Saturday, July 31, 2010

2010 Tax Cap Credits - Townships and Excluded Cities

Continuing with the tax cap credits information provided to me by Marion County Treasurer, Mike Rodman, and Administrative Deputy, Cindy Land, today we look at the Township governments as well as the larger Excluded Cities and Towns in Marion County.

The levy figures noted below come from the Indiana Department of Local Government Finance's 2010 Revised Certified Budget Order for Marion County.


LEVYCircuit Breaker
Credit
%
Township Government
Center$2,783,421$264,3799.5%
Decatur5,474,087671,08412.3%
Franklin8,982,3792,200,97824.5%
Lawrence11,941,055663,8575.6%
Perry346,55712,7573.7%
Pike16,544,673330,9862.0%
Warren276,09711,6124.2%
Washington700,06032,6854.7%
Wayne19,258,2862,539,17613.2%
Excluded Cities & Towns
Lawrence$8,923,358$440,1734.9%
Beech Grove5,576,0891,565,25928.1%
Southport185,8263,2521.8%
Speedway5,219,91553,8291.0%
Clermont481,47183,31317.3%
Cumberland912,369169,30018.6%
Homecroft75,1321,1831.6%
Meridian Hills165,8711,5000.9%

It should be noted that these levies may not be the entire amount of tax money that these units receive. In the case of the Township governments, I do believe that is the case, but I could not find a quick reference with that information posted. So, these figures show only the effect of the property tax caps on the property tax revenue each taxing unit obtains.

The levies for Center, Perry, Warren and Washington Townships are lower because IFD handles their fire protection and is a separate taxing unit. For reference, the Indianapolis Fire Special Service taxing unit saw $2.9 million circuit breaker credit impact on its levy of $53.9 million - amounting to a 5.4% impact.

As with the overall Township information posted yesterday, Franklin Township government stands out, followed by Wayne and Decatur. Beech Grove, which spills into 4 Townships, saw the greatest impact from the tax caps on the revenue it gets from property taxes.

Friday, July 30, 2010

Get Your Waders On - Marion County Tax Cap Credits for 2010

The tax caps are now fully in effect for property taxes in Indiana. Homestead property is capped at 1%, farms and rental property caps come in at 2%, and commercial real estate is capped at 3% of the GROSS Assessed Value.

Tax cap credits were applied to all properties whose tax bill was going to be greater than the percentage allowed by the tax cap for that type of property. If your bill was going to be $1251, and the tax caps only allowed a maximum of $1000, then your 'tax cap credit' is $251. Tax cap credits are called 'circuit breaker credits' as well.

Well, we now have the total amount of circuit breaker credits issued in Marion County for 2010. Thanks to Mike Rodman, Marion County Treasurer, and Cindy Land, Administrative Deputy, for providing me with the information.

I did a little crunching of the numbers to bring them to the level of the circuit breaker credit applied by Township. Below I also list the property tax 'levy', which is what the bills would have totaled without the tax caps. The '%' column shows the circuit breaker credit as a percentage of the 'levy'.


LEVYCircuit Breaker
Credit
%
Center$136,294,039$13,320,4769.8%
Decatur35,771,5654,381,03812.2%
Franklin65,315,78916,053,29924.6%
Lawrence115,826,5386,933,1606.0%
Perry82,864,4644,029,4044.9%
Pike106,431,4382,352,8522.2%
Warren86,482,6783,896,9724.5%
Washington158,059,28910,323,9666.5%
Wayne122,517,57814,005,27311.4%
Marion County
Total
909,563,37875,296,4398.3%


Obviously, Franklin Township stands out with a quarter of all property taxes given a tax cap credit. Even looking at it as a total dollar amount, Franklin Township scored the highest with over $16 million in credits, besting far more developed Townships.

Overall, property taxpayers saved an aggregate of $75 million in 2010 on property taxes due to the new property tax caps.

Wednesday, July 28, 2010

Suddenly - Decatur School Board Calls Special Session

A special session of the MSD Decatur Township school board has been called for 8:15 pm, tomorrow night, July 29, in the Board Room of the Central Office. The agenda is posted here.

All that is on the agenda is:

1. Call to Order
2. Personnel
a. Staff Report
3. Other
a. High School Handbook
4. Adjournment


One has to wonder exactly why this could not have waited until the next regularly scheduled meeting in August. Perhaps the disclosure of the illegality of the recent retirement packages given to Administrators in contradiction of Board policy and without contractual obligations or any evidence of Board action... (see "Decatur Administrator Severance Packages Really Sweet" and "Decatur Administrator Severance Packages in Contradiction of School Board Policy") is proving too much ?

This agenda, of course and per usual, says absolutely nothing. This has prompted me to begin a task I have been intending to do, but never quite got the time. That task is to look at the agendas and minutes of other school districts in Marion County.

Today I take a peek at what IPS is doing for agendas.

Here's a link to their agendas. You'll have to click on a date in the far left to view one. I suggest "Jul 27, 2010", which is the most current as I write this entry.

They have a great deal of information on their agenda. Imagine that - the public can actually see what is to be discussed and some real detail about each action item !! Don Stinson would never allow that to happen here in Decatur.

Scroll down the left hand panel and click on any action item. I clicked on "5.05 Increase Contract with Luerssen Consulting, LLC For Substitute Nursing Services". That already is far more detail than any Decatur School Board agenda would have. Clicking the link brings up information in the right hand panel. Imagine - MORE INFORMATION for the public !!! I have reprinted this one item below:
Agenda Item Details
Meeting Jul 27, 2010 - Board Action Session; July 27, 2010; 7:00 P.M.
Category General Superintendent's Recommendations - New Business
Subject Increse Contract with Luerssen Consulting, LLC for Substitute Nursing Services
Type Action
Fiscal Impact Yes
Dollar Amount $ 35,000.00
Budgeted Yes
Budget Source IDEA Grant

Presented By: Dr. Willie Giles Robb K. Warriner
Strategic Plan: Everyone Can Learn

TOPIC: Approval to extend contract with Luerssen Consulting, LLC for substitute nursing service at a cost of $35,000.00.

Background Information: Given the continuing need for substitute nursing services, it is recommended that we extend our contract with Luerssen Consulting, LLC, for the 2010/2011 school year to include services through June 30, 2011. The amount of the contract will remain the same at $35,000.00.

***Superintendent’s Recommendation: I recommend that the Board of School Commissioners approve the contract with Luerssen Consulting LLC for substitute nursing services at a cost not to exceed $35,000.00. I also recommend the Board authorize the Director of Special Education to execute the extension on behalf of the Board. Funding will be provided through the Individuals with Disabilities Education Act (IDEA) grant and will not impact the General Fund.

The Decatur School Board doesn't approve contracts - in violation of State law -- much less let the public know how much money is involved in anything. Not only are their agendas worthless, attending meetings leaves the audience without a clue as to what is being decided, and their minutes complete the trifecta of keeping the public in the dark. Even the Bell, California, Council meeting agendas have more detail than Decatur School Board does - and look what they got away with !

Tuesday, July 27, 2010

Update on Bell

You will recall the gynormous salaries of Bell, CA, elected and appointed officials and the outrage that resulted from an LA Times expose' on the matter (see "Bell City - Just the Absurd Apex of Business as Usual", if you perchance missed this one).

Well, the hammer has been coming down. UPI is reporting that the City Manager, Assistance City Manager, and Police Chief, whose combined salaries topped $1.6 million per year, have resigned. The four of five City Council members have all agreed to a 90% reduction in their roughly $100,000 per year part time salaries - down to $673 per month. The fifth member only makes $8000 per year as it is. (I erroneously noted only 3 Council members in my previous blog entry, as these were the only ones noted on the Bell website) And the Mayor is now working for free and vows not to seek re-election in March, when his current term expires.

