San Mateo County Grand Jury
2012-2013
From the annual report
The consolidated year-end volume. The individual investigations it contains are listed separately below.
📑 Year-End Report
The full consolidated volume; individual reports are listed below.
Individual reports (9)
Findings & Recommendations
5 findings
F1:
The COE should have documented ROP policies and procedures that conform to those recommended by the state.
Related Recommendations (1)
R1:
The Grand Jury recommends that the County’s Office of Education do the following:
Direct Staff to document the fundamental policies for its ROP. The following topics, mentioned in the Instructions and Guidelines for the development of the 2008-2012 Career Technical Education (CTE) Local Plan, California Department of Education, should be considered: • Evaluation of program success • Accountability, and continuous improvement • Leadership at all levels • High-quality curriculum and instruction • Career exploration and guidance • Student support and student leadership development • Industry partnerships • System alignment and coherence • Effective organizational design • System responsiveness to changing economic demands • Skilled faculty and professional development • CTE promotion, outreach, and communication.
F2:
Failure by the COE to seek a federal grant for career technical education funds for the high school program may have cost the County additional funding for ROP. The 2013-14 Budget Restructuring the K-12 Funding system; www.lao.ca.gov/analysis/2013/education/restructuring-k12-funding/restructuring-k12-funding-022213/aspx. 36 http://www.ebudget.ca.gov/2013-14/pdf/Revised/BudgetSummary/Kthru12Education.pdf 37 Per COE management, these 12 counties are allowed to use excess property taxes for this purpose per the state Education Code. These counties are: Marin, Napa, Riverside, San Diego, Santa Barbara, Sonoma, Stanislaus, Santa Clara, San Mateo & Placer. San Luis Obispo and Monterey have excess property taxes but they don’t run an ROP 38 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB88 39 http://www.leginfo.ca.gov/pub/13-14/bill/sen/sb_0051-0100/sb_69_bill_20130528_amended_sen_v95.pdf 10
Related Recommendations (1)
R2:
The Grand Jury recommends that the County’s Office of Education do the following:
Take advantage of all ROP-related funding opportunities made available through the state and federal governments.
F3:
County high school students would benefit from having ROP classes more geographically dispersed throughout the County, as the majority of ROP classes taught on campuses take place in only two school districts.
Related Recommendations (1)
R3:
The Grand Jury recommends that the County’s Office of Education do the following:
Aggressively pursue potential underwriters for ROP courses. The Grand Jury recommends that each County High School District and Unified School District do the following:
F4:
Guidance counselors play a critical role in identifying the most suitable courses for each child’s education and career path.
Related Recommendations (1)
R4:
The Grand Jury recommends that the County’s Office of Education do the following:
Work with the COE to add ROP classes to its on-campus curriculum or document its reasons for not having such classes on campus.
F5:
The ROP would benefit from additional underwriting of its courses by the business community.
Related Recommendations (1)
R5:
The Grand Jury recommends that the County’s Office of Education do the following:
Require that each guidance counselor in high school districts that offer ROP courses be required to confirm they have considered discussing ROP classes as part of each student’s coursework. 11
Findings & Recommendations
6 findings
F1:
The SO is providing the police services for which the cities of Half Moon Bay, Millbrae, and San Carlos contracted within the cost perimeters of the contracts.
Related Recommendations (1)
R1:
Continue contracting police services with the SO.
F2:
Public response to the transition from individual police departments to the SO is positive.
Related Recommendations (1)
R1:
Continue contracting police services with the SO.
F3:
No increase in the number of police involved incidences has been reported by the cities due to the transition of policing services to the SO and one city, Millbrae, reports a decrease of 17 per cent in crime.
Related Recommendations (1)
R1:
Continue contracting police services with the SO.
F4:
The transition from individual police departments to the SO was incident free with former city personnel generally pleased with the change. 7
Related Recommendations (1)
R1:
Continue contracting police services with the SO.
F5:
The police service contracts between the SO and each of the cities of Half Moon Bay, Millbrae, and San Carlos serve as good models to other cities in the County which operate their own police departments and which are facing budgetary restraints.
Related Recommendations (1)
R1:
Continue contracting police services with the SO.
F6:
The trust funds for each city comprised of unallocated funds should be disclosed in financial reports and described in the policing service contracts.
Related Recommendations (2)
R2:
Discuss amendments to their contracts to include language addressing the allocation of the funds held by the SO in the trust fund accounts maintained on their behalf.
