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Old Mendocino County Courthouse Around 1915

California County Pension Debt


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Mendocino and Beyond


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Contents Below - scroll down the page

My Articles in Local Papers

New Pension Reporting Rules

10 Years - Officials Refuse
to Answer Questions

Gina Raimondo - Rhode Island's Pension Reform Hero

Moody's Adjustments of
Government Pension Finances


Memos & Reports

City of San Diego Pension Crisis

Grand Jury Reports

IRS Voluntary Correction Program

Peer Review of My Analysis

No on Measure C Campaign


CA Public Employee Pension "Reform Act"

Fall 2017

The 88,000 People of Mendocino County yours must pay a total of TWO-THIRDS OF A BILLION DOLLARS to eliminate unfunded pension debt that isn't supposed to exist.

This debt was created by the unaccountable Retirement Board that runs our County's Pension Fund and County officials. We believe illegal activity played a major role in creating this debt. But today's Retirement and County officials refuse to tell you about this. They want us to shut up and pay.

I wrote a series of 3 articles laying out two major examples of law breaking. They are being printed in newspapers around Mendocino County in Fall, 2017.

Mendocino County's Mental Health Tax and Unfunded Pension Debt (Opens pdf file - Published October 2017)

Mendocino County Officials Hid Pension Increases from the People (Published November 2017)

A $9.6 Million Pension Fund Fraud? (To Be Published Early December 2017)

I don't know what the second biggest threat to our County government's ability to function is. But whatever it is it's nowhere close to the massive damage unfunded pension debt payments will impose over the next 25 years.

Summer 2016

These three articles were published in four local newspapers around Mendocino County in Summer of 2016. (Links open pdf files.)

Mendocino County's Unfunded Pension Debt - the Cost of Rewarding Failure (Click to see - Published 7/21 - 7/24)

County Employees & Retirees - Your Pension House is On Fire! (Published 8/4 - 8/7)

County Pension Grand Bargain or Bankruptcy - Which Do You Prefer? (Published 8/18 - 8/21)

On April 22, 2014 the Steering Committee of Mendocino County's "Reform Our County Coalition" (ROCC) submitted s letter signed by nearly 300 County residents addressed to County and Retirement Association officials and major County bargaining units - aka "unions". The core request was ...

Please read the attached Questions about Mendocino County's Unfunded Pension Debt and Analysis of that Debt produced by the "Reform our County Coalition - Mendocino". We ask you to confirm or disprove their analysis and conclusion (and) answer their questions.

Before we can solve big problems we first have to recognize we have them. Then we need to understand what they are. Before talking about solutions we need to know what's true and accurate. Are the attached analysis and findings essentially correct? If they aren't, please relieve our deep concern by proving they're wrong.

As of the end of August 2014 the County Board of Supervisors and CEO haven't responded in any way. However, the Retirement Board responded in a letter dated 7/23/14. It was preceded by a response from Mendocino County Supervisor John McCowen writing in his role as a Retirement Director. His response was referred to and in part incorporated in the Retirement Board's response.

County Treasurer-Tax Collector Shari Schapmire chaired the Retirement Board and County Auditor-Controller Lloyd Weer was a retirement Director at the time of this "Questions" Report. We can assume the Retirement Board's response represented their views as well unless they say otherwise.

In simple terms the Retirement Board and Supervisor McCowen answered 4% of the questions. They refused to answer the other 96%.

These are the documents:

Citizen's Letter to Officials with Signatures

My April 17, 2014 analysis with questions:
7 Page Summary of Analysis
Full Report - 22 pages plus attachments)

I suggest you read the summary - it has all the questions - and if you want more info go to the same section of the full report.

Here are the responses:

John McCowen's response with my reply
the Retirement Board Response

John McCowen's response (Mendocino County Supervisor from Ukiah writing as a Retirement Director) is much more extensive than the Retirement Board's and is included by reference in the Board's response.

Moody's is one of the nation's major credit rating agencies. They think government financial reports don't "tell the truth" about the great risk of unfunded pension debt. They are going to make major adjustments in setting ratings.