Meanwhile, Los Angeles County and State officials are investigating the salaries to determine if laws were broken.

AP posted this video on YouTube:

Monday, July 26, 2010

Council Meets Tonight -- Utility Deal Up

The City-County Council meets tonight, and the transfer of the water utility and the sale of the sewer utility are on deck. The agenda is posted here.

Among the proposals to be introduced that strike my eye is Proposals 215, authored by the Office of Finance & Management and sponsored by Councillor Hunter. This proposal would budget $9.9 million of County Option Income Tax to :

SECTION 2. A certified distribution in an amount not to exceed $9,900,000 is to be used for the following purposes:
(1) the provision and maintenance of modern, dependable, and efficient public safety communications systems within the district for the purpose of promoting the expeditious delivery of public services to the residents and taxpayers throughout the district in order to assure the public health, safety, morals and general welfare and
(2) the provision of computers for the efficient functioning of governmental offices for the benefit of the residents and taxpayers throughout the district.

This bears looking into further, to see just what is being purchased and what will lose COIT funding in the future.

The very last action item on tonight's agenda is the utilities deals, Proposal 197. This deal has the benefit, should all the promises actually be kept, of some major infrastructure remediation in Indianapolis. But, the deal itself has too many highly negative aspects to warrant the 'yes' vote of any Councillor.

Here is my short list of primary reasons to vote against the utility transfer and sale:

1) There is no dedication of funds to ensure that the money will actually be spent on infrastructure as promised. The Council itself stopped this from happening, preferring to leave spending decisions to future Councils. There has been no proposal, as far as I have seen, to even account for the spending of the proceeds. Can the prediction of funding for Superbowl expenses be too far off? More money for the ICVA, IDI, CIB, or IEDI? Maybe a boost in arts funding? How about cash for other pet projects that are in favor? Or a few bucks toward raises, new software packages, or contracts with PR firms? The only banned expenditure for the funds is to the benefit of sports teams, an amendment introduced by Councillor Lutz.

2) All of the cash will be the proceeds of bond sales. Meaning the sewer utility ratepayers will be paying not only the money to be used for infrastructure (again IF the promises are kept), but also at least that much again for interest and fees to Citibank and the like.

3) The ratepayers will pay on the bonds for 30 years, while the infrastructure repairs will last 10 to 15 years. Your children or grandchildren's pockets are being picked so that your street can be smooth and shiny for a short while. What will they do for street repairs? It seems to me that a key ingredient that is missing here is sustainability. When the money is gone, it is gone for good. The next generation will have higher bills and lower ability to pay for their own needs. This is NOT looking 50 years down the road and doing what is right. It is looking to the next election year and doing what is expedient.

4) Not to be overlooked is the impact of this deal on the local taxing units besides the City/County. By attempting to preserve the property tax-free status of the sewer utility, the City is blocking the other units (schools, library, health & hospitals, and townships) from receiving tens of millions of dollars in property taxes each year. The question I posed to City officials and blogged on in "The City Needs To Learn To Share", remains unanswered by those officials. Without that added information, I cannot begin to guess whether the other units are losing their share of $25 million annually, or losing their share of $125 million annually. In either case, it is substantial. One can only guess what the Legislature will do in future years to remedy this loophole in the Indiana Code, perhaps putting taxpayers on the hook in addition to the hook they definitely will be on as ratepayers.

5) There is no clawback ability in the case of mismanagement by Citizens Energy. Yes, first right of refusal is in place, should Citizens Energy attempt to sell the utilities in the future - which is very good. But, there is no ability to pull them back without the consent of Citizens, should the need arise.

6) Last but not least is something I haven't heard talked about. That is the fact that Citizens Energy is awaiting the decision of the Indiana Utility Regulatory Commission on the 35% water utility rate hike that is currently before them. Yes, the deal with the City stipulates that Citizens Energy cannot request a new rate hike for 2 years after the deal is completed; pushing further rate hikes beyond the next Mayoral race. But, the 35% increase is still alive and critical to Citizens Energy's calculations. Citizens Energy officials have been clear, they have a strike price in mind for how large an increase the IURC must allow this time, for the utilities deal to make financial sense to them. Should the rate increase be too small, Citizens Energy will not consummate the deal. Yet, the deal is in separate pieces. Maybe I missed it, which could well be given the length of the documents, but I don't see both utilities being tied together as one deal. If the IURC fails to meet Citizens Energy's strike price, could they buy the sewer utility only and decline to assume the nearly $1 billion in debt on the water utility transfer? The sewer utility is well run and has always been the cash cow in this deal. One can only guess and wonder - and wait - on this last point.

Well, that's my dirty half-dozen reasons why Proposal 197 should be voted down.

Friday, July 23, 2010

SBOA Audits

The State Board of Accounts has some new audits -- they never stop working. For Marion County, there is a very interesting audit of the Marion County books, for way back in 2006, which is just before Billie Breaux took over the County Auditor spot. Here's a snippet of the cover letter:
The Single Audit Report contains twenty-one current audit findings and $6,205,934 in questioned costs on pages 13 through 44. The auditors have issued an adverse opinion on compliance with applicable requirements for seven of the eight major programs.

An audit for the City of Lawrence for 2009, is also up.

Thursday, July 22, 2010

Bell City - Just the Absurd Apex of Business as Usual

Bell, California, just 10 miles from Los Angeles, is a town of 37,000, with a per capita income half the US average, and a general fund budget of $15 million. Wikipedia reports the median income in Bell is $29,946.

Last week the Los Angeles Times broke the story that, unbeknownst to most of the town's population, the city manager, the assistant city manager, the chief of police, and even the town council members, all pull down stratospheric salaries.

Reporters Jeff Gottlieb and Ruben Vives noted:
Bell, one of the poorest cities in Los Angeles County, pays its top officials some of the highest salaries in the nation, including nearly $800,000 annually for its city manager, according to documents reviewed by The Times.

In addition to the $787,637 salary of Chief Administrative Officer Robert Rizzo, Bell pays Police Chief Randy Adams $457,000 a year, about 50% more than Los Angeles Police Chief Charlie Beck or Los Angeles County Sheriff Lee Baca and more than double New York City's police commissioner. Assistant City Manager Angela Spaccia makes $376,288 annually, more than most city managers.

and goes into how the Council may have worked their way around State laws in garnering salaries 20 times what they should have received
The district attorney is investigating Bell over the hefty compensation of its City Council members -- about $100,000 a year for part-time positions. Normally, council members in a city the size of Bell would be paid about $400 a month, Demerjian said.

The council has increased its compensation by paying members for serving on a variety of city agencies, including the Community Redevelopment Agency, the Community Housing Authority, the Planning Commission, the Public Financing Authority, the Surplus Property Authority and the Solid Waste and Recycling Authority.

Demerjian said city records show each council member receives $7,873.25 per month for sitting on those boards.

Records indicate that the boards of those agencies perform little work and that board meetings take place during council meetings, though the names of some of the agencies seldom appear.

In some years, the council would hold separate meetings for those agencies, and they would sometimes last no more than a minute. On July 31, 2006, four agencies each met for one minute. On March 3, 2008, the redevelopment agency meeting was called to order at 7:21 p.m. and adjourned at 7:22 p.m.

Councilman Luis Artiga, who was appointed to the council 15 months ago to fill an unexpired term, said he had no idea how much he would be paid. When he received his first check, he thought it was "a miracle from God."

Rubin posted a follow up article yesterday in the Times, now that the Bell community is up in arms.
At a closed-door meeting Monday night, as hundreds of residents protested outside, council members also discussed reducing their own pay. Most of them make $100,000 a year.

