“Retired” Ann Arbor City Employees Earning $100K+ While Collecting Taxpayer Funded Healthcare/Pension Benefits
Detroit Mayor Dave Bing, in his State of the City address, verbally slapped around Governor Snyder (who was in attendance) a bit about the proposed state budget which would, Bing said, do the “most harm to Detroit.” A few minutes later, Mayor Bing stressed that he is “…committed to change the way we deal with our labor negotiations. A culture that was rusted in place over a period of decades is now showing signs of progress and cooperation…The bottom line is that our current pension obligations are unsustainable and it is in no one’s best interest to allow that to continue.”
In Ann Arbor, according to the retirement plan actuarial reports, on June 30, 2005 the city had an unfunded retiree healthcare liability of $121,568,000 million. Its pension plan was overfunded by $14.322 million (plan’s actuary said the assets were $14.322 million more than needed to make future pension payments). As of June 30, 2010, Ann Arbor had a retiree healthcare debt of $169,637,000 million and a pension debt of $45,496,000 million. In a single year, 2008-2009, the city’s retiree pension fund lost 27 percent of its assets ($80.5 million) due to investment losses. The same year, in order to keep the pension fund 93 percent funded, the city was required to increase its contributions to the pension fund by 100 percent, from $7 million to $14 million (money which comes directly from the same pool of revenue that funds citizen services). As of 2010, Ann Arbor taxpayers were supporting 834 retirees, and in 2010 the system was projected to pay out $26.2 million to those individuals, or an average pension of about $31,000 per employee. Health care costs are separate, and that fund is 87 percent underfunded.
As the chart below shows, the cost of benefits for city employees has risen sharply since Roger Fraser became City Administrator in 2002.
In just eight years, Fraser has plunged Ann Arbor almost half a billion dollars into debt, when debt for capital projects and the unfunded pension liabilities are combined. Under Fraser’s administration, the city’s debt load has quadrupled and debt payments have skyrocketed, as well. It’s not the total amount of debt that’s the problem. Ann Arbor could take on loads more debt, legally, as Third Ward Council member Christopher Talyor pointed out in an error-filled email “explaining” the city’s debt—a move that earned him an A2Politico Weekly Whopper award. It’s that the pension/debt payments must be made from the city’s operating funds. Fraser, with Council’s blessing, has taken the city into more debt than the city’s operating fund can accommodate. As a result, citizen services have been cut and backdoor tax hikes have been levied in the form of fee hikes for water, sewer, solid waste, etc….
While Council has played Twister to try to close short-term budget gaps, John Hieftje, City Council members, and City Administrator Roger Fraser have done next to nothing to curb the increasing pension gap. Well, they did something. On January 3, 2011, Council voted to change the language of the pension ordinance, with Fraser’s blessing, including a change that made cost of living (COLA) increases to city pensions mandatory. Prior to January 3, 2011 cost of living increases were discretionary.
When he ran for re-election, Fifth Ward Council member Carsten Hohnke told voters this summer the city’s underfunded pension was one of his “main” concerns. Six months later, Hohnke seems to to have stopped fretting; he hasn’t sponsored a single resolution to address the pension problems. John Hieftje did Hohnke one better while running for office. Hieftje assured voters he “had a plan” to address the pension woes. Now, six months later, Hieftje has not uttered a single word in public about his “plan.”
Ann Arbor’s future retiree health care obligation is 87 percent unfunded. If that sounds innocuous, think again: taxpayers are responsible for coughing up the money to pay that obligation. Even city’s that go under, financially, find themselves responsible for paying for city employee pensions and health care benefits. This future employee retiree mess is one of the most serious financial problems facing Ann Arbor. It’s a system that allows retirees to vest after just five years, and to collect healthcare benefits and full pensions from the City while working full-time elsewhere. In Ann Arbor, employees can retire with benefits at 43, and many do retire in their early 50s.
