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Old Mendocino County Courthouse Around 1915

California County Pension Debt


Mendocino County's Pension Debt

Immediate Causes of the Debt

The Fraud of Pension Fund "Excess Earnings" Part Three

Immediate Causes of Unfunded Pension Debt

Choices -

Immediate v. Fundamental Causes

Inadequate Investment Profits

Not Enough Money Invested

The "Excess Earnings" Fraud

Retained Profits Even Worse

Actuary Built In Debt

Other Immediate Causes


MendoCERA’s Actuaries “Built In” County Debt Related to Excess Earnings

MendoCERA’s Actuaries calculated the “Normal Contribution” (click to see definition)– split between the County and employees - based on the assumption the Pension Fund would AVERAGE its target rate of return. But clearly the Actuaries knew that the diversion of “Excess Earnings” to pay retiree healthcare made it impossible to average the target rate of return given the financial position of the Pension Fund in those years.

By maintaining the assumed rate of return at 8% during most of this period while the Pension Fund was earning less on average and also diverting so-called “Excess Earnings” out of the Pension Fund to pay retiree healthcare the Actuaries clearly defined a value for required Normal Contributions that was far too low to fully fund pensions being earned in those years.

Therefore the Actuaries designed more County debt into MendoCERA’s Actuarial Valuations.

And – therefore the Retirement Board adopted Actuarial Valuations that would unavoidably produce more County debt given the real performance of the Pension Fund over those decades.

How could the Actuaries and Retirement Board have told people with a straight face the Pension Fund would average it's target rate when they knew everytime it exceeded that rate they'd take the money out of the Pension Fund?

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