This article is one of a series of editorial articles that express personal opinions and views. They are written with no pretensions to be error free. I will gladly correct substantial errors of fact. My opinions can change, depending upon my awareness of changes in factual information. It is my intent to remain focussed on specific public issues, regarding the personalities involved. For all I know, all the characters are saints, concerning their private lives and other public business...
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Today, I intend to address the Schoolcraft County Board of Commissioners regarding the financing of the commissioners' MERS based retirement benefits.
The commissioners' benefits are paid for, primarily, by other county employees, and all Schoolcraft County taxpayers are forced to subsidize the balance of the commissioners premiums, over a period of 30 years from the start date of a select few's retirement. I was not aware of, and did not understand sufficient details of the retirement plan the Board voted into existence, a week before Commissioner Lauzon was recalled, in January 1998. Now, with a much more clear understanding of what appears, to me, to be fraud, I request a public accounting.
My present understanding, right or wrong, leads me to the conclusion that currently retired commissioners are receiving benefits they are not due, assuming they have no legal right to collect benefits that have not been paid for, and that, subsequently, come out of the benefit pot paid for by the wage-benefits contracts of other county employees. Those benefits are provided to commissioners, virtually "free", as a consequence of their own predatory Board decisions and those of Schoolcraft County administrative personnel. Those administrative personnel are responsible for the administration and financial integrity of the Schoolcraft County MERS plan, created for the benefit of all county employees, with principles of fiduciary responsibility and equity as guiding standards.
I have no reason to believe that any part of the commissioners plan was accidental, and I do not believe it would have been effective without the collaboration of certain courthouse officials that hoped to benefit also, in the same way; therefore, they remained silent.
Given the historic nature of Schoolcraft County politics, rife with nepotism, cronyism, deceit, political ambition and retribution, in a poor community that derives a substantial percentage of its better paying jobs from public service positions, few folks are willing to put their jobs and futures on the line to reign in local government parasites, and incompetents.
I feel confident in requesting, of the sitting County Board, a lucid accounting of what I conclude to be the current unearned MERS retirement income payments to a select group of ex-county commissioners. I also want to know who else bought into the apparent scam, with the intent to profit by claiming future unjustified, and unearned retirement payments from a retirement plan financed by the contractual premium payments benefits package of other county employees.
I do not care to listen to some apologist explanation that thrives in the intellectually and morally deprived environment of Schoolcraft County administration. I know that the Schoolcraft County MERS plan is 100% funded by the county, and, as a consequence, whenever the degree of equity in the fund drops below a certain point, MERS will inform Schoolcraft County to increase its premium. That would make up for the effects of paying benefits to those commissioners that paid nothing. That would make up for the grossly under funded premium balance, of four? commissioners, paid with county tax revenues, amortized over a thirty year period. The only saving grace of the process is, assuming the county is not broke, one can assume tax revenue, better spent elsewhere, will be used to keep the county MERS plan liquid, at taxpayer expense.
I understand the sham of buying discounted "generic retirement time", or prior time working for the county, with tax revenues, amortized over a 30 year period, at an 8% interest rate, that pays, with tax revenues, nothing more than a fraction of the premium needed to pay back other county employees equity from which the retired commissioners' draw their benefits. A two bit actuary can see through that.
I also know that I do not know everything, but if it looks like a scam, works like a scam, pays like a scam, and victimizes like a scam, then it is likely to be a scam.
The retirement plan profiteering is elegant in its simplicity, once you understand the concepts, and basic arithmetic. I make no claims of accuracy, interest inclusion, and amortization schedules. I provide general representative numbers, along with a simple explanation, for those that care about such things. I will use example figures that might represent Commissioner X's county retirement investment, and the subsequent costs to the county MERS plan and taxpayers.
If, over the last 6 months, retired Commissioner X was drawing $660 per month, from the Schoolcraft County MERS plan, then he would have collected $660 x 6 = $3960. If, over the 12 months prior to the last 6 months, retired Commissioner X was drawing $625 per month, then he would have collected $625 x 12 = $7500. Therefore, for the last 18 months, retired Commissioner X would have collected a total of $3960 + $7500 = $11,460 collected in benefits from the MERS plan.
