Letters (Oct. 5, 2016)
by AVA News Service, October 5, 2016
THE BLACKBIRD-TRUMP CONNECTION
The Terry Gross interview with David Fahrenthold last week that revealed Donald Trump's commingling of nonprofit with for-profit enterprise elicited a guffaw from me as I realized the pattern connection with Philo's own Pathways in Education/Blackbird Farm family, John Hall, Joan Hall and Jamie Hall Donahue of Pasadena. Shysters all.
John Hall has close to 40 businesses both for profit and nonprofit. Joan about 25 and Jamie about 15. An "Extraordinary Audit" dated Aug. 9, 2006 exposes John and Joan Hall as paying themselves over $320,000 a year each to run only one of their nonprofits while they earned an undisclosed income from a for-profit business that supplied "goods and services" to the nonprofit.
At Blackbird Farm, owned and operated by Pathways in Education Inc. a nonprofit, we have a similar commingling trying to be initiated and I honestly don't know how the law can allow them to do it. Currently they are operating an 11 day rotation of young students from the city during the school year. Their self-promotion is slick, glossy and colorful. They get paid well by the State to do this.
But almost immediately upon purchasing the Highland Ranch from George Gaines they applied for a Major Use Permit from the County in 2013 to increase maximum capacity for guests and employees from 36 to 292. We local residents didn't hear anything about it until June of this year, one month before it was to go before the Planning Commission for final approval.
Thankfully our community was outraged, wrote letters in protest and showed up at the Planning Commission in numbers to argue against the project. We won a postponement until December 15.
Contrary to their self-promotion none of the expansion has anything to do with the student based nonprofit enterprise and everything to do with for-profit accommodation of "guests." How can that happen on land owned and operated by a nonprofit organization?
Now they seem to be worried and have been sending representatives around to wineries, tasting rooms and some neighbors handing out a letter asking for support and a full color glossy flyer that attempts to make it appear that the expansion is all about the students — which it clearly is not. The letter states that the reason they want to expand is they haven't "been able to recover expenses to date" but remember they applied for the expanded use permit even before they made any attempt to recover expenses. Such was part of their intent from the beginning. They have also been glad-handing and extending invitations to lunch. If this whole project is not illegal, it is deceptive, immoral and unethical.
Please stand with your friends and neighbors in opposition to this unhealthy and unscrupulous exploitation of our Valley.
Now that I think about it, John Hall actually looks somewhat like Donald Trump. I wonder if gross amounts of deviously achieved money by a predecessor 70 years ago could have had access to a secret experimental clone doctor of the day?
WILL BLACKBIRD FLY?
Last week's questions by Beverly Dutra (AVA Letters, 9/28/16) about the proposed expansion of Blackbird Farms in Philo from 36 to 292 people woke me up from my complacency. At the July Planning Commission meeting the chief planner, Andy Gustavson, acknowledged that issues raised during the meeting would warrant continuing the public hearing to a later date. I haven't heard anything about another public hearing, have you?
I admit, I have a vested interest in the potential expansion of Pathways in Education at Blackbird Farms. I am one of many seniors who walk on Ray's Road regularly for exercise. If the expansion goes forward, I might as well take my chances at walking on Highway 128.
Also, I am a retired public school teacher who finds it very troubling that the State of California has a lawsuit for $53 million in overcharges by the nonprofit Pathways in Education charter school corporation. It feels as if Pathways is using the system to profit the corporation at the expense of California taxpayers. I hope there will be a public hearing and community conversation in the near future.
ED REPLY: The next public hearing on Blackbird’s proposed expansion plans was tentatively scheduled for December in front of the County Planning Commission. The Planning Commission usually meets on first and third Thursdays which would be December 1 or December 15. Neighbors have held at least one organizing meeting that we know of and we understand they intend to hold the County’s feet to the fire regarding a proper Environmental Review which fully addresses all the issues and impacts which the original “mitigated negative declaration” did not do. We agree that the Pathways charter school set up has a dubious background, but we doubt that their scholastic-financial shenanigans will be addressed by the County’s Planning process.