The Los Angeles County district attorney's office has inquired about the salaries.

Resigning would make City Manager Robert Rizzo, Police Chief Randy Adams and Assistant City Manager Angela Spaccia eligible for lucrative pensions. But the three also have contracts that protect them from being fired without cause.

As a result, unless they agree to resign, the city would face the prospect of buying out their contracts, which could cost hundreds of thousands of dollars in additional payments.

Reuters reporter, Jim Christie, is reporting that the Bell city manager, Robert Rizzo, is expected to do quite well on his pension:
If Rizzo leaves his job, which irate residents of Bell are demanding, he could draw $884,692 in his first year of retirement, according to her calculations [Marcia Fritz, who heads the California Foundation for Fiscal Responsibility].

At age 62, when Rizzo could also begin receiving Social Security payments, his annual pension would rise to $976,771, topping $1 million two years later. If he lives to age 83, his annual payout would rise to $1.48 million.

The Bell website lists a Mayor, Vice Mayor, and three Council members.

Now, the Bell officials chose to spend their tax money on themselves and key employees. How different are we in Indianapolis, where we choose, instead, to spend our tax money on powerful movers and shakers?

Wednesday, July 21, 2010

Never Fear -- IDI Is Here !

The inclusion of Tamara Zahn in the Indiana Black Expo task force to find solutions to the violence that erupted this past weekend, sent these old eyes rolling. Zahn is President of Indianapolis Downtown, Inc., (IDI) an organization that by all appearances simply duplicates the efforts of other organizations while living large off government handouts.

You may find it interesting that IDI received a City "Community Crime Prevention Grant" to the tune of $100,000 to run from April 1, 2010, through March 31, 2011. Insulting to all neighborhood groups, they received this grant in the "Neighborhood" category. The grant is available on the City's new contract database and is contract number 7683.

The grant/contract says:
The primary goal of the IDI bike and walking patrol is to decrease the number of crimes from levels recorded in previous years. In 2010, we will strive to continue to reduce Downtown crime to fewer than 2,000 crimes. We rely on IMPD and FBI crime statistics which we regularly review and analyze in order to proactively allocate patrol hours to address and mitigate emerging trends.

Talk about duplicating services. If downtown crime can be reduced by a greater police presence, then why isn't IMPD allocating their resources accordingly? Especially when it is City money being spent by IDI.

The latest tax return for IDI on guidestar.org, is for 2008. It reports $1.8 million in revenue, 68% of which was from public sources, and expenses of $2.4 million, while sitting on assets nearing $6 million. Perhaps more interesting is that they reported 17 employees, among which they list the top 5 paid. Among these 5 is President Zahn, and 4 Vice Presidents. Talk about a top heavy organization ! No telling how many other VPs are among the remaining 12 employees.

Zahn pulled down $200,000 in reportable compensation plus $18,132 in 'other compensation' in 2008. VP Julia Watson received $104,480 plus $13,277 -- VP Fred Laughlin got $89,500 plus $3,440 -- VP Terry Sweeney was paid $85,883 plus $11,222 -- and VP Molly Williams received $84,900 plus $11,403.

The City should not be helping to fund IDI - especially since they are duplicating services provided by the City itself. IDI should be forced to sink or swim on its own hook. If it truly is a benefit to downtown businesses, then it would survive without the government dole.

Friday, July 16, 2010

Decatur Administrator Severance Packages In Contradiction of School Board Policy

A document entitled "Metropolitan School District of Decatur Township Administrators' Employee and Retirement Benefits (July 1, 2004)", is a very interesting read - in light of the sweet retirement packages being collected by 5 Administrators which I posted earlier today, and especially in light of a WTHR report by Rich Van Wyk on July 6.

The WTHR report says in part:
The administrators' severance policy, in place for more than a decade, includes free health insurance and roughly a year's pay in addition to their pensions.

For many administrators it wasn't a tough choice. Retire now with full benefits or retire later and receive less generous benefits similar to what teachers receive now.

Stinson expects board members to discontinue the special retirement benefits and he intends to replace only two of the retiring administrators, saving roughly $750,000 a year, about equal to their one-time retirement costs.


The 'Stinson' referenced is, of course, Don Stinson, Superintendent of MSD Decatur Township.

But, surprise, surprise - the retirement benefits policy signed by then School Board President, Larry Taylor, and Secretary, Judy Collins, on May 11, 2004, emphatically contradicts Don Stinson, and clearly eliminated nearly ALL of the items in the retirement packages Stinson supplied to Jeff Baer, Gary Pellico, Dave Rather, Pat Jones, and Janet Larch.

Totaling well over $800,000 for the first year, and including paid health insurance for an unnamed number of years going forward (which can easily total $100,000 per year), these retirement packages are just one more extravagance Stinson is bestowing upon Administrators. This level of expense could have covered all other RIFs forced upon other employees in the District. RIFs continue, as well, in case you hadn't heard. For perspective, $800,000 could fully fund 15 young teachers for a year.


A little background - back in the early 2000's, the State Legislature finally acted to get ahead of the unfunded retirement benefits looming to become budget busters in Indiana schools. These unfunded mandates were obligations set up by employment contracts for certain items to be included in retirement packages, but for which no money was being set aside by the Districts. The State enacted a window of time during which school districts could float bonds to pay for unfunded pension obligations from the past. MSD Decatur School Board approved this type of bond issue in the amount of $8 million at its September and October, 2003 Board meetings. The September, 2003, minutes state:

Dr. Baer, Assistant Superintendent of Business, explained that the purpose of requesting the additional appropriation was to purchase bonds to cover the School Corporation’s unfunded retirement or severance liability.

All School Board members voted in favor: Larry Taylor, Don Huffman, Judy Collins, Cathy Wiseman, and Herb Bazemore. Huffman, Collins, and Wiseman continue on the Board to this day and should certainly remember the changes in retirement benefits.

The retirement benefits policy, ""Metropolitan School District of Decatur Township Administrators' Employee and Retirement Benefits (July 1, 2004)", sets in motion the change from unfunded retirement benefits for Administrators to fully funded benefits. The fiscal impact would be to put money away each year, according to the commitments in the Teachers Contract and the Administrator's addendum to that contract, instead of trying to come up with money from operating funds in future years after these administrators retired. To achieve the change, the previously contractual obligations had to be appraised for their monetary value, that money invested in appropriate retirement accounts set up for each individual administrator, and future contracts written in keeping with these changes. The 2003 bond was to be used to pay for these buyouts.

The administrator addenda for the 2009-2010 school year for Jeff Baer, Gary Pellico, Dave Rather, Pat Jones, and Candace Milhon-Baer, are all consistent with the new retirement benefits laid out in this 2004 Board policy. I do not have a copy of Janet Larch's latest contract. Don Stinson's contract, however, has several additional retirement benefits, including:

10. A retiring Superintendent shall have the option of remaining in his/her selected corporation health insurance program until qualifying for Medicare, if the minimum requirements of the insurance plan are met. The Corporation shall pay an annual amount equal to the full employee/spouse premium.

11. There will be no limit on the number of accumulated personal illness leave day. [sic]

and a rather long item 18 that invests part of Stinson's 2004-2005 benefits buyout into a series of $15,500 annuities in each of 5 years. The total value of this item is $77,464 - part of the value of Stinson's retirement benefits buyout that resulted from this 2004 Board policy. Other Administrators may very well have recieved as large a buyout as Stinson.

