Score: -3 (1/13/4)

Mendocino County Grand Jury • 2011-2012

Mcera Evaluation Time to take the next step

Published: April 18, 2012 6 pages

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⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Findings and Recommendations 25 findings

MCERA is responsible for the investment of retirement funds.

Related Recommendations (3)

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

MCERA encourage the BOS to revisit pension benefits to renegotiate and reduce benefits for new hires. (Findings 1-2, 20)

MCERA produce reports that facilitate better financial management to sustain principle assets and eliminate the need to sell off investment assets to pay for obligations. (Findings 1, 22, 23-24)

The County, under the direction of the BOS, is responsible for negotiating public employee benefits. 2

Related Recommendations (5)

MCERA encourage the BOS to revisit pension benefits to renegotiate and reduce benefits for new hires. (Findings 1-2, 20)

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

BOS examine pension benefits for new hires and renegotiate to reduce benefits, which are not sustainable. (Findings 2, 20, 25)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

In 1998, retiree health benefits were discontinued for new employees after the date of the resolution.

Related Recommendations (1)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

The county continues to partially fund non-Medicare eligible retirees.

Related Recommendations (2)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

The county has 1044 active employees.

Related Recommendations (2)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

The county has 1174 retired employees.

Related Recommendations (2)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

COLA increases are allowed up to 3% per year.

Related Recommendations (1)

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

Declines in the funded ratio due to market conditions, growing pension liabilities, and the opportunity to reduce interest costs on pension liabilities resulted in the issuance of POBs in 1996 and 2002.

No recommendations for this finding

This year’s POB deficit is $82.98 million.

No recommendations for this finding

F10

The Buck Consulting firm and MCERA collaborated in 2005 on questionable actuarial practices to justify “excess earnings” of $9.6 million.

No recommendations for this finding

F11

Some of the 2005 “excess earnings” were diverted to fund health care.

No recommendations for this finding

F12

Ultimately, this $9.6 million was written off as a loss in FY 2010-2011.

Related Recommendations (1)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

F13

The IRS is currently reviewing the county’s diversion of “excess earnings” as part of the Volunteer Correction Program (VCP). The VCP is associated with the maintenance of tax-exempt status.

Related Recommendations (2)

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

MCERA participate in the early trial implementation of the revised GASB 25 offered by the IRS. (Findings 13, 21)

F14

In February 2007, the BOS and the Board of Retirement Ad Hoc Committee recommended hiring an independent MCERA Administrator.

No recommendations for this finding

F15

The MCERA Administrator was hired in October 2008.

No recommendations for this finding

F16

The new administrator position was created to establish an organization with supporting policies and procedures that increase the effectiveness and transparency of MCERA.

No recommendations for this finding

F17

The hiring of a full time director and staff increased MCERA salary costs from $167,000 a year in 2007 to $322,000 a year in 2010.

No recommendations for this finding

F18

The creation of an independent MCERA has increased the effectiveness and the cost of its operation with the creation of Comprehensive Annual Financial Reports (CAFR), a web presence, and televised meetings.

No recommendations for this finding

F19

Since 2008, the following changes have been made through a formal Request For Proposal (RFP) process: • In October 2009 the financial consultant Peter Chan was replaced by Callan Associates • In March 2011 the actuarial consultants Buck Consulting was replaced by Segal Company • In July 2011 the audit consultant Jim Sligh was replaced by Gallina LLP.

No recommendations for this finding

F20

MCERA’s unfunded actuarial accrued liability (UAAL) as of June 30, 2010 was $91,784,613. In this year’s actuarial valuation, the UAAL has increased to $124,912,676.

Related Recommendations (1)

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

F21

The revised GASB reporting standards, to be implemented in 2013, will reflect a current financial market value of pension assets and liabilities.

Related Recommendations (1)

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

F22

MCERA liquidates investment assets on an “as needed” basis to meet pension requirements.

Related Recommendations (1)

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

F23

Decision making information has not been readily available to MCERA due to failure to produce cash flow reports.

Related Recommendations (2)

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

MCERA produce reports that facilitate better financial management to sustain principle assets and eliminate the need to sell off investment assets to pay for obligations. (Findings 1, 22, 23-24)

F24

The CAFR is produced a full year after the financial reporting period, too late for planning purposes.

Related Recommendations (3)

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

MCERA produce reports that facilitate better financial management to sustain principle assets and eliminate the need to sell off investment assets to pay for obligations. (Findings 1, 22, 23-24)

F25

MCERA has lowered its 8% projected investment return rate to 7.75%, which has a 54% probability of fulfillment over the next 28 years. 3

Related Recommendations (1)

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

Agency Responses 5

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.

Board of Supervisors

July 31, 2012 • 3 pages • 4 responses • Score: 0 (+0, 4, 0) View Details ▾

PDF

4 responses to findings and recommendations

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

Response: Implemented

Score: 0

Recommendation 3:</b> This recommendation has been implemented and reflects current practice and is ongoing.

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

Response: Implemented

Score: 0

Recommendation 4: This recommendation has been implemented and reflects current practice and is ongoing.

BOS examine pension benefits for new hires and renegotiate to reduce benefits, which are not sustainable. (Findings 2, 20, 25)

Response: Implemented

Score: 0

Recommendation 5: This recommendation has been implemented and reflects current practice and is ongoing.

