FINANACIAL STABILITY AGREEMENT BETWEEN THE COUNTY OF WAYNE AND THE TREASURER FOR THE STATE OF MICHIGAN WHEREAS, the City of Detroit (‘the City’), has filed for protection under Chapter 9 of the Bankruptcy Code, see, In Re: City of Detroit, Michigan, Case Number: 13- 53846 (Bankr. E.D. Mich). The City of 139 square miles represents ___ percentage of the County's property tax and personal tax revenues; The City, prior to seeking relief pursuant to Chapter 9 of the Bankruptcy Code (‘Municipal Bankruptcy Act’), executed an agreement designed to restore its financial stability as a result of systemic fiscal imbalances and deficit conditions aggravated by the deterioration in revenues received from property taxes, income taxes, interest eamings, utility revenues, and intergovernmental revenues ... by the growth in the City's legacy costs concurrently with the City's diminished ability to camry such costs and by the difficulty in rapidly restructuring the City's operations so as to bring short-term and long-term expenditures in line with current and projected revenues. See, Financial Stability Agreement between the City of Detroit and the Treasurer of the State of Michigan certified on April 9, 2013; WHEREAS, as recognized in Opinion and Award in the matter of Public Act 312 arbitration between the County of Wayne ("the County") and the Police Officers Association of Michigan (‘POAM"), Case Number: D12 C-0189, dated October 16, 2013, the County's general fund/general purpose revenues have similarly deteriorated, decreasing by 23% over the four fiscal years 2008 through 2012. (Exhibit A). This decline is related directly to a deterioration in property tax revenues, which were 36% higher in 2007-2008 than those projected for 2012-2013.sent bat Financial Stabilty Ag 9 the County and State Treasurer (ORAFT) Page 2 January 6, 2014Hoverbec-19,2013 WHEREAS, and as noted in the Award, Exhibit A, supra, pp. 11-12, annual funding for its defined benefit plans increased from $38.9 million in 2007 to a projected $73.3 million in 2014, and in fiscal year 2012-2013, retiree health care cost the County $42,858,232.00, 23% more than the cost of health care for its active employees; WHEREAS, the County is committed to protecting the accrued pension benefits of its employees and retirees, and the County has developed a detailed plan to address pension and post-employment health care obligations for which it is responsible; WHEREAS, the County provides crucial services for the resident of Wayne County, including, but not limited to, treatment and education of at-risk and adjudicated juveniles through its Department of Children and Family Services, providing health services to Wayne County residents pursuant to its Department of Health and Human Services, emergency preparedness through its Department of Homeland Security and Emergency Management safeguarding the community pursuant to the Office of the Prosecuting Attorney, quality law enforcement pursuant to the Sheriff's Office, along with providing badly needed services to seniors and veterans pursuant to its Department of Seniors and Veterans Services; WHEREAS, a financially stable County is important as a catalyst for the State of Michigan's overall image and success in economic development, business attractiveness, quality of life, and other factors; WHEREAS, the County through the Office of the County Executive and the County Commissioners seek to pursue this long-term vision by successfully completing a continuing operation plan detailed herein;Financial Stabity Agrsemant batwoen the Counly and Stato Treasurer (QRAFT) WHEREAS, the People of the State of Michigan have required the establishment of the Department of Treasury as a principal department of State government under Section 3 of Article 5 of the State Constitution of 1963, ("Treasury Department’) and provided that the State Treasurer, a constitutional officer appointed by the Govemor, with the advice and consent of the Michigan Senate, the (‘State Treasurer’) shall serve as the head of the department which is vested the responsibilities related to local government finance, budgeting, and administration under State law; WHEREAS, the County is a political subdivision of the State of Michigan organized as a Charter County under 1966 P.A. 293, as amended, with Home Rule Charter for Wayne County, as adopted June 16, 1981, by the Wayne County Charter Commission, and approved by the voters on November 3, 1981, and as amended by the voters, the ("Charter"), and the People of the State of Michigan provide Home Rule power to the County through the State Constitution of 