PHARM NOT FARM: NO ON AF
To the Editor,
Measure AF, the "Agricultural Fraud Act", on the November 2016 ballot is a blatant, well-financed attempt by the pot industry to subvert the County planning and zoning process by permitting commercial pot production on virtually the entire Mendocino County land base.
Measure AF amends Mendocino County Code Chapter 10A to designate commercial pot production as an "agricultural operation", thereby protecting this activity under the County's "Right to Farm Ordinance", shielding the pot producers from neighbors' complaints about noxious odors, loud noise, glaring lights, and pesticide drift. In reality, pot production is primarily a pharmaceutical operation.
Measure AF amends Mendocino County Zoning Ordinance Section II Title 20 to permit commercial pot productionin all zoning districts, including Residential, Public Facility, and Open Space.
Measure AF imposes a regulatory scheme by initiative format that bypasses environmental assessment and eliminates public review by local elected officials, specifically the Board of Supervisors.
Measure AF, as an initiative, becomes entrenched in regulatory mumbo jumbo that makes it virtually amendment-proof.
Measure AF bans criminal enforcement of pot permit rules and substitutes a civil enforcement procedure that would be totally ineffective.
Measure AF would allow explosive butane to be used in the production of hash oil as a "principal permitted use" in any industrial zoning district even though the dangerous practice has caused many fires and serious injuries.
Measure AF would have a devastating effect on Brooktrails, west of Willits, opening the entire subdivision to commercial pot production - including the Greenbelt.
Unverified reports reveal that parcels in Brooktrails are being marketed by real estate agents as potential places for pot production. The District Office has received numerous recent inquiries by "farmers" planning to clearcut lots to produce pot who said they were told that it was allowable. In recent months the Brooktrails Fire Department has actually encountered perpetrators in the process of clearcutting their lots for pot production.
Current law makes such clearcutting illegal under the Brooktrails Specific Plan ; therefore it can be stopped through existing legal procedure. Measure AF,if passed, will allow legalized clearcutting and pot production on all Brooktrails parcels.
Measure AF is an arrogant, selfish attempt by the pot industry to write its own rules and regulations that circumvent environmental and community review.
VOTE NO ON MEASURE AF !
Don Morris & Maryl Morris
CUT LOOSE, HILLARY
I am a big Hillary Clinton supporter but honestly I don’t think she did well in the debate. The entire debate she sounded like she was reading from a script. Clinton needs to step outside of her comfort zone and attack Trump.
Let go of the script and speak from her heart. I know she can do it. I’ve seen her do it and it is very appealing. Trump, although he is unfit to be president, has great passion which is appealing and draws support. He speaks to the common man and he addresses their concerns.
He speaks in a language that they understand. About 42 percent of the electorate are independents and I hope that they are smart enough to see past the superficial and vote for the most qualified candidate.
To The Editor:
For those who think Mr. Trump is their guy, the right man to lead the nation:
The following excerpts are from a New York Times book review of a new history, “Hitler: Ascent, 1889-1939,” by Volker Ullrich. (Reviewed by Michiko Kakutani, 9/28/16). The reviewer notes that Ullrich attributes Hitler's rise to power to a number of factors, summarized in part by the reviewer as follows:
“Hitler was often described as an egomaniac who 'only loved himself'--a narcissist with a taste for self-dramatization and what Mr. Ullrich calls a 'characteristic fondness for superlatives.' His manic speeches and penchant for taking all-or-nothings risks raised questions about his capacity for self-control, even his sanity. But Mr. Ullrich underscores Hitler's shrewdness as a politician—with a 'keen eye for the strengths and weaknesses of other people' and an ability to 'instantaneously analyze and exploit situations.' ”
“Hitler was known, among colleagues, for a 'bottomless mendacity' that would later be magnified by a slick propaganda machine that used the latest technology...to spread his message. A former finance minister wrote that Hitler 'was so thoroughly untruthful that he could no longer recognize the difference between lies and truth.' and editors of one edition of “Mein Kampf” described it as a 'swamp of lies, distortions, innuendoes, half-truths and real facts.' ”
“Hitler was an effective orator and actor...adept at at assuming various masks and feeding off the energy of his audiences. Although he concealed his anti-Semitism beneath a 'mask of moderation' when trying to win the support of the socially liberal middle classes, he specialized in big, theatrical rallies staged with spectacular elements borrowed from the circus. Here, Hitler 'adapted the content of his speeches to suit the tastes of his lower-middle-class, nationalist-conservative, ethnic-chauvinist and anti-Semitic listeners,' Mr. Ullrich writes. He peppered his speeches with coarse phrases and put-downs of hecklers. Even as he fomented chaos by playing to crowds' fears and resentments, he offered himself as the visionary leader who could restore law and order.”
