Shelby Township reviews Police finances, insolvency forecasted by 2017

The Shelby Township Board of Trustees held a work session to review Police Department finances June 27.

The meeting featured an overall review of the department’s operations by Shelby Township Police Chief Roland Woelkers, a review of Police finances by consultant John Kaczor and a look at the Police and Fire Pension funds and legacy costs by township Labor Attorney Craig Lange.

“On its current financial course, the Shelby Township Police Department is facing insolvency in 2017, and something needs to change,” Kaczor said.

Township Supervisor Rick Stathakis said that the Police Department’s grim economic picture has led to some uncertainty within the community.

“More than a few residents have asked if we’re headed down the same path as Detroit with its financial problems, and I understand their very real concern for the situation facing our Police Department,” Stathakis said. “And we cannot sustain the present course or wait to address this.”

“While our general fund is healthy and robust, there is definitely a problem with our Police Department’s finances, which saw a third straight operating deficit in 2012 with those deficits increasing to more than $2 million in 2013,” Stathakis added citing the Township’s general fund, by comparison, had just recorded its fourth straight operating surplus totaling more than $4 million.

Stathakis said he felt it was necessary to get a firm grasp of all the factors contributing to the Police Department’s finances following a $1.67 million operating deficit in 2012, which Kaczor defined as the beginning of a trend leading to insolvency by 2017, coupled with unfunded legacy cost liabilities within the police department to the tune of roughly $13.2 million in pensions and $29.2 million in OPEB costs for retiree healthcare.

“All of these financial shortcomings -- the $1.67 million operating deficit, $13.2 million pension liability and the $29.2 million in unfunded legacy costs -- would require a shutdown of all police operations and expenses for nearly three years just to get that department back to zero on its overall balance sheet,” Stathakis said.

Stathakis said furthering the need to address the Police Department’s financial issues are the threats posed to current retirees’ benefits if the department is not reformed.

“We must honor our pension promises to current retirees,” Stathakis said. “I remember what happened to my family when my father’s pension was not honored and the hardship it caused. That is a situation that we cannot allow to happen in Shelby Township.

“Rather we are asking our current employees and their unions to allow us to reform the systems in place, so that we can put a stop to the hemorrhage of funds, institute more sane approaches and ensure we able to keep our current pension promises.”