From JANIE SHEPPARD
[As a local retailer who will be negatively affected by Measure C, I am voting for Measure C as a citizen. -DS]
A vote against Measure C, which, if passed would increase the sales tax by ½ % to pay for county services, is not going to bring to justice any wrongdoers in connection with the county pension fund, as John Dickerson (YourPublicMoney.com) would have us believe (see John Dickerson’s argument below, and the rebuttal by John McCowen).
A taxpayer lawsuit would, however, accomplish that.
Meanwhile, the county needs revenue to provide services.
The issues are separate. Don’t get confused.
Vote Yes on Measure C and encourage John Dickerson to bring a taxpayer lawsuit. That way the county can have much-needed revenue and justice can be served.
From JOHN DICKERSON
I understand that the Mendocino County Democratic Central Committee will be reconsidering whether or not to endorse Measure C.
I spent all day writing the attached paper trying to lay out why – as a lifelong Democrat – I oppose Measure C.
In re-reading it I believe it comes across as being too “all encompassing” in casting blame across all County officials responsible for the County’s finances. I believe just about every official who was elected and took the oath of office and who had significant financial responsibility bears some responsibility for the very dangerous financial situation our County is in. But I think I’ve not made enough distinctions and allowances in this paper.
To be clear – after three years of pretty intensively studying this situation my firm conclusion is the individual most responsible for the County’s very dangerous debt is former County Treasurer-Tax Collector Tim Knudsen. I’ve said all along I’m a money-hound. My nose is to the ground and I’m following the money. If I come to a rock I’ll flip it over and see if anything crawls out. I’m not going to spend a lot of time hypothesizing where I think the trail is going to lead me – I’m just going to continue sniffing and following the money.
Up until a year ago I specifically stated I had seen nothing to suggest any significant laws were broken. Then last September – more than a year ago – I told the Board of Supervisors that even given the deeply politically fraudulent definition of “Pension Fund Excess Earnings” in the 1937 County Employees Retirement Act, my analysis led me to conclude that there weren’t enough so called Excess Earnings to have funded all the retiree healthcare payments that had been made over the past 10 years.
I strongly urged the BOS to demand that MCERA produce a report showing exactly how it conformed to the requirements of the 1937 Act in paying for retiree healthcare from Pension Fund Excess Earnings as defined in the law. I said at that point I didn’t think MCERA conformed to the law.
John McCowen takes offense that I say the Board ignores things I say. Well … the Board did nothing about this I can see.
Then the most reformist member of the Retirement Board (at least that’s what he looks like to me) Randy Goodman demanded that report be provided to the Retirement Board. Tim Knudsen plainly stated that from 2004 through 2006 the Retirement Board diverted $6.1 million directly out of the County’s contributions to the Pension Fund that was intended to fund the part of future pension payments being earned by employees that year. The money was used to pay retiree healthcare. As Knudsen said “we didn’t have any Excess Earnings but we had health insurance to pay”.
That appears to me to be a direct violation of the provision in the 1937 Act that states the Retirement Board must put all the money contributed by the County to the Pension Fund for each year’s pensions being earned into the Pension Fund – period. No exceptions.
Then in 2006 MCERA “discovered” it might be violating the law and so they “paid the County back”. With what? The money was gone. They gave credit to the County for having paid its full required contributions during 2004 – 2006, but that was just a bookkeeping entry. No money went into the Pension Fund. The law doesn’t say the County should be credited for having paid its full contribution – it says the full contribution must be deposited into the Pension Fund. It’s the money that counts.
MCERA set up what clearly appears to me to be a “fake receivable” for $6.1 million that was essentially a claim against future Pension Fund Excess Earnings if and when they may occur. I can tell you with 100% assurance that does not satisfy the requirements of being an asset. You can’t put the money you think you’re going to make in the future on your balance sheet as an asset – it isn’t an asset until you earn it.
And – the Retirement Board then took another $3.5 million out of the Pension Fund because it still didn’t have enough Excess Earnings to fund retiree healthcare – so this “fake asset” was $9.6 million.
And now the Retirement Board just voted to “write off” that $9.6 million as a “complete loss” – frankly, because it was never a real asset. It was air.
My training and experience makes me think that really looks both fraudulent and an extreme violation of fiduciary duty to the beneficiaries of the Pension Fund. Nearly $10 million was taken out of the Pension Fund most of which was contributed to fund future pensions of current employees and used to pay a benefit current employees can never receive.
But I can’t be sure – I’m not a lawyer and the law governing governments is far more “relaxed” about these things that that governing private sector organizations (with which I am fairly familiar).
My point is this – this is clearly enough evidence to suggest significant laws may well have been broken at a cost of over $10 million to the people of Mendocino County and further placing future pension payments for current employees at risk.
And yet … has there been any effort on behalf of County officials to determine the facts and the law – to hold one of their fellow electeds accountable?
No. Or – at least nothing the public can see.
Instead … they want us to raise our taxes and do – what – regarding holding other electeds accountable?
A big reason I’m a Democrat is it pisses me off to see working people getting clobbered while the guys at the top of the money-power pyramid skip away unscathed. Isn’t that probably what has happened in our County?
How can the Central Committee of the Democratic Party not demand accountability on behalf of the people of our County and the employees who are losing their livelihoods?
And yet that appears to be what many of you are prepared to do.
Am I wrong? if so, how?
That’s not my main argument against C – but it’s still important to me. How can the Democratic party refuse to hold “its” elected officials accountable?
At any rate – sorry for the rant. I submit my argument for your consideration.