1963, subject to the limitations on the exercise of that power contained in the Constitution or the Charter, or imposed by statute; WHEREAS, the Treasury Department desires to undertake jointly with the County efforts for the betterment of the residents of the City of Detroit, County of Wayne, and the State of Michigan ("the State") as a whole through the adoption of this Financial Stability Agreement (‘this Agreement’); WHEREAS, this Agreement contains the terms and conditions authorizing a cooperative undertaking between public agencies for addressing the County's accumulated deficit with the goals of (i) insuring that the County continues to provide optimal services to its residents and businesses and creates a civic culture andinoncial StabityAgraemant between the County and Stats Treasurer (DRAFT) Pago ‘anor 6, 2014Novambae-49,2083 environment that attracts as well as retains investment, businesses, jobs, and new residents to the County and the State, and; WHEREAS, approval of this Agreement is intended to reaffirm the role of the County's Executive and Legislative branches under the Charter in the development of this strategy to continue to provide optimal services to County residents; WHEREAS, under this Agreement, the County and the Treasury Department agree to jointly exercise powers relating to public finance, budgeting, and administration that they share in common and that each may exercise separately, including but not limited to, the powers, privileges, and authorities of the Treasury Department to protect the credit of the State and municipalities in the State, and to aid, advise, and consult with municipalities with respect to fiscal questions and certain other matters under, inter alia, Act No. 436, Public Acts of 2012, Local Financial Stability and Choice Act, until such time as the County achieves “qualified status" subject to the terms of this Agreement and other agreements or commitments made herein by and on behalf of the Treasury Department 4, CONTINUING OPERATION PLAN MANAGEMENT BOARD 1.1 Establishment and Purpose. (a) Pursuant to this Agreement and Section 8 of P.A. 436, the parties create a Continuing Operations Board (‘Operations Board") to assist the County and to administer and execute the County's Continuing Operations Plan. 1.2 Composition. The Operations Board shall be composed of five (5) members, each of whom shall possess professional qualifications and character suitable to render decisions within the context of highly complex municipal transactions asFincncial Stabily Ageaamant between tha County and State Treasurer (DRAFT) Page 5 | danuary 6, 201 43.2088 described more fully below. The initial Operations Board shall be appointed by the Governor of the State of Michigan (the holder of such office at any given time, “the Governor’), the Chief Executive Officer, the Wayne County Commission, and the State Treasurer as follows: (a) one individual appointed by the Governor; (b) one individual appointed by the Chief Executive Officer; (0) one individual appointed by the County Commission; (d) one individual appointed jointly by the Governor and the County Executive and subject to confirmation by the County Commission, and (e) one individual appointed by the State Treasurer Any such member ("a member’) shall have at least ten (10) years experience in: (a) sophisticated municipal financial transactions; (b) government restructurings; (c) governmental labor relations, health care benefits, and/or pension matters; (d) local government management with governmental units having consolidated revenues of $250 million or more. Members shall not be officers or employees of the County or the State or of the County Executive's staff or a member or a former member of the County Commission. The terms of all members shall be three (3) years provided that, of the members identified, the Governor's shall be appointed for one (1) year and the County Executive's for two (2) years. (DETAILS AS TO COMPENSATION, REIMBURSEMENT) (STANDARDS OF CONDUCT, CONFLICTS OF INTEREST, AND ETHICS TO BE COMPLETED AT A LATER TIME) 2. CONTINUING OPERATION PLAN MANAGER POWER AND AUTHORITY Within thirty (30) days after the effective date of this Agreement, the County Executive shall create the position of Continuing Operation Plan Manager (‘Operation Plan Manager’) subject to approval by both the County Commission and the Governor.nancial Staity Ageoement bstween the County and Stata Treasurer (DRAFT) Page 6 | danuary 6, 2014November-19,2013 The Operation Plan Manager shall report to the Operations Board as to implementation of the Continuing Operations Plan 3. CHIEF