Moody's Investor Service's Proposed Changes in Analyzing Government Pension Data: (1/11/13 (939KB)

YourPublicMoney.Com produces memos and larger reports from time to time about the issues addressed in this website.

County Comparisons: California County comparative debt measures, rank ordering, and graphs based on the Annual Counties Report from the State Controllers Office - pdf files

Note - I stopped producing these reports because the State Controller didn't include unfunded pensions as County Debt and had a very weird way of dealing with significant real estate debt. After the new pension financial reporting rules are implemented (see top right column) I'll pick up producing these reports again.

How Pension Funds Work : (8/4/10) Actuaries plan and analyze pension funds. You can't know how our County got this deep in debt or what needs to be done about it if you don't understand what they do. This is my best effort to explain the basics as simply as I can. For concerned citizens who want to and officials who need to understand. Be prepared to spend a few hours. It's important. - 35 page pdf file (658KB)

Mendocino County's Long Term Debt: (8/31/11) This is the third major revision of my comprehensive analysis of our County's debt. 26 page report with a 3 page summary - pdf file (1.17 MB)

The "CSAC Affair": (5/23/11) County officials didn't attempt to refute any of my findings until they wanted voters to approve a sales tax increase. They asked the California State Association of Counties (CSAC) if my finding that our County is the most indebted per capita in California is correct. The first report from CSAC said I was wrong - real wrong. Supervisors started waving the report around. I challenged the CSAC analysis on his data. A week later he admitted he "couldn't replicate his results" - and it look like I was correct (with a qualification or two). After that - not one peep from County Supervisors. - pdf file (204KB).

BOS Debt Actions: (UPDATED - 4/26/11) A Sampling of Board of Supervisors actions regarding debt since 1996 - 15 years of deeply flawed financial management of retiree benefits - pdf file (210KB).

Two Huge Financial Threats - County of Mendocino - Next Five Years: (4/5/11) A two page summary of the report below.pdf file (164KB)

Two Huge Financial Threats - County of Mendocino - Next Five Years: (4/5/11) Two major financial threats are likely to push Mendocino County into insolvency within the next five years - more than doubling of debt payments within 3 to 4 years and a loss of ability to borrow short term operating loans.19 page report with 2 page summary - pdf file (902KB)

Bad News Just Got Much Worse - Pension Fund Payments to Double: (2/28/11) In January 2011 Mendocino County's Pension Fund's Actuary - Buck Consultants - admitted they made very serious errors in their analysis of the Pension Fund over many years. As a result they recommend the County's payments to the Pension Fund increase from $9 million to $13 million. This was the same error discovered 2 years ago in Stanislaus County. One year ago Supervisor Smith strongly assured the public Buck hadn't made the same mistake here - but it did.9 page pdf file (496KB)

Mendocino County's Financial Time Bombs - In Place and Lit: (8/5/10) A month ago I saw what I'm afraid is the specific path that will lead Mendocino County to financial disaster. - 6 page pdf file (467KB)

Unfunded Pension Payment Schedules (Amortization) : (6/21/10) The County of Mendocino was required to begin to make Unfunded Pension Deficit payments in fiscal year 2010-11 on top of its normal yearly contributions. This paper describes how payment schedules developed by the County's Retirement Association are deeply flawed, and presents corrected schedules. The method being used by the County to determine annual payments doesn't even pay interest expense for the first 12 years and therefore increases the County's debt.- pdf file (401KB)

Excerpts from First Mendocino County Debt Report dated 10/16/08 (NOTE - zip file link below): (2/4/10) The purpose of this excerpt from the original 45 page report is to show Mendocino County citizens the breadth, depth, and extent of this report that County officials have not made even one attempt to refute in the 16 months since it was published. - pdf file (915KB)

Excerpts from First Mendocino County Debt Report dated 10/16/08 (NOTE - zip version): (2/4/10) A "zip version" of the report above - should download in 1/3 less time, but you have to be able to "un-zip" the file. pdf file (656KB)

The 800 Pound Gorilla: (8/27/09) A 1 page summary of the paper below - pdf file (296KB)

