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What I didn’t know about the City of Greenbelt’s Finances

posted in: Government, Opinion

by Jeff Lemieux


Did you know the City of Greenbelt’s share of the state pension system’s unfunded liability is $15,449,406, assuming the system achieves an investment return of 7.55%?

Me neither! It’s on page 46, under Note 12 of the Notes to Basic Financial Statements, deep inside the City’s Comprehensive Annual Financial Report for Fiscal Year 2016, which was posted in December, 2016.

Did you know that if we assume an investment return of only 6.55% instead of 7.55%, the City’s unfunded pension liability jumps from $15,449,406 to $21,835,350?

Me neither, but it’s right there on page 48.

Greenbelt’s total long-term liabilities – both long-term liabilities like pensions and other liabilities combined – increased from $23,523,696 in 2015 to $26, 852, 207 in 2016. It says so right in the table on page 7, and there’s a breakdown of the long-term liabilities under Note 8 on page 41.

The main reason for the increase in our financial liability last year is the pension funding, but there were other interesting liabilities to discover if you dig into the footnotes.

Did you know that the City of Greenbelt’s liability to City employees for accrued vacation, sick leave, and compensatory time was $2,481,839, of which $1,777,092 is due within one year?

Me neither! It’s on page 34, subsection Q. of Note 1 to the financial statements. Our liability for sick, vacation, and comp time actually fell a little bit in 2016; it was $2,583, 057 in 2015.

Source: http://www.greenbeltmd.gov/ArchiveCenter/ViewFile/Item/355

What does all this mean?

I don’t know! I’m not enough of an expert (yet) on the City’s finances to know whether these liabilities are alarming or routine. According to the report, the City’s bonds “carry favorable ratings of A2 at Moody’s Investors Service and A+ at Standard & Poor’s Corporation” (see page xii in the introduction section).

I don’t know if these pension and other liabilities will become a drain on the City’s resources or not. I don’t know if we have funds set aside to pay off those liabilities. I don’t know if that $2,583,057 in liability for “compensated absences” (that is, the accrued sick, vacation, and comp time) is really a financial liability that would be paid out if employees quit. Maybe it’s not a big deal.

I do know that I’d be a lot more comfortable with a pension system that was 100% funded, not 68% or 69% funded. And I’d be way more comfortable if the fund didn’t have to assume such high investment returns to be funded even that well!

It certainly concerns me that the City’s main source of income – property taxes – has stagnated in recent years. The City Manager and Treasurer are also concerned. Here’s what they said in their report:

“The main issue for the City remains how to deal with constrained fiscal resources while maintaining quality City services. City revenues have been constrained since the economic recession. Total assessed value for real property was $1.9 billion in FY 2016, almost 14% below the peak valuation of $2.2 billion in FY 2011.” (page ix)

It also kind of bugs me that City’s buildings and vehicles and cars are plugged in as “assets” in the financial statements, as if they’d somehow offset the liabilities. We can’t sell the Community Center or the pool or the street lights or the asphalt in our streets to raise money. So those things may be community assets, but they’re not liquid assets – we can’t pay down our pension liability or an employee’s sick leave balance with asphalt.

I realize sifting through 100 pages of financial statements and notes is not for the faint of heart. I also get that the City council’s budget process is incredibly lengthy and difficult to keep up with. (And it’s mostly focused on short-term spending decisions and minutiae, not long-term liabilities and planning.)

I hope all Greenbelt residents pay careful attention to the FY2016 financial report. Please ask our City Councilmembers-for-Life lots of questions, and try to familiarize yourselves the best you can and be aware of the financial issues our City potentially faces.

It might be all routine stuff, and everything’s under control. But we still need to ask the tough questions.

Jeff Lemieux has been a Greenbelt resident since 1987, living in GHI and Old Greenbelt, and has avoided community activism during most of that time. He’s a bike commuter to UMD and (sometimes) DC, and was the Washington Area Bicyclist Association’s advocate of the year in 2015. Jeff’s wife Laurie owns a bike shop in College Park, and they often lead weekend bike rides toward Beltsville and Bowie or Hyattsville and DC.

3 Responses

  1. Ellen Carter
    | Reply

    Jeff, This is quite a bit of work and as a GB residents, I thank you. Have you ever assessed GHI financial statement in this detail? – Ellen Carter

  2. Carol Shaw
    | Reply

    Having been an executive director for i’m profit organizations. I know these items are routine. It is not easy to understand the financial reporting requirements of Government Accounting Standards Board dictates our city’s reporting format . What’s counted as credits & liabilities are always confusing. I recommend you do a little research to find out what these things mean. Here’s a link to Wikipedia

  3. Sandra Roberts
    | Reply

    I wish my state retirement system was paying so well.

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