FINANCIAL OFFICER The Chief Financial Officer, who shall supervise all finance and budget activities of the County, shall report directly to both the Chief Executive Officer, as well as the Operation Plan Manager. The Chief Financial Officer (‘CFO") shall directly assist the Operation Plan Manager on all strategic and tactical matters relating to budget management, financial management, cost benefit analysis, forecasting needs, the securing of funding, and budget matters as they pertain to implementation of the Continuing Operation Plan. The Chief Financial Officer shall report directly to the Chief Executive Officer as to all budget, financial reporting, and cost benefit analysis as to the operation of County government. 4, DIRECTORS OF HUMAN RESOURCES AND LABOR RELATIONS The Directors of Human Resources and Labor Relations shall supervise personnel activities of the County, along with administration of collective bargaining agreements and implementation of modifications to collective bargaining agreements required by the Continuing Operation Plan. The Directors of Human Resources and Labor Relations shall report directly to both the Chief Executive Officer, as well as the Operation Plan Manager. They shall directly assist the Operation Plan Manager on all strategic and tactical matters relating to modifying terms and conditions of employment, including, but not limited to, changes as to health care benefits for active employees, health care benefits for retirees, pension benefits, overtime, and other fringe benefits, along with wages as they pertain to Implementation of the Continuing Operation Plan.Financial Stability Agroae Page 7 ‘January 6, 2014Navernbac19-2013, 00 tha County and State Treasurer (DRAFT) These Directors shall report directly to the Chief Executive Officer as to all personnel and labor contract administration associated with the operation of County government. Additionally, these Directors may only be removed or have their compensation reduced pursuant to a vote of four (4) out of the five (5) members of the Financial Advisory Board. 5, IMPLEMENTATION OF CONTINUING OPERATION PLAN, PHASE | 5.1 Pension Benefits and Retiree Health Care. 5.1(a) An evaluation of the costs associated with pension _and post-employment_health care obligations for_which Wayne County is responsible and the plan for how those costs will be addressed and reduced. Normal cost is the cost attributed to the benefit each person earns in a fiscal year of service, and according to the valuation establishing the County's contribution for fiscal year 2013-2014, the County's total normal cost is 11.63% of payroll. See, pertinent portions of valuation report of September 30, 2012 attached herein as Exhibit B. Along with normal cost is a second costing consideration, that being the status of the, fund in regards to the benefits already earned. Presently, the funding value of the assets is $746,447,000.00, which is 46% of accrued abilities of $1,624,660,000.00. See, Exhibit B, p. As a result, the actuary recommends a total computed employer contribution of 50.66% of defined benefit plan payroll, and 41.5% of this payroll is allocated to the unfunded actuarial accrued liability. Most revealing is the fact that, though each and every retirement should be fully funded upon separation from theFioancial Stability Agreement between the County and Stata Treasurer (DRAFT) Paga 8 January 6, 20¢4Hovernber-49,2043 County, presently retiree and beneficiaries are 50% funded and actives are without any funding whatsoever. Exhibit B, supra, p. The defined contribution plan (Plan 4) covers payroll of $104,301,618.00. This plan requires funding of approximately $12 million annually The fund has deteriorated as a result of poor investment performance, distribution of return on investment exceeding the assumed rate of return to retirees by way of 13th checks, as well as overly generous benefit plans. As a result, the County must both change how the Plan is administered, as well as reduce benefits to its active employees. Operating Plan response re: reduction of benefits for active employees. As of September 30, 2014, collective bargaining agreement (‘CBA’) provisions establishing pension benefits for all employees will have effectively expired. See, Exhibit C showing all County bargaining groups, number of employees, and the expiration date of their respective contracts. The County will negotiate or, if need be, implement the following changes to defined benefit plan provisions in alll of its CBAs:Financial Stabilty Agreement between the County and State Traasurar (DRAFT) Page | January 6, 