Financial Professionals
Our Community Needs Your Help!

Most of what makes for "good financial management" isn’t political or ideological at all.

If open-minded financial pros - regardless of political ideology - look at the facts and analysis almost all will agree our County's debt is dangerous, and could have and should have been avoided. Almost all will agree not only the debt must be confronted - but financial management and accountability must be hugely improved.

Most financial pros would agree on a wide range of proposed solutions - again not ideological - but technical.

No one has yet come close to proposing a real plan to confront this dangerous debt and reform financial management . Such plans need to be proposed and properly evaluated. At some point a comprehensive plan - almost certainly a compromise - must be implemented.

Most of our County's debt is unfunded retiree benefits. There are a number of ways we can "overcome" this debt - but all are highly controversial. The stakes are huge.

There will be "politics" - but the more we can "de-politicize" what the facts are and clarify the problems - and if we can submit proposals to professionally credible analysis - the more likely an effective solution will evolve.

Again - Want to learn more? Send an email - click here.

Over the past year – scattered among news and analysis – I published four in a series of five articles laying out my "big picture" understanding of our County's debt. This is the fifth – what to do about it. The four previous articles lay the groundwork for what why we are organizing the Coalition. (Link may open new window or new tab.)

1) The Debt: Past & Present
2) Major Actuarial Error
3) Two Huge Threats
4) Core Financial Problems

Articles 1) “Debt Past & Present” and 4)”Core Financial Problems” are especially important to understand why we are organizing the Coalition as we are.

The Coalition will be composed of two new non-profit corporations. We’ve filed the Education Fund’s Articles of Incorporation to established the new non-profit (click to see - may open new window/tab) with the state. We expect to file Articles for the larger Coalition in Spring .

CGFA Education Fund : A core of qualified independent financial professionals will review professional analysis of our County’s finances and financial management, make evaluations and recommendations, inform the second group, and educate the public about critical issues. This will be tax-exempt AND tax deductible.

The organizing Board of Directors for CGFA Education Fund are Ted Stephens (financial and retirement advisor), John Robertson (CPA), and myself – John Dickerson (analyst and planner).

Larger Coalition : A larger group of active respected concerned citizens from across the political spectrum will engage with those professionals to understand the financial issues, communicate what’s important to broader groups of citizens across the spectrum and county, and advocate for the reforms and accountability needed.

On 12/12/11 the Mendocino County Board of Supervisors met with the County's Retirement Board.

One Supervisor - Carre Brown - said something the local press completely missed. Click to see - Less than 2 minutes.

"It's difficult for me as a first-term Supervisor to look at information (about the County's Pension Fund) and believe I can have trust in it." Think about what it means when a County Supervisor comes to that conclusion.

In January 2011 Retirement Administrator Jim Andersen gave the Retirement Board the draft "Actuarial Valuation" for June 30, 2010. Valuations lay out the Pension Fund's financial position and sets Pension contributions for employers and employees.

The Net Investment Profit for 2010 was reported as $44.7 million. That's a key number that affects the Valuation.

The following month Anderson passed out the draft Audited Financial Statements for June 30, 2010 produced by a CPA. That document showed Net Investment Profit for 2010 to be $38.1 million - $6.5 million less!

There isn't supposed to be a difference - they should be EXACTLY the same. Andersen hadn't noticed the difference - nor did any of the Retirement Directors - except for Ted Stephens.

I had compared the two reports and saw the difference. Ted confirmed the error. Ted said to the Retirement Board "How can we approve these two reports with a $6.5 million error - and we don't know which one is wrong?"

Well - the Retirement Board DID approve the two reports - with the $6.5 million error!

Andersen gave a memo to the Retirement Board in March 2011 that stated the Actuarial Valuation was in error - the Actuary had included transfers from the Pension Fund to pay Retiree Healthcare as if the transfer were investment profits!

Well - LAST MONTH the Retirement Association got it's latest Actuarial Valuation. Guess What.

It carried forward the same $6.5 million error - it wasn't corrected!

The Retirement Board - over Ted Stephen's objection - approved the Actuarial Valuation - WITH THE SAME $6.5 MILLION ERROR!

I can give dozens of examples of information from the Retirement Association FULL OF ERRORS - and never "fixed".

No one in the County or Retirement Association (until Ted came along) seems to think it's their job tomake sure the reports are "right".

Our County has the highest debt per capita of all California counties because of this kind of deeply flawed financial management.

Supervisor Brown is completely justified in not having trust in the information Supervisors receive about the Pension Fund!

Frankly - until I started no one ever analyzed County and Retirement Fund financial reports from the public's point of view. It does't have to be me - but by now we should know someone has to do this analysis - and that's one major reason we need the Coalition Education Fund.

No one ever looked over the County's financial shoulder from the public's point of view and today's hugely destructive debt is the result.

At the end of the December 12 Supervisors - Retirement Board meeting all 5 Supes had some important things to say (click to see - 16 minutes). What "Pension Reform" means to them, what went wrong, what the underlying problems are. Important insight into how Supes think.

In my last email newsletter I talked about how 2012 would be the year of "Pension Reform". I thought the year in California would be dominated by a 3-way chess game with public unions. Governor Brown, and an group named Californians for Pension Reform (CPR) pushing for a major ballot initiative.

Oops. CPR announced they wouldn't put their initiative on the November ballot after all.

All links open either a new window or tab if clicked. San Diego Union-Trib slams Attorney General Kamala Harris' Dirty Trick on Pension Reform. Calpensions opines that the action will now focus on many much stronger local reform ballot measures. The SacBee says it's time for Jerry Brown to come up with a Pension Plan B and agrees Harris produced an "inaccurate and dishonest" summary of CPR's proposed initiative.