If, for the same 18 months period of time, retired Commissioner X had paid a total of $2,300 as a one time lump sum for his total "share" of all premiums due, and, at the same time, Schoolcraft County paid $85 per month as its share of the premiums, based on a 30 year amortized rate with 8% interest, then the county's total payment to MERS, along with the commissioner's payment, would be 18 x $85 = $1530 + $2300 = $3830 total payed into the MERS plan.
For the first 18 months of retirement, retired Commissioner X collected $11,460 - $3830 = $7,630. With an initial cost of $2,300 to Commissioner X, he will collect $660 per month, or more, for the rest of his life, from a MERS plan that must be paid for, in full, by every other county employee and taxpayer. That is a free MERS retirement income for Commissioner X, and implies the same for Commissioners Y, and Z and whomever else.
For those that wish to pick nits, concerning my contention that the retirement is "free" to the retired commissioners, consider the following. In the first 4 months of the retirement period, Commissioner X receives a "cashback" rebate, in the form of his first 4 retirement checks, that reimburses him for his initial lump sum cost of $2,300. He then receives the rest of his retirement checks, free of any other prior or future monetary obligation, for the rest of his life. In the real world, that's free.
Why is that so? Why and how did the commissioners vote themselves into an existing Schoolcraft County MERS plan that denies similar benefits to all other county employees? What legislation, county policy, or contract option, sanctioned the purchase, by part time county employees, of underpriced/ discounted "generic time", with county tax revenues? What MERS equity exists when some part time county employees get free retirement benefits, funded by the benefits package of full time county employees? What options exist for those county employees, still paying into the county's MERS plan, that wish to purchase "generic time"; do they get the same options to pay discounted rates, with county funds and credit? What impact has the payment of unfunded benefits to Commissioner X, Y, and Z had on the county's MERS plan, and its costs to full time employees, Schoolcraft County, and county taxpayers?
If the MERS retirement plan is part of a county employees' negotiated wage and benefit package, then why do certain retired commissioners, or soon to be retired commissioners, get to collect the equity in the county MERS plan created by all county employees that pay into the system in the manner for which it is designed? What value do all the other county employees get, or county government, other than higher "buy in" and premium rates and artificially high contract negotiating costs?
Why did it take from 1997 to 2004, for some one to question an apparent Schoolcraft County ripoff?
It's damage control time, again, boys and girls.
I attended the Schoolcraft County Board of Commissioners meeting, this evening, and read three paragraphs from the above, and then stated that the background documentation was available to anyone. No one but Chairman Frennette chose to speak of the matter, and he chose to disavow any knowledge of what I spoke of. I then stated that I hoped the public would remember his denial.
SCHOOLCRAFT COUNTY BOARD OF COMMISSIONERS The following is an excerpt from the minutes of a duly noticed meeting of the Schoolcraft County Board of Commissioners held on Tuesday, July 17, 2001: "... Under new business, it was moved by Commissioner Lindsley B. Frenette and was seconded by Commissioner Oliver H. Sholander that all those persons electing to purchase Generic Service Credit (additional years toward retirement service not earned while working as an employee of Schoolcraft County) are required to pay the Municipal Employees' Retirement System for One Hundred Percent (100%) of the actuarial cost of such credited service. The roll was called as follows: Chairperson Ernest S. Hoholik voted yes. Vice-Chairperson Keith P. Aldrich voted yes. Commissioner Lindsley B. Frenette voted yes. Commissioner Oliver H. Sholander voted yes. Commissioner Douglas W. Erickson voted no. The motion carried....." I, Sigrid I. Doyle, County Clerk and Clerk of the Schoolcraft County Board of Commissioners, do hereby certify that the above is a true copy of the minutes adopted by the Board. Dated: October 23, 2003 Sigrid I. Doyle, Clerk Schoolcraft County Board of Commissioners Schoolcraft County, Michigan [SEAL]The above does not make Chairman Frennette a liar, but it does indicate that it is likely that if he voted to change the county employee purchase cost of generic time to 100%, then he knew it was something else, prior to his vote.