2014November-49, 2983 44% of payroll-to-8.01%-of payrall-and-reduce that-portion-of-its-contribut* Reduction in Multiplier -- Effective October 1, 2014, any multiplier for purposes of determining retirement compensation in the County's defined benefit plans shall, consistent with the State's best practices, be reduced to 1.5% of average final compensation for all years of credited service accrued after that date. Annual Cost Savings: $6,546,000.00 Savings to the County General Fund: $2,545,000.00 + Restrictions on Average Final Compensation -- Effective October 1, 2017, compensation used to determine accrued financial benefits shall be calculated as the average of the last consecutive six (6) years of compensation and shall not include more than a total of 240 hours of paid leave, again, consistent with the State's best practices. Similarly, overtime hours shall not be used in computing the average final compensation AFC’). In order that accrued benefits not be impaired, credited service prior to October 1, 2017 shall be computed using AFC pursuant to the present provisions in the collective bargaining agreements. Annual Cost Savings: $2,250,000.00 Savings to the County General Fund: + Increase in Employee Contribution -- Effective October 1, 2014, the employee contribution in defined benefit plans 1, 3, 5, and 6 shall be 7% of gross wages. Effective October 1, 2017, when the AFC modifications are implemented, the employee contribution shall be reduced to 6% of gross wages. Annual Cost Savings: $3,000,000.00 Savings to the County General Fund: $1,189,000.00 + Defined Contribution Plan Changes ~ Effective October 1, 2014, Plan 4 shall be changed to require the employer to contribute 10% of gross wages and bargaining unit members 2.5% of gross wages. TheseFinancial Stabilty Agreement botwoen the County and State Treasurar (RAFT) Page tt January 6, 2014M=ver 19,2013 modifications have already been implemented as to appointees and exempts. Annual Cost Savings: $1,000,000.00 Savings to the County General Fund: TOTAL ANNUAL COST SAVINGS FROM OCTOBER 1, 2014 PENSION MODIFICATIONS: $10,546,000.00 ADDITIONAL ANNUAL COST SAVINGS FROM MODIFICATIONS EFFECTIVE OCTOBER 1, 2017: $1,251,000.00 * Board Composition. In order to improve retum on investment and address the fiscally imprudent practice of distributing 13th checks to retirees, the Board shall be changed as follows: The chairperson of the County Commission or his or her designee; A trustee appointed by a majority of the County Commission who is neither a participant in the plan or an employee of the County and is a licensed or certified professional in investment or finance; The County Executive or his or her designee; A trustee appointed by the County Executive who is neither a participant in the plan or an employee of the County and is a licensed or certified professional in investment or finance; Three members of the Retirement System who are residents of the County to be elected by the members of the Retirement System. Each member trustee shall be from a different County department, as provided in the County Charter of January 1, 1987. The elections shall be conducted in accordance with procedures adopted by the Retirement Commission.Financial Staity Agroemant beteen the Counly and State Teaasurer (DRAFT) Page 12 | danuary 6, 20140 19.208 One retired member who is a resident of the County to be elected by the retired members and beneficiaries. The election shall be conducted in accordance with procedures adopted by the Retirement Commission 9th Trustee. An additional 9th trustee who shall not be a participant in the plan or employed by the County in any capacity shall be selected by the County Executive's Office, subject to approval by a majority vote of the Retirement Commission Board of Trustees, and is a licensed or certified professional in investment or finance. Such trustee shall serve as a full member of the Retirement Commission Board of Trustees and vote on any and all matters considered by the Commission. The term for this trustee shall be three (3) years. The Treasurer shall designate a member of the Continuing Operations Board to sit on the Retirement Commission Board of Trustees for the duration of this Consent Agreement. This member shall serve at the discretion of the Treasurer for a term not to exceed two (2) years and shall otherwise attend and participate in all meetings but shall be without voting rights. Pursuant to P.A. 436, Section 12(m), because the Municipal Government Pension Fund is not actuarially funded at a level of 80% or more, according to the most recent Governmental Accounting