BOS authorize and support the creation of an initial plan to manage pension sustainability. (Findings 2, 4-6, 9, 12-13, 20, 25)

Response: Implemented

Score: 0

Recommendation 6: This recommendation has been implemented and reflects current practice and is ongoing.

Board of Supervisors

April 02, 2012 • 8 pages • 1 response • Score: -1 (+0, 0, -1) View Details ▾

PDF

1 response to findings and recommendations

F13

The IRS is currently reviewing the county’s diversion of “excess earnings” as part of the Volunteer Correction Program (VCP). The VCP is associated with the maintenance of tax-exempt status.

Response: Disagree Score: -1

, the District does not permit, track or regulate the transport and lay-down activities associated with the use of Rubberized Asphalt Concrete. Therefore, the District has never required odor control plans or neighborhood odor patrols from contractors. The requirement for an "odor control plan" in the case of Rubberized Asphalt Concrete production is a permit condition contained in the permit issued to the production facility only. Finding 15: The Mendocino County Board of Supervisors disagrees with this finding based on the following information submitted by the Mendocino County Air Pollution...

Board of Supervisors

March 30, 2012 • 4 pages • 5 responses • Score: -3 (+0, 2, -3) View Details ▾

PDF

5 responses to findings and recommendations

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

Response: Will Not Implement

Score: -1

Recommendation 1: This recommendation will not be implemented.

MCERA encourage the BOS to revisit pension benefits to renegotiate and reduce benefits for new hires. (Findings 1-2, 20)

Response: Will Not Implement

Score: -1

Recommendation 2: This recommendation will not be implemented because it has been determined that the current arrangement has been both successful and cost effective.

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

Response: Implemented

Score: 0

Recommendation 3: This recommendation has been implemented and the Mendocino County Board of Supervisors will continue to provide available funding to the Mendocino County Sheriff's Office.

BOS examine pension benefits for new hires and renegotiate to reduce benefits, which are not sustainable. (Findings 2, 20, 25)

Response: Will Not Implement

Score: -1

Recommendation 5: This recommendation will not be implemented as the Mendocino County Board of Supervisors is unable to direct the Sheriff regarding staff assignments and is therefore unable to implement this recommendation.

MCERA produce reports that facilitate better financial management to sustain principle assets and eliminate the need to sell off investment assets to pay for obligations. (Findings 1, 22, 23-24)

Response: Implemented

Score: 0

Recommendation 7: This recommendation has been implemented.

Board of Supervisors

March 28, 2012 • 4 pages • 6 responses • Score: 0 (+0, 6, 0) View Details ▾

PDF

6 responses to findings and recommendations

MCERA have a thorough understanding and a documented account of all fixed monthly pension costs. (Findings 1, 22-24)

Response: Implemented

Score: 0

Recommendation 1: This recommendation has been implemented.

MCERA encourage the BOS to revisit pension benefits to renegotiate and reduce benefits for new hires. (Findings 1-2, 20)

Response: Implemented

Score: 0

Recommendation 2: This recommendation has been implemented.

BOS have a working knowledge of the county’s pension obligations and current investment return trends. (Findings 2, 20-21, 24-25)

Response: Implemented

Scheduled: Fiscal Year 2010 Score: 0

understanding that the EOC should never have been staffed beyond the level required by a specific emergency. As stated in the OEC Coordinator's response, one of the lessons learned during the debriefing of the Tsunami response of March 11, 2011, is to utilize the EOC for all incidents such as the Tsunami response. This keeps the EOC staff familiar with their roles, duties, and EOC operations systems and also promotes more effective communication and a consistent concept of operations throughout the emergency management and emergency response disciplines. Recommendation 4: This recommendation h...

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

Response: Implemented

Score: 0

Recommendation 4: This recommendation has been implemented.

BOS examine pension benefits for new hires and renegotiate to reduce benefits, which are not sustainable. (Findings 2, 20, 25)

Response: Implemented

Score: 0

Recommendation 5: This recommendation has been implemented.

This year’s POB deficit is $82.98 million.

Response: Disagree Partially Score: 0

: The Mendocino County Board of Supervisors disagrees in part with this finding. Based on the response submitted by HHSA, REHIT has responded to 7 incidents in the first quarter of 2012.

Board of Supervisors

March 07, 2012 • 5 pages • 3 responses • Score: +1 (+1, 1, 0) View Details ▾

PDF

3 responses to findings and recommendations

BOS examine alternative pension strategies and proposals to reduce liabilities and increase funding. (Findings 2-7, 17, 20)

Response: Will Implement

Score: +1

Recommendation 4, 5, 8: These recommendations have not yet been implemented, but will be implemented in the future.

F14

In February 2007, the BOS and the Board of Retirement Ad Hoc Committee recommended hiring an independent MCERA Administrator.

Response: Unknown Score: 0

and this finding, both of which are incorporated herein, by reference. The temporary lack of appropriate check in windows and waiting room space resulted in construction delays and was always intended to be corrected. See the response to this finding by the HHSA Director for more information. Recommendations 1, 2, 6, 7: These recommendations have been implemented. The Board of Supervisors incorporates herein, by reference, the responses to these recommendations prepared by the HHSA Director. Recommendation 3: This recommendation is not feasible under current budgetary conditions, and therefor...

F15

The MCERA Administrator was hired in October 2008.

Response: Disagree Partially Score: 0

: The Mendocino County Board of Supervisors partially disagrees with this finding based on the response by the HHSA Director, which is incorporated herein, by reference.