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Old Mendocino County Courthouse Around 1915

California County Pension Debt

 

Mendocino County's Pension Debt



Impact of the Pension Debt:

Local Taxes Diverted to Pay Pension Debt



Mendocino County's Unfunded Pension Debt


Choices -

Five Main Impacts

Local Taxes Consumed

Staff Cuts

Public Service Cuts - Failing Roads

Pressure to Raise Taxes & Fees

Loss of Local Control

 

Unfunded Pension Debt is Consuming Local Taxes

These show Mendocino County's total local tax income and how much the County's pension-related payments were as a proportion of that tax income. (Note 1)

1997
Total Tax Income = $29.2 Million
in $Millions
Mendocino County's Local Income Tax Income and Pension-Related Payments - 1997
  2015
Total Tax Income = $63.4 Million
in $Millions
Mendocino County's Local Income Tax Income and Pension-Related Payments - 2015
In 1997 the County's local tax income was $29.2 million - and it's pension-related payments ("Normal Contribution" + Unfunded Pension Amortization") was $3.6 million - 12% of local tax income. The County's local tax income grew to $63.4 million in 2015 and it's pension-related payments were $23.1 million - 36% of local tax income - a proportion three times higher than 2 decades before.


Changes in Local Tax Income & Pension-Related Payments

  $ Millions   Percent of Total Local Tax Income   Annual Growth Rate
  1997 2015   1997 2015
Pension Related Payments
  Unfunded Pensions 0.9 8.1 3% 13% 13%
Pension Bonds 0.0 7.9 0% 12% na
Total Unfunded Pension Debt Pmts 0.9 16.0 3% 25% 17%
Normal Contribution 2.7 7.1 9% 11% 6%
TOTAL 3.6 23.1 12% 36% 11%
County Local Tax Income
Taxes Net of Pension-Related 25.7 40.3 88% 64% 3%
Total Local Tax Income 32.8 86.4 100% 100% 4%

Pension-related payments grew three times faster than local tax revenue over those 18 years. Although yearly growth will vary from the long-range average, pension-related payments will continue to grow significantly faster than tax revenues over many years into the future.

The "driver" of increased pension-related payments is unfunded pension debt - both Net Pension Liability owed to the Pension Fund and the remaining balance of Pension Obligation Bonds. The County paid about $900,000 to reduce unfunded pension debt in 1997. They paid about $16 million in 2015 - more than 16 times greater.

That $16 million should have been used to provide mental health services, make sure there's a uniformed deputy sheriff on duty all the time, support the county library, fix our rapidly decaying county roads, build up a rainy day fund for the next recession, and much more. That's what We the People of Mendocino County expect our County to do with the property and sales tax we pay to the County. But an amount equal to 1/3 of the local taxes We the People pay is being diverted to pay a debt that isn't supposed to exist.

That unfunded pension debt exists because County and Retirement officials dramatically failed to do what they said they'd do - completely fund pensions with only Normal Contributions and investment profits.

 
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