Standards Board’s applicable standard, at the time of the most recent comprehensive annual financial report for the Pension Fund, the Operations Manager may, as an alternative to implementing board composition changes enumerated in the prior section, act as the sole Trustee of the Pension Board,Financial Stabilty Agroamant betwasn tha County and Slats Treasurer (ORAFT) Page 13 January 8, 2014N 49,2082 replace all serving Trustees of the local Pension Board, and hire professional and administrative assistants as necessary to properly administer the Plan. Such a decision would be made pursuant to a majority vote of the Operations Board, th yt thera-health-care-benefits-similar_to-thoce-atforded-actinancial Stability Agresment betwaen the County and State Treasurer (DRAFT) Page 14 January 6, 2014Novembsr-19-2043 employees—Th st has-net made-a-deciel to-4the tys-tight-to implement some-other reputable actuarial service: ‘ae agree Juda_any-subsidies thase-raliroes-might-be-entiled-to,uhich ingraase-tha funding available to them-to-purchase-health-care-Einancial Stability Agreement between the County and State Treasurer (ORAFT) Page 15 January 6, 2014Novamber 19-2012 5.4__Pension and Retiree Health Care: Because-of-the_tatitude it has_tochange_retiree health_care_pursuantte theFinancial Stailty Agreement between the County and Slats Treasurar (DRAFT) Page 18. | January 6, 2014Novernber-19,2033, health_care-costs-for-its-actives-by-an-additional $3.4 mili ly By-eliminati County-funding-of- dental_aad-visionth: by-would: thor-$3.5- f \d/or- dependents—All-such-ret all-be-subject-t hiFinancial Stabily Agreement between Page 17 January 6, 2014Novemnber-49.2913 ——The-County-has-obtained_certain-wage-concessions_from_employees-in-the a ee [ : County and Stata Treasurer (ORAFT) tain -the-'40%'-— Similarly appointoos rece! i eeFinancial Stabilly Agreement between the County and Stata Teasurar (RAFT) Page 18 January 8, 2014Movernber-19, 2042 the -POAM-collective-bargaining_agreament_and-all-other_bargaining-ag sofFioanciat Stabiky Agreement batwosn the County and Stat Treasurer (ORAFT) Page 19 | January 6, 201¢November 49,2013, RETIREE HEALTH CARE a. Furnishing Health Care to Those Who Retired Between 1990 and 2005 Pursuant to the State/Federal Health Exchanges -- In total, there are 2,272 1990-2005 retirees. Of these, 1,584 are Medicare eligible. Furnishing health care to all 1990-2005 retirees costs the County, for fiscal year 2012-2013, approximately $27,000,000.00. If Medicare eligible in this group received from the County a $100 per month stipend to obtain health care pursuant to the Federal/State Exchanges, they could afford, for example, Medicare Advantage Plans from Blue Cross Blue Shield of Michigan (‘BCBSM") not significantly dissimilar from what they will be receiving from the County otherwise beginning October 1, 2014. If non- Medicare-eligible retirees with single-person coverage received $300.00 per month, those receiving retiree and spouse coverage $400.00 per month, and those with family coverage $500.00 per month, they should have the wherewithal to purchase the high-end silver plans supplying benefits not significantly less than what the County would otherwise provide those retirees in 2014-2015. These changes will be effective October 1, 2014. Annual Cost Savings: $16,000,000.00 b. Health Care Changes to Those Who Retired Prior to 1990 and After 2005 Who are not Participating in the Health Care Trust -- These retirees participate in the same health care plan options, coverages (excluding Master Medical and dental coverage), co-pays, deductibles, etcetera, as active employees. Their premium sharing is, however, limited to 10% annually. Effective October 1, 2014, they will receive the plan design changes described below, which will be implemented at that time for all active employees. Annual Cost Savings: $1,500,000.00 ¢. Retiree Health Care Modifications for Those Retiring After October 1, 2017 -- Effective that date, those retiring from the County in Plans 1 and 5 who accrued benefits pursuant to a multiplier in excess of 2.0% prior to October 1, 2014 will receive $300.00 per month for single coverage, $400.00 per month for retiree and spouse, and $500.00 per month for family coverage. Those who are in Plan 4 who retiree from County service who are eligible for post-retirement health care benefits shall continue to participate in the same health care plan options, coverages ® These figures do not include any subsidies these retirees might be entitled to, which would further inerease the funding available to them to purchase health care.Financial