Mendocino County Grand Jury
• 2009-2010
Unfunded Liability – Our Children’s Inheritance (another) Update on the Mendocino County Retirement System
⚠️ 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
In 1998 the BOS created a two-tier employee health care system. Employees hired after 1998 no longer receive retiree health benefits.
No recommendations for this finding
F3
In 2002 a second POB was issued for approximately $92 million, at a time when interest rates were favorable, which included the defeasance1 of one half of the $31 million POB issued in 1996.
No recommendations for this finding
F4
From 2004 through 2006 MCERA diverted over $9.6 million from the County pension fund to pay retiree healthcare costs. This was a questionable action; MCERA devised this as a way to solve funding issues for a shortfall in retiree health care. It may have been in conflict with California Government codes §31584 and §31587. (Appendix A)
Related Recommendations (3)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
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.
Related Recommendations (5)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R5
all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
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 (5)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the 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 (4)
R5
all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F9
The MCERA Board has produced reports which demonstrate their investments have performed at or above the level of peer counties.
Related Recommendations (6)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R5
all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F10
Mendocino County uses financial fund advisors to project investment performance over time. Investment returns on assets have been projected at 8% through 2026, when economic experts have said that the 30-year rolling average for a stock-bond portfolio is 4.4%.
Related Recommendations (6)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F11
Other entities have questioned the assumptions and data used by MCERA’s contracted actuary.
Related Recommendations (7)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R5
all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
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.
Related Recommendations (7)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R2
the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12)
R3
a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15)
R5
all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12)
R6
the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F13
In 2008 changes in GASB reporting standards §43 and §45 required that all State and local government entities disclose future retirement health care obligations and resources for this obligation. The County’s unfunded liability for health care is currently about $130 million.
Related Recommendations (3)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R8
The BOS immediately take steps to rectify the unfunded liability.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F14
In 1998 when the BOS ceased offering retiree health benefits for new employees they did not address the insufficiency of funds for health benefits already given to employees.
Related Recommendations (3)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R8
The BOS immediately take steps to rectify the unfunded liability.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
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.
Related Recommendations (2)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F16
The economic downturn which began in the fall of 2008 has compounded fiscal problems for cities and counties. Major cuts from the State have severely restricted County funds.
Related Recommendations (4)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R4
the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F17
Investment funds have not fully recovered from the 2008 stock market downturn. Critics have projected it would take an increase of 17% per year for eight years to grow the MCERA investments back to cover the recent losses. Critics see this as an unrealistic expectation.
Related Recommendations (4)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R4
the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F18
Revenues from property and sales taxes are decreasing.
Related Recommendations (4)
R1
the MCERA Board adopt a rate of return that reflects the current economic environment and question the actuarial recommendations. (Findings 9-12,16- 18)
R4
the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F19
Individual health care and retirement payroll contributions are increasing, while positions are being eliminated due to budgetary shortfall.
Related Recommendations (3)
R4
the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F20
For the first time, the number of retired County employees is expected to be greater than the number of current County employees, due to layoffs.
Related Recommendations (2)
R7
the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan.
R18
2. the MCERA Board insure that an independent audit be performed on past and present actuarial assumptions and make a full and transparent disclosure of the results to the public. (Findings 6-7, 9-12) 3. a citizens’ financial oversight committee be established to monitor the County obligations assumed by the transactions of the MCERA Board, and to bring a critical view, transparency and fresh ideas to the UAAL problem. (Findings 4, 6-7, 9-12,15) 4. the MCERA Board and Administrator closely monitor the impact of the retirement fund on the County budget, rather than comparing the performance with other counties. (All Findings) 5. all MCERA financial reports be structured so that both the actuarial value of assets and the market value of the pension fund assets (as of a specific date) be made public. (Findings 6, 8-9,11-12) 6. the MCERA conduct a review of excess earnings; develop a policy that articulates the definition of excess earnings and plans for future allocation. (Findings 4,6-8,10-12,15,17) 7. the MCERA Board monitor and study the issues and solutions developed by other counties. (Findings 7-20) , e.g.: • clearly state the Retirement Fund’s financial position regularly and, when necessary project the amount needed for recovery and develop a plan, • design a two tier retirement plan for employees. Other counties are developing a “401-K” type plan. Existing employee plans have been frozen with future contributions put into a “401-K” type plan. The County could make a small percentage matching contribution, • no defined benefit plans for new employees, reducing the amount of benefits paid by the County, • reduce the pension plans for all employees, enabling them to retire earlier and allowing new employees to start at a lower salary and benefit levels, and/or delay pension payment until the employee reaches age 65, • reduce staff levels, consolidate functions, and review salaries, freeing money to pay down debt, • closer monitoring of investment risk, • full disclosure of unfunded liability, • no payment be given an employee who opts out of the health plan. 8. The BOS immediately take steps to rectify the unfunded liability.
F21
Prior GJ pension fund reports have been ignored by the BOS, evidenced by the fact that they have not adjusted the debt repayment.
No recommendations for this finding