Another Voice - County's debt a serio...

Another Voice - County's debt a serious problem

There are 43 comments on the The Ukiah Daily Journal story from Feb 1, 2010, titled Another Voice - County's debt a serious problem. In it, The Ukiah Daily Journal reports that:

Because we are a politically diverse group of experienced financial professionals, John Dickerson of www.YourPublicMoney.Com requested we review his work on Mendocino County's debt.

Join the discussion below, or Read more at The Ukiah Daily Journal.

First Prev
of 3
Next Last
John Dickerson

Ukiah, CA

#41 Feb 8, 2010
Well - progress. We agree the Retirement Board caused hundreds of millions of dollars of Mendocino County’s debt and are not accountable to the people for having done so.

In terms of what the County could do now and could have done in the past - I could talk about a bunch of things such as the lack of telling the truth, demanding reform, and defending the common good.

What I will write about:
ACTUAL CAUSES OF UNFUNDED PENSIONS AND RETIREE HEALTHCARE

The cause of the unfunded retiree healthcare obligation is simple - the County never set aside one dime to pay for it. It was by design unfunded from the beginning. That was absolutely in the County’s control.

These are the main causes of the County's unfunded pension debt I’ve calculated so far:
MAJOR CAUSES
1) Pension Fund investment earnings were far below target.
2) Millions of dollars were diverted out of the underfunded Pension Fund to pay retiree healthcare.

OTHER SIGNIFICANT CAUSES
3) Retroactive increase in pension benefits to about 50 employees without providing any funds to prevent the immediate increase in unfunded pensions that caused.
4) Increased total salaries in many years much faster than the Pension Fund Actuary was told to assume.
5) Paid significantly less than it was told to pay for its yearly pension contribution in a couple of years.
6) A very high percentage of retired Deputy Sheriffs with “service-related disabilities”.(Increases pensions up to 50%.)

Regarding the “significant but second tier causes”:
Numbers 3, 4, and 5 clearly were under the County’s control.

Number 6 - Mendocino County’s rate of service related disability retirements for Deputy Sheriffs is only slightly less than the highest among Counties that have their own independent retirement systems. More than half of all retired Mendocino County Deputies have “service related disabilities”. That increases their pensions up to 50%.

I don’t believe the County ever examined this “driver” of its pension debt.

Regarding the “major causes”:

Number 2 - diversion of pension funds to pay retiree healthcare. See above.

Number 1 - The actual average Pension Fund rate of investment return over the past 13 years was 4.4%. The target was 8%.

At some point the County should have said “Hey - the reality is you’re earning far less. You need to set the target rate to be less than 8%- significantly less - because that’s what you are really earning.”

If the County had said that, why would the Retirement Board have objected? They would have gotten more money from the County and employees each year and had less pressure to perform. The Pension Fund would have been more secure.

So - why didn’t the County ever make that move?

First, it was a lot more fun to spend more money than it could really afford by ignoring the unfunded pension debt that was building up. Second, they wouldn’t have to take political heat from employees because they would also have been forced to pay in more (and why shouldn’t they have been forced to do so?).

But in general - do we really expect our County officials, when confronted with something like an unaccountable Retirement Board that is creating hundreds of millions of dollars of County debt, to just throw up their hands and say “Oh my, ah’ jes’ feel so tarrible but thay’s jes’ nothin’ I can do about that!”

I would have thought County officials who saw what was happening would have raised HOLY HELL. They could have and should have put a spotlight on that organization and made damn sure the public knew what it was doing to them.

So - ultimately - why did County officials do all this?

BECAUSE THEY WERE POLITICALLY REWARDED BY VOTERS AND EMPLOYEES FOR PROMISING MORE THAN THEY COULD DELIVER AND SHOVING THE PART THEY COULDN'T DELIVER AS FAR INTO THE FUTURE AS POSSIBLE SO THEY'D BE OUT OF OFFICE WHEN SOMEONE ELSE HAD TO FINALLY DEAL WITH IT.

Now - who has to finally deal with it? Take a look in the mirror.
John Dickerson

Ukiah, CA

#42 Feb 8, 2010
Well - progress. We agree the Retirement Board caused hundreds of millions of dollars of Mendocino County’s debt and are not accountable to the people.