R3:
Obtain a current accounting of those trust fund accounts.
Findings & Recommendations
14 findings
F1:
The Board and the Manager share in responsibilityfor the lack of oversightthat was instrumental in allowing the embezzlement to occur. The City ofHalf Moon Bay agreeswith this finding.
F2:
The Manager and the Board' s finance committee did not recognize red flags in the financial reports that could have revealed the embezzlement far sooner. The City of Half Moon Bay agreeswith this finding.
F3:
The insurance company's denial ofthe District's embezzlement loss claim reinforces the conclusion that there were inadequate management practices, insufficient accountability, and inadequate oversight ofthe District. The City of Half Moon Bay disagrees with this finding. The issue of insurance coverage is complex, with multiple legal issues. It is not possible totake a position without an in -depth understanding ofthe District's insurance policies.
F4:
The District's Manager did notfollow policies and procedures in the hiring of one ofthe employees subsequently charged with embezzlement. The City of Half Moon Bay agrees with this finding.
F5:
The District did not have adequate internal financial controls in place to prevent the embezzlement or lead to its early discovery. The City ofHalf Moon Bayagrees with this finding.
F6:
Trustees and senior District staff should receive monthly financial reports. The City of Half Moon Bayagrees with thisfinding.
F7:
The Board in general and its finance committee in particular did an inadequate job of overseeing the District's operations. The City of Half Moon Bay agrees with thisfinding.
F8:
The Board's evaluation ofthe Manager revealed significant differences in the levels of confidence in the Manager's ability to manage the District. The Cityof Half Moon Bay agreeswith this finding.
F9:
The District would benefit from a redesigned Manager evaluation process. The City of Half Moon Bay agrees with this finding.
F10:
Trustees are confused about their responsibilities, some feeling their only role isto make district policy, while others feel they have more oversight responsibility. The City of Half Moon Bay agrees with this finding.
F11:
Even though LAFCo Commissioners rejected the recommendation to dissolve the District and transfer itsfunctions to the CEHD, this issue needs further evaluation. The City of Half Moon Bay agrees with this finding and would support further evaluation of the matter.
F12:
Cost savings could possibly be achieved with a transfer ofthe District's functions to the CEHD. of3 The City of Half Moon Bay agrees with this findingand would support further evaluation of the matter.
F13:
LAFCo would benefit from additional resources to ensure Service Reviews, as mandated by State law, are performed in a timely fashion' Response: son Mateo LAFCo ogrees with the finding ond offers additional information' The Cortese Knox Hertzberg Act (Act) sets forth budget adoption process and the funding formula for LAFCos. The Act sets forth that each LAFCo shalt adopt a budget os on Ìndependent agency' Once adopted the Act stipulates that the budget shatl be apportioned in thirds to the County, cities and independent special districts. Pursuont to the formulo, the city and independent special district shares ore determined proportionally based generalfund revenues as reported to the stote controller. The Board of supervisors does not have exclusive authority to increose the LAFCo budget. As noted in the Grond Jury Report, LAFCo composition consists of two members of the boord of supervisors, two members of city councils, two independent special dìstrict board members and a public member. This composition gives eoch lunding entity representotion in determining the LAFCo budget. tn the current fiscot year, the Commission augmented the budget by 550,000 to fund consultønt prepared reports to expedite completion of munìcipal service reviews' The Commission has the discretion in future years to odopt a budget that includes resources to complete municipol service reviews. ZO¡Z-I3 Civil Grand Jury -San Mateo County Mosquito and Vector Control District September L6,2OI3
F14:
Not all cities appoint a representative to the Board in a timelyfashion or select a qualified individual as stipulated in the Health Code. The City of HalfMoon Bay agrees with this finding.
Additional Recommendations
3
Not linked to specific findings.