“Hitler increasingly presented himself in messianic terms, promising 'to lead Germany to a new era of national greatness,' though he was typically vague about his actual plans. He often harked back to a golden age for the country, Mr. Ullrich says, the better 'to paint the present day in hues that were all the darker. Everywhere you looked now, there was only decline and decay.' ”
“Hitler's repertoire of topics, Mr. Ullrich notes, was limited, and reading his speeches in retrospect, 'it seems amazing that he attracted larger and larger audiences' with 'repeated mantralike phrases' consisting largely of 'accusations, vows of revenge and promises for the future.' “
These circumstances are stunning in their clear relation to Mr. Trump's character, manner, and actions in the current campaign. I offer them here because relatively few of us were alive as adults during this period of history. It is history and context that should not be forgotten today.
HERE TODAY, GONE TOMORROW
Is it possible that something can grow too big to be managed? For example, you have a dog. You walk him on a leash every day, with no bad consequences. However, you are over-feeding your dog and he gets grossly obese. So heavy, in fact, that when you take him for a walk he pulls you off of your feet and you crash to the ground.
What if it is the case that our national and our global economies are too big to be managed for our long term benefit. Too much debt, too much inflation, too much planned obsolesce, too much negative environmental impact, too much poverty, and so on.
Scale is important. Sustainability depends upon having the proper scale. The optimum sustainability for the Unite States is a population of 125 million. We are now at 308 million and growing. The global population is now 7.4 billion, and growing.
I think that environmental health is a derivative of economic health, and our economic system is not "healthy". In essence it is a Ponzi scheme, fostered upon the masses by a small group of bankers and economists at the Federal Reserve called the FOMC. The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board that determines the direction of monetary policy. The FOMC is composed of the board of governors, which has seven members, and five Reserve Bank presidents.
If the crash of 2008 did not wake us up then the next one will; coming soon to your neighborhood economy.
How is it that we have set it up such that a few people at the Wall Street Stock Exchange can determine how much, if any, food is on our tables? Whether the market is bull or bear and whether it will remain that way or shift, depends, now, on the whims and guesses and fortune telling of those few people.
Very few Americans have significant amounts of investment in stocks and bonds. Yet what they think/feel about the market determines what Wall Street does or doesn't do, which impacts greatly on our personal lives.
All of this is based upon magical thinking. It is based on the concept of perpetual growth. The GNP is the new god, and the people on Wall Street are the new priests that serve that god.
A Ponzi scheme is based upon the idea of perpetual growth. Everyone makes money until nobody does when it all comes crashing down. There are many very serious thinkers, both in and out of the Ponzi scheme that is our economy who think that it will all come crashing down very soon. But the emperor has no clothes. Even the candidates for the Democratic Party nomination did not call it what it is, but instead, talked about economic growth. The Republican candidates, all 17 of them, worship at the feet of continual growth.
How fat can your dog get before he becomes uncontrollable? How large can an economy get, whether national or global, before it becomes unmanageable and the scale pulls it all down. This has to do with monetary policy and the amount and cost of credit available. Our current version of these two factors are based upon make-believe.
Any Ponzi scheme is based upon the concept that it can keep on growing and growing with no limit in sight.
Perhaps an apropos slogan would be, "Scale down, not up". This is the opposite of "More is more". Instead, a better one would be, "Less is more". That is the opposite of what the FOMC and Wall Street strive for. They tell us that we should have 'faith' in the dollar.