What could the County have done? How about tell the truth, demand reform, and defend the common good?

More specifically -:
ACTUAL CAUSES OF UNFUNDED PENSIONS AND RETIREE HEALTHCARE

The cause of unfunded retiree healthcare - the County never set aside one dime to pay for it. It was by design unfunded from the beginning. That was absolutely in the County’s control.

Causes of the County's unfunded pension debt:
MAJOR CAUSES
1) Pension Fund investment earnings were far below target.
2) Millions of dollars were diverted out of the underfunded Pension Fund to pay retiree healthcare.

OTHER SIGNIFICANT CAUSES
3) Retroactive increase in pension benefits to about 50 employees without providing any funds to prevent the immediate increase in unfunded pensions that caused.
4) Increased total salaries in many years much faster than the Pension Fund Actuary was told to assume.
5) Paid significantly less than it was told to pay for its yearly pension contribution in a couple of years.
6) A very high percentage of retired Deputy Sheriffs with “service-related disabilities”.(Increases pensions up to 50%.)

Regarding the “significant but second tier causes”:
Numbers 3, 4, and 5 clearly were under the County’s control.

Number 6 - More than half of all retired Mendocino County Deputies have “service related disabilities”. That increases their pensions up to 50%. I don’t believe the County ever examined this “driver” of its pension debt.

Regarding the “major causes”:

Number 2 - diversion of pension funds to pay retiree healthcare. See above.

Number 1 - The actual average Pension Fund rate of investment return over the past 13 years was 4.4%. The target was 8%.

The County could have said “You need to set the target rate to be less than 8%- significantly less - because that’s what you are really earning.”

How could the Retirement Board have objected? The Pension Fund would have been more secure.

So - why didn’t the County make that move?

First, it was a lot more fun to spend more money than it could really afford by ignoring the unfunded pension debt that was building up. Second, they wouldn’t have to take political heat from employees because they would also have been forced to pay in more (and why shouldn’t they have been forced to do so?).

But in general - do we really expect our County officials, when confronted with something like an unaccountable Retirement Board that is creating hundreds of millions of dollars of County debt, to just throw up their hands and say “Oh my, ah’ jes’ feel so tarrible but thay’s jes’ nothin’ I can do about that!”

I would have thought County officials who saw what was happening would have raised HOLY HELL. They could have and should have put a spotlight on that organization and made damn sure the public knew what it was doing to them.

So - ultimately - why did County officials do all this?

BECAUSE THEY WERE POLITICALLY REWARDED BY VOTERS AND EMPLOYEES FOR PROMISING MORE THAN THEY COULD DELIVER AND SHOVING THE PART THEY COULDN'T DELIVER AS FAR INTO THE FUTURE AS POSSIBLE SO THEY'D BE OUT OF OFFICE WHEN SOMEONE ELSE HAD TO FINALLY DEAL WITH IT.

Now - who has to finally deal with it? Take a look in the mirror.
John Dickerson

Ukiah, CA

#43 Feb 8, 2010
OH NO.

I posted the first comment - system rejected said too many characters. Edited the Word document I composed in - posted shorter version - and now the previous posting has shown up.

Sorry - gremlins in the system.

Tell me when this thread is updated:

Subscribe Now Add to my Tracker
First Prev
of 3
Next Last

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

Stanislaus County Discussions

Title Updated Last By Comments
News North Valley leaders fuel bipartisan fast track... Apr 24 Lucy Jane 1
News Modesto Elects New Mayor Feb '16 Kent 3
News Suspect in fatal Oakdale shooting dies in Stani... (Jan '13) Sep '15 Yourewrongasshole 23
News Ryan Neal Mazzariello, 25, of Oakdale suspected... (Nov '12) May '15 Emily 48
News Diablo Grande closes course, defaults on loan (Feb '08) Feb '15 Ricky1 25
Lawyer banned from visiting clients' jail after... (Dec '14) Dec '14 kev 1
News Police say Pittsburg homicide likely a drug dea... (Aug '09) Sep '14 knowthehurt 5
More from around the web