Fall 2017 Articles
Hiding Pension Increases & "Fraudulent" Funding of Health Care
I started digging into Mendocino County's unfunded pension debt 13 years ago. I had no idea how much bad news I'd find.
Mendocino County's unfunded pension debt is the largest of the 21 CA Counties with independent Pension Funds compared to its assets. Some of what happened was unique. But much happened in many other counties.
The near-complete lack of real accountability is a brutal lesson that applies to nearly all County Pension Funds.
For the first several years of digging into this mess I made a point of saying I hadn't seen evidence of breaking laws.
And then I saw it. And then I saw more. And more.
The People of Mendocino County (population 88,000) must pay a total of TWO-THIRDS OF A BILLION DOLLARS to eliminate unfunded pension debt that wasn't supposed to exist. It won't produce one minute of public services or fill one pothole.
This debt was created by the unaccountable Retirement Board that runs our County's Pension Fund and County officials. Illegal activity played a major role.
Today's Retirement and County officials refuse to tell the People about this. They want us to shut up and pay.
|
|
Summer 2016 Articles
Reality Sometimes is Very Painful
Retirement and County Officials hid what they were doing. They denied financial reality. They sacrificed the County's long-term financial health for their short-term benefit. They found clever ways around the law. No one felt accountable for the accuracy of Pension Fund and County financial reports.
Local papers ran three articles in Summer 2016 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. We all failed.
In these articles I tried 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,
•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 federal bankruptcy and a huge write-down of pension benefits imposed on retirees and employees.
The longer it takes to confront this threat the worse the ultimate cost will be.
Click the links in the lower table at the upper right of this page to see these articles.
|
|
3/21/18:
Twenty-one California counties have independent County Pension Funds. As of this date only one - Imperial - has not released its June 2017 audited statements.
A few weeks after Imperial finally releases its statements I'll publish a more complete report. This is a "Sneak Preview".
The graph below shows the percentage that debts are of total assets and whether or not there are more assets than debt (or vice versa).
Click for a larger image.
The red columns are unfunded pension debt. There are 2 kinds - "Net Pension Liabilities" owed to the Pension Fund and the remaining balance of Pension Bond debt (in the "black boxes"). That's money borrowed in the past by selling Bonds to eliminate earlier Net Pension Liabilities. The source of the debt's the same - unfunded pensions.
The pink columns are all other debts. The green columns show the percentage the value of assets was greater than total debt for 17 counties. The 3 counties with more debt than assets have no "green".
Seventeen reported more Assets than Debts. They had "positive" Net Assets. Three - Fresno, Mendocino, and Sacramento - reported more Debt than Assets. They have "negative" Net Assets. They owe more than they own.
For the first time since major reforms in government pension financial reporting were imposed in 2015 Mendocino County is no longer at the bottom - Fresno is.
However - the County in the best shape once again is Tulare.
|
|
American's best public-pension news source focusing on (but not limited to) California. Jack Dean emails you a daily listing of yesterday's media articles and reports. Click through to the articles you want.
Ed Mendel is a long time political reporter in Sacramento. Research and writing are excellent. Focus on big statewide systems CalPERS and CalSTRS but often delves into local governments. Ed's exposed a number of outrageous violations of the public trust. A wealth of articles on a broad range of issues.
I've learned more of importance from Girard Miller than any other expert. Although he stopped being public finance analyst for Governing Magazine several years ago a number of his articles are still the best available. Link above is listing of all his articles - look for those about pensions. In particular read Pension Puffery.
This takes you to a list of "Resources for California Pension Reform". Scroll to the bottom for a list of their excellent reports.
The state's most complete public record for pensions and employee compensation.
Another site with gobs of information about California's state and local pension debt. Produced by Stanford Institute for Economic Policy Research.
|