R8:
That the County Board of Supervisors provide increased resources to LAFCo so it can meet state mandates with regard to Service Reviews. As noted above, the Cortese Knox Hertzberg Act gives LAFCo authority to adopt a BSSponse: budget os on independent Commission. The Boord of Supervìsors does not have exclusive authority to increose the LAFCo budget. Rg. That LAFCo further study the dissolution of the District and evaluate the cost savings that might result from transferring the function to the County Environmental Health Department. Response: This recommendation will not be implemented ot this time for the reasons stated obove. LAFCo believes it is the County Environmentol Health Division thot has the knowledge and expertise to determine the orgonizotional and fiscatfeasibility, improved occountability and transporency and cost savings that might be achieved in transferring mosquito and vector controlfunctions as well as Son Mateo County Mosquito and Vector Control District personnel, assets, etc. to the County. LAFCo will send a request to the Son Moteo County Environmental Health Division that the Division study the feasibitity of tronsferring mosquito ond vector control services to the County. The request for the study will include o request for information such øs recommended orgonizotional structure that would include absorbing appropriate personnel of the District, a recommended budget for operation, odministration and capitol improvements and provisions to ossure mointoining level of service while providing for occountability and transparency. Once more detoited fiscot evaluation is complete, LAFCo will have the opportunity to reconsider transfer of mosquito and vector control service to the County of San Mateo. please contact the LAFCO office if you have any questions or if we can be of further assistance. Mateo LAFCO CityofHalf Moon Bay 5 nii f'y pP 501 Main Street HalfMoon Bay, CA94019 650- 726 -8270 September 17, 2013 Hon. Richard C. Livermore Judge ofthe Superior Court Hall ofJustice 400 County Center, 2nd Floor Redwood City, CA 94063 -1655 SUBJECT: Grand Jury Report: San Mateo County Special Districts: Who is Really in Charge ofthe Taxpayer's Money? The Mosquito District Embezzlement: Is it theTip of the Iceberg ?" Dear Judge Livermore: At its regular meeting of September 17, 2013, the City Council ofthe City of Half Moon Bay approved the following response, based on the information contained in the Grand Jury report.
R10:
Appoint a council member to the District Board if a representative cannot be found after vetting applicants. The City agrees with this recommendation. The City currently has a representative on the District Board. The recommendation will be implemented in future recruitments as necessary depending on the results of the recruitment process.
R11:
Require regular reporting about the District’s operations by their representative at a scheduled council meeting. The City agrees with this recommendation and will establish a regular reporting schedule before the end of 2013. On behalf of the Redwood City Council, I appreciate the Grand Jury’s interest and work on this report. Thank you again for the opportunity to comment. Sincerely, Alicia C. Aguirre, Mayor City of Redwood City C: City Council, Redwood City Dr. Robert B. Bell, City Manager
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Findings & Recommendations
4 findings
F1:
Outsourcing is a point of contention between the County and the two leading unions representing County employees.
Related Recommendations (1)
R1:
Submit to the voters for approval a Charter amendment that would allow outsourcing at the County Manager’s discretion.
F2:
A Charter revision that clearly authorizes the County Manager to contract out work when deemed economically and/or operationally beneficial would provide improved legal standing for outsourcing.
Related Recommendations (1)
R2:
Establish clear lines of communication among all parties involved in making the County function as a unit, from managers to employees to unions.
F3:
Outsourcing flexibility would give the County another management tool to use when determining how best to deliver services.
F4:
Communication among the County and the two unions representing the majority of County employees appears less than optimal. 8
Findings & Recommendations
3 findings
F1:
The public benefits from financial reporting that is thorough, yet understandable.