According to the July 1, 2004 Board policy on Administrator retirement benefits, a company named Educational Services Company, was to determine the value of each Administrator's unfunded retirement benefits, and how much money should be deposited into each of the new retirement accounts set up for each individual Administrator. You can read all of these details at your leisure and according to your interest in such things.

The policy states (page 1; emphasis is mine):

Any rights to retirement and severance pay, including, but not limited to, amounts payable following termination of employment for years of service, accumulated sick leave or health insurance from any policy, contract, or addendum to a regular teacher's contract... currently held by an Administrator are terminated and shall not apply to any Administrator retiring or severing employment with the School Corporation on or after the Effective Date. In replacement, the Retirement Benefits of the Administrators employed by the School Corporation as of June 30, 2004 shall be bought out and contributed to the 401(a) Plan and VEBA, as described below.

The policy describes the annual contributions that the District will make to a 401(a), 403(b) and a VEBA retirement accounts (begins page 6). The last is an account designed to purchase health insurance and pay for health related costs after retirement.

The policy requires Administrators to pay for their own health insurance after retiring (page7):

Following retirement, an eligible Administrator and spouse shall be allowed to remain on the group health, dental and vision plans then maintained by the School Corporation, if any, at their own expense until the first day of the month following their eligibility for Medicare.

An Administrator may carry forward a maximum of 30 vacation days each year (page 7) and any in excess of 30 are turned into personal illness days. They may carry forward no more than 5 personal business days each year (page 8) and can cash in the extra for $100 a day, or they will turn into medical illness days.

The policy states (page 8):

Upon retirement, an Administrator's unused and accumulated person illness (sick leave) and personal business leave days shall be forfeited and not otherwise purchased by the School Corporation.

According to this policy and the lack of anything to the contrary in the contracts for Baer, Pellico, Rather, or Jones, they are not entitled to severance payments for service years, leave days, 30% of base salary, compensation for any more than perhaps 30 days of vacation accumulated, and no buyouts for additional years toward the Indiana State Teacher Retirement Fund. Most of the $800,000 in these severance packages are not in accord with Board policy nor are they contractual obligations. Any future payment by the School District for health insurance through the District's health plan, are also strictly forbidden by this policy and is not in their contracts.

Let me go back to Rich Van Wyk's report:

The administrators' severance policy, in place for more than a decade, includes free health insurance and roughly a year's pay in addition to their pensions.

For many administrators it wasn't a tough choice. Retire now with full benefits or retire later and receive less generous benefits similar to what teachers receive now.

Stinson expects board members to discontinue the special retirement benefits and he intends to replace only two of the retiring administrators, saving roughly $750,000 a year, about equal to their one-time retirement costs.

The Board policy does not include free health insurance nor roughly a year's pay upon retirement. The Board already discontinued the old, unfunded, retirement benefits 6 years ago. When you figure in the buyout of their retirement benefits in 2004-2005, some of whom could easily have seen as much as the $77,000 + obtained by Stinson, AND the fact that taxpayers have been contributing to several retirement plans for these Administrators since 2004, it becomes double or triple dipping. This is entirely a give away, far better than a gold watch, using taxpayer money that could have been used to save jobs in the District instead of further feathering nests that did not need to be further feathered.

Decatur Administrators Severance Packages Really Sweet

The severance packages given to 5 retiring Administrators are really sweet deals. Right after the MSD Decatur Township School Board approved the retirements of Gary Pellico (Director of Communications), Dave Rather (Director of Construction/Safety), Candace Milhon-Baer (Director of Instruction), Pat Jones (Senior Director of Student Services) and Janet Larch (Elementary Principal), I requested the retirement packages provided to each of them, as well as that of Jeff Baer (Director of Business/Operations), whose retirement had been approved some months back. The request was made on June 9, 2010. On July 9 I received a table with some specifics of the deals outlined, which I have reproduced below. Missing was any information about health insurance benefits. After inquiring after those figures, Gary Pellico responded with "add approximately $100,000 to the Total Severance Cost". I have asked for more specificity with these retirement packages, which I will note below.

There was no severance package given to Milhon-Baer - the table only noted 'not eligible'. The rest are:

BaerPellicoRatherJonesLarch
Service Years$3,400.00$3,800.00$3,800.00$4,000.00
Leave Days$10,005.00$19,749.00$16,704.00$14,210.00
30% base$43,940.83$39,054.00$43,940.83$42,007.44$20,000.00
Vacation$3,667.71$11,848.10$20,291.04$23,696.20
Teacher Retirement Fund$87,952.96$73,990.38$82,997.68$76,814.23$80,895.36
Total$148,966.50$148,441.48$167,733.55$160,727.87$100,895.36
















I assume that the entry for 'Teacher Retirement Fund' is for money sent to the that Indiana State fund in order to 'purchase more years' so as to increase the pension payout to each retiree. I have asked for more specificity in this item, like how many years were purchased for each person. The regular teacher contract, which is the only contract component for these administrators that even addresses contributions to the ISTRF, mentions a 3% of salary payment each year that will be covered by the District. At that rate, these contributions would be for the purchase of 20 years or more - so this definitely needs clarification.

I also asked for the number of service years, leave days, and vacation days involved with each administrator at at what rate they were compensated.

On the topic of health insurance, I requested the exact cost of this year's premium, and for how many years each retiree would be receiving free health insurance.

And last but not least, I requested information regarding what board policy or action granted these retirement benefits, as I could not locate them in either the teacher contract or the administrator contract addendum.

That was last Friday, and so far, no additional information has been provided to me.

In contrast to the sweet deal retiring administrators got, the District website says :

An early incentive for retirement program has been approved for Decatur teachers who qualify. Teachers who are eligible and choose to retire and who are on the district's insurance plan will receive a one-time bonus of $15,000 contribution to their retirement plans. Those not on insurance would receive a one-time $20,000 contribution. Also included in the incentive is extension of their health insurance for a year.

The board also approved a proposal for retiring bus drivers to remain on the district's insurance plan for one year after retirement.

I believe these contributions would be sufficient to allow the retiring teacher to purchase the cost of one year's health insurance under the District's plan. Those of you closer to that situation, please let me know if I misunderstand this 'contribution to their retirement plans'. The bus driver who retires gets to pay full boat for the insurance, just like those who did not retire and as required by Federal COBRA laws anyway.

More on all of this later.

[edited to add: an IBJ report from April 21, 2010, says the ISTRP contributions are 3% from the employee, which is picked up by the District here, and 7% from the school district. So these TRF contributions would cover 6-8 years, roughly]

Thursday, July 15, 2010

The Utilities Sale Is a Mixed Bag

Anything as complex as the sale of Indianapolis' water and sewer utilities will garner mixed reactions. Not exactly a shocking statement. So, here is my take on several aspects of the deal as it is pending before the Indianapolis-Marion County City-County Council in the form of Prop 197 (see here for supporting documents and here for background documents). By the way, the Utility Transfer Oversight Committee of the Council is scheduled to meet again on July 19 - presumably in the Public Assembly Room, where they will again take public comments. That meeting will begin at 5:30 pm.

The basic outline of the deal is that the City of Indianapolis is transferring the water utility it owns to Citizens Energy for no cash, just the assumption of existing debt, and, it is selling the sewer utility it owns to Citizens Energy for $262.6 million in cash and the assumption of existing debt. Clearly, the sewer utility is the cash cow in this situation.

There have been some key players in crafting the sale, notably Chris Cotterill, the Mayor's Chief of Staff, and Dave Sherman, head of DPW, who I find to be genuinely interested in listening to ideas that can make this deal better in pretty much any aspect, except the core idea of the sale itself and the use of the proceeds for primarily infrastructure improvements. I am pleased to find this sort of openness in government, and I wish there were more folks like them. Now, that doesn't mean I think others who are involved give a hoot what the public thinks or how to improve the deal. Certainly there are some who are only looking to prod the deal in any direction that will send money to companies and outfits with which they are associated. And also certainly, there are those who are only motivated by the resulting humongous slush fund for Republican candidates for Mayor and Council in 2011.

