Mendocino County Grand Jury
• 2009-2010
• Agency Response
Response to:
BRING BACK THE DOG!
Response Form Grand Jury Report Title: Unfunded Liability - OUR Children's Inheritance Report Dated: June 3, 2010*
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 21 findings
F1
In 1996 the County authorized issuance of $30.7 million in POB.
No recommendations for this finding
F2
Resolution 98-147 stated in part that only those retirees hired before September 1, 1998, and has a minimum of ten (10) years of service with the County of Mendocino would be eligible for Retiree Health care. Active employee health care remained unaffected by this action. The Board of Supervisors partially disagrees with this finding.
Related Recommendations (1)
R2
Resolution 98-147 stated in part that only those retirees hired before September 1, 1998, and has a minimum of ten (10) years of service with the County of Mendocino would be eligible for Retiree Health care. Active employee health care remained unaffected by this action. The Board of Supervisors partially disagrees with this finding.
F3
POB's issued in December 2002 in the amount of $91,945,000 were used in part to defease one-half (1/2) of the outstanding principle of 1996 bonds. The outstanding principle was $23,795,000, and the proceeds used to prefund the defeasance of the 1996 bonds amount to $13,220,000. The Board of Supervisors agrees in part with this finding. The
Related Recommendations (1)
R3
POB's issued in December 2002 in the amount of $91,945,000 were used in part to defease one-half (1/2) of the outstanding principle of 1996 bonds. The outstanding principle was $23,795,000, and the proceeds used to prefund the defeasance of the 1996 bonds amount to $13,220,000. The Board of Supervisors agrees in part with this finding. The
F4
Board believes that this action was done at the recommendation of the Consultants for MCERA. See also response of MCERA. The Board of Supervisors can neither agree nor disagree with this
Related Recommendations (1)
R4
The following Recommendation will not be implemented by the Mendocino County Board of Supervisors because it is not warranted and/or not deemed reasonable, attached, as required is an explanation therefore. It is not within the authority of the Mendocino County Board of Supervisors to direct the MCERA Board to implement this recommendation. The Board supports the concept of MCERA closely monitoring the impact of the retirement fund on the County Budget, but also recognizes that comparing MCERA to other retirement systems provides important measurements of how well MCERA's Board, staff and consultants are performing their duties.
F5
In 2008 the MCERA Board took the action of hiring its own manager independent of the BOS.
No recommendations for this finding
F6
In 2009 the MCERA Board projected a $66.9 million UAAL. This amount has been disputed by citizens who argue that using the market value of holdings makes the UAAL twice as much. Defeasance: Auditors may allow a debt to be 'defeased' or extinguished for reporting purposes provided that pre-conditions are met.
No recommendations for this finding
F7
In 2009 the State of California instructed public entities to follow GASB standards to include UAAL as a foot note in their financial statements. This may increase the interest charges on borrowed funds.
Related Recommendations (1)
R7
The following Recommendation will not be implemented by the Mendocino County Board of Supervisors because it is not warranted and/or not deemed reasonable, attached, as required is an explanation therefore. It is not within the authority of the Mendocino County Board of Supervisors to direct the MCERA Board to implement this recommendation. However, several of the specific points made in this recommendation are not within the authority of MCERA. Mendocino County, as a 1937 Act County, is legally constrained in its ability to modify retirement benefits. The County is currently reviewing the implementation of a two-tier system for new hires. No payments are made to employees who opt out of the health plan. The Mendocino County Board of Supervisors supports closer monitoring of investments by MCERA, and full transparency regarding unfunded liability.
F8
The County is one of few 1937 Act Counties in the State where the "excess earnings" from investments have continued to be used to provide health insurance funding for retirees. This fund is projected to be depleted by the first quarter of 2011.
Related Recommendations (1)
R8
The following recommendation has been implemented by the Mendocino County Board of Supervisors and attached, as required, is a summary describing the implemented actions. The unfunded liability is addressed by the Board on an annual basis through the County's budget process. Additionally, the Chief Executive Officer has formed a "Debt Committee" comprised of the CEO, County Auditor-Controller, County Treasurer-Tax Collector, and the Retirement Administrator. This Committee is working to systematically identify all debts of the County, and make recommendations as to how they can be addressed in a comprehensive and sustainable manner.
F9
The MCERA Board has produced reports which demonstrate their investments have performed at or above the level of peer counties.
No recommendations for this finding
F10
finding, as it does not know the data source used. The Board of Supervisors can neither agree nor disagree with this
Related Recommendations (1)
R10
finding, as it does not know the data source used. The Board of Supervisors can neither agree nor disagree with this
F11
Other entities have questioned the assumptions and data used by MCERA's contracted actuary.