Stability Agreement between the County and Stat Treasurer (ORAFT) Page 20 || January 6, 2014Movember-49,2013 (excluding Master Medical and dental coverage), co-pays, deductibles, etcetera, as active employees. All such retirees shall be subject to premium sharing not to exceed 20% annually. TOTAL ANNUAL COST SAVINGS FROM OCTOBER 1, 2014 MODIFICATIONS TO RETIREE HEALTH CARE: $17,500,000.00 Il, MODIFICATIONS TO ACTIVE EMPLOYEE HEALTH CARE In fiscal year 2012-2013, the County's cost for health care for its active employees was $34,630,727.21, reduced from $53,229,911.74 in 2007-2008. The per- employee contract cost in 2007-2008 was $10,486.60. Despite five years of medical- trend inflation at approximately 8% annually, the County has reduced per-employee contract cost by 9%. The County will implement the plan design changes similar to those imposed on active employees at the City of Detroit. In pertinent part, these are as. follows: KEY MEDICAL PLAN PROVISIONS In Network $750.00 per person, Deductible $1,500.00 per family Out-of-Pocket Maximum (excludes $4,500.00 per person max, $4,500.00 per deductible) family Coinsurance (most services) 20% Preventive Services No Cost Office Visit Copayment $25 [Urgent Care Visit $25 ER Copayment $100 (waived if admitted or accident) Inpatient Hospital Admission, Surgery, and 20% after deductible and $100.00 Maternity copayment PRESCRIPTION DRUGS Generic/Preferred/Non-Preferred Retail $10/$35/$50 Mail Order $20/$70/$100 TOTAL SAVINGS FROM OCTOBER 1, 2014 CHANGES TO ACTIVE HEALTH CARE: $3,400,000.00 TOTAL SAVINGS TO THE COUNTY GENERAL FUND: $1,225,000.00 Ill. WAGES (5% Reduction) The County has obtained certain wage concessions from employees in the majority of its bargaining units. Though the concession sought was 10% of the employees’ base wage rates, it ultimately obtained significantly less than that.Financial Stability Agreement between the County and Stata Treasurer (DRAFT) Page 21 ‘January 6, 2014Maversbar-49, 2019 Additionally, several major bargaining units never agreed to these reductions. The County proposes to implement a 5% wage reduction, effective October 1, 2014 in lieu of the 10% concessions, Unlike their previous wage concessions, this reduction would, in fact, be used to established their defined benefit plan accruals and the employer contribution to the DC plan and would similarly apply to all bargaining unit members, including those not taking the 10% concessions. TOTAL ANNUAL COST SAVINGS FROM WAGE MODIFICATIONS IMPLEMENTED OCTOBER 1, 2014*: $7,000,000.00 TOTAL ANNUAL SAVINGS TO THE COUNTY GENERAL FUND: $3,813,000.00 IV. OVERTIME, HOLIDAY, & TUITION REIMBURSEMENT Prior to the Opinion and Award in the matter of Public Act 312 arbitration between Wayne County and Police Officers Association of Michigan (‘POAM"), Case Number: D12 C-0189, the Sheriff Deputies had some of the most generous overtime provisions possible. The provisions awarded by the arbitrator in the above award are far more restrictive, essentially limiting overtime to that required by the Fair Labor Standards Act. Those provisions, along with awarded provisions limiting compensation for “major holidays”, should save the County approximately $3,500,000.00 annually as to that bargaining unit alone. The majority of the County's collective bargaining agreements contain provisions similar to those in its prior contract with the POAM bargaining unit. Virtually all bargaining units have provisions requiring the County to pay special pay, in effect, triple time for work performed on major holidays. Such provisions will be eliminated mandating that employees receive regular pay for all hours worked, in addition to their regular pay, for any holiday. Finally, the County intends to eliminate Columbus Day and birthdays as holidays. TOTAL ANNUAL COST SAVINGS FROM OCTOBER 1, 2014 OVERTIME, HOLIDAY, AND TUITION REIMBURSEMENT MODIFICATIONS: $7,465,000.00 TOTAL ANNUAL SAVINGS TO THE COUNTY GENERAL FUND: $. SUMMARY TOTAL ANNUAL COST SAVINGS FROM * The County projected this figure using a .40 fringe rate The 5% wage reduction is off their base wages (pre-concession wages) Effective October 1, 2016, the wages will be restored to the pre-concession levels Effective October 1, 2017, employees will receive a 2.5% increase in wages.Financial Stability Agreement between the County and Stato Treasurer (DRAFT) Pago 22 January 8, 2014 $90 WAGE AND BENEFIT MODIFICATIONS: $41,946,000.00" 5.9 Miscellaneous Collective Bargaining Agreement Positions. ‘As a result of the expiration of CBAs by September 30, 2014, the County can modify certain miscellaneous provisions that presently make it more difficult for it to manage its workforce, including, but not limited to, temporary assignment and successorship clauses. 