Among the tinkered edges improved by public input, is the inclusion in the sales documents, of a prohibition on Citizens Energy ever selling these two utilities to a for-profit company. Additionally, a strong part of the deal is the first right of refusal if Citizens ever sells the water and sewer utility to a not-for-profit company or entity. Access to properties that is now enjoyed by the public, such as to Geist Reservoir, is to be preserved as well - although perhaps not to the full extent some members of the public would prefer.

Strong arguments that I have heard put forth, that have failed to materialize in the final documents, are water quality standards beyond baseline standards set by the EPA, any oversight on water quality or quantity by local authorities, or any instances of gross negligence under which the City would be able to take back these utilities without the consent of Citizens Energy. One I feel especially fervently about, and which will not see the dark of ink, is a dedication of the money to infrastructure improvements - making legal and binding, all the promises that are being made to the public in order to 'sell the sale'.

Now lets talk about the forbotten topic - should the City sell these utilities? Much is made of the nearly $1 billion in debt owed by the City for the water utility. Many believe that this utility is not managed and operated nearly as well as it should be. This is used to promote a sale. Also used to promote a sale, is some desire to remove 'partisan political governance'. Personally, I don't find any of these issues compelling. The debt is huge - but the ratepayers will still be on the hook for repaying it, regardless of who owns title to the utility. The sales agreement calls for Citizens Energy to honor the existing operating contract with Veolia that are now obligations of the City - so again no change. And lastly, one person's 'partisan political governance' is another person's 'accountability'. You say potato, I say potato. We move the water and sewer utility from services contracted by the City of Indianapolis and its elected officials, to services contracted by Citizens Energy with its self-perpetuating Board accountable to nobody else - not even shareholders.

Nobody talks about mismanagement or onerous debt encumbered by the sewer utility. By all accounts, the City has done a pretty fair, and lately a darned good, job of owning and running the wastewater system. It is under a consent decree with the EPA to make about $2.5 billion worth of improvements to keep sewage from overflowing into our rivers and streams every time it rains (Combined Sewer Overflow remediation). This represents a reduction of $1 billion from an earlier arrangement with the EPA. Everyone I know attributes this reduction in projected cost to the stewardship of Dave Sherman as head of DPW.

It is this reduction in projected cost for CSO remediation that gets garbled up in all the numbers - and I think this garbling is deliberate and unfortunate. The City's PR team wants to sell the public on the idea that Citizens Energy can pay the City $262.6 million in cash for the sewer utility and still keep rates lower than they would have been prior to the $1 billion reduction in projected cost of remediating the CSO problem. I think it is more fulsome to say that the $1 billion in reduction in the projected cost of remediating the CSO problem is fantastic - thank you Dave Sherman. But, the fact that Citizens Energy will have to float a 30 year bond to raise the cash to pay the City, will cause sewer rates to go up in order to repay the principle and interest on the bonds.

This is where the folks who support a simple transfer have a very good point. But, the water company 'sale' pretty much IS a simple transfer of that utility from the City to Citizens Energy. And all the poor management and onerous debt sound like supportive arguments making a case for the transfer. It is the sewer utility sale that is not a transfer, and without any real compelling arguments for the sale - except there is cash to be pulled out of the sewers that will result in higher than absolutely necessary rates for sewer customers. Make no mistake about it, the value of the sewer utility is not in any hard equity built into that system, but is totally contingent upon the fact that Dave Sherman brought projected rates lower than they would have otherwise gone, and the illusion that we somehow can spend that difference like it was equity.

So, now we're on to the topic of cash being obtained from the sewer utility. Just last month the City-County Council approved an increased PILOT from the sewer utility, most of which would be used to secure a 30 year bond to bring roughly $140 million immediately to the City for infrastructure improvements. I attended the Council committee hearing on this matter and something that Councillor Brian Mahern said still rings in my ears. He called it 'monetizing the PILOT payments'. Only, its 'monetizing money'. What they did was to basically take out a loan for $140 million, to spend over the next 2-4 years, and repay more than twice that amount when interest and fees are calculated -- when they could get the same $140 million from the PILOT payments in less than 10 years and have over 20 years of gravy after that. This leads me directly to the conclusion that a major purpose of generating this money is to fund the re-election campaign of Greg Ballard and Republican members of the Council. Otherwise, why be so impatient? Remember, the sewer ratepayers will be paying for 30 years to make infrastructure improvements that will last 10-15 years (and some say even fewer years than that). Why be impatient for the money?

This is the same situation that sewer ratepayers will face when Citizens Energy floats a 30 year bond for the $262.6 million sales price. That $262.6 million may be spent by the City on infrastructure improvements that last 10 -15 years -- but the rates will be elevated for 30 years to repay that money plus interest and fees.

Ratepayers will pay back at least twice the principle of both bonds, and easily more, when interest and fees are considered. So, $800 million to be paid by ratepayers over 30 years for street repairs costing $400 million that will last half that time. This money also eats up any rate savings that Dave Sherman's CSO remediation plan affords the community. Its not savings if you spend it. It is just an expense column adjustment.

On top of all this, there is no guarantee the money will be spent on infrastructure improvements. It is my understanding that the Mayor's office was willing to look at how to dedicate the proceeds of the PILOT and the sewer utility sale, but the Council blocked it. That's not good, in my book. If a Councillor is knee deep in 'selling the sale', then they have an obligation to ink down the promises being made - to protect the community from a bait and switch deal.

This deal is awash in politics - even as anti-politics is said to be a motive for selling the water and sewer utilities. This deal is clearly bad financing (monetizing money) - even as it is being touted as 'clever' financing. And, this deal will leave the sewer ratepayer with around $800,000,000 to pay off, long after the streets that do get repaved are crumbling once again.

I like very much the fact that at least some in City government have been honestly listening to the public. I'm not sure if I could be in favor if the deal was a straight transfer of the water utility only - but quite possibly. But, floating 30 year bonds for $400 million, to be spent on promised infrastructure improvements that will last half that time and leave the ratepayer on the hook for $800 million, strikes me as a generational ponzi scheme that is fiscally irresponsible.

Wednesday, July 14, 2010

Fox 59 Faceoff on Water / Sewer Utility Sale Making Quite a Splash

The debate between Council President, Ryan Vaughn, and Council Minority Leader, Joanne Sanders, shown on Fox 59's Faceoff on July 6, is making quite a splash in the blogosphere.

Here is the short video version:



Here is a link to the longer video, which is 14 minutes long. This link will also get you to a written position for both debaters.

The blogs are strongly siding with Joanne Sanders as the winner of this debate.

In "Ryan Vaughn Must Be Insane", the Bart Lies ! blogger makes a number of excellent points. One stands out, and that is the idea that selling the water company does not make the enormous $900 million debt go away - it only transfers it to Citizen's Energy, where ratepayers will be on the hook through Citizens, instead of through the City.

Jon Easter over at Indy Democrat, said that "Sanders whooped up on Vaughn who appeared to be out-of-touch with the prevailing opinion on the street".

Paul Ogden posted "Ryan Vaughn's Rough Week; Vaughn Loses Debates, Called "Insane" and a "Liberal Big Spender" by Members of His Own Party", wherein he brings up a number of issues, including "Vaughn has no answer - none- to the point that the Mayor's plan involves taking out a 30 year loan to pay for improvements that won't last 10 years".

