Reality Sometimes is Very Painful

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.

Last summer I wrote three articles to the People of Mendocino County and our County's employees and retirees summing up what I've learned and where I believe we're heading. It isn't pretty.

I wish County officials ten to twenty years ago had taken their financial duty seriously. I wish employees and retirees had held their Retirement Board accountable for gutting their Pension Fund. I wish We the People had taken our democratic (small "d") duty to hold our County accountable seriously. But we all failed.

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,

•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.

UPDATE: 4/5/17: Twenty-one California counties have independent County Pension Funds - 20 have released their June 2016 annual audited financial statements. (Only Marin has yet to do so. When it does I'll release a full analysis of these counties!

Here's a little taste. This shows "Common Size Balance Sheets" for these counties "general government" functions (sheriffs, roads, public assistance, etc.). Red and pink bars together are the percent of each county's total debts compared to its total assets. If it has more assets than debt then it has "positive net worth" - the green bars. Mendocino, Fresno and Sacramento have more debt than assets. They have"negative net worth". They're "in the red" - "Balance Sheet Insolvent".

Click for a larger image.

Red bars without boxes are "Net Pension Liability" - the amount of unfunded pensions owed to the Pension Fund. ALL these County Pension Funds are underfunded. Red bars IN boxes are amounts still owed for Pension Obligation Bonds sold in the past to eliminate earlier Net Pension Liabilities. About 2/3 of the counties sold bonds to get a lower interest rate than their Pension Funds charge. The Pension Funds got the bond money - the People still owe the debt.

Pink bars are all other debts - construction loans, accounts and salaries payable, etc.

Mendocino is the most financially damaged by unfunded pensions. It has nearly 20% more debt than assets. It's held that dubious distinction for as long as I've kept track of these 21 counties - 10 years. Once again Tulare reports it's in the best shape - also the position it's held for those years.

I hope to have the full report available in a few weeks.

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)

A monthly round-up of some of the articles about unfunded pensions and other retirement debt that caught my eye - 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).

3/29/17 - Huge Pension Cost Increases Loom Ahead for Sonoma County's Cities (op-ed - Ken Churchill / Press Democrat)

3/29/17 - What's Happening With Kern County's Pension Costs? It's a Mixed Picture (James Burger / Bakersfield Californian)

3/27/17 - Your Pension Could Be at the Center of America's Next Financial Crisis (Jeff Reeves / The Hill)

3/24/17 - Public Pension Crisis Too Big for Markets to Ignore (column - Danielle DiMartino Booth / Bloomberg)

3/23/17 - Why It's Raining Rate Hikes at the Marin Municipal Water District: Pay and Pensions (op-ed - Dick Tait / Marin Independent Journal)

3/22/17 - Kern County's Pension Fund Is Underfunded by $2 Billion, Says Report (Daniel Freeman / KGET-TV Channel 17 News)

3/10/17 - CalPERS, Unions Deceiving Public About Pensions (column - Daniel Borenstein / East Bay Times)

3/8/17 - Why California Cities and Counties Should Be Scared by Pension Payments (editorial - Sacramento Bee)

3/8/17 - California Fire Districts Are Morphing Into Retirement Plans (Marc Joffe / California Policy Center)

3/7/17 - Too Late to Turn the Tide on Santa Monica's Salaries and Pensions (Kate Cagle / Santa Monica Daily Press)

3/6/17 - Despite a Booming Economy, Oakland's Finances Deteriorate (column - Daniel Borenstein / East Bay Times)

3/3/17 - CalPERS Threatens to Slash Pension by 63% for Some Unfortunate Retired East San Gabriel, California Public Employees (Tyler Durden / Zero Hedge)