Three Articles -
July - August 2016

John Dickerson

I started digging into Mendocino County's unfunded pension debt 11 years ago. I had no idea how much bad news I'd find.

I stepped back over the past few months to write three articles to the People of Mendocino County and our County's employees and retirees. The first will appear in newspapers around the County beginning July 21 (2016). The second and third will hit at two week intervals.

I'm trying to convey:
•what I think is the most fundamental cause of this debt,

•why I believe no group is more responsible for creating this debt than the County's Retirement Board,

•that employees and retirees have a moral duty to the People of our County to help clean up the mess their reprentatives on that Board made,

•what I believe the fundamental goals of a resolution of this threat must be,

•that by far the best fair resolution would be to reach a "Grand Bargain" among the key stakeholders in our County,

•but I believe the most likely future is our County will be driven into federal bankruptcy and a huge write-down of pension benefits will be imposed on retirees and employees.

It could take a surprisingly long time to get there. The longer it takes to confront this threat the worse the ultimate cost will be.

Click the links at the upper right of this page to see these articles with links to the analysis that supports them.

8/14/16: According to internal financial statements Mendocino County's Retirement Board that controls the County's Pension Fund appears to have increased the County's unfunded pension debt somewhere in the $40 to $50 million range in the fiscal year ending June 30, 2016.

This shows the County's unfunded pension debt over the past 20 years including my projection as of June 2016 - unfunded pensions owed to the Pension Fund and the balance of Pension Bonds sold to eliminate earlier unfunded pensions.

The Retirement Association's unaudited "Income Statement" (called "Statement of Changres in Plan Net Position") for June 30, 2016 is available at this link.

The market value of the Pension Fund's assets declined $18 million for two reasons. Instead of earning it's assumed return on investments of 7.25% it lost about 2%. And the Fund paid out $32 million for pensions and administration costs, but County and employee contributions were only $25 million.

Also the total pension obligation almost certainly increased $30 million. This shows the total obligation over the past 20 years. This is how much the Pension Fund should have to be fully funded. The value for June 2016 is a projection of the long-term growth of total obligations.

If indeed unfunded pension debt increased, say, $45 million taxpayers and residents will have to pay a total of about $85 million more (including interest) that won't provide one minute of services or fill one pothole.

DAVID v. GOLIATH
in MARIN COUNTY

David Brown is a core member of Marin County's Citizens for Sustainable Pension Plans (CSPP) - one of California's most active County pension reform groups.

David's trying to help all of us. We need to help him.

Twenty-one counties have independent Pension Funds. Grand Juries in 3 produced reports showing the process their counties used in granting massive pension increases in 2002 - 2004 violated key California laws designed to protect the public's right to know and be heard.

This is a BIG DEAL. Another example of the desdain of County and Retirement officials about legal obligations to the People. And - illegally granted pension increases might be reversable in court.

David is filing suite in Marin Superior Court to force Marin County to admit it's failure to obey the law. If they do - or the Court rules they did - Round 2 gets really interesting.

Marin County is spending big bucks to fight David and has filed a motion that David must PERSONALLY pay all their legal costs.

Please visit David's explanation of what he's trying to do - and give David what you can to help this good man fight this fight that needs to be won.

Click for the Grand Jury Reports and Responses from Counties: Marin (4/16/15), Sonoma (June 2012), Sutter (5/18/16 - report only - no responses)

Courtesy (mostly) of American's best public-pension news source - PensionTsunami.com (the date is when the story appeared in PensionTsunami - link opens new window).

7/30/16 - Bankrupting Pensions - One Basis Point at a Time(Mike Larson - Money and Markets)

7/29/16 - California's Ignored Pension Crisis is Only Getting Worse(op-ed - Sacramento Bee)

7/25/16 - Urgency Needed in Addressing Sonoma County Pension Crisis (editorial - Press Democrat)

7/25/16 - California's Politicians Ignore Long-Term Effects as They Seek Instant Payoff (column - Dan Walters / Sacramento Bee)

7/15/16 - Bad CalPERS Earnings Worsen $93 Billion Taxpayer Debt (column - Daniel Borenstein / Mercury News)

7/11/16 - Sonoma County Pension Report Is a Must-Read (editorial - The Press Democrat)

7/5/16 - California's Public Employee Pensions Are an Enormous Problem (op-ed - Kerry Jackson / Orange County Register)

7/5/16 - California Pensions Take Above-Average Tax Bite (blog - Ed Mendel / Calpensions)

7/5/16 - REPORT: California's Pension Crowd-Out (pdf - Wayne Winegarden / Pacific Research Institute)

7/1/16 - A Tale of Two California Pension Funds -- First in a Series (David Crane / Medium)