From JOHN McCOWEN
I realize that we are all busy and have limited time for this discussion. I confess that my eyes start to glaze over when I start reading this stuff, so I won’t fault you if you skip over this. Suffice it to say, I agree with Joe Louis Wildman and Rachel Binah. The issue of the debt really is separate from the duty of the County to provide public services. John Dickerson is using the debt as a proxy to attack and defeat Measure C. For his sake, I hope he fails. Otherwise, the legacy of this self-proclaimed “lifelong Democrat” will be diminished public safety, diminished public health services, further deterioration of public infrastructure and fewer hours of operation for libraries and other vital public services.
That said, no one deserves more credit than John Dickerson for bringing to light issues related to the County’s pension liability – issues which absolutely must be dealt with. Unfortunately, John is blind to the fact that he has been heard and that both the Retirement Board and Board of Supervisors have responded in significant ways to address the issues he has raised. Sadly, his triumph has become his tragedy as he blindly lashes out in an attempt to defeat Measure C and hamstring the ability of the County to provide vital services at a time when revenue is shrinking and the need for services is increasing.
When I ran for Supervisor two years ago, I was quite taken with Mr. Dickerson’s “analysis” of County debt issues. His assertions were alarming. Clearly there was a problem of major proportions. And no one seemed to be listening. In retrospect, no one seemed to be listening to John. Now I know why.
At some point after I got elected I began suggesting to John that he tone down his inflammatory rhetoric, that it was counter productive and that he would gain more credibility if he let the facts speak for themselves. Instead, the super heated rhetoric continued to escalate, as it does to this day.
I also realized that John was consistently misrepresenting the roles and responsibilities of the Board of Supervisors and the Retirement Board, creating confusion on the part of the public about who has the power to do what. I have challenged John on this point, but he persists. I can only conclude that blaming the Board of Supervisors for things beyond their control is more important to him than accuracy.
By law, the Retirement Board has sole authority for management of the retirement fund. How the funds are invested, the assumed rate of return, the annual contribution rates, the amortization schedule for the unfunded liability, and a host of other investment and actuarial decisions are made by the Retirement Board, not the County Board of Supervisors.
I finally realized that something else was missing from John’s analysis – a clear statement of what the County should do to fix the problem. I began challenging John in these terms: “John, you are great at saying what the problem is, but what is the solution? There must be some obvious thing staring us in the face that we should do. What is it?” I never got a specific answer. When asked for a solution at the candidate’s forum October 5th, John still had no answer.
Mistakes were made. In better economic times, the County increased the number of employees, their total compensation and their retirement benefits to levels that were not sustainable. Safety employees in particular were given enhanced retirement benefits. Probation employees were also added to safety retirement. These changes may have made sense from a collective bargaining standpoint, but in hindsight no one considered the long term effect on the retirement fund. That mistake will not be made again.
John Dickerson has stated that the policy of using “excess earnings” to fund retiree health was the single biggest factor in creating the unfunded liability, but fails to acknowledge that the practice has been ended. The Retirement Board has adopted a policy that prevents the diversion of “excess earnings” out of the retirement fund. Further, the County will no longer pay for retiree health, so there is no longer a place to divert the funds to. But John continues to beat up the County and the Retirement Board over the excess earnings policy as if it was still an operative practice. In fact, the last diversion out of the retirement fund took place years ago. The number one thing that John complains about has been resolved, but you will not hear that from Mr. Dickerson.
The Retirement Board has also hired an independent administrator, hired a new investment advisor, created a website to better inform the retirees and the public, facilitated televising of the meetings, and hired an independent auditor to audit the findings of their actuary. In fact they hired the same auditor that raised questions about the work of the same actuary in Stanislaus County. You will also not hear about any of this from Mr. Dickerson.
The County is doing everything it can to contain costs. In recent years, the County has cut 400 jobs from the payroll, more than a 25% reduction, including over 200 in the last two years. Salaries are being cut 10% or more. Many administrative positions have been cut. Programs have been eliminated. The County is successfully negotiating the right to establish a lower tier for retirement benefits for new hires. Again, you will not hear any of this from Mr. Dickerson.
John is a master at using data and rhetoric in a very biased way to prove his point. By mixing apples and oranges, by confusing roles and responsibilities, and by failing to acknowledge that any action has been taken to address debt issues, John is able to paint a worst case scenario. Sadly, by presenting selective and misleading information, the man who implores others to “tell the truth,” seems incapable of doing so himself.
Mr. Dickerson also fails to acknowledge that public and private pension funds nationwide have been rocked by the greatest financial meltdown in 80 years. Ironically, the housing bubble, which precipitated the meltdown, was driven by private sector profiteers who are the first to complain about government regulation and oversight. Locally, people with the same kind of anti-government mindset, who see government as the enemy, and who want to “starve the beast” are exploiting the pension fund issue in an effort to defeat Measure C and force further draconian cuts in services.
Ross Liberty, who is bankrolling the campaign against Measure C, does not believe government should provide school lunches for poor children. Because Ross is a wholesaler, who does not pay sales tax on the materials he uses or the products he produces, Measure C will have little financial impact on him. But from an ideological standpoint he welcomes the thought of starving the County into further cutting services.
Just for example, the County is considering ending family planning and all public health prevention programs for next year. I also got an email over the weekend that the County librarian wants to eliminate County staffing for the Coast Community Library in Point Arena. The remaining libraries may also be faced with further cuts in hours. I believe these types of cuts are only the tip of the iceberg if Measure C fails.
Mr. Dickerson claims to be concerned about the negative impact to employees and the public that he says will come about in future years as a result of the debt. His solution seems to be to fire those employees and force the elimination of services right now by defeating Measure C. With all due respect to Mr. Dickerson, he should stay focused on pension and debt issues, not try to cripple the ability of the County to provide services at a time when they are critically needed.