I really believe it is mathematically impossible for our SBCERS county pension to be anything other than currently 100% funded. In fact just recently a local county elected official put me in contact with one of their VERY influential friends so that I could share my pension research with them. Here it was my time to shine and I did a very poor job of it. Not because my findings were incorrect but as it turns out my presentation was too confusing. I am contacted weekly about my pension research and I usually ask for a face to face meeting that may last upwards of two hours. Well as Larry Mendoza recently found out you better be able to provide a viable reason for some one’s time if you are requesting their assistance.
It has taken me almost two years to learn that market value and book value is not the same thing. Also the accounting practice of smoothing gains and losses over a 5 year period makes it very easy to get confused as to how that affects the current value of the pension. So that let’s see if I can simplify my findings in a manner that might help me obtain a meeting with that influential person. As we all know in order to keep the pension solvent two things must happen. 1-Santa Barbara County must contribute a specific percentage of its employee’s salary to the pension fund. Then 2- these funds must then be invested and earn the required minimum net return on assets to meet all their pension obligations. As it stands right now the SBCERS pension has been reporting for years that the fund’s investments have consistently under preformed. And because of this currently there is a 1 billion dollar deficit that must be immediately dealt with. Because of this the biggest challenge facing Santa Barbara County is the ever changing additional contribution rate used to offset and eliminate any unfunded portion to our pension. As of today this act will take at least a 20 year commitment. Have you heard that our County Officials is reporting that this year’s budget will only have a 15 million dollar deficit? Are you aware that if we withheld the county’s 2012/13 unfunded amortized payment to the pension our 15 million dollar deficit would change in to a 45 million dollar surplus? Or that the total sum of contributions to the SBCERS pension from 2009 through 2028 is enough to give every current County Employee two full pensions, YOU BETTER WAKE UP!
You see between 2009 and 2028 Santa Barbara County will actually contribute more to the unfunded side of the pension than the normal side? So during that 20 year span our County will be contributing to the pension at a rate of over 200 %. 100% will be the normal contribution rate and over 100% to the UAAL or unfunded side. See for yourself @ http://sbcers-trustee.com/Documents/2010-02-24-RRubalcavaPublicCommentHandout.pdf
Review the selection of alternative 2 as it pertains to the UAAL balance until the year 2028.
Because of the reported unfunded future liability (UAAL) this county has also been paying on the average an additional 55% above the normal rate to the pension for the past 24 years. Imagine my surprise when I found out the SBCERS 24-Year Compound Average “net return at market value” was an outstanding 8.5%. So once again let’s do the math. Our Santa Barbara County pension has earned more than we required for 24 years on average. While our elected officials have been contributed 50% more funds than the normal required level. It is just mathematically impossible to be over funding our pension and out earning our target assumption for 24 years and be a Billion Dollars short. Yet our elected officials want us to believe there is just that 1 Billion dollars in future unfunded liability.
Well I hope I have your attention now because between the years of 1988 and 2007 our SBCERS pension earned an average net return on assets of a mind boggling 10.10%. Don’t believe me check it out for yourself @
Santa Barbara County Employees’
June 30, 2007
In closing lets do the math AGAIN. 20 years of earning a net 10.10% return while over contributing to the pension at 150% above the normal required amount.
I HAVE SO MUCH MORE TO OFFER OUR COUNTY TAX PAYERS, PLEASE SEEK ME OUT.
S.B.C.C.C. The place where COMMON SENSE never goes out of style!