Yesterday’s poll, May 25, 2010 asked: Since 2002 the Mariposa County PERS Retirement Costs have risen from $750,000 to?
With varying answers in dollar amounts.
The correct answer is $17,000,0000. Corrected to $19,000,000 like the Poll mentioned.
Updated: The $14,000,000 is the unfunded laiblity that the county has been letting build and build since about 2003.
Just before the current CAO came to the county the interim CAO had requested the county departments take a 10% cut, thus saving the county $2,000,000. He was going to apply that amount of money to the unfunded liability which was then at around $10,000,000. The new CAO Rick Benson felt that it was a better use of the money to stick the money in reserves so no money of that $2,000,000 was applied to the then $10,000,000. How did this unfunded liability keep growing? CalPERS requested the money from the county, the county did not pay it and CalPERS charges 7.75% annual interest on the money.
In just a few short years the PERS payment has skyrocketed from $750,000 to $17,000,000. $19,000,000
So the county that is not in “Dire Straits” according to Supervisor Janet Bibby apparently cannot pay their current bills and has financed $14,000,000 to your children.
Supposedly the county has entered into a CalPERS Fresh Start program that will pay off $14,000,000 over twenty years at 7.75%. That is a projected payoff of $27,000,000. The payment to pay that amount of money off would be almost $1,300,000 annually for the twenty years. The funny thing is, when we asked the current Auditor, Chris Ebie last week he said he had no idea about the ‘Fresh Start’ program and produced numbers that predict the CalPERS increase for the next budget year (2010-2011) increasing by around $200,000.
So the question is how do you pay off $14,000,000 when your payment only increases by $200,000? CAO Rick Benson is confident that it is being paid. But another funny thing is that when this item was before the Board a year ago or so, the debt was at $13,000,000. And now in a meeting a few weeks ago Mr. Benson mentioned that it is now at $14,000,000.
Updated: Chris Ebie contacted me and said he knows all about the Fresh Start Program and said that I misunderstood him when we were talking about the Fresh Start Program. He also said that the county is paying into the Fresh Start Program.
Updated: More numbers: The PERS payment for 2008-2009 was $4,955,538
The PERS payment for 2009-2010 is so far $5,231,376 This was the First Year of the PERS Fresh Start Program and the payment went up around $275,000. The Projected payment for 2010-2011 is $5,450,000 a rise of around $220,000.
Ask your Supervisor if this debt is being paid and have him or her produce some actual numbers for you that prove it.
And let's not forget about OPEB (Other Post Employment Benefits) for health care (defined benefit and NOT defined contribution) that present an unfunded liability nearly as large! The combined total is now around $30 million and growing. Clearly this is an unsustainable situation and something must be done.
to pay off $14,000,000 over 20 years at 7.75% assuming a once a year payment, requires an annual payment of $1,399.506.24 per year total interest $13,990,124 for a total pay off of $27,990,124. The math is correct in this article. So we opened a new credit card to transfer the balance from the old credit card we could not pay off. So if we couldnt pay off the old credit card and had to transfer the balance to a new credit card then what makes it more likely we can pay it off this time around? Nothing does, it is kicking the can down the road for future generations so the present generation doesnt suffer and pretending you fixed the problem. What is the current payment which will allegedly "only increase by 200K"? It must be at 1.1 million right now for the 200k increase comment to be accurate.
What I find truly amazing is that about 2 weeks ago, I sat with 3 department heads to get an update on what was being done to find a solution. ALL THREE TOLD ME THAT NOBODY HAS CONTACTED THEM FOR INPUT. I asked if they would be willing to be part of a task force to work on a solution, and all three said they would, and they were all surprised that I was the first person to ask them to do this.
One department head, whose salary is $85,000 receives a direct payment benefit (monies the county pays for retirement, medical, life insurance, etc.) of over $44,000 per year, bringing the salaried cost to $129,000 per year. When you add on the four weeks paid vacation and three weeks paid sick leave per year, the cost to the county jumps to over $140,000.
The County of Mariposa has paid the required pension contributions for the years June 30, 2007, 2008 and 2009. This is the annual cost for those years and not the back liability. The unfunded liability as of June 30, 2008 was $11,200,760.
This information is available in the Notes To Basic Financial Statements and Required Supplemental Information included in the annual audit of the finances of the County of Mariposa for the fiscal year ended December 31, 2009.
The unfunded liability is the difference between actuarial calculation of the entry normal retirement liability and the actuarial value of the assets held by CalPERS. Since CalPERS has lost billions in its investment portfolio, it should be of no surprise that the unfunded liability has increased.
I have also met with the department heads several times. They are not trying to hide anything from the public. It is a serious matter and they are exploring way to solve it.
Eric,
You are right in that all the department heads are very open about the problem. I believe they are truly concerned and very willing to work with anybody to explore a solution. Again, I was surprised to find out that their opinions had not be asked and that there is no task force working on the solution. Sounds like a good thing to get started on June 9!
The unfunded liability for the Miscellaneous Members of Mariposa County was $11,200,760 at June 30, 2008 as stated by Mr. Oster in his comment. (This does not include Safety Members, the other segment of county employees) This figure does affect our rates set by CalPERS for each fiscal year.
The actuarial calculations, completed by CalPERS, are based on a number assumptions about the future. There are demographic assumptions about the percentage of employees that will terminate, die, become disabled and retire in each future year. There are economic assumptions about future salary increases for each active employee and the assumption with the greatest impact which is the future asset returns at CalPERS for each year into the future until the last dollar is paid to current members.
These assumptions are very long term predictors and will surely not be realized each year as we go forward. For the past twenty years CalPERS returns have ranged from -24% to +20.1%. As you can see the market volatility has been rather dramatic.
Comment will be continued
Christopher Ebie
Mariposa County Auditor
Our Entry Age Normal Accrued Liability, which is our expected costs into the future to meet retirement obligations is increasing faster than our Actuarial Value of Assets (basically the value of Mariposa County's share of assets deposited with CalPERS) . The majority of this increase is due to the poor investment performance of CalPERS.
This unfunded liability is analyzed every year by CalPERS through their actuarial calculations. Due to the economic conditions of the present day, the unfunded liability represents the amount the amount we would be short if we had to rely on the value of our assets with CalPERS to satisfy our retirement obligations. One needs to remember that this liability is our obligations that extend many years into the future. If economic conditions change for the better and Mariposa County is attentive and conservative with its financial resourses this unfunded liability would likely diminish in the years ahead.
Christopher Ebie
Mariposa County Auditor
No growth, Budget out of control, spin it anyway you want Eric the problem remains. Along with the continued
Catheys Valley Community Plan. The totally out of control Planning Director that has put Mariposa County in
a ,suicidal, financial spiral dive. Couple all the above with several Supervisors in absolute denial and refusing
to take responsibility and you have identified the problem. No Eric we are not suprised at the unfunded liability. We
are however "SHOCKED" at the everythings O K attitude and the benign function of the Board of Supervisors.
Keep your eyes and ears open folks. I will be calling out the guilty Supervisors by name and their crimes aganist
Mariposa county citizens and property owners in furture communications.
I have not tried to spin anything. Everything I have said is true about the unfunded pension liability. See Chris Ebie's explanation above. Do not try to drag me into your agenda! My feelings are not the same.
What the article does not mention is that the assumptions used by the CalPERS Retirement Board are among the most optimistic in the state. If you look at the Funding Ranking Survey in the Ramble at roederfinancial.com, that will become immediately apparent. So, if investments lag below their assumed 7.75% bogey, the unfunded liability numbers cited have the potential to become much larger. Sincerely, Rick Roeder