Related Recommendations (14)
R1:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Direct staff to prominently disclose in table and/or graph form in one location in the proposed and adopted Budget the following information for the budget year and the actual amounts for the previous four fiscal years: a. Total sources of funds, including, without limitation, Excess ERAF and any other so-called “one time” revenues b. Total requirements (expenditures) c. Total increase or decrease in General Fund Reserves d. Identify non-recurring revenues or expenditures in excess of $3 million (individually or in the aggregate) from one source or for one project e. Budget amount per San Mateo resident, i.e. total requirements divided by the most current official estimate of County population f. Ten largest County expenses by category (expenditure object) e.g., employee payroll, employee benefits, amortization of unfunded liabilities, debt service, etc. g. Ten largest County expenses by department, e.g., Sheriff’s Office, Behavioral Health and Recovery Services, Human Services Agency, etc. h. Total number of workers providing services to the County in each of the following categories 1. Classified 2. Unclassified 3. Temporary/Extra Help/Intern 4. Volunteers i. The total payroll for all County employees j. The total cost to the County of all benefits to all County employees k. Total payments to contractors providing services to the County, excluding contractors making capital improvements l. The following unfunded liabilities: i. SamCERA, both as calculated by SamCERA’s actuary and calculated using a “risk free” rate of return ii. Other Post Employment Benefits (OPEB) iii. Any other unfunded liabilities not associated with bonded indebtedness m. The amount paid solely to amortize each of the unfunded liabilities listed in the preceding subparagraph The Grand Jury recommends that the County Controller do the following: 7
R1a:
and R2a Requests reporting of all sources of revenue. The Grand Jury has learned that the Budget does not report all revenue that the County anticipates receiving during a given fiscal year. For example, for FY 2013, the County anticipated receiving approximately $40 million in Excess ERAF revenue that was not shown in the Budget. In fact, this additional, 7 http://www.calpirgedfund.org/page/caf/about-calpirg-education-fund (April 20, 2013). 8 http://www.calpirg.org/news/cap/new-report-california-receives-%E2%80%9Cf%E2%80%9D- annual-report-transparency-government-spending; http://www.calpirgedfund.org/reports/caf/transparency-city- spending?__utma=1.775119842.1366460629.1366460629.1366460629.1&__utmb=1.12.10.136 6460629&utmc=1&__utmx=&__utmz=1.1366460629.1.1.utmcsr=google|utmccn=%28organic% 29|utmcmd=organic|utmctr=%28not pr (April 20, 2013). RECOMMENDATION EXPLANATION NUMBER unreported Excess ERAF revenue is now $53 million. An accurate report of all anticipated revenues is imperative to an understanding of the County’s true financial picture.
R1b:
and R2b Requests that all “requirements” (expenditures) be reported. This is already done, but it would be useful to report this amount adjacent to the report of all revenues.
R1c:
and R2c Requests reporting of increases or decreases in the County’s “rainy day fund” reserves, i.e., unrestricted monies that may be used by the County for any purpose. This information is useful in determining the County’s financial health. This information is currently reported in the CAFR but is not easily accessed.
R1d:
and R2d Requests reporting of significant non-recurring revenues and expenditures. This information is useful in understanding increases or decreases in the County’s reserves.
R1e:
and R2e Requests per capita calculations that would help County residents put into perspective the cost of County government. This information is not currently reported.
R1f:
and R2f Requests the ten largest County expenses by category, e.g., employee payroll, employee benefits, amortization of unfunded liabilities, debt service, etc. This tells the reader where the County spends the bulk of its dollars by category. This information is not currently reported in this format.
R1g:
and R2g Requests the ten largest County expenses by department, e.g., Sheriff’s Office, Behavioral Health and Recovery Services, Human Services Agency, etc. This tells the reader where the County spends the bulk of its dollars by department. This information is not currently reported in this format.
R1h:
and R2h Requests the number of County workers in each of four categories. This will help the reader understand the County’s employment trends. This information is not currently reported or is difficult to discern.
R1i:
and R2i Requests the total County payroll. The County payroll for FY 2013 is over $400 million and is one of, if not the, largest County expenses. This information is not currently reported.
R1j:
and R2j Requests the total cost to the County of benefits paid to County employees. The total cost of benefits comprises another large County expense and is not currently reported.
R1k:
and R2k Requests the total payments to contractors providing services to the County, excluding contractors making capital improvements. This information would be one measure of the extent to which the County outsources services. As 5 RECOMMENDATION EXPLANATION NUMBER reported by the 2011-2012 Grand Jury, outsourcing is one 9 means by which to rein in retirement costs. This information is not currently reported.
R1l:
and R2l Requests the amounts of the County’s unfunded liabilities such as that owing to SamCERA. This information is currently reported, but should be included in the information sought here because of the next request for information.
R1m:
and R2m Requests the amount paid solely to amortize each of the reported unfunded liabilities. These payments, especially to SamCERA ($92.5 million in FY 2013), are a large part of the budget. Knowing these amounts helps in understanding the present cost of past commitments. This information is not currently reported.
F2:
Highlighting certain major financial elements in the Budget would make the County’s financial reporting more understandable.