The wording of the approved motion still allows those in the know to request the purchase of discounted prior time, working for the county. "Free" retirement years, based on a 3% or 5% cash payment, with the rest paid by the county, should be available for a "select" few, based on past policy that, to the best of my knowledge, is still in effect. I am unaware of any County Board action to change the policy.
I noted Commissioner Erickson's cynical and humorous "no" vote. As the last commissioner to vote, on a motion that had already passed with a majority, he sent a message to the other County Board members, and other county employees, that, as far as Schoolcraft County policy was concerned, if part time county employee commissioners could rip off the counties MERS plan, then all county employees should have equal opportunity to do the same.
I have learned to appreciate Commissioner Erickson's integrity and sharp wit, and I appreciate his efforts to expose the fraud and waste that others choose to ignore. I wish him well.
For a different point of view, residents of Schoolcraft County can inquire of Commissioner Aldrich, concerning details of his MERS retirement plan. He knows a good deal when he sees one. I suspect that his huddle with the County Clerk, Sigrid Doyle, after my controlled rant, this evening, indicates an appropriate degree of concern that others might understand the details and implications of the "good deal" that he chose not to share.
The first damage control rumors are surfacing. A senior Schoolcraft Courthouse administration official has been paraphrased "It's all ancient history. There is nothing to be gained by turning over rocks."
Assuming such a view has been expressed, by someone at the heart of the matter, I will express my views.
If a scam costs County funds, it should be stopped.
No one is entitled to profit by fraud because the victims were, or are, ignorant of the act and the manner achieved.
Preventing other Schoolcraft County employees from collecting free retirement benefits, paid completely by tax revenues, after a small speculative cash investment, does not sanction the free retirement of those that closed the window of opportunity for others. Schoolcraft County Commissioners created free lunches, and then denied everyone else the opportunity to eat, while enjoying theirs.
No one should continue to profit by apparent fraud, because those that help to commit it might be hurt by the consequences of public knowledge regarding their complicity.
Economically unsound and contrived entitlements were created, used, and then disavowed, while those that disavowed them continue, or attempt, to draw benefits from the consequences of county fiscal policy known to be predatory.
If the fictitious Commissioner X lives 5 years from the start of drawing retirement, his total drawn will be ($625 x 12) + (660 x 48) = $7500 + $31,680 = $39,180, not counting any 5% annual benefit increase.
Given Schoolcraft County tax paid amortized premium payments, to the county MERS plan, of $85 per month, for 30 years, the total paid back into the MERS plan, is $85 x 360 = $30,600
So, if Commissioner X dies in less than 5 year, before drawing more than $30,600, the only cost to the county taxpayers will be the approximately 95% of his full premium payments, paid over a 30 year period, billed to Schoolcraft County. The other 5%, paid in a lump sum by Commissioner X, was paid back to him with his first four retirement checks. If Commissioner X draws over $30,600, not to worry! The County MERS plan, and or tax revenues will pay for it.
No matter how I slice it, from my perspective, the system of checks and balances, regarding local government spending, was circumvented and manipulated to provide free retirement to a select few part time Schoolcraft County government employees.
Call it whatever you wish, and do nothing; it is still a ripoff. I turned over the rock and found, again, that some public saints are private sinners, with public money.
The inquiry letter, that follows, might not make a lie of Schoolcraft County Board of Commissioners Chairman Frennette's 06/15/04 statement that he knows nothing about the purchase of retirement time, with county revenues, at a fraction of the actual cost. It does indicate that he wanted to purchase county employment credit, at less than the 100% cost he voted for generic employment credit, on July 17, 2001. For others, that receive what Mr. Frennette sought, that cost was ~5% of what most other Schoolcraft County employees had to pay.