If faith is the only thing keeping the economy afloat we are in big trouble. Faith in economic growth is no more efficacious than religious faith in prayer. Both are magical thinking that keep us under the control of the high priests. Sooner or later reality creeps in. Do we have time to wait?
Round Hill Farm, Virginia
‘ACCIDENTS’ ARE NO ACCIDENT
In the rush for profits workers lives are sacrificed.
Remember the Metro-North Railroad Hudson Line passengers train derailed December 1, 2013 - killing 115 passengers, and injuring another 61. It was caused by a Lack of safety controls.
Remember the Amtrak Northeast Regional train that derailed in Philadelphia May 12, 2015 - killing 8 and injury over 200, 11 injured critically. It was caused by a Lack of safety controls
There is a positive train control system that automatically slows or stops a train but they were not installed due to Congressional inactivity, euphemistically know as “budgetary shortfalls”.
Other obvious protections would be to have a minimum of 2 engineers in the control room of all trains at all time. Installation of Dead man’s switches in all trains, Speed controls on tracks and trains and a reduction of the work day could all be instituted
What about the crash that critically injured Tracy Morgan, TV actor on “30 Rock Star” show. It was caused by Wal Mart’s employee’s Truck Driver Fatigue, a preventable condition that is responsible for killing over 5,000 people a year.
These deaths can be prevented by Legalizing, Regulating and Enforcing shorter working hours, adequate sleep, time for commuting, time for family and time for meals as well as adjustments for work shift affects on Circadian Rhythms.
It was recently reported in the AP, August 11, 2015, that a report showing air controllers work schedules were causing them to miss sleep chronically and thus contributing to 50% of the errors made by air controllers. Instead of immediately insuring that air controllers get 8 hours sleep The US Government kept the report secret for years.
The Government in general works to maintain the profits of the bosses, their finance and industry, not the health of the working class as the above adequately demonstrates. Public health refers to all the organized methods used to prevent disease, promote health and prolong life among the population as a whole. The US Government’s Public Health Activities receives only 3% of the over Two Trillion dollars spent for health related services.
Only when workers have total control of their working conditions will we have the possibility of making the safety of working people one of the highest priorities of our society.
Dr. Nayvin Gordon
STONER VOTE SPLIT FACTION REVISES THEIR POSITION
Mendocino Medical Marijuana Advisory Board/MMMAB has become a dissident voice within the Heritage Campaign, regarding policies and strategies we believe are best suited to further the cannabis community's goals and interests. We present ideas from a different perspective that we hope will make you a more informed voter.
MMMAB is recommending No on AI, the Cannabis Tax Initiative, and Yes on AF, the Mendocino Heritage Initiative, contrary to the Heritage Campaign's message to vote Yes on Both.
Both can't win in Winner Take All. If AI gets the most votes, it will win and void the relevant tax sections in AF in their entirety, and leave us with a new cannabis crime -- a criminal misdemeanor for 'any' violation of the cannabis tax code.
The Mendocino County Board of Supervisors Cannabis Tax Initiative reads as follows:
VIOLATION DEEMED MISDEMEANOR
Any person violating any of the provisions of this Chapter shall be deemed guilty of a Misdemeanor and shall be punishable therefore.
The BOS has sunk to a new low by creating a new cannabis tax crime, "deeming" "any" violations of the tax code criminal misdemeanors instead of civil infractions with punishments of jail or fines or both.
Having done our research with due diligence, MMMAB has uncovered a trend of prohibitionist public officials around the state, who are adding the clause: "any violation is deemed a misdemeanor" to their new cannabis tax measures, as an ingenious way to extend cannabis prohibition in perpetuity via tax law, just when it looks like it's ending.
MMMAB sent out a question thru CA NORML, asking attorneys if any of them knew of a new cannabis misdemeanor embedded in cannabis tax law?
NORML Attorney Richard Rosen responded and confirms that this is also happening in Monterrey County which enacted regulations for commercial and personal cannabis cultivation. "Section 7.95.140 for personal cultivation provides 'any violation of the regulations is a misdemeanor'. No proof of knowledge, intent or other mental state is required to establish a violation. Similar provisions are included in regulations for commercial grows. A county tax ordinance is on the ballot this November. I believe this also includes provisions making all violations misdemeanors.
