Score: -2
(1/1/3)
Mendocino County Grand Jury
• 2011-2012
A Report on the Teeter Plan How did we get to this point?
⚠️ Aviso de traducción: Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 31 findings
F1
County Counsel recommended in a memo to the CAO in 1993 that written agreements to participate in a Teeter Plan be obtained from two-thirds of the participants in the Pool before adopting the Teeter Plan.
No recommendations for this finding
F2
The GJ found written agreements from 22 Pool participants regarding the Teeter Plan.
No recommendations for this finding
F3
The County never sought judicial approval in adopting the Teeter Plan as suggested in the California Debt Issuance Primer.
Related Recommendations (1)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
F4
The Plan funding Note #1993-1 was issued on November 1, 1993 and expired on June 30, 2000.
Related Recommendations (1)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
F5
The Plan funding Note #2003-1 was issued on May 23, 2003 and expired on April 1, 2011.
Related Recommendations (1)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
F6
The Plan debt increased from the initial debt of $5,426,949 on November 1, 1993 to a high of $11,243,824 on June 30, 2008.
No recommendations for this finding
F7
Interest payments on the Plan debt are computed on a short-term basis.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F8
The Plan debt has been in existence for approximately 19 years.
Related Recommendations (3)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F9
Short-term notes are issued for periods of one year or less.
Related Recommendations (3)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F10
Long-term notes are issued for periods of over one year.
Related Recommendations (3)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F11
During fiscal year 2011-2012, the County’s long-term credit rating was lowered to BBB-, just above junk bond status.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F12
At the November 8, 2011 Board of Supervisors meeting, it was announced that the County couldn’t get refinancing on Certificates of Participation (COPs) because the County can’t get insurance for refinancing due to the long-term credit rating.
Related Recommendations (2)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
F13
However, at the March 13, 2012 meeting, the Board of Supervisors announced that the Insurance Company reconsidered their position and agreed to cover the COPs. This change of position was a result of the over 400 employee layoffs and other cost saving actions taken to balance the budget by the Board of Supervisors.
Related Recommendations (2)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
F14
The background information regarding the Plan supplied to the Board of Supervisors for this meeting, entitled “Preliminary Official Statement Dated (POS Date)”, states on that the County, “…borrowed from the County Treasury” to fund the Plan.
Related Recommendations (1)
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
F15
The numbers supplied to the Board of Supervisors in anticipation of the November 8, 2011, meeting, which were prepared on October 4, 2011, were not in agreement with the printout of the actual Teeter Receivable worksheet supplied to the GJ. 4
Related Recommendations (2)
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F16
In interviews, Board of Supervisors members were not initially aware of the expiration of either Note #1993-1 or Note #2003-1. It was not clear whether any of the members interviewed were aware of the existence of the notes prior to the interviews.
Related Recommendations (3)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F17
It did not appear that any of the current County officials responsible for administering the Plan, who were interviewed by the GJ, were initially aware of the notes or the respective expiration dates prior to contact by the GJ.
Related Recommendations (3)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F18
Communications among the County Treasurer, County Auditor, County Counsel and the Board of Supervisors are lacking in clarity on the issue of the Plan debt.
Related Recommendations (3)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F19
Their respective predecessors historically train the County Auditor and County Treasurer.
Related Recommendations (1)
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
F20
The GJ did not find evidence that any current County employee has ever been specifically trained in Teeter Plan financing.
Related Recommendations (2)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
R6
In all presentations to the Board of Supervisors, the respective elected County Officials provide accurate, concise and meaningful documentation for the Board of Supervisors regarding the Teeter Plan debt and particular areas of exposure to increases in defaults. (Findings 12-20)
F21
Most of the interviewees the GJ spoke to appeared to be (initially) unacquainted with the California Debt Issuance Primer (CDIP).
Related Recommendations (1)
R1
The County hires a Bond Counsel to advise them on how to handle the historical Plan debt. (Findings all) 5
F22
The CDIP calls for interest on internal borrowing to be computed at a taxable rate.
No recommendations for this finding
F23
The Plan, as adopted by the County, uses internal borrowing.
No recommendations for this finding
F24
A taxable rate is the rate at which the interest on corporate bonds is computed.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F25
A non-taxable rate is the rate at which the interest on municipal bonds is computed.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F26
Short-term rates are less than long-term rates.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F27
Interest on municipal bonds is less than the interest on corporate bonds of the same credit rating and life of the bonds.
Related Recommendations (2)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
F28
For fiscal year 2008-2009, the Board of Supervisors decided to adopt a long- term repayment plan to eliminate the Plan debt. The initial repayment plan was for an additional 19-year period.
Related Recommendations (5)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R4
The Board of Supervisors continues to pay off the Plan debt as quickly as possible using the current repayment plan. (Findings 28-30)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F29
This was changed to a new projected payment date per the adopted repayment plan document to July 1, 2022, a thirteen-year period.
Related Recommendations (5)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R4
The Board of Supervisors continues to pay off the Plan debt as quickly as possible using the current repayment plan. (Findings 28-30)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F30
According to the County Auditor Staff, they anticipate actual repayment of the Plan debt within the next five to seven years. This is accomplished by a fixed payment each year with additional payments based on receipt of payment of interest and penalties from the delinquent taxpayers.
Related Recommendations (5)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R4
The Board of Supervisors continues to pay off the Plan debt as quickly as possible using the current repayment plan. (Findings 28-30)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
R7
The Plan debt continues to be reflected in the budget as a separate line item until eliminated by the completion of the current payment plan in the interest of transparency. (Findings 15-18, 28-30)
F31
The County is currently paying interest on the Plan debt at a taxable short- term rate.
Related Recommendations (3)
R2
If the Bond Counsel so advises, the Board of Supervisors issue formal recognition of the Plan debt as a long-term obligation of the County. (Findings 4-5, 8-10, 28-31)
R3
If the Bond Counsel so advises, the Board of Supervisors corrects the historical underpayment of interest to the Pool. (Findings 7-11, 24-31)
R5
If the Bond Counsel so advises, the Board of Supervisors provide for the payment of the proper amount of interest to the Pool for all future years reflecting the fact that the County’s current long-term credit rating is BBB-. (Findings 7-13, 24-31)
Agency Responses 2
Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.