Related Recommendations (3)
R2:
The Grand Jury recommends that the County Controller do the following:
Prominently disclose in table and/or graph form in one location in the PAFR the following information, on an accrual basis, for the current and previous four fiscal years: a. Total sources of funds, including, without limitation, Excess ERAF and any other so-called “one time” revenues b. Total requirements (expenditures) c. Total increase or decrease in the combined total of the following General Fund accounts: Committed, Assigned, and Unassigned d. Identify non-recurring material (as defined by the Controller and individually or in the aggregate) revenues or expenditures from one source or for one project (expenditure object) e. Total “general revenues, extraordinary item, and transfers” per San Mateo resident, i.e. the sum of these items divided by the most current official estimate of County population f. Ten largest County expenses by category (expenditure object), e.g., employee payroll, employee benefits, amortization of unfunded liabilities, debt service, etc. g. Ten largest County expenses by department, e.g., Sheriff’s Office, Behavioral Health and Recovery Services, Human Services Agency, etc. h. Total number of workers providing services to the County in each of the following categories 1. Classified 2. Unclassified 3. Temporary/Extra Help/Intern i. The total payroll for all County employees j. The total cost to the County of all benefits to all County employees k. Total payments to contractors providing services to the County, excluding contractors making capital improvements l. The following unfunded liabilities: i. SamCERA, both as calculated by SamCERA’s actuary and calculated using a “risk free” rate of return ii. Other Post-Employment Benefits (OPEB) iii. Any other unfunded liabilities not associated with bonded indebtedness m. The amount paid solely to amortize each of the unfunded liabilities listed in the preceding subparagraph n. The combined total of the end of year amounts of the following General Fund accounts: Committed, Assigned, and Unassigned. o. Total increase or decrease in net assets 8
R2n:
- Requests from the Controller the combined total of the end of year amounts of the unrestricted reserves. These reserves are an indicator of the County’s financial health. This information is not currently reported in this format.
R2o:
Requests from the Controller the increase or decrease in net assets, another measure of the County’s financial health. This list of important financial information is not exclusive. There may be, and probably is, additional financial information that would be beneficial. That said, there is a balance between providing so much information that the public cannot understand it and providing so little as to be uninformative. The Budget and CAFR fall into the first category, the PAFR into the second. It should be noted that representatives of the County and the Controller’s office were cooperative and forthcoming during the Grand Jury’s investigation. They acknowledged that the County’s financial reporting is complicated and not easily understood by the general public and welcomed the Grand Jury’s effort to bring clarity to the County’s financial picture.
F3:
Highlighting certain major financial elements in the PAFR would make the County’s financial reporting more understandable. Ibid. 6
Related Recommendations (1)
R3:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Temporary/Extra Help/Intern
Additional Recommendations
1
Not linked to specific findings.
R4:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Volunteers i. The total payroll for all County employees j. The total cost to the County of all benefits to all County employees k. Total payments to contractors providing services to the County, excluding contractors making capital improvements l. The following unfunded liabilities: i. SamCERA, both as calculated by SamCERA’s actuary and calculated using a “risk free” rate of return ii. Other Post Employment Benefits (OPEB) iii. Any other unfunded liabilities not associated with bonded indebtedness m. The amount paid solely to amortize each of the unfunded liabilities listed in the preceding subparagraph The Grand Jury recommends that the County Controller do the following: 7 R2. Prominently disclose in table and/or graph form in one location in the PAFR the following information, on an accrual basis, for the current and previous four fiscal years: a. Total sources of funds, including, without limitation, Excess ERAF and any other so-called “one time” revenues b. Total requirements (expenditures) c. Total increase or decrease in the combined total of the following General Fund accounts: Committed, Assigned, and Unassigned d. Identify non-recurring material (as defined by the Controller and individually or in the aggregate) revenues or expenditures from one source or for one project (expenditure object) e. Total “general revenues, extraordinary item, and transfers” per San Mateo resident, i.e. the sum of these items divided by the most current official estimate of County population f. Ten largest County expenses by category (expenditure object), e.g., employee payroll, employee benefits, amortization of unfunded liabilities, debt service, etc. g. Ten largest County expenses by department, e.g., Sheriff’s Office, Behavioral Health and Recovery Services, Human Services Agency, etc. h. Total number of workers providing services to the County in each of the following categories
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Findings & Recommendations
6 findings
F1:
The law enforcement agencies in the County are aware of the linguistic issues presented by the County’s non-English speaking population and, in general, have responded well by implementing written policies for language access and instituting hiring procedures designed to recruit multilingual personnel.