The 800 Pound Gorilla: (8/27/09) 6 pages - The Market Value of the County's Pension Fund is about $113 million less than it needs to be to pay all the pensions it owes in the future. County officials are focusing on trying to reduce payments to the Fund over the next few years to help get through the current budget crisis. But they are ignoring the "800 Pound Gorilla". - This debt will grow 8% a year until it is eliminated. This is a very dangerous situation and there are no good solutions - pdf file (367KB)

Questions for 3/18/09 Meeting: (3/12/09) Memo for meeting arranged by 2 Supervisors with me and Retirement Association officers - questions, data, analysis. Retirement officers did not prepare for these questions and for the most part have made no attempt to answer them. pdf file (398KB)

Two Stories: (5/10/09) These narratives give a sense of how the County Board of Supervisors has approached issues relating to its debt including telling the people the truth - web page in new window.

Retiree Healthcare Debt Brief: (10/8/08) Analysis of Mendocino County's Retiree Healthcare debt-with AON consulting valuation attached - pdf file (519KB).

The Mendocino County Grand Jury has produced three reports regarding Mendocino County's unfunded pension debt and the Mendocino County Employees Retirement Association (MCERA) in the past decade.

2010 Grand Jury Report - Unfunded Liability - Our Children's Inheritance: (6/7/10) The most recent Grand Jury report. "MCERA neither reflect(s) realistic possibilities for financial growth, nor demonstrate(s) transparency in their reporting". " Mendocino County's short term thinking has resulted in the real possibility of financial disaster including bankruptcy". "Major cuts in personnel, salaries and services are necessary ...". "Several past GJ reports ... have been ignored ... Current criticism by community members cannot be easily ignored. The questions raised need to be answered." "Communications with the public must be transparent and accurate". "Basic assumptions of MCERA need to be examined". "The citizens of Mendocino County need to hear truth, not rhetoric.". pdf file (140KB)

2006 Grand Jury Report - Dollars and Sense: a Report on Retirement Funding: (6/1/06) pdf file (399KB)

2003 Grand Jury Report - The Mendocino County Employees Retirement Association: (6/30/03) pdf file (366KB)

Three financial professionals reviewed our analysis of Mendocino County's debt with a focus on the cause of most of that debt - unfunded retiree obligations. The group was organized at the end of 2009. In early February 2010 the Group published a letter in the Ukiah Daily Journal and provided the County Board of Supervisors with a more detailed report about their findings. Both are available below.

Video of 2 Peer Group Members "stirring up" County Supervisors: Financial Pros deliver bad news to the Board of Supes - some get excited (video - 24 minutes).

Letter to BOS and Citizens: This is the text of the article that was published in the Ukiah Daily Journal on 12/2/10. (pdf file - 92KB).

Report to Board of Supervisors: This is a more detailed report of Peer Group findings and recommendations that was provided to the Board of Supervisors. (pdf file - 37KB).

These are some of the more important sources of data and information we used in our analysis of Mendocino County's debt.

General List: A pdf file with many of the important data sources - pdf (321KB)

County of Mendocino Audit (Financial Statements) Reports: Available online for 2000 forward. Previous year audit reports available in the County Auditor's Office at 501 Low Gap Road, Ukiah.

County of Mendocino Final Budgets: Some online. Previous year budgets available in the County Auditor's Office or County Chief Executive Office at 501 Low Gap Road, Ukiah.

Mendocino County Employees Retirement Association Audits, Valuations: MCERA began putting these and other reports on line in 2009. Previous reports available at MCERA office, 625-B Kings Court, Ukiah

Counties Annual Reports: State Controllers Office website page listing all publications - choose the Counties link.

Public Retirement Systems Annual Report: State Controllers Office website page listing all publications - choose the Public Retirement link.

Actuarial Valuation - Retiree Healthcare: (8/21/08) First report County ever received about its Unfunded Retiree Healthcare debt - pdf file (323KB).


The Governmental Accounting Standards Board (GASB) adopted huge changes in how state and local governments must report pension finances were on June 25, 2012. The rules are known as "GASB Statement No. 68".

Public Pension Fund financial statements will change in 2013-14, and government financial statements will change in 2014-15.

