I Think I Just Felt A Rain Drop.
Michael McDaniel April 8, 2008
Nevada County, City of Nevada City and especially City of Grass Valley should be on the edge of their seats.
Board of Supervisors and City Council members should be taking notes on the situations in Vallejo, Orange County and now San Diego. It appears that "leaders" in San Diego have mis-managed public pension plans for years, and now they will be brought to justice. The associated press reports HERE.
AP writes, "The Securities and Exchange Commission filed a civil complaint Monday against five former San Diego city officials, alleging they committed fraud by concealing a ballooning shortfall in the city pension fund.
The SEC said the officials knew the city was underfunding its pension obligations and failed to disclose the extent of its problems to bond-rating agencies or to the investors who bought city bonds in 2002 and 2003.
The latest complaint filed in federal court in San Diego seeks unspecified civil fines from former City Manager Michael Uberuaga; former Auditor Edward P. Ryan; former Treasurer Mary E. Vattimo; Patricia Frazier, former deputy city manager for finance; and Teresa A. Webster, former assistant auditor and comptroller.
The complaint claimed the officials knew the city's unfunded pension liability — the gap between the value of its pension assets and its obligations to retirees — was expected to soar to about $2 billion in 2009 from $284 million in 2002. The officials failed to tell investors about the commitments in five bond sales that raised a total of $260 million, the complaint said.
The complaint also said the officials failed to tell investors that the city carried a $1.1 billion liability for retiree health care and that the city had been using above-average returns on pension investments to give bonus checks to retirees since 1980. Typically, investment gains are set aside to cushion against downturns in the market."
In addition, amendments to the Pension Plan in 2002 caused the unfunded liability to soar (sound familiar Grass Valley?). Due to mis-managed plan amendments (increases in pension benefits) the AP reports,"Five former pension fund officials, including Webster, were indicted by a federal grand jury in 2006 on charges of concealing information from fellow pension board members about a crucial 2002 vote that caused liabilities to rise sharply."
Folks, our county agencies are not an exception to this mis-management. I urge you to read the SESF Unfunded Liability Report to gain appreciation for the size of the problem locally.