Related Recommendations (1)
R1:
The cities of Atherton, Colma, Daly City, East Palo Alto, Hillsborough, Pacifica, Redwood City, and San Bruno develop a written policy/procedure for language access based on the guidelines set forth by the United States Department of Justice22 and customized for California Law by Lexipol in Policy 368 (See, e.g., Appendix E)
F2:
The 911 Service does a good job for the non-English speakers in the communities serviced by the San Mateo Sheriff’
Related Recommendations (1)
R2:
The cities of Brisbane and Hillsborough subscribe to a telephonic translation service that provides immediate access for dispatchers and officers in the field. Overcoming Language Barriers, Solutions For Law Enforcement, Community Oriented Policing Services, U.S. Department of Justice, www.cops.usdoj.gov/Publications/vera_translating_justice_final.pdf (1/9/2013). 6
F3:
Written policies and procedures, such as those adopted by Belmont, Brisbane, Burlingame, Foster City, Menlo Park, City of San Mateo, South San Francisco, and the Sheriff’s Office, are useful in guiding law enforcement during encounters with non-English speakers.
Related Recommendations (1)
R3:
Every County policing agency examine the feasibility of providing smart phones to patrol officers so that they can access free translation services such as Google Translate 23.
F4:
Language Line is helpful in reducing communication difficulties between the immigrant population and law enforcement.
Related Recommendations (1)
R4:
Every County policing agency encourage and financially support participation in POST24 language skills classes.
F5:
Alternative language translation services such as Google Translate, accessible by smart phones in the field, are useful in multilingual law enforcement situations.
F6:
It would be beneficial for law enforcement agencies to take advantage of low cost Spanish education available through the POST program.
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Findings & Recommendations
10 findings
F1:
The County’s “structural deficit” is created solely because the County chooses not to recognize all anticipated revenues in a given fiscal year.
Related Recommendations (1)
R3:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Refrain from stating that the County has or will have a deficit, structural or otherwise, unless it has taken into account all resources, including, without limitation, Excess ERAF, in making its calculation.
F2:
The public is best served when the County includes in the budget all anticipated revenues, and not just some.
Related Recommendations (1)
R1:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Report in the budget as “resources” all revenues it anticipates receiving in a fiscal year, including, without limitation, Excess ERAF.
F3:
In practice, the County has not restricted the use of Excess ERAF to one-time expenditures.
Related Recommendations (1)
R2:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
If the Board is concerned that Excess ERAF may be taken away or reduced by the state, it should budget Excess ERAF for only the following purposes: a. Capital projects such as acquisition of real property and construction of, or major improvements to, buildings b. Payment of County obligations with a finite life, other than bonded indebtedness, such as SamCERA’s unfunded liability or other post-employment benefits. c. Similar “one-time” expenditures
F4:
Excess ERAF is not “one-time” money.
F5:
The County can address concerns regarding the potential loss of Excess ERAF by limiting the purposes for which it is spent.
F6:
The County is in good financial condition since it has not had an actual deficit since at least FY 2003 and its primary government net assets have increased for each of the past 10 fiscal years.
F7:
County officials had the facts in hand prior to the June 5, 2012, election to know that there would be an actual surplus for FY 2012 but did not publicize this fact.
F8:
County officials had the facts in hand prior to the November 6, 2012, election to know that there was an actual surplus for FY 2012 and that the budget for FY 2013 was balanced, but did not publicize these facts.
F9:
County officials did not adequately inform the public of the County’s true financial condition prior to the June 5 or November 6, 2012, elections.
Related Recommendations (1)
R4:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Be completely transparent with regard to any claim that the County has or will incur a deficit, structural or otherwise.
F10:
The public is best served if the Board, as the governing body of the County, as opposed to individual Supervisors, adopts a ballot argument in favor of measures it submits to voters for approval. 27 http://sanmateo.siretechnologies.com/sirepub/mtgviewer.aspx?meetid=104&doctype=MINUTES (May 9, 2013). 28 http://sanmateo.siretechnologies.com/sirepub/cache/2/xwwp5ks01xkrjo4wc5ssswf2/1866105092013123303768.PD F (May 9, 2013). 29 https://www.shapethefuture.org/elections/results/2012/nov/official/NOV12_Final1203.pdf (May 26, 2013). 11
Related Recommendations (1)
R5:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Adopt a procedure with respect to a measure it submits for voter approval that proposes to increase, extend, or impose a tax, fee, or other revenue raising means that: a. Informs the public of the most current assessment of the County’s deficit or surplus condition after accounting for all anticipated revenues, including Excess ERAF. b. Requires the Board to exercise its best efforts to adopt a budget argument in favor of the measure and, if approved, submit the same to the County’s Chief Elections Officer for inclusion in the appropriate Sample Ballot.
