Crestwood board to continue efforts to stabilize city's financial problems
June 22, 2005 - The Crestwood Board of Aldermen next week will continue its efforts to resolve the city's fiscal woes by discussing the renovation of City Hall to include a new police facility.
The Board of Aldermen will conduct a work session at 6 p.m. Tuesday, June 28, at City Hall, 1 Detjen Drive.
During a lengthy work session last week, aldermen discussed a restructuring proposal by City Administrator Don Greer to stabilize the city's financial problems through $1 million in personnel reductions, including cutting six Police Department employees and four Fire Department employees.
Part of Greer's restructuring plan includes increasing the benefit level for employee pensions to encourage retirements for a two-year period. The city participates in the Missouri Local Government Employees Retirement System, or LAGERS.
The city administrator has identified as many as 18 employees who are or will become eligible to retire during the next two years and would take advantage of the change in the percentile calculation to 2 percent from 1.5 percent.
But during the work session, Ward 3 Al-derman Jerry Miguel said he was concerned about the longtime cost to the city, saying the increase in benefits could increase the annual costs of the pension plan by $400,000 annually and the unfunded liability of the pension plan by $3.7 million.
Greer, however, said that if staff is re-duced through the proposed restructuring, besides the roughly $1 million savings in personnel costs, the annual costs of the pension plan would be reduced by $9,000 per year.
As outlined in a June 12 memorandum to the Board of Aldermen, Greer said the cuts in public safety-employees would be accomplished "exclusively through attrition.'' But that would not be the case with proposed staff reductions in other areas, including parks and recreation, according to the memorandum.
At one point during the work session, Greer said, "Please don't lose sight of the fact that you're committing to reducing the operating expenses ... Do we know who's going to retire?
"No, I don't know who's going to retire. I think a lot of people will,'' he said, noting he has talked to a number of employees who have said they would retire if the change was made.
"The commitment is to reduce the operating expenses. That's what this whole plan is designed to do. This plan is not designed to give everybody a nice pension. This plan is designed to reduce our operating expenses and I'm telling you people, you have to reduce your operating expenses. Please if you don't hear anything else, know that. And it has to be through personnel. And it has to be significant.
"So, I mean I need some help. Tell me how to get here,'' he added.
But throughout the discussion, Miguel continued to express concerns about the unfunded liability in the pension plan.
"I'm telling you that we're taking out a $3.7 million liability immediately and we have to pay that off over 30 years. That's like paying house payments,'' he said.
Mayor Roy Robinson said, "You've got to pay some of these anyway.''
Miguel said, "This is — I'm talking about the increment from 1.5 (percent) to 2.0 (percent) is $3.7 million. That's the price tag we're putting on the taxpayers and we'll be paying for it over a 30-year period ...''
Robinson asked, "Well, do you have a better solution? ... Do you have a method of getting this city back on track financially and maintaining our services. I mean, it's easy to sit here and talk for the people out there, saying: 'Well, you've got to cut and you've got to scrap and all that.' That's true. But we also — we also want to know that we're going to maintain our services that we depend on for our livelihood. This is a city. This is not a corporation. We're not in for making money. We're in to provide services for our community and you can't do that unless you're willing to take the risk when you're in as far a debt as we are. You got too many bills to pay and we got to make the cuts and this is a — if it's $3.1 million over 30 years, that's fine. You take that risk because, in fact, those costs will go down ... In 30 years, those costs, the $3.1 (million), won't mean as much ...''
Miguel said, "Well, I would say this: That I look at that the same way that I look at long-term debt and we've got to cut our long-term debt, not increase it.''
Robinson asked, "Well, how do you propose we could do that?''
Miguel said, "Um, I think a ...''
Robinson interjected, "Well, one way of doing it is and as I said before this is not trying to be funny, but one way we can do it is close down the city and turn over, get rid of everybody and turn it over to the county as somebody put in the paper today ... There's no place, no avenue to get any money. Everybody wants to maintain the services, yet they don't want to take a risk and try to get this thing settled out.''
Miguel interjected, "This is a great idea. but I'm just saying I don't feel we can afford the cost. We need to take the medicine without the sweetener.''
Robinson asked, "Well, what's the medicine?''
Miguel said, "It's obvious.''
Robinson said, "Cut down, just cut the city apart and not provide the services.''
Miguel said, "I didn't say that. I didn't say that ...''
Robinson continued, "Well, I'm not willing to go that far.''
Miguel said, "(Ward 1) Alderman (Rich-ard) Breeding brought up an item earlier in the meeting tonight. Let's take another look at the police building, OK?''
Robinson said, "... I didn't think we were going to talk about the police building tonight ...''
Miguel said, "Well, you're asking for solutions and I'm suggesting that is a — could be a major factor in a solution.''
Robinson said, "If, in fact, that's what the board decides they want to do, it would greatly enhance this deal of getting our city back in (shape financially). We could probably actually start paying off the line of credit.''
Miguel said, "You know, we're talking about a program that will encourage a few people to retire sooner than they would otherwise. In my opinion, that number is going to be minimal. Eventually people will retire ...''
Greer interjected, "Can I ask what your opinion is based on? Is it just your opinion?''
Miguel replied, "That's just my opinion.''
Greer said, "OK. It's not — it wouldn't be consistent with my opinion related to the conversations I've had with those employees.''
Miguel said, "That's just my opinion.''
Greer said, "OK, I just wanted to know where you were coming from.''
Miguel said, "I have no doubt that some people will be encouraged to retire earlier. Others will not. Once the commitment is made, the benefit is there. Once the benefit is there, sure, people will look at it, check their retirement: 'Do I have enough?' OK, yeah, I got enough. I'll go.' Or: 'Hey, I'll wait and I'll work a few more years and send the grandkids to college.' It's all a personal decision ...''
Miguel later said, "OK, I'll ask the question since no one has asked it. What would be the cost reduction if all the reductions were made immediately without the plan ...''
Greer replied that it would be roughly $1 million, less what the city owed employees for accrued vacation. But the same benefit wouldn't exist, he said, because the personnel cuts would come for the "bottom.''
Miguel estimated the immediate personnel cuts would total total as much as $850,000, "but you don't incur that $3.7 million liability in the pension fund.''
Greer said, "No, you don't.''
Miguel said, "Tough decision.''