tim, I linked to the best information available.  How do you read the "goddamn fucking" articles I linked to?  

The council unanimously voted to support a plan that would pay off about $305,000 in overpayments 108 retired city employees received from the Public Employees Retirement Association. The city is in line to receive about $395,000 from PERA for excess contributions it made to the fund in the past and will apply a portion of those funds to covering the debt. Alternatively, PERA would have sought repayment from the affected retirees.
So "we pay PERA $305K so retirees don't have to" is how I read that paragraph. More explicitly PERA refunds us $395K. We then pay PERA $305K so that PERA doesn't go after the retirees. ($305K isn't much in our city budget, but it would have been enough to cover the econonomic development person that the tax hike is paying for. It's also a good hunk of what we hoped to get by selling the stain glass window a few years ago. So it's not insubstantial.) If I'm reading this right, please recognize: I'm not about starving retirees. Put a lien on their property which is only collected when the property is sold. Put a lien on their estate that is only paid after death. We don't need the money now. What information am I missing? Please help.

TimK

about 9 years ago

The city is in line to get the whole $395K from PERA. It paid 90K into covering the debt (which we can assume will balance out when the PERA money is paid back to the city). I'm not picking on you JP- you were asking a question. Others who use this blog always jumping on the "all government/regulations/public employees are bad" bandwagon is who I'm frankly getting tired of... anyway, the Trib article is not worded very well, which might have caused your question in the first place. Also, because setting the tax levy at the same meeting that you resolve a matter like this makes it seem as though our taxes are going up BECAUSE of this. It's the perfect gasoline for the haters...

Nathaniel

about 9 years ago

Hasn't the city already extracted enough concessions from its retirees? This was an easy way for them to play nice and still pocket $90k.

TimK

about 9 years ago

I rest my case.

[email protected]

about 9 years ago

Tim, I'm fairly sure you have the numbers backward, even according to this website.

The kneejerks in this thread bug me, and I regret giving them space, but the unanimity of the vote still makes me think I missed something.

TimK

about 9 years ago

As I understand it, PERA paid benefits greater than calculated to retirees. PERA or the city could have asked the retirees to pay it back (a hardship for most). PERA actually makes money (interest, stocks, bonds, etc.) off of the payments employees pay into the system. The city also pays in as part of negotiated contractual benefits. The 90k the city got was from PERA. The remaining $$ will come from PERA's balance sheet, too. This is all accounting -- making your columns balance properly.  

The retirees aren't being ask to give anything back, but their current benefit is adjusted to reflect actual contribution. If the city of Duluth was going to be stuck holding the bag on this, you know it would not have been a unanimous vote. In the end, the taxpayers come out ahead $90,000, the retirees don't have to cough up the over payments and PERA will (hopefully) not make future accounting errors.

TimK

about 9 years ago

Man, the keyboard on my phone allows for a lot of errors. Good thing I'm not in charge of anything important...

[email protected]

about 9 years ago

Tim,

I'm fairly sure you're wrong about this:
"The remaining $$ will come from PERA's balance sheet, too."

Can you help me find a source on this?

[email protected]

about 9 years ago

A reporter at a local station sent me this PDF, in response to this thread.
WDIO rocks.

TimK

about 9 years ago

I give up.

[email protected]

about 9 years ago

Tim -- Giving up is not what I want.  Details and documents.

I'm not trying to be a jerk, but it looks to me like "option B" in this chart was approved.

TimK

about 9 years ago

It's a huge pain to download pdfs onto my phone. I guess the simple answer I'm trying to get across is that the city covers the PERA "debt" out of the general fund. PERA reimburses the city after the fact. That's as simple as I can make it. It's not dollars you put in your wallet per se. It makes columns balance out in the end. It's additionally complicated by the fact that current employees over-paid their contributions (some will get refunds). Everyone wants a bad guy. Sometimes it's just math. I think this situation is just math. I have a pretty good memory and I read and watch a lot of local news. I didn't cite sources or documents (other than those you linked) because I'm shooting off my loud mouth on a phone. I can't cut and paste. I'm just an over-educated freedom-hating liberal.

[email protected]

about 9 years ago

I guess we will have to agree to disagree.  Not the DNT nor the Finance Committee documents support your reading.

Is there a councillor out there who will chime in?

TimK

about 9 years ago

In the Trib story- 3rd paragraph. Who is the "it" that over paid?

[email protected]

about 9 years ago

Tim, I read this paragraph, which I pasted above yesterday, as:

"The city is in line to receive about $395,000 from PERA for excess contributions THE CITY made to the fund in the past.  THE CITY will apply a portion of those funds to covering the debt OF THE RETIREES, RANGING FROM LESS THAN $3K to $18K, TOTALLING $305K. Alternatively, PERA would have sought repayment from the affected retirees."

Or, as the DNT story put it:

""I think this is a win-win situation," said Councilor Sharla Gardner. "It makes the retirees whole, it makes current employees whole, and the city still gets $90,000."  Alternatively, the city could have chosen to pocket the entire $395,000, leaving affected retirees to repay the fund on their own."