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Findings & Recommendations
12 findings
F1:
Board of Supervisors has failed adequately to address SamCERA’s unfunded liability because it has not (i) properly monitored the performance of SamCERA’s investment portfolio, (ii) made contributions sufficient to cause SamCERA’s funding to be sound or (iii) taken steps to reduce the County’s retirement costs significantly.
Related Recommendations (1)
R1:
Adopt a policy to reduce SamCERA’s assumed rate of return by 0.25% per year until such time as it has achieved a funded ratio of 90%.
F2:
SamCERA’s Board of retirement has not adequately addressed SamCERA’s unfunded liability in that it has adopted an assumed rate of return that does not sufficiently recognize the guaranteed status of its participants’ benefits.
Related Recommendations (1)
R2:
Once a funded ratio of 90% has been achieved, establish SamCERA’s assumed rate of return each year by taking into consideration the guaranteed nature of its participants’ benefits and relevant macro-economic factors while disregarding (i) the effect, if any, the assumed rate of return will have on required contributions to SamCERA and (ii) the assumed rates of return of other public pension funds.
F3:
SamCERA’s unfunded liability is materially greater than $962,282,000 as reported in the SamCERA CAFR for FY2012, and is probably closer to $2 billion.
Related Recommendations (1)
R3:
Include in the SamCERA CAFR and SamCERA PAFR, the following information in tabular form: a. For each of the past one, three, five, and ten fiscal years: i. Its annual investment earnings (or losses) stated as a percentage and in dollars, both net of investment costs ii. Its actual rates of return as compared with its assumed rates of return iii. Its peer rankings iv. The peer rankings of each of its investment managers for which such rankings are available b. The unfunded liability amount for each of the past 10 years c. The amount contributed by the County to SamCERA attributable solely to its unfunded liability for each of the past 10 years d. The number of beneficiaries receiving annual benefits for each of the past five years in the following amounts: i. $100,000 - $149,999 ii. $150,000 - $199,999 iii. $200,000 and up e. The average and median annual benefit paid to SamCERA beneficiaries for the past five years 27
F4:
SamCERA’s assumed rate of return of 7.5% is unrealistic given the actual rate of return of SamCERA’s investments over the past 10 years (5.54%) and the discount rate (4%) used by the 100 largest public companies in calculating their unfunded liabilities.
Related Recommendations (1)
R4:
Replicate on SamCERA’s website, modified to apply to SamCERA, CalPERS “Facts at a Glance.”
F5:
SamCERA’s investment performance over the past 10-year period has been poor.
Related Recommendations (1)
R5:
Employ only investment managers for its alternative assets that rank in the top 10% of their peer group for at least the past five years. The Grand Jury recommends that the County’s Board of Supervisors do the following:
F6:
SamCERA’s Board of Retirement can create liabilities that are required by law to be paid by the Board of Supervisors.
Related Recommendations (1)
R6:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Implement GASB Statement 68 for FY2014.
F7:
County taxpayers, not SamCERA’s beneficiaries, bear the economic burden of SamCERA’s investment performance because reduced County services, tax increases, or both, are required to pay SamCERA’s unfunded liability.
Related Recommendations (1)
R7:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Appoint to the Board of Retirement only individuals who possess substantial experience in managing or overseeing investment portfolios, either by professional training, or by business or personal experience.
F8:
There is no assurance that SamCERA’s change in investment strategy to include a significant allocation to alternative investments will produce better returns than the previous strategy or reduce the risk of its portfolio.
Related Recommendations (1)
R8:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Formally review in open session on a quarterly basis the investment performance of SamCERA.
F9:
The Board of Supervisors has not committed to using any portion of Measure A sales tax revenues to increase contributions to SamCERA to pay down SamCERA’s unfunded liability. 91 http://www.moneymanagementintelligence.com/Article/3137141/Community-Awards2/Small-Public-Plan-Of- The-Year-Nominees.html 92 http://www.gabrielroeder.com 93 Roeder Financial, California Pension Systems: Ranking their Funding Assumptions (March 15, 2013) 26
Related Recommendations (1)
R9:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Give higher priority to funding SamCERA’s unfunded liability, an obligation that already exists, than to other new or expanded programs it may contemplate.