Indy Student reiterates that Vaughn has a "clear conflict of interest", being an Associate with Barnes & Thornburg.

The folks over at Indy's Political Stock Exchange called it a "pummeling" of Vaughn.

Abdul, at the Indiana Barrister, who supports the deal, didn't have any comment on the debate specifically. But, he did let Think Again pen a rebuttal that focused on Vaughn's debate points. That was followed by a rebuttal of Think Twice's piece by Vaughn. The comment thread on this particular post has a good deal of vitality to it. The comments are not about the Fox 59 Faceoff debate, but are debate points on the sale of the water company itself.

If you are still looking at the water / sewer utility deal issues, Fox 59 has indeed spurred some very good public discussion.

Tuesday, July 13, 2010

What Will Become of the MSA Parking Lots?

Through a series of variances over the years, the two gravel parking lots on the site of the old Market Square Arena have been allowed to operate without the usually required paving. Well, the variance extensions are just about over - the current variance expires on August 6, 2010.

The approval letter reads in part:
This Approval shall be temporary, expiring August 6, 2010, at which time the parking lots shall be hardsurfaced and striped by the petitioner per the Central Business Districts Zoning Ordinance, or the petitioner shall cease parking facility operations.
The owner and petitioner are none other than the Capital Improvement Board, which is so flush with cash, that it just yesterday agreed to give the Pacers another $10 million per year for 3 years AND make at least $3.5 million in improvements to Conseco Fieldhouse.

In 2008, the CIB netted an income of $788,693.12 for those two lots.

Also in 2008, the Regional Center Zoning Ordinance was revised to prohibit parking lots in the Mile Square, which would include this site. So, even if the CIB wanted to pave the lot, it would have to file a variance to allow the lot itself. The CIB has not filed for any petition as of today.

You will recall that just last year the CIB claimed it couldn't get by without at least $43 million more per year, plus a one time infusion of another $43 million.

The State Legislature authorized an expansion of the Professional Sports Development Area, allowed the City-County Council to increase the innkeeper tax by 1% in 2009, and offered a $9 million a year loan for each of three years. In addition, they allowed the City-County Council the option of increasing the car rental tax by 2% and the admissions tax by 4% in 2013.

At the time, the Legislative Services Agency estimated that the expanded PSDA would provide the CIB with about $600,000 in 2010, predicted to grow to $6 million by 2012 as the new hotels and amenities in that area come on line. The increased innkeeper tax was estimated to give an additional $4 million per year. So, that amounts to a total infusion of $13.6 million in 2010, growing to about $16 million by 2011, and dropping back to $10 million in 2012 as the state loans dry up.

Of the $43 million the CIB claimed was bare bones, absolutely necessary to avoid bankruptcy and worse, there was provision for $15 million to the Pacers.

The new Pacers deal suggests that the CIB could actually get by on a whole lot less than they made out. (I know, imagine that !) Even though the CIB got roughly $13.6 million in new cash this year, they are able to give away a full $10 million to the Pacers, promise at least $3.5 million in Fieldhouse renovations, and give up on about $800,000 in revenue from the old MSA parking lots. Next year the new money should provide a cushion of a couple million dollars. But in 2012 the influx of new cash should drop back down, again eating up any cushion for CIB operations. That might suggest to some, that the CIB wasn't in nearly the dire situation they made out. If you can give it all away, maybe you didn't really need it to begin with.

I sure would like to hear what the Legislators, who ran quite a gauntlet just to come up with their CIB bailout plan last year, think about the CIB at this point in time. Wonder what the Councillors who voted for the CIB bailout think, too.

Alert Poster Notes - Decatur School Board Meets Tonight

Again, our ever alert posters caught an important event. The MSD Decatur School Board will be holding a regularly scheduled meeting at 7:00 pm tonight, in the Board Room of the Central Office. This is following an Executive Session.

The agenda, such as it is, is posted online here.

Of particular interest to me is item 6.03 "Tax Anticipation Warrant Resolutions". I was told that the transfer of $6.2 million from debt service to the rainy day fund (last month) and from the rainy day fund to operating expenses (also last month), was so that a tax anticipation warrant would not have to be issued. Hmmm....

Saturday, July 10, 2010

When Will Downtown Be Able To Stand on Its Own Two Feet?

Perusing new (to me) blogs and I tripped over some distressful news at Indy Tax Dollars. In his entry "A curious array...", blogger Fred McCarthy notes that Circle Centre Mall just might need financial incentives to retain the mall anchor stores.

Say what?

Taking quotes from an IBJ article by reporter, Cory Schouten ("Circle Centre vies to keep anchor stores"), McCarthy summarizes the situation that the City is looking to bail out yet another downtown endeavor thusly:

These little tidbits made us wonder whether the CIB is now "negotiating" for the city with regard to mall properties. We have the involved public official who doesn't know when the leases come up for renewal. We have no idea about potential costs to the taxpayer because "...Simon has not yet made a request..." We're flying blind because suggested recipients of municipal generosity pay rent "...not spelled out in publicly available documents." And, we don't know whether we might wind up subsidizing a store to compete with itself!


Why is "more money" always the answer rather than "alternative uses?" With tax dollar proposals for bikers' showers, adequate public transportation and subsidy of a retail mall, there must be a place for the word "Priority." Maybe we should have said "A Me First Array...'


Schouten reports that while the mall turned a $8.9 million profit on $23 million revenue last year, an increase in profit over the year before, the sales per square foot have dropped from $374 to $330.

The IBJ penned an editorial on June 26th that can be summarized by "its not just money, its civic pride". They say:
After all that effort and considerable investment on the part of the city and the 20 mostly local companies that have a stake in the mall, it would be na├»ve to expect the city to stand on the sidelines and let nature—in this case, retail sales—take its course.

I have to ask why "nature" isn't doing well enough here. From Schouten's report it seems that there is a still tidy 38% profit margin.

I agree with McCarthy - the act of setting priorities seem to be lacking in Indianapolis. I would add that there is also a driving need for a complete, holistic, look at downtown - how much it costs, what the real benefits are. Once we know for sure what is what, THEN we can intelligently discuss options for the use, or not, of taxpayer resources in a plan to once and for all get this money pit under control. Because right now, it is only about MORE and BIGGER bailouts.

Decatur Education Association Saw Freeze in New Contract

The new Decatur Education Association contract is now posted on the district website. It covers last school year and the next three. During those 4 years, the salary schedule is frozen at the 2008-2009 school year contract levels.

For those unfamiliar with how teachers are paid, there is a chart, which you will find beginning on page 31 of the contract. With each year of teaching, salary goes up. With the attainment of benchmark educational levels, salary goes up. These are called 'step increases' and are zealously regarded as different from 'raises'. Only when the entire schedule increase, does the DEA consider it a raise. This is very different from all other employees in other careers, who pretty uniformly consider any increase in take home pay to be a raise.

So, the step increases remain for all teachers up to 20 years of service and a Masters plus 60 hours of education toward a Doctorate. Salaries range from $37,343 to $77,673. This, of course, does not include additional money awarded for extracurricular activity - supervision of clubs or coaching, for instance. A teacher moving from their first to second year of teaching would see an increase in pay of $1680, while a 19 year teacher transitioning into their 20th year would see an increase of $1120. Beyond 20 years, there is no change due to years of service. A first year teacher who earns a Masters Degree, gains $1240 a year. A 20 year or older teacher who earns a Masters Degree, gains $10,643. The schedule is in the contract for closer examination, if you are interested; again, beginning on page 31.