"Oh, what a tangled web we weave,
When first we practice to deceive!
But, when you've practiced for a bit,
You'll find you're getting good at it."
With years of practice, some never become accomplished liars.
County of Schoolcraft Chairperson, Ernest S. Hoholik, District No. 5 Vice-chairperson, Keith P. Aldrich, District No. 3 Commissioner Douglas W, Erickson, District No. 4 Commissioner Lindsley B. Frenette, District No. 1 Commissioner Oliver H. Sholander, District No. 2 March 29, 2001 Municipal Employees' Retirement System of Michigan 447 North Canal Road Lansing, Michigan 48917 Attention: Jennifer Willis Re: Schoolcraft County, Municipality Number 7503 Purchasing prior years of service Dear Ms. Willis: Lindsley B. Frenette has been an elected County Commissioner since 1969 to 1977 and from 1979 to 1990. During that time, elected county commissioners in Schoolcraft County were not included in the Municipal Employees' Retirement System. In 1997, the commissioners were included in the system. When Mr. Frenette was re- elected he was included in the system and now he would like to purchase those prior years of service with Schoolcraft County and the Schoolcraft County Board of Commissioners agrees. Terri A. Evonich worked as a part time employee for Schoolcraft County starting in June of 1972, working four months in that year. Mrs. Evonich then worked five months in 1973 and three months in 1974. The Payroll department erred in not reporting her part time wages for those periods of employment. Mrs. Evonich wishes to be credited for the total of twelve months to the Municipal Employees Retirement System and the Schoolcraft County Board of Commissioners agrees. Sigrid I. Hedberg worked as a full time employee beginning April 1964 until November of 1966. The Municipal Employees' Retirement system was not adopted until 1968 but Mrs. Hedberg wishes to be credited with those periods of employment with Schoolcraft County and the Schoolcraft County Board of Commissioners agrees. Very truly yours, Ernest S. Hoholik, Chairperson Schoolcraft County Board'of Commissioners Schoolcraft County Board of Commissioners 300 Walnut Street Courthouse-Room 125 Manistique, Michigan 49854 Telephone 906-341-3611 Fax: 906-341-5680
There is little doubt, from reviewing the web site access statistics for this web page, that a fair amount of interest exists regarding its content. I can only request, from those that may find the information contained of sufficient substance to effect their voting choices, that due consideration is given to the likelihood that not all Schoolcraft County Commissioners seek a free lunch, or free retirement, for themselves or others. Not all those with knowledge of what happens have the luxury of speaking candidly, without risking their job. Not all those with knowledge of what happens have the luxury of speaking candidly, without risking ugly politically motivated retribution that may ruin their lives.
Given more objective reasons, guilt by association is a poor reason on which to base a voting choice.
At the candidate public forum of 07/15/04, a question by Ray Burns and another resident was addressed to to the candidates for county commissioner.
Paraphrased: "What's to be done about the "free" retirement benefits of some part time county commissioners"?
Commissioner Aldrich stated, in so many words, that he couldn't answer the question because the County Clerk wasn't present with the information relative to the question. No other elaboration was offered.
Commissioner Frenette said "It was no big deal.", and that everything had been done in public with an actuary's approval. That statement was a marked change from his public total denial of knowledge, at the 06/17/04 meeting of the Schoolcraft County Board of Commissioners.
Commissioner Erickson said he had purchased 3.5 years of generic time at a lump sum cash cost, to him, of $11,356, consistent with the 100% M.E.R.S. requirements for other county employees, at the time of purchase.
Commissioner Erickson then pointed out that, to the best of his knowledge, other retired and sitting commissioners had purchased a collective total of 62.5 years for a collective total lump sum cost, to them, of $5,500. (with the balance of the premiums paid with county tax revenues, financed over 30 years - author)
County commissioner candidates Barbara Hoffmeyer and Marian Helmus both spoke of how the questionable retirement financing bore no relationship to anything that either one had known of, heard of, or experienced in their professional careers. Both expressed views that considered such retirement schemes as inappropriate.