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Mendocino County's Debt Section
Choices -


Description

Compared to Other Counties

Basics

Pension Debt

Retiree Healthcare Debt

"Excess Earnings"

Other Debt

Budget Crisis Next 2 Years

Impact of Debt

What Went Wrong

What To Do

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Description

Last Update 2/21/11

This is a brief description of Mendocino County's debt.

Supplemental Data Sheet Icon Supplemental Data Sheet: If you see this Icon you can click it to see the data sources, numbers and graphs for that section. It will open a New Window with a pdf file. You need a free copy of Acrobat Reader available by clicking here.



Growth of the Debt

Growth and Source of Mendocino County Debt.

$ Millions

June 1993   June 2010
Unfunded Pensions $33.8   $224.5
Real Estate 23.9   24.9
All Other 2.7   20.9
Total Debt $60.4   $270.3

Unfunded Pensions are calculated using the real Market Value of the Pension Fund's investments. Pension Obligation Bonds are included in Unfunded Pensions in this graph - because they are money the County borrowed to eliminate previous Unfunded Pension deficits.



1996: County develops $45 million of "Unfunded Pension Obligations" - borrows $31 million in "Pension Obligation Bonds" ("POB").

2002: County again develops Unfunded Pension Obligation, this time around $85 million. Borrows an additional $76 million by selling more POB.

2008 - 09: Two major events caused the County's debt to explode in 2008 and 2009:

  • Unfunded Retiree Healthcare: New accounting standards forced the County to disclose it had about $130 million of "Unfunded Retiree Healthcare Obligations".
  • Unfunded Pensions: For the third time in 13 years the County again develops a significant Unfunded Pension Obligation. The official "Actuarial Value" was $67 million, but the actual "Market Value deficit" was $132 million as of June 30, 2009.

During fiscal year 2009-2010 the County Board of Supervisors terminated the County's obligation to pay part of the cost of retiree healthcare. County officials declared that terminated the County's debt for this benefit.

However, many retirees believe the County made firm promises to pay this benefit as a part of its enticement for them to take the County job decades ago. Some say it was the critical factor in their family's decision to move to Mendocino County.

Retiree organizations in other counties have sued their counties for rescinding their obligation to pay this benefit. My sense is many of our County retirees are waiting to see how those lawsuits are concluded.

We'll see if this debt stays off the County's list of liabilities. At this time we've taken it off, but it could wind up back on the list in the future.

The financial management of the County's Pensions caused 80% of the debt (not including retiree healthcare).

Debt Payments

Mendocino County's Annual Payments on Debt
    1994-95   2010-11
Debt Payments   $2.2 million ~ $14million
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