The district covers 86% of the cost of health and hospital insurance (page 8) for teachers. The new contract has some changes to that for the coming years. There are three levels of insurance plans offered - I, II, and III; with the Plan I level being the most expensive. Beginning with the 2010-2011 school year, a teacher may opt for a Plan I level, but the district will only pay up to 86% of the cost of a Plan II level. In addition, all teacher insurance enrollees will receive a payback of $30 per month (if they get the single plan), $50 per month (if they get the employee/spouse or employee/child plan), or $70 per month (if they get the family plan).

I did some calculations, using the insurance rates from the 2009-2010 school year. If a teacher enrolls in a Plan I level, it will cost $36.48 more per year for the single plan, $237.60 more for the employee/child plan, $285.12 more for the employee/spouse plan, and $176.40 more for the family plan over the costs for this past school year. However, with the additional paybacks, those enrolled in any of the Plan II or Plan III levels will see their insurances costs go down. For those teachers, a single plan will cost $360 less per year, employee/child or employee/spouse plan will cost $600 less, and a family plan will cost $840 less than this past year.

I did a very ballpark calculation, and it looks like roughly -- if more than 3 times as many teachers are enrolled in Plan I level as in the other two levels, the district saves money -- if fewer than 3 times as many teachers are enrolled in Plan I level as in the other two levels, the district loses money. I don't have the figures to know for sure, which case applies.

Other monetary impact items are those related to district contributions to a variety of retirement funds on behalf of the teacher (pages 6-7 and 10-11). Unless I missed something, these contributions add up to 8% of salary in the old contract and for the 2009-2010 school year under the new contract. That drops to 6.5% of salary for the 2010-2011 and 2011-2012 school year. For the 2012-2013 school year, it rises back to the 8% of salary level.

Along with these retirement fund contributions, the vesting period (the length of time it takes for a teacher to actually 'own' the money in the fund) has been shortened for the 401(a) fund (page 10). In the past, after 10 years a teacher was vested to the tune of 33.3%, after 15 years they were vested to 66.7%, and after 20 years they were vested in 100% of the fund balance. The new contract changes the vesting period to 50% after 5 years and 100% after 10 years of employment. The vesting period for the remaining retirement funds is unchanged from the old contract.

There are some other changes to committees and such, but the monetary changes are represented above.

Friday, July 9, 2010

The City Needs To Learn To Share

With the advent of the age of the tax caps, Indianapolis needs to learn to share property tax proceeds and not scarf as much of the pie as they can legally get away with.

As property tax caps are now in full effect and a ballot question in November could make them constitutional in Indiana, legal loopholes are being mined by the City of Indianapolis to allow the City to take a tad more than they are due.

The one power that the City of Indianapolis has that no other taxing unit in Marion County has is the right to grant abatements. Which it seems to do with abandon lately. Just look at the Jeff Swiatek's article in yesterday's Star business section, where he reports an abatement for CSO Architects, Harlan Bakeries, Greatbatch Medical, and Sharp's Academy - all in one fell swoop.

Now we are all lectured to remember that an abatement is a forgiveness of taxes in the future for businesses or expansions of businesses that do not exist today - taxes that we are supposed to believe would never have been generated because these businesses would have taken all their marbles and gone to another County to play, had Indianapolis not stepped up to sweeten the deal with a forgiveness of property taxes. The City forgives not only the money that would be owed to Indianapolis, but also the taxes that would be owed to our schools, the library, our township, etc. I'm actually not trying to build a case against abatements; not at the moment anyway.

One good aspect of the abatement process in Indianapolis, is the routine inclusion of 'clawback' clauses. If the business doesn't invest the full amount of money promised, or create or retain the full number of jobs promised, the City can get the amount of the forgiven taxes back.

The 25th floor, under Mayor Ballard, is very very clever when it comes to finding and mining legal loopholes. I don't want to discourage that sort of thing entirely, since the State wields a heavy hand when telling all cities and towns how to go about their business. Finding a good loophole from time to time could be beneficial.

But, in today's property tax climate, we should all be concerned that the tax revenues are meted out proportionately and therefore fairly.

The Ballard Administration found a loophole in the case of 450 E. Market Street (see "Ludicrous or Clever - You Decide" and "MDC Public Hearing On The TM Miller Enterprises Abatement" and "MDC to Hold Public Hearing on Abatement for 450 E. Market") and were set to abate about $6.7 million in property taxes, get paid that very same amount, and use the money to buy an overpriced garage. In short, the City was planning on taking the tax money that would have gone to the schools and library and township and health & hospitals and keep it for its own. On top of it all, it was going to waste that money on buying a garage that it didn't really need. This deal, even though it passed all MDC and Council votes, has not yet been inked down - and that is a very good thing.

The Ballard Administration found another loophole with the $5 million clawback of abated taxes in the case of Navistar. (See "Abatements - Scary Loopholes Need Closing") And they kept it all -- even though the property tax distribution formula would suggest they 'deserved' only about 20% of it. They kept all the money. Then, they wasted that money by sending it on to the Indianapolis Economic Development, Inc. and the Indianapolis Convention and Visitors Association; two not-for-profits living largely off government largess while paying handsome salaries for its operators.

Now the Ballard Administration has found an even bigger loophole whereby proper apportionment of property taxes is set aside to the benefit of the City over the rest of the taxing units. This one makes the $6.7 million and $5 million deals look like chump change. And this is the loophole on the carve out of the sewer utility from the property tax system.

Indiana Code 36-3-2-10, authorizes Payments In Lieu of Taxes (PILOT) from otherwise property tax free parcels in Indianapolis. Indiana Code 36-3-2-10(d)(4), lists "wastewater treatment facility", which at the time, was owned entirely by the City of Indianapolis.

The City-County Council recently increased the PILOT payments from the sewer utility and authorized the money be used to pay off 30 year bonds for infrastructure repairs. (See "City-County Council Should Vote Down Prop 132") The plan is to sell the sewer utility for another $260 million in cash to Citizens Energy. The sales agreement stipulates that Citizens Energy will not attempt to get the Legislature to change the sewer utility from a tax-free, PILOT paying, enterprise into a property tax paying enterprise. Now, this tax-free status is very different from the gas utility and the water utility - both of which currently pay and which will continue to pay property taxes after this sale goes through.

I have asked a couple of folks in City government this question: Are the PILOT payments from the sewer utility more than, less than, or equal to, the amount the utility would pay if it owed property taxes? I have not been able to get an answer. The law does not allow PILOT payments to be more than the utility would pay in property taxes - so let's just toss that possibility out.

Let's run through the remaining two possibilities.

If the PILOT payments are equal to the amount the utility would pay if it owed property taxes, then the City is actually keeping all of roughly $25 million per year for 30 years, when all it would be due is 20% of that. That means that roughly $20 million per year will not go to schools and the library and health & hospitals and the townships. And, over 30 years that would add up to $600 million.

If the PILOT payments are less than the amount the utility would pay if it owed property taxes, then the City is forgiving 80% of the taxes Citizens would otherwise have to pay and shafting the schools and the library and health & hospitals and the townships.

Why the Council voted to increase the PILOT payment from the sewer utility BEFORE getting a clear okay from the State Legislature that it will not rescind the special tax free status of that utility in the future, is beyond me. If the Legislature were to do that, then Indianapolis taxpayers could be on the hook for repaying those infrastructure bonds - and not just as ratepayers, but also as taxpayers. But, it all depends upon the answer to my question: Are the PILOT payments from the sewer utility more than, less than, or equal to, the amount the utility would pay if it owed property taxes?

In any case, I finally come to the final point of this post. With property tax caps fully implemented, the City should refrain from pulling any of the money owed to the other taxing units to use for their own purposes. And, if the City will not do it of its own accord, the State Legislature should step in and require this simple act of fairness.