The city still gets less than 1/4 of the amount due it repaid.  Which is fine -- I would have expected sympathy for the elderly (or a desire not to lose the senior vote) to drive this decision.  But the unanimity on the night that a levy increase is passed is what surprises me.

eolson

about 9 years ago

Here's my thought: call your city councilor. If they felt confident enough to vote on the issue they should be able to explain it to you.

TimK

about 9 years ago

I can see your interpretation, though it is based on a very shabbily written article. I think "the city is in line to receive $395,000..." is the grist of it. 395k from PERA, minus 305k to cover debt of retirees leaves 90k the city keeps.

[email protected]

about 9 years ago

Tim, we absolutely agree.  Now if you will agree that the city had the option to let PERA collect $305K from the retirees directly, rather than from the city, we will agree 100%

The next question is, why a unanimous vote to let the city cover the individual debts of these citizens to their retirement fund?  This was not a debt the city incurred, nor was it a debt the city would be liable for.  

To be "nice?"

rev

about 9 years ago

Well, it sounds like the city gets to keep an extra $90k, no? Why would you belittle that with the Council just being "nice?" Christ.

[email protected]

about 9 years ago

If I stood in line at Target to buy a gallon of milk and a candy bar for $4.05, handed over a ten dollar bill, and got two dollars in change... and the guy behind me got an extra $3.95 in change (the $3.95 I was supposed to get)...

I would expect Target to clear its debt to me.  I would not willingly say to Target:  well, give me 90 cents and call it even;  the guy behind me in line looks like he needs the $3.05.  He might.  

But so does the library, the parks system, the oh-my-god street repair fund.  This $305K is not a windfall;  it is money that the city spent that could have kept the Mt. Royal Library open in the years when its hours were truncated (or re-opened it without spending the parks levy on it), among other uses.  It is in that context that I wish I understood it, not "well, this is a windfall;  $90K of free money is better than $0 free money").

lojasmo

about 9 years ago

I read this as PERA has decided not to hassle the retires to recompense PERA's fuckup, and is going to reimburse the city.  The city ends up $90K in the black.

I think the bitching tag should be removed.  Seems like a reasonable compromise.

And @Jadiaz; we do have recourse.  Participate in the process, and vote.

Don Ness

about 9 years ago

Sorry, I'm only now seeing this...

So the primary issue here is one of an accounting dispute over what qualifies as PERA eligible income.  For many years, many cities assumed that a certain type of health care related benefit could be assumed to be income and therefore would help determine pension benefits.

PERA then later determines that this should not be PERA eligible income.  Several lengthy court battle with PERA ensues...  End result is that the City would be reimbursed for the overpayments and retirees would have to pay back their pension payments that were larger than they should have been.

It should be pointed out that when we found out about this three years ago, these same retirees had their pensions (going forward) reduced to the correct amount.  

So, imagine you are a retiree on a fixed income and you receive a letter saying you now owe $10,000 for income that you have previously received and now have to pay it back.  That would be a very bitter pill to swallow.  So, I personally agree with the decision of the council to provide this relief.

Yes, the $300k would have helped build our reserve, but the hardship for those individuals (through no fault of their own) would have been much worse.  And yes, we have made changes to retirees' health care to reduce our liability by $190 million (and saving $2 million+ a year).  That's certainly is a factor to consider - I think it puts that $300k in proper perspective.

[email protected]

about 9 years ago

Thanks for replying, Mayor Ness, and on Christmas, no less.  Thanks, too, for explaining this clearly -- too many folks didn't get it (and possibly couldn't open the council .pdfs on their mobile devices to follow it).

I'm still torn -- I can't imagine any Duluthian I know wouldn't find a $10,000 bill a "bitter pill to swallow," or who wouldn't appreciate $10,000 (or even $1,000) of council relief in their debts, fixed income or not.  So the issues of fairness still strikes me.  But I was at an open house last night where I was in the only married couple with one job per person -- nearly every other couple there had at least three or four jobs between them to make ends meet.  So I am extra conscious of the struggles of my fellow Duluthians.

But your last paragraph seems to suggest that a greater fairness is served by this relief, given the changes in their health care.  

On Christmas Day, I can't argue otherwise.

Thanks for taking the time to reply.

TimK

about 9 years ago

Yeah, thanks for the clarity, Mr. Mayor. My perspective (and the point I couldn't seem to make) is that this is over. We aren't taking $305,000 out of the current or future budget. Yes, it's unfortunate, but the error was found and fixed. Win-win. Maybe think of it as paying too much for a car. Still driving, but next time you will shop more carefully.

[email protected]

about 9 years ago

Oh, Tim, if you keep arguing past Midnight, I'll lose the Christmas spirit.

PERA wins -- they get their overpayments back.

The retirees win -- they don't have to repay their overpayments.

The only way I win is by accepting that the city can do exceptionally nice things to retirees in partial karmic responsibility for changes to their health care plan, even at the cost of increased tax levies of $213,000 next year (or a less robustly solvent reserve, to use the Mayor's more likely example) that would not be warranted if the $305K were paid back.  (That was a mouthful.) 

On Christmas, I'm willing to accept that.

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