The new rules will hit thousands of local and state governments in the US like a ton of bricks.

I developed a model that estimates what recent financial statements for the 21 California counties that have their own Pension Funds would have been had GASB 68 been in effect. I applied that model to show the impact on my home county - Mendocino - and on several other California counties with independent County Pension Funds.

Unmasking Pension Debt & Hidden Expense: (3/13/13) The impact of the new rules on 7 California Counties: Alameda, Contra Costa, Marin, Mendocino, Orange, San Mateo, and Sonoma. Their 2011 audits reported a total of $10 Billion of Net Assets. If the new rules had been in place it would have been $1 Billion. $9 Billion of Net Worth would have been wiped out. This report describes the new pension finance reporting rules and changes in how Moody's Investor Services evaluates unfunded local and state pension debt. - 19 pages. pdf file (1.1 MB)

Major Pension Financial Reporting Reform = Major Hit on Mendocino County: (8/8/12) The impact of the new rules on Mendocino County - 11 pages. pdf file (654 KB)

Very Short Description of My GASB 68 Predictor Model: (8/8/12) A short description of my model - 2 pages. pdf file (164 KB)

Summary Description of My GASB 68 Predictor Modely: (10/16/12) A somewhat longer description description, summary of a more complex paper not posted here at this time - 8 pages with 5 pages of quotes from GASB 68. pdf file (790 KB)

Video - New Pension Financial Reporting Rules: (8/23/11) My video explaining why GASB's reforms are so important in "non-technical" lingo - for Concerned Citizens. - Windows Media file (12 minutes)

"Official Comment Letter" to GASB on New Rules - : (9/27/11) GASB received hundreds of letters reviewing their proposed standards. This is my comment letter. It's a case study of Mendocino County. Would the new rules have helped? What do they miss? - 17 pages. pdf file (703 KB)

Gina Raimondo was running a Rhode Island venture capital firm when the mother of two read that a growing fiscal crisis might force cutbacks in libraries and busses. The threat drove her to seek public office for the first time. "I literally put the paper down and said 'I have to do this. I have to run.'"

Raimondo was elected Treasurer of Rhode Island in November 2010 in a landslide. One year later because of her incredible leadership Rhode Island adopted the nation's most extensive public pension reform ever. The heavily Democratic union-supporting Legislature passed the bill 57 to 15 in the House, 35 to 2 in the Senate.

Raimondo was elected Governor of Rhode Island in November 2014 and is one of the most outstanding Democratic Party leaders in the US who is a staunch Pension Reformer.

Gina Raimondo's Shining Example -Pension Reform in Rhode Island: (10/5/12 updated 1/24/13) With a one page summary -
•I compare Rhode Island to California (some similarities, some huge differences)
•How she achieved the nation's most complete pension reform in her first year in office
• The major changes obtained
• How these changes re-aligned employee and retire focus to support positive Pension Fund perrformance
• The financial impact of the reform on the state
• How a Democratic Party leader engaged the public unions and won
• And what California can learn.

"Truth in Numbers - The Security and Sustainability of Rhode Island's Retirement System: (June 2011) Raimondo's hugely effective 14 page report to the People of Rhode Island "to lay out the main reasons for the state's pension challenges, explain the implications for all Rhode Islanders, and offer a framework for devising solutions".

Click here for a list of video programs you need to view these videos.

These are best viewed on high-speed internet connections.

Some people can't pause the videos or rewind - most should be able to. If you have that problem, you may want to download the video. Windows users - right click- then "Save Target As" - give it a name and browse to the folder to which you want to save it.

First California County Pension Reform Conference

I produced this conference held in San Rafael (Marin County) on 5/10/14. These are videos of the afternoon public session.

