What To Do?

First - Recognize We Have a Problem

Before you can solve a problem, you need to recognize you have one. And you need to define what that problem is. Most County officials still deny the extent of its debt problem, and far too many local political activists are still unaware of the extent of the problem.

In this highly "politicized" County there is great danger the debt issue would immediately become polarized and ideological. The more we can agree on the nature and dimension of this problem, the more likely eventual "solutions" will actually "solve" the problem. But there isn't much time.

"Constitutional" Agreement Among People Active in Local Politics

In our system of government the people are supposed to hold their governments accountable. We have to admit that we in our County didn't do so. We believe there are two changes needed.

First, we believe there needs to be broad agreement across the political spectrum to a specific set of financial duties of County officials:

• Tell us the financial truth
• Manage our finances competently and transparently
• Protect and build our County's financial strength
• Don't force unfair payments onto our kids

These duties transcend ideology and political affiliation.

A majority of people active in local politics need to agree to hold elected officials accountable to live up to these duties.

Second, a system needs to be developed to provide politically active people across the spectrum with the information they need to judge whether or not these duties are being fulfilled.

We intend to help organize an association of local financial professionals that will track the County’s finances and debt. The strategic purpose is to be an effective link between our financial analysis and politically active citizens in our County across the political spectrum.

The group will use their professional knowledge to answer this question - “Are County officials fulfilling these four core financial duties?” Political issues such as the level of taxes, what programs are funded, and so on would not be part of this association's deliberations. Members of this group would "leave their political guns at the door".

Reorganize Public Services Across the County

If all the County's obligations are to be paid, somewhere between $15 to $20 million will be paid each year for the next several decades. These payments would consume most of the County's property tax income and much of the County's truly discretionary funding.

The County historically has dealt with financial crises one year at a time - focusing solely on its own budget and making tiny adjustments here and there to cover their cash deficits.

If that's how the County responds to this crisis over the next two years we will suffer a very significant cut back in vital public services.

The only way to avoid that fate is to conduct a thorough and "no holds barred" reorganization of how public services are organized, financed and delivered all across the County - including cities and special districts.

We propose the following goal:

Those specific numbers may need to be revised, but they are in the ball park of what needs to be done.

Such a reorganization is the only way we can regain control over our discretionary County funding and secure the vital public services our communities need over the next 3 decades.

Reform the County's Financial Planning

The main planning system the County uses to plan its finances is the County Budget. The Budget is a one year cash flow plan. It does not project the County's finances beyond one year. It ignores the development of unfunded retiree benefit debt. It doesn't incorporate a long-term County infrastructure capital plan - such as adequate road maintenance.

Technically - the Budget doesn't include projections of the County’s Balance Sheet. Therefore it doesn’t incorporate or plan for long-term shifts in major capital items (land, buildings, major equipment) and financing items (debt in particular).

The County simply can’t work its way through this long-term debt quagmire if it doesn’t extend its planning horizon at a minimum to five years. Of course it doesn’t have to do anywhere near the detailed planning it does for its one year budget, but it should project major programmatic and departmental spending and revenues out that far. And it needs to add into that mix all significant changes in its Balance Sheet, including debt, capital assets, and the financial position of retirement benefits.

It needs to test a range of scenarios - ".what if the State raids our funds again? What if the economy recovers? What if it doesn’t?". They have to build reserves in the relative "good times" to support programs through the "bad times".

You get what you manage for. If you focus only on the short term, you get the long-term reality you planned. That is, you get an unplanned reality.

Serious Evaluation of Retiree Benefits

County leaders will utterly fail their responsibilities to the citizens if they do not perform a complete and "no holds barred" evaluation of the structure and management of its retirement benefits.

YourPublicMoney.Com takes no position on what the County's retirement benefits should be. We absolutely take the position that whatever they are, fund them properly, don't build up significant unfunded obligations, report their finances truthfully, and don't allow the funding of retiree benefits to gut public programs.

The County should have a serious discussion about what its retiree benefits are. It also needs to examine how they are managed.

The Mendocino County Employees Retirement Association (MCERA) is the smallest non-CalPERS County System in the State. It is directly responsible for producing about $200 million of Mendocino County’s debt.

Our County should take a serious look at joining the larger public employee retirement systems in the state instead of maintaining an independent county system. The same needs to be done about the County’s "Self-Insurance" for healthcare. Can one of the smallest Counties in California do a good job being its own insurance provider - given the record?

Blame Past Officials - Not Those in the Future Who Have to Deal With It

These huge problems were forced on the future by past Boards and County officials. The pain the County can no longer avoid would have been prevented had earlier officials fulfilled their duty.

People are going to scream "bloody murder" at the officials who didn't create this mess but who now have to clean it up. They need to be asked "where were you when this debt developed? Why didn't you do something about it when we still had a chance to avoid this pain?"

Don't blame the people who will try to fix this mess; blame those who created it.