"These regulations are recriminalizing actions that the state has decriminalized. The provision for personal grows removes the requirement of mental state and creates a criminal offense that is more onerous than anything in the CA Penal Code or Health & Safety Code. All state and criminal regulations require proof of knowledge and general criminal intent. This is outrageous public policy and I hope we can show it is unconstitutional as well." MMMAB supports plaintiffs filing a court challenge to enjoin the new cannabis crime on constitutional grounds, so that it never gets off the ground on appeal.
The misdemeanor bomb in Measure AI'sCannabis Tax Act is reason in itself to vote No!! A Yes vote for AI is a vote to subject the entire cannabis community to a new misdemeanor crime and the prospect of cultivation recriminalization instead of reasonable regulation. This ruse is designed to trap well meaning growers who want to be legal into a situation they may not realize awaits them with the slightest misstep in the regulatory process, for instance lateness... "any" violation. These are intended consequences.
Vote No on AI to stop the new misdemeanor crime in the Cannabis Tax Act and Yes on AF, the Heritage Act, to save and protect the family farm, the economic backbone of the cannabis future.
Pebbles Trippet, Paula Deeter, Ralf Laguna
Mendocino Medical Marijuana Advisory Board/MMMAB
Dear Concerned Citizens:
I am writing you concerning the Initiative AF heritage act. The AF Heritage Act is a 60 page ordinance that has been written by greedy marijuana growers who have no concern for our environment, fisheries or wildlife. Mendocino County Board of Supervisors has just revised the 9.3.1 program. The new 9.3.1 program has a number of safeguards to protect our environment, fisheries and wildlife. If the AF Heritage Act is passed, it will eliminate many of the protections in the 9.3.1 program. The AF Heritage Act does not contain the wildlife exclusive fencing as provided by the 9.3.1 program. The wildlife exclusive fencing in 9.3 1 program is to protect the deer, elk, wild pigs and bears from growers who would either shoot or poison them if they threatened their marijuana crops. If the AF Heritage Act proponents really cared about the wildlife, they would not have removed the wildlife exclusion fencing from their Act. Trinity County's new ordinance copied the 9.3.1 program when it came to wildlife fencing. Even the spokesperson of the Mendocino Wildlife Association, Traci Pellar, who is an advocate for wildlife and marijuana growers, stated in the September 6 Ukiah Daily Journal that the AF Heritage Act lacks significant wildlife protection.
Another flawed provision in the AF Heritage Act is that it requires a two-year Mendocino County residency to be a marijuana grower. This provision is obviously unconstitutional and would open Mendocino County to certain litigation.
The major flaw with the AF Heritage Act is on page 20 of this act and that is that the compliance mechanisms and related penalties bear no teeth to those who violate the Act. Under the proposed Act, you could effectively violate all 60 pages of the Act and the initial penalty is a $100 fine and a 60 day compliance order. If the violation continues after 60 days, there is a $1,000 fine and another 60-day period to comply. If after the second 60-day penalty assessment the violator is still in violation, then the violator is subject to a 1% fine on their total receipts of sales. This third penalty provision is an absurdity to anyone who engages in the cultivation of marijuana as marijuana grower defense attorneys would never advise their clients to provide incriminating receipts to the government. Basically for the price of a pound of marijuana ($1100), you buy an entire grow season that results in profits exponentially in excess of the meager penalties. This is an obscene absurdity. But the true tragedy of this faux Act is that the quality of life in Mendocino County for those who live within 100 feet of one of these large industrial cultivation sites would be exposure to endless noise and pollution. The quality of life for those who end up living next to one of the large industrial cultivation sites would be decimated with no recourse.
If the AF Heritage Act is passed and enacted, a green rush of out-of-county growers would descend upon us and result in certain destruction of our wildlife, fisheries and watersheds.
As a 36-year resident of Blue Rock Creek north of Laytonville, I have many neighbors who are conscientious marijuana growers and seem to be doing very well under the existing 9.3.1 program. In my opinion, the proposed AF Heritage Act would result in out-of-control industrial marijuana cultivation. This also has been expressed by Bruce Anderson of the Anderson Valley Advertiser. In his September 7 editorial he described the AF Heritage Act as "totally nuts."