San Jose Mayor Chuck Reed - Keynote Speaker - "The California Rule & the Reed Initiative - Help Local Governments Avoid Insolvency" : Chuck Reed, the 64th Mayor of San Jose, was re-elected in 2010 with 77% of the vote. In 2012, nearly 70% of San Jose voters passed pension reform supported by Mayor Reed. (video - 29 minutes)

Alameda - Contra Costa - Marin - Mendocino - Sonoma - San Mateo: Financial Impact of Unfunded Pensions : John Dickerson (video - 28 minutes)

California Pension Reform - History & Future : Legislature, Lawsuits, Bankruptcy, Local Initiatives - Jack Dean, Dan Pellissier, Karol Denniston, Lance Christensen, Moderator: John Dickerson (video - 43 minutes)

County & City Officials : How bad is it? What must be done? What can be done? - Dan Gjerde, Larry Chu, Linda Pfeifer - Moderator: Michael Lotito (video - 42 minutes)

Elections & Reformers : Getting Reformers elected, How to "run on Reform", What would you do? - Duf Sundheim, Andrew Crutchfield, John Lowry, Holly Madrigal, Ken Churchill - Moderator: Michael Lotito (video - 42 minutes)

Conference Wrap Up : John Dickerson (video - 5.5 minutes)

Other Videos

Supervisors - "What's Wrong With our County Pension Fund?" 12/12/11: Supervisors each saying what they think is "wrong" with the County's Pension Fund and what "Pension Reform" means to them at the end of a joint session with the County's Retirement Board. (video - 16 minutes, 53 seconds)

"I Can't Have Trust in Retirement Association Reports" 12/12/11: First District Mendocino County Supervisor Carre Brown explains why she doesn't trust financial information about the County's Pension Fund. (video - 1 minute 50 seconds).

What are Mendocino County's Legal Options in Changing Pension Benefits? 12/12/11: Report from County Counsel and CEO to joint session of County Supervisors and Retirement Board about what the County's legal options and constraints are about changing pension benefits.

BOS Being Told of Buck Error in Stanislaus - Supervisor Smith's Denial - released 3/2/11: Snippet of me telling County Supervisors on 2/2/10 that an "Actuarial Audit" in Stanislaus County in December 2008 reported that their Pension Fund's Actuary - Buck Consultants - committed very substantial errors that will force that County's payments to its Pension Fund to significantly increase. As of the date of the release of this video Buck has been our County Pension Fund's Actuary for well over 10 years. The video shows Supervisor Kendall Smith flatly denying Buck made the same mistake here - which we found out one year later they did. (video - 3 minutes 46 seconds).

Bill Gates on Public Pensions - released 8/14/10 - "Gates interviewed at the July 2010 Aspen Ideas Festival - asked about if the US has a problem with unfunded state and local government pensions - Gates states "only fradulent accounting" allows governments to pretend they have balanced budgets. (video - 5 minutes).

Comments on Grand Jury Report on Retirement Association and Violations of Law - released 6/20/10: My comments to County Supervisors on 6/9/10 (the day after the County Grand Jury released its third report on our County's Retirement Association in the decade) focusing on very possible violations of law (video - 5 1/2 minutes).

Retirees at Board of Supervisors 4/2/10 - "We've Been Betrayed": Mendocino County Retirees tell Board of Supes how they feel about termination of County funding of retiree health benefits (video - 16 minutes).

First Do No Harm - 12/9/09: The video that exposed the "political fraud" of funding Retiree Healthcare with so-called "Pension Fund Excess Earnings". Since this video was released the County abrogated its previous commitment to pay for this benefit, and as of mid-2011 this benefit is no longer being paid by the Retirement Association. Our problem wasn't that retirees were getting healthcare benefits - it's the fact it was paid for by increasing the County's long-term debt. (a serious video - slightly over 50 minutes).

My Fundamental Criticism of "Pension Fund Excess Earnings" - released 10/15/09: I laid out my analysis of why the County and Retirement Association's use of so-called "Pension Fund Excess Earnings" is so deeply flawed for County Supervisors in their 9/9/09 meeting (2 1/2 minutes).

Board of Supervisors - 9/15/09 - Part A: Good discussion of changes needed in County Planning process (planning for the County, not the Building Department). You see frustration at the lack of County Executive leadership. 15 minutes.