5.10 Appointment of a Chief Administrative Officer for the Sheriff's Department, As recognized in the recent report from , the Sheriff's expenditures must be curtailed in order for the Counly to balance its budget going forward. As noted in Exhibit __, average overtime income per bargaining unit member is $20,000.00 annually, and these excessive overtime costs have caused the Sheriff's expenditures to exceed budgeted funds by approximately $26 milion in fiscal year 2012 and almost $30 million in fiscal year 2013. The Chief Administrative Officer shall conduct, with professional assistance, a full audit of the Sheriff's Office operations, ‘emphasizing an analysis of jail operations and recommend policies and procedures to operate the office more efficiently. This report shall be submitted to the Financial ‘Advisory Board, the Continuing Operations Plan Manager, and the Chief Executive Officer within 120 days after execution of this Agreement. This analysis shall consider implementation of 12-hour shifts in the jail facilities, as well as privatization of all or part of court security * This excludes $7,000,000.00 of annual savings projected from retiree health care changes implemented January 41, 2013 and the $3,500,000.00 of annual savings referred to in footnote 3nancial Stability Agreemant between the County and Stata Treasurer (RAFT) Page 23 “January 8, 2014 19,2018 After completion of the first analysis, the Chief Administrative Officer assigned to the Sheriff shall work with the Sheriff, and the two may hire additional professional assistance to analyze how the Sheriff's Office may provide services to the City of Detroit and other municipalities throughout Wayne County. This report shall, inter alia, include analysis of returning Sheriff's Patrol Officers to City of Detroit buses, patrolling Belle Isle, Highland Park, and Hamtramck. The Treasurer shall assign State personnel to assist in this analysis, which shall also include determining whether Wayne County Sheriff's officers could assume duties performed by the Michigan State Police in Wayne County. A report, including funding considerations, shall be furnished to the Financial Advisory Board, the Continuing Operations Plan Manager, the Chief Executive Officer, the Sheriff, and the Treasurer. 5.11. Inventory of County Property to Reduce Unfunded Accrued Liabilities in its Pension System. The County will conduct an inventory of its properties to determine whether the general fund could receive any assets upon liquidation of assets that would be available to reduce the unfunded accrued liabilities to the pension system. 5.12 Audit of County Operations. The County has engaged the services of to audit County operations as to efficiencies. The scope of this audit is and is primarily responsible for it. To date, the following has occurred. A final report shall be submitted to the Operations Board at that time. 5.13 Reduction of the Accumulated Deficit.Financial Stabilty Agreement betwoan the County and Sats Tre Page 25, ‘lanuary 6, 20148 rae (DRAFT) or 49,2019 9, SHORT-TERM DEBT-- TAX ANTICIPATION NOTES The County, as do many states and local governments, has used Tax Anticipation Notes (“TANs") as a short-term financing vehicle to assist it with cash flow needs in the advance of future tax collections. For fiscal year 2011-2012, the County issued $100 million in TANs, which were repaid on October 31, 2012. For fiscal year 2012-2013, the County issued million in TANs, which were repaid on , 2013. The County seeks million for fiscal year 2013-2014, which shall be repaid by 2014. 40.PHASE I The County's funding obligations for Circuit Court significantly impairs its wherewithal to balance its budget and otherwise provide needed services. When the County assumed funding obligations for the Third Circuit Court in : it received an additional revenue stream, i.e., Circuit Court equity, and othemvise received an increase to its State revenue sharing. (SOLON AND KEVIN TO VERIFY AND FILL IN DETAILS.) More importantly, at that time, excluding these additional revenue sources funding Circuit Court, required __% of the County's general fundigeneral purpose revenues. The County projects funding requirements for the Third Circuit Court of $105,770,380.00 for fiscal year 2014-2015. As a result, excluding all revenue sharing, as well as court equity funding, the County's obligation for this fiscal year exceeds $58 million, or 15%, of its general fundigeneral purpose revenues. This