I strongly urge a NO vote on the AF Heritage Act.
Chris Brennan, cattle rancher & wildlife conservationist
WHAT I KNOW AFTER SIX YEARS ON THE PENSION BOARD
To the Editor:
I have been on our county pension board, MCERA, for about six years. Before that I studied the situation for about a year or two. From this experience I can tell you that the pension plan has been and still is a very big problem for our county. Although we are throwing an incredible amount of money at this problem, and many are telling us “not to worry,” this problem is not getting better, it is getting worse. I do not believe this plan is sustainable. If we continue as we have, this program will suck up every available dollar the county has to offer. Not only should taxpayers and users of county services beware, I believe participants in the plan should be very concerned too.
Before I say anything else, let me tell you I have nothing against our county employees, retirees or their beneficiaries. I think these folks should have a good retirement plan. I also think my fellow trustees and our administrator on the pension board are nice people who mean well. I am speaking as an experienced financial professional as to my experience and education with this plan. I am going to be treated as a terrible traitor for telling you this; with my experience, if I did not tell you this I would not be doing my job.
In 2010 I was put on the pension board by the county supervisors after the shenanigans of practices like “excess earnings” were exposed by those of us on the outside. Fortunately we were able to drive a stake through the heart of this fraudulent practice. The excess earnings story is an indicative one, but would take up too much space here. Please not all the rate of returns I quote below are before any “excess earnings” were skimmed from the assets in the plan.
I became interested in the retirement plan after the Mendocino County Farm Bureau(MCFB) asked me to review John Dickerson’s numbers (yourpublicmoney.com). The Farm Bureau asked me as I am a member through the management of our home ranch, but I have also been in the finance and tax industry for over three decades. My educational background is normal college degrees in business and economics, but also Master’s degrees in both Finance and Taxation. I have managed assets and taxes for families and businesses for over 30 years. I have managed private sector retirement plans for over 30 years also. I serve, and have served, on several private and non-pfrofit boards.
My response to MCFB was that John Dickerson was on to something; since then I have said he was an optimist. John has had terrible things said about him for this work he has done for the community. Let me say right here that I have always found John to go the full distance in his research and modeling(so much so he makes many “eyes glaze over”). John has always been totally open to explain or update any and every item he has had the courage to share with us. I have seen John be totally patient and humble in explaining the facts to those who wrote the rules(GASB board members when they didn’t understand their own regulations), the state legislative analyst(when they challenged him and were wrong), or most of us trying to wrap our minds around the complicated inner workings of a defined benefit plan.
When I came to the pension board I thought, in the stressed 2010 condition of our county, I could share the discipline we use on our boards in the private sector. I was not able to implement the discipline with our board; in fact this board has taught me how they have, and will continue to, spend/borrow public money. For this board member, it really drove home the lesson from Noble Laureate Milton Friedman on “Nobody spends somebody else’s money as carefully as he does his own.”
The following is what I have learned about our county pension system:
1. By design the county plans are set-up as a “Moral Hazard.” A moral hazard is where one group places the bets and the other party has to pay for their risk taking. In our case a voting super majority(2/3s) of the pension board has a vested interest in the benefits and the taxpayers and users of county services must pick-up 100 percent of every mistake, low balled employee contribution and every actuarial surprise. I don’t think it helps the moral hazard condition that the supervisors are also covered under the pension plan and that government workers are the single largest voting block representing about 18 percent of the county jobs. If the plan was managed fairly, the county should pick up about 50 percent of the costs and the employees would pick up about 50 percent of the cost. As proof of the moral hazard, notice that the county pays about five dollars for every one dollar the employees now pay. If the risk was borne equally(or entirely by the employees), I believe the pension board would exhibit very different behavior(probably about like the private boards I sit on.)