Board of Supervisors - 9/15/09 - Part B: Supervisor Colfax gets very angry at another Supervisor - mostly uncut. 20 minutes

Board of Supervisors - 6/3/09: Working on fiscal year 2009-10 budget. Issue - layoffs in Sheriff's Department. You will see for yourself the desperate situation. - 8 minutes.

A pension scandal blew up in the City of San Diego in 2003. It was the first big media story in what has today become a nationwide pension debt crisis. Many officials lost their jobs, some were prosecuted, and the City was hit with numerous penalties and judgments. Voters restructured the Retirement Board and kicked all the incumbents out.

The most penetrating analysis I've yet read about any local government pension crises is the "Kroll Report" about this City issued in 2006. The Executive Summary is an amazing document - if you are concerned about local and state government financial crises you should read it. There are issues specific to the City of San Diego - but its analysis of the City's systemic and government cultural problems is painfully relevant to thousands of local and state governments across the US.

Our Summary of the "Kroll Report" : (4/7/10) The Kroll Report is the most comprehensive analysis of a case of terrible mismanagement of the funding of local government retiree benefits. There are very interesting parallels with Mendocino County. - pdf file (194KB)

The Executive Summary from the "Kroll Report" - dated 8/8/06 : This is the Executive Summary of the Kroll Report. They summarize what went wrong and why, why it took so long to get to serious effective reform, and a list of powerful recommendations highly relevant to just about all local and state governments. - pdf file (260KB)

After voters threw the old City of San Diego Retirement Board out the new Board initiated what's called a "Voluntary Correction Program" (VCP) with the IRS. Under that program retirement systems identify violations of law and other requirements that could jeopardize the Pension Fund's tax advantages with the IRS, calculate the monetary damage that's been done and if it is significant how the damage will be "fixed", and commit to make whatever changes in laws and ordinances and procedures are necessary to make sure they don't happen again.

The San Diego Pension Fund's first VCP filing identified 1 "failure" that could jeopardize its tax-advantaged status. Its last filing 2 and a half years later identified 14. Most were "dotting i's and crossing t's" - not all that big a deal. Two were very big deals - one of which is extremely relevant to Mendocino County - the use of (phony) "Excess Earnings" to pay retiree healthcare benefits that resulted in more and more long term County debt.

All 20 independent County Pension Funds in California organized under the "County Employee Retirement Law" (CERL) are going through this VCP process today (Spring 2012) and reports should begin to come out fairly soon. I expect some shocking disclosures.

Legal Analysis of Voluntary Correction Plan Settlement: (3/27/08) If you want to see the breadth of complexity of the San Diego VCP - this is for you. Outside counsel analysis of final agreement, the final agreement itself, and the comprehensive "Compliance Strategy Report" that guided the City Retirement Board through the process - pdf file (6.2 MB!!!)

Extract from Legal Analysis - the Final Agreement and Surplus Earnings-Healthcare: (3/27/08) An extract from the much bigger document above. This has the complete final VCP Agreement (11 pages) and some excerpts of the analysis regarding the use of "Surplus Earnings" to pay retiree healthcare - pdf file (490KB)

Pension Board OKs Adoption of IRS Plan: (12/22/07) An article in the San Diego Union Tribune describing the agreement - pdf file (115KB)

Remaining Balance in the Retiree Health Insurance Reserve - Letter from Mendoicno County Retirement Association to County: (12/22/07) This letter from Mendocino County's Pension Fund to the County describes why the Fund will not continue to pay retiree healthcare costs as a result of its participation in the VCP process. - pdf file (115KB)

The County of Mendocino put Measure C on the November 2010 ballot attempting to raise the county's sales tax one-half percent for 10 years. County officials said "Measure C will preserve vital public services during these difficult economic times". We demonstrated the money would be consumed by increasing unfunded pension payments within 3 years. Measure C lost by a 70% No v. 30% Yes vote.

This link opens a page that explains the campaign and its results - and provides examples of print and radio ads.

The Measure C Campaign

PEPRA was signed into law in September 2012. Although it does some good things, compared to the scale of the problem it's trivial.

One Page Abstract: (10/12/12) (138KB)

Eight Page Summary: (10/12/12) (670KB)

Full Report: (10/12/12) (1.54MB)

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