F10:
The effects of the 2011 Changes and the adoption of PEPRA, both intended to reduce retirement costs, are minimal, apply principally to new hires, and will not yield significant savings when compared to the size of SamCERA’s unfunded liability.
Related Recommendations (1)
R10:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Adopt the goal that SamCERA’s funded ratio should be 100% and that its minimum funded ratio is 90%.
F11:
The longer the Board of Supervisors delays in eliminating SamCERA’s unfunded liability, the greater the cost will be to do so, and the more the burden of doing so will fall on the next generation.
Related Recommendations (1)
R11:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
At a minimum, set the County’s annual contribution to SamCERA attributable solely to the unfunded liability to the amount necessary to achieve a funded ratio of at least 90% on or before June 30, 2023.
F12:
The financial reporting in the SamCERA PAFR can be improved.
Related Recommendations (1)
R12:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Once the minimum funded ratio of 90% is achieved, at a minimum each year thereafter, set the County’s annual contribution attributable solely to the unfunded liability to the amount necessary to maintain a funded ratio of at least 90%.
Additional Recommendations
3
Not linked to specific findings.
R13:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
If they withstand judicial challenge, take all steps necessary to implement pension changes similar to those passed by San Jose’s voters. The Grand Jury recommends that SamCERA’s Board of Retirement and the County’s Board of Supervisors do the following:
R14:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Acknowledge that the reported unfunded liability of $962,282,000 is materially understated if either a risk free rate of return or SamCERA’s actual rate of return over the past 10 years is used in its calculation.
R15:
The Grand Jury recommends that the County’s Board of Supervisors do the following:
Annually compare SamCERA’s unfunded liability calculated in accordance with GASB Statement 68 with its unfunded liability calculated utilizing a risk free rate of return and SamCERA’s actual rate of return over the past 10 years.
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Findings & Recommendations
4 findings
F1:
Continues to fund a variety of programs that provide direct healthcare services to residents of the SHD.
Related Recommendations (1)
R1:
SHD Board of Directors (Board) and staff should implement the 2009-2013 Strategic Plan, including a five year revenue projection with estimated operational expenses, grant program allocations, and investment objectives to ensure a positive future direction for the SHD.
F2:
Continues to participate in the development of Sequoia Hospital rebuilding as mandated by the State of California and authorized by the residents of the SHD.
Related Recommendations (1)
R2:
The SHD should more directly inform residents and voters of its role as a joint partner in oversight of the hospital and increase community awareness of the services supported by and available to residents of the district. The SHD should consider creating an annual informational mailer for it residents. The mailer should describe the SHD’s services and guide residents to the SHD’s website and grant applications.
F3:
Established a five-year strategic plan in 2008 which addresses management of financial resources.
Related Recommendations (1)
R3:
On a one-year basis, the SHD Board of Directors is allowed to decline some or all of its share of the general tax rate, thereby reducing the tax rate for property owners. Declining some or all of its share of the general tax rate should be an action considered by the SHD Board in years with a healthy operating surplus.
F4:
Provides minimal communication regarding SHD services to its residents. Conclusions The 2008-2009 San Mateo County Civil Grand Jury concludes that the Sequoia Healthcare District (SHD) complied with the 2004-2005 San Mateo County Civil Grand Jury
Related Recommendations (1)
R4:
The SHD should continue to work with other healthcare systems in San Mateo County in an effort to decrease the cost of healthcare services, including a comprehensive study of how public agencies are delivering services and where true efficiencies can be obtained. A model would be the Children’s Health Initiative, a program that was developed with community input and costs shared by the SHD, the Peninsula Health Care District, and San Mateo County, along with other funders.
Additional Recommendations
1
Not linked to specific findings.
R5:
The SHD should be proactive in identifying pressing healthcare needs in the community, exploring ways to support services outside the SHD that impact its residents, and enhancing community input and involvement. 4 525 Veterans Blvd. Redwood City, CA 94063 650-421-2155 August 11, 2009 Honorable George A. Miram Judge of the Superior Court Hall of Justice 400 County Center, 2nd Floor Redwood City, CA 94063-1655 Subject: Response to Sequoia Healthcare District Civil Grand Jury Report Revisited 2008-2009 Honorable Judge Miram: Enclosed is the Sequoia Healthcare District’s response to the recent Grand Jury recommendations. This response was approved at our Board of Directors meeting on August 5,