Tuesday, July 6, 2010

Now We Know Why the Decatur School District Wouldn't Turn Over Documents

WTHR reporter, Rich Van Wyk, posted a story today on the perks handed out through early retirements of Administrators from MSD Decatur Township.

In the report Superintendent Don Stinson says that the early retirement perks include paid health care benefits, and a years salary as a parting gifts. The salaries alone add up to $750,000. This is in addition to their pension benefits from the Teachers Pension Fund; payments toward which have been paid entirely by the overly generous, rubber-stamping school board.

I requested the severance packages back on June 9 and have been stonewalled since then. It is obvious that the cookie jar contents that would be exposed by these public documents were too hot to release. They remain hidden in the District files regardless of the public's legal right to them. Maybe now that Stinson thinks he has laid the proper spin control through Van Wyk's report, maybe now they will release the documents so that the public can see for themselves exactly how many years of health insurance payments are involved and exactly how much of a full year's salary each administrator gets to pocket at taxpayer expense. For now we are left with the rumor that it is a full decade, which would easily add up to over $300,000 per administrator.

In addition, talk is that at least a couple of these 'early retirees' will be back under contract - milking the pension system and continuing to milk Decatur Taxpayers.

I must add that there has been a loss of 34 teaching positions, not the reported 11. There were 23 teachers who decided to retire; Stinson's spin not withstanding. This is the equivalent of over one entire elementary school - which was always going to be the case ever since Stinson decided to move the kindergarten out of the moldy ECC and send all the the Lynwood elementary students to beefed-up class sizes in other schools throughout the rest of the district.

I will post as soon as I get the public documents on the retirement packages for each of the administrators.

Two Council Committees Meet Tonight

The Indianapolis-Marion County City-County Council has two committees with meetings tonight, both scheduled for room 260 of the City-County Building.

First, at 5:30 pm, the Rules Committee has two items on its agenda - Prop 183 which would put the authority of the Board of Waterworks into the Board of Public Works (and which is likely a moot point since the BofW already supported the sale of the water company to Citizens Energy) -- and -- Prop 196, which is a Council resolution sponsored by Councillor Evans to limit contracts and attendance at conferences in Arizona until that state suspends or repeals its new immigration law.

Then at 6:00 pm, the newly formed Utility Transfer Oversight Committee will be meeting to discuss Prop 197, which authorizes the sale of the sewer and water utilities to Citizens Energy. The City and Council have posted a bunch of information regarding Prop 197:

Exhibit A (19 pages) -- roughly, creates a new Authority to oversee the sewer utility, which would be controlled by Citizens Energy upon the sale of that utility. Interestingly enough, and importantly enough, this document seeks to bar the future sale of the sewer utility to a for-profit entity. This is what the paragraph under "Purpose" says:

In addition to the purposes set forth above, this Agreement provides for (a) the provision of wastewater collection and treatment services through the formation of the Authority as a separate legal entity organized as a nonprofit corporation, (b) the transfer to the Authority of the System as specified in the Purchase Agreement, (c) the delegation and/or transfer to, and vesting in, the Authority of all powers that are necessary, useful or appropriate, except the taxing power and taxing authority of the City and the District, (i) for the acquisition, ownership and operation of the System and/or (ii) for the Authority to have jurisdiction over disposal of sewage, industrial wastes or other wastes and qualifying as a publicly owned pretreatment works within the meaning of the Clean Water Act, in each case, except the taxing power and taxing authority of the City and the District, and (d) the exercise by the Authority of the powers delegated and/or transferred to it herein on behalf of the City, the District and Citizens for the benefit of the inhabitants of the City and the customers of the System in a manner that (x) protects the City and its inhabitants against further sale or disposition of the System, and forever from private ownership, control or partisan political governance; and (y) is coordinated with other utility properties that may be held, owned and/or operated by the Citizens or its affiliates (including the Authority) and (z) is irrevocable.

Exhibit B (84 pages) entitled "Asset Purchase Agreement" -- roughly, is the sales agreement for the sewer utility. A quick perusal finds that the agreement would
-- prohibit the future sale of the sewer utility to a for-profit entity and as an additional safeguard, a grant of the right of first refusal for repurchase of this utility by the City-County (two thumbs up !!)
-- allow NO MORE THAN a 10.75% annual rate hike through 2013 - which through reference much later in the document appears to be the rate hike request now under review by the Indiana Utility Regulatory Commission
-- an agreement that Citizens Energy will not seek to have the sewer utility placed under the property tax system and thereby jeopardize the PILOT just passed by the Council that I discussed in "City-County Council Should Vote Down Prop 132" and which I will bring up again in another post
-- all for the assumption of debt and a cash payment of $262,600,000

Exhibit C (78 pages) also titled "Asset Purchase Agreement" -- roughly, is the sales agreement for the water utility
-- prohibit the future sale of "Geist Reservoir, Morse Reservoir, the Canal,the South Well Fields, and any other wells or current water sources to the extent such wells or water sources are critical to providing water to the trust beneficiaries" (excellent provision)
--prohibit the future sale of the sewer utility to a for-profit entity and as an additional safeguard, a grant of the right of first refusal for repurchase of this utility by the City-County (two more thumbs up !!)
-- a rate freeze for at least 2 years (until right AFTER the next Mayoral race - coincidence??)
-- the sale is contingent upon the results of the rate hike now before the IURC being "acceptable" (as I understand it from another meeting, it must be acceptable to Citizens Energy or they will not go through with the purchase) and the sale shall not be consummated prior to 6 months after the new rates take affect
-- all for the assumption of debt alone

Supporting document A (7 pages) -- titled "Articles of Incorporation of CWA Authority, Inc.", which is the authority created to assume the assets of the sewer utility and to be run by Citizens Energy

Supporting document B (119 pages) -- the Consent Decree for the remediation of the CSO problem, dated 9-20-06

Supporting document C (75 pages) -- sales disclosure for the sewer utility

Supporting document D (27 pages) -- amendment to the Consent Decree dated June 3, 2010

Supporting document E (1 page) -- a map of the excluded assets of the Belmont treatment plant

Supporting document F (68 pages) -- sales disclosure for the water utility

Supporting document G (31 pages) -- appears to be the 2010 Capital Improvement Plan for the water utility

Supporting document H (1 page) -- map titled "Current System Configuration" showing the location of various features of the water utility with Council Districts overlaid. The south wellfield seems to have been omitted on the map to these eyes.

Supporting document I (1 page) -- flow chart of Veolia's proposed water utility capital improvements, dated 10-17-2008

WHEW !!!!

The Utility Transfer committee members are: Republicans Ryan Vaughn, Marilyn Pfisterer, Bob Lutz, Barbara Malone, Angel Rivera, and Mikes Speedy, and Democrats Joanne Sanders, Paul Bateman, Maggie Lewis, Brian Mahern, and Angela Mansfield.

This committee is set to meet again on July 19 at 5:30 pm in room 260 of the City-County Building.

Sunday, July 4, 2010

Happy Independence Day !

As we celebrate the birth of our nation some 234 years ago, we should remember that it is WE THE PEOPLE who are indeed the government. With that comes a big responsibility to participate. There is an overabundance of participation by those who want only personal gain - the lobbyists and their clients come to mind immediately to mind. What we need constantly in America is the participation of those who want to make this system work for all of the people.

Much thanks to all of you who serve in the military, those who serve on juries, those who work the elections, those who vote, and those who call and write their elected representatives about issues.

Have a safe and fun 4th of July. I hope your picnics and barbecues and get-togethers are fabulous.

IN CONGRESS, July 4, 1776.

The unanimous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.


We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.--Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.


He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies
:For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments
:For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.


In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.


Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.


We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.