And the Winner Is ...
Mendocino
Most Indebted County Per Capita
in California - AGAIN!
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Number One Fourth Year Running!
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8/24/10:
Mendocino had the highest debt, highest payments on debt, and highest interest expense - all on a per resident basis - among California's 58 Counties in 2008 according to data from the State Controllers Office (SCO).
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SCO produces the Annual Counties Report each year (click to see SCO's local government reports. I first analyzed the 2005 report. Mendocino County has been "Number One" since 2005 in these categories.
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Mendocino County's Debt Ranking
All 58 California Counties
2008
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Mendocino |
#2
County |
Average County |
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Rank |
Amount |
| Per Capita |
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Long Term Debt |
#1 |
$1,258 |
$1,092 |
$315 |
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Debt Payments |
#1 |
$195 |
$112 |
$36 |
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Interest Expense |
#1 |
$130 |
$67 |
$17 |
| % Prop Tax |
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Debt Payments |
#2 |
42.7% |
69.4%* |
11.2% |
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Interest Expense |
#1 |
28.4% |
17.0% |
5.1% |
| % of Ttl
Expenditures |
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Debt Payments |
#2 |
9.60% |
10.0%* |
2.2% |
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Interest Expense |
#1 |
6.40% |
2.90% |
1.0% |
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* In these two categories this is the value for
the #1 County |
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Click to see my report for more detail - including an explanation of some important debt data missing from this SCO report.
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How Pension Funds Work
8/7/10:Very few people understand the finances of the County's Pension Fund - including the County Board of Supervisors that establishes our County's budget. That's because the way "Actuaries" analyze and plan Pension Funds is very complicated.
This lack of understanding is a major cause of the major financial damage has been done.
As I was writing the "Financial Time Bomb" report I found myself repeatedly explaining Actuarial terms and calculations. The report got way too long. So I finally did something I've wanted to do for over a year.
I wrote "How Pension Funds Work" (click to see) to explain the concepts concerned citizens and public officials need to understand to see how our County got into such deep debt, and to engage effectively in the debates about what to do now.
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Bill Gates on Fraudulent Government Pension Accounting
8/18/10:
Microsoft chairman Bill Gates appeared in several discussions at the 2010 Aspen Ideas Festival in July. One conversation wandered into talking about education budgets. The Moderator then asked if Gates thinks unfunded government pensions are a big problem. Boy howdy!
One example - in discussing whether or not state and local government budgets are really "balanced" in light of their huge unfunded pension debts Gates said -
"Only accounting fraud allows you to pretend its balanced".
That's what allows Mendocino County Supervisor John Pinches to brag to voters the County has always had balanced budgets. The County's budget doesn't include the expense that created the County's $220 million unfunded pension debt.
I 100% agree with Gates. I realized a few years ago that Mendocino County's accounting does exactly what Gates describes in this video. That realization is why I decided I needed to raise holy hell about our County's debt. It completely blew my mind that government accounting works this way. Our County's financial statements don't tell the truth - big time!
It is fraudulent!
Click to see a video of what Gates had to say.
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Mendocino County's
Five Financial Time Bombs
Too Late to Avoid Disaster
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8/5/10:
I'm afraid I see the specific path taking our County over the financial cliff.
This almost certain fate was caused by the County's spectacular failure to achieve its pension funding plan.
The County's Pension Fund was supposed to have $400 million on June 2009. The Fund should be fully funded. Instead as of the last report in June 2009 the County's citizens still owed $215 million because of unfunded pensions.
As a result of this failure, a number of financial time bombs are now embedded in the Pension Fund that will explode over the next five years. Although specific cost may vary, the explosions are a mathematical certainty!
My calculations indicate County debt payments will double and the official value of unfunded pensions will triple in five years.
At some point something big is going to break.
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The Time Bombs
Over the next four years $100 million of negative earnings in '08 and '09 will be included in the County's "official" value of unfunded pensions. This will increase the amount of unfunded pensions the County must eliminate.
The County is making extra payments to eliminate the unfunded pensions. Payments are designed to increase every year.
Unfunded pensions incur 8% interest expense each year until they are eliminated.
The Retirement Association's cash flow has been $5 million negative each of the last five years and will continue to be negative.
And - the Pension Fund is "writing off" a $9.3 million fake receivable.
A financial "Hurricane Katrina" is coming, and our County is not prepared. See my report below.
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