No recommendations for this finding
F12
An approved industry process called "smoothing" is also used to level financial changes over time. Using this process helps the County avoid dramatic annual changes in their share of payment toward the retirement fund, making the budget projections more predictable. Normally, the actuaries "smooth" investment gains and losses over five years.
No recommendations for this finding
F13
GASB 43/45 liability for Mendocino County is zero. The Board of Supervisors disagrees with this finding, because the
Related Recommendations (1)
R13
GASB 43/45 liability for Mendocino County is zero. The Board of Supervisors disagrees with this finding, because the
F14
finding as it is confusing as to whether the report refers to retirees or active employees. The Board of Supervisors can neither agree nor disagree with this
Related Recommendations (1)
R14
finding as it is confusing as to whether the report refers to retirees or active employees. The Board of Supervisors can neither agree nor disagree with this
F15
Funding for the retiree health plan was to come from excess earnings from retirement systems investments. The County states that excess earnings have been calculated on an annual basis. Critics have noted that when UAAL is considered, excess earnings have never occurred.
No recommendations for this finding
F16
The economic downturn which began in the fall of 2008 has compounded Major cuts from the State have fiscal problems for cities and counties. severely restricted County funds.
No recommendations for this finding
F17
finding as it has no information upon which to base an opinion as to the legitimacy of analysis "critics." The Mendocino County Board of Supervisors disagrees with this
Related Recommendations (1)
R17
finding as it has no information upon which to base an opinion as to the legitimacy of analysis "critics." The Mendocino County Board of Supervisors disagrees with this
F18
Revenues from property and sales taxes are decreasing.
No recommendations for this finding
F19
Individual health care and retirement payroll contributions are increasing while positions are being eliminated due to budgetary shortfall.
No recommendations for this finding
F20
finding. Including Court staff, there are 1,083 retirees or surviving spouses receiving benefits from the retirement system as of June 30, 2010. This is compared to 1,273 active contributing members, and 301 inactive, deferred, or reciprocal members. DISAGREES: The Board of Supervisors disagrees with this finding as the
Related Recommendations (1)
R20
finding. Including Court staff, there are 1,083 retirees or surviving spouses receiving benefits from the retirement system as of June 30, 2010. This is compared to 1,273 active contributing members, and 301 inactive, deferred, or reciprocal members. DISAGREES: The Board of Supervisors disagrees with this finding as the
F21
Board of Supervisors has considered prior Grand Jury reports.
Related Recommendations (1)
R21
Board of Supervisors has considered prior Grand Jury reports. RECOMMENDATIONS: Recommendations 1, 2, 3, 5, 6: The Mendocino County Board of Supervisors has no specific information regarding these recommendations and therefore incorporates by reference herein, the responses to findings prepared by Mendocino County Employees' Retirement Association. Recommendation 4: The following Recommendation will not be implemented by the Mendocino County Board of Supervisors because it is not warranted and/or not deemed reasonable, attached, as required is an explanation therefore. It is not within the authority of the Mendocino County Board of Supervisors to direct the MCERA Board to implement this recommendation. The Board supports the concept of MCERA closely monitoring the impact of the retirement fund on the County Budget, but also recognizes that comparing MCERA to other retirement systems provides important measurements of how well MCERA's Board, staff and consultants are performing their duties. Recommendation 7: The following Recommendation will not be implemented by the Mendocino County Board of Supervisors because it is not warranted and/or not deemed reasonable, attached, as required is an explanation therefore. It is not within the authority of the Mendocino County Board of Supervisors to direct the MCERA Board to implement this recommendation. However, several of the specific points made in this recommendation are not within the authority of MCERA. Mendocino County, as a 1937 Act County, is legally constrained in its ability to modify retirement benefits. The County is currently reviewing the implementation of a two-tier system for new hires. No payments are made to employees who opt out of the health plan. The Mendocino County Board of Supervisors supports closer monitoring of investments by MCERA, and full transparency regarding unfunded liability. Recommendation 8: The following recommendation has been implemented by the Mendocino County Board of Supervisors and attached, as required, is a summary describing the implemented actions. The unfunded liability is addressed by the Board on an annual basis through the County's budget process. Additionally, the Chief Executive Officer has formed a "Debt Committee" comprised of the CEO, County Auditor-Controller, County Treasurer-Tax Collector, and the Retirement Administrator. This Committee is working to systematically identify all debts of the County, and make recommendations as to how they can be addressed in a comprehensive and sustainable manner.
* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.