These former City of Ann Arbor employees demonstrate the serious flaws in the pension system, flaws that were identified by a Blue Ribbon Panel appointed by John Hieftje in 2005 to produce a report on the pension system. Hieftje never acted on the report. As a result, all of the following “retired” Ann Arbor city employees are collecting both pension and healthcare benefits while working full-time elsewhere. Two of the “retirees” are double-dipping (collecting money from the city as contractors, salaries from their new employers, as well as a pension and healthcare benefits funded by Ann Arbor taxpayers):
Ron Olson served for 20 years as associate city administrator and superintendent of the Ann Arbor parks and recreation department, as well as filling in as interim city administrator on two occasions. He applied for the job of City Administrator in 2002, but the job was awarded to Roger Fraser. Olson became chief of the Parks and Recreation Division for the State of Michigan Department of Natural Resources in January 2005. He is responsible for operations, budgeting, planning and strategic management of the division that includes harbors, state parks, recreation areas, trails and boating access sites. Ron Olson earns a six-figure salary from the State of Michigan, and the City of Ann Arbor pays about $65,000 per year for his retiree healthcare benefits and pension, according to the Fiscal 2010-2011 information available from the City of Ann Arbor.
In his almost 20-year career with the Ann Arbor Police Department, Greg O’Dell, climbed the chain of command from patrol officer to deputy chief. He “retired” in January of 2008, and applied to receive his pension and healthcare benefits. On February 7, 2008 O’Dell was hired as the executive director of public safety at Eastern Michigan University, where he continues to work full-time earning a six-figure salary, while collecting pension and healthcare benefits worth almost $65,000 per year from the City of Ann Arbor, according to fiscal 2010-2011 information available.
Adrian Iraola worked as a project manager for the Downtown Development Authority, and the City of Ann Arbor for 25 years. He “retired” in 2005 and went to work at Washtenaw Engineering. In 2008, the DDA employed Iraola to oversee the demolition of the old YMCA building. In 2009, the DDA was charged by the City of Ann Arbor to build an underground parking garage. When the DDA began the underground parking garage project, Iraola left Washtenaw Engineering and launched his own company, Park Avenue Construction Consultants. It was Iraola’s company that was employed to oversee the Fifth Avenue parking garage project. Iraola is a senior project manager in charge of the underground parking garage project. The City of Ann Arbor charges Iraola’s retiree healthcare costs to the DDA. Not only does Adrian Iraola’s new company earn money from his former city employer, he is one of two double-dippers on this list. While he is being paid as a consultant on the underground parking garage project, Iraola is also collecting a pension and healthcare benefits from Ann Arbor taxpayers worth over $60,000 per year.
Michael Bergren was the City of Ann Arbor’s Assistant Field Operations Manager, the city’s “lighting expert.” He retired from the City in September of 2009, and is now working for Park Avenue Construction Consultants. Like Adrian Iraola, Bergren is a double-dipper. While he is being paid as a consultant on the Fifth Avenue underground parking garage project, Bergren is also collecting a pension and healthcare benefits from Ann Arbor taxpayers worth over $60,000 per year.
Jayne Miller Miller, 52, worked for the City of Ann Arbor for almost 22 years. At the end of her career, she was the community services area administrator for the City of Ann Arbor, which included Parks and Recreation Services, the Office of Community Development, Planning and Development Services, and the Open Space and Parkland Preservation Program. Miller “retired” from the City of Ann Arbor in February of 2010. On March 1, 2010, Miller began retirement as the newly hired head of the Huron-Clinton Metroparks. Miller resigned from that post abruptly in September of 2010. In October of 2010, Miller was hired by the Minneapolis Park and Recreation Board as the superintendent of that city’s park system. While she is earning a six-figure salary from the City of Minneapolis, Miller is also collecting a pension and healthcare benefits from Ann Arbor taxpayers worth over $65,000 per year.
Ann Arbor’s City Administrator Roger Fraser will be eligible for a pension and healthcare package worth over $65,000 when he “retires” from the City of Ann Arbor after nine years of service. He will be “retiring” into a job with the state of Michigan that pays a six-figure salary. Roger Fraser sits of the Board of Trustees of the Employee’s Pension System, as does the city’s CFO Tom Crawford. The 2005 Mayor’s Blue Ribbon Panel report recommended removing Fraser from the Board of Trustees, as in his position as city administrator he would have little impetus to reign in the cost of pensions or make changes to the benefits offered. In fact, Fraser recommended to Council on January 2011 that pension COLA raises be made mandatory, and he will benefit directly from that recommendation.
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