is times the percentage of general fund/general purpose revenues allocated in the fiscal year of the transfer, and clearly, this kind of funding obligation was not contemplated. (HISTORYFinancial Stabilty Agreement between tha County and State Treasurer (DRAFT) Pago 24 January 6, 2014Neveribert9,2083, (KEVIN TO DISCUSS THE REDUCTION OF THE ACCUMULATED DEFICIT BY USING PROCEEDS FROM THE DELIQUENT TAX FUND.) 6, PENDING LITIGATION REPORT FILING Beginning of August 1, 2014, and continuing thereafter on a quarterly basis, Corporation Counsel shall submit to the Operations Board a report (the “Pending Litigation Report’) identifying all pending lawsuits or other legal actions or proceedings, including, but not limited to, lawsuits, actions, or proceedings relating to workers’ compensation claims, to which the County is a party (any such lawsuit, action, or proceeding a “Pending Action."), Each Pending Litigation Report shall identify with respect to each Pending Action: (a) al plaintiffs; (b) all defendants; (©) the court and judge before which the Pending Action is pending; (d) legal counsel representing the County (if other than Corporation Counsel); (e) the specific causes of action; (f) the length of time the Pending Action has been pending; (g) an estimate as to the budgetary impact upon the County (if any) from a disposition of the Pending Action unfavorable to the County; (h) the applicability of any liability insurance maintained by the County; and (i) an assessment of the likely outcome of such Pending Action (which section of the Pending Litigation Report shall remain subject to any and all applicable privileges) 7. REPORTING REQUIREMENTS (WILL USE GENERAL LANGUAGE FROM DETROIT AGREEMENT.) 8. FINANCIAL AND BUDGET PROCESS, REVENUE CONFERENCES, AND BI-ANNUAL BUDGET (THIS SHOULD BE DRAFTED BY MANAGEMENT & BUDGET. | AM ENCLOSING THIS SECTION FROM ONE OF THE DETROIT CONSENT AGREEMENT DRAFTS.)Financial Stability Agreamant baeon the County and State Traasures (DRAFT) Paga 28, January 6, 20188 OF THE LEGISLATION TO SUPPORT THIS RESULT. WE MIGHT CONSIDER 2049 OUTSIDE COUNSEL FOR THIS ONE SECTION.) (There is great room to modify this proposal, including, but not limited to, tying additional revenue sharing to a ratio of general fund revenues over Third Circuit Court funding requirements.) 41. EXPIRATION OF AGREEMENT/RELEASE 44.4. Duration of Agreement; Termination; County’s Release from Obligations. This Agreement shall remain in effect until both of the following occur (“Financial Stability’) (a) The date of the earlier of: (i) the end of the third consecutive fiscal year of the County in which each of the following conditions have been satisfied: (a) the County's audited financial statements indicate, on the basis of accounting principles generally accepted in the United States, that the County general fund, excluding any revenues derived from borrowed funds, is not in a deficit condition; and (b) the County's accumulated deficit has been eliminated; or (ii) the County has achieved and maintained for at least two consecutive calendar years a credit rating by two or more nationally recognized securities rating agencies (without regard to any third party credit enhancement) on the County's outstanding long-term unsubordinated debt, in any of the four highest long-term debt rating categories of such rating agency (BBB/Baa or higher), without regard to any refinement or gradation of such rating category by numerical modifier or otherwise; and (b) The date that the State Treasurer certifies to the Governor that no material condition exists within the County, and that no action has been taken, or is being contemplated by County officials, that would (a) implicate the need for a deficit elimination plan under Sec 21 of Act 140, excepting for fund deficits of an immaterial nature; or (b) require implementation of the Treasury Department's authority under Sec 802 of Act 34. (c) The Chief Executive Officer, with the approval of the County Commission, may apply to the Operation Board to be released from the terms and conditions of this Agreement. If the financial conditions set forth in Section| danuary 8,201 41.(a) and (b) have been satisfied by the County, the Operations Board shall release the County from the terms and conditions of this Agreement (4) Notwithstanding the provisions of subsections 11.1(a), (b), and (6) of this Section 11.1, this Agreement shall be earlier terminated by the Operations Board with the consent of the State Treasurer, if requested by the Chief Executive Officar and the Commission on behalf of the County or by the Treasury Department,