2. Actuarial surprises that the taxpayers and users of services pay for is the legacy of the pension board. In 1996 we fully funded the plan with a county Pension Obligation Bond or POB to “fix” the problem(fool me once, shame on you), in 2002 we “fixed” the NEW underfunding with another POB(fool me twice, shame on me), today we have a larger unfunded liability than ever before and it is getting worse(fool me trice, shame on us!). I no longer give the actuaries very much credibility.
3. In the 150 plus years we have been a county we had built up equity in our county assets. Not anymore as the size of the pension debt has off set all our county equity to where our liabilities are greater than our total county equity. We now have negative net worth to show for our 150 plus years thanks to our county pension system.
4. The county is paying about 46 cents on every payroll dollar (before social security, the match on the deferred comp for managers or any other benefit) when you include the amount the county pays to the plan and the POBs each year. The employees are paying just under an average of 10 cents on every payroll dollar. There is no private business that could survive with this 46 percent payroll load for the pension alone. Any normal business would be out of business or forced to offshore.
5. The unfunded pension liability payments total about $20.3 million per year and are growing. This cost is a very significant hit to our county and the ability to serve the needs of our peple.
6. With all the money going into the plan, the incoming funds still do not make administrative and benefit payroll. We have to sell about a third of our expected plan return, if we have any, just to cash flow the out payments. This is from a severely underfunded plan.
7. Our administrative budget, although small in comparison to the benefits paid, shows our largess. For the current fiscal year we budgeted to increase our spending almost 40 percent above what we spent last year. The spending on administration always increases in very large amounts since I have been on the pension board. This spending just adds to our debt and will be paid off over the next 18 years. As on most items, I am the lone dissenting vote against this practice.
8. We have amounts we just write-off without reporting out to anyone. Sometimes these add millions to our debt. The vote could go to collect the dollars back as the funds were paid by mistake or to just to let it go; we vote just to let it go. This is the way a moral hazard rolls. I promise you the vote would have been different if it was charged against the participants accounts rather than having the taxpayers and users of county services pick up the entire bill.
9. Our Target Rate of return (7.25 percent) is 1 percent to 1.25 percent higher than we can justify by what our investment advisor tells us we can expect over the next ten years (6.2 percent) or we have experienced over the last 10 years (5.6 percent). This is the gross rate of return after subtracting the investment management and administration costs. IF we dropped our Target Rate 1 percent our plan funding would go from about 70 percent funded to about 57 percent(include the POBs and we are only about 46 percent funded). With the drop in the Target Rate of Return, employer and employee costs would go up. This is resisted by county and employees because of the “cost”, but there is no free lunch; the cost will be paid now or later. The expected rate of return is what it is. If we do not lower the Target Rate the entire shortfall will be paid via debt by the taxpayers and users of county services; the employees will pay nothing (until their benefits crash). The hesitation and delay is also what one expects to experience from a moral hazard.
10. Our plan year end just closed. Our net return, before we sold assets to make benefit and administration payroll, is flat for the last two years. For this same period our assets are down about 4 percent due to selling assets to make cash flow( the end of June 2014 we had $442 million, the end of June 2016 we now have $426 million in plan assets).
11. A bit over one thirds of our county collected taxes go to just pay pension related benefits.
12. In 2008 the unfunded liability was about 29 percent of payroll; in 2010 it was about 133 percent, at plan year end 2015 it is about 314 percent of county payroll and it is getting larger.
13. We have had a miraculous market recovery. When I came on the pension board I was told that the plan funding would return when the market recovered. In 2008 our funding was 94.5 percent, in 2010 it was 78,9 percent, last year it was 70.2 percent. This year it will be worse. Oh how I wish the market would recover; oh, my gosh, it did! Note if you adjust for the overstated Target Rate and the pension obligation bonds as in #9 above...funding is substantially lower.
14. I said it in $6, but it bears repeating. Not a single new dollar ever goes into this plan. Every new county and employee dollar goes to pay those already retired. We even have to sell plan assets to the extent of about one third of our expected return or about 2 percent of plan assets above and beyond all of the contributions to make benefit and administration cost payroll. County employees; your contributions, or those the county pays for you, never ever make it to the plan.
15. A private pension plan is in the “Green Zone” when it is 80 percent funded or above. It is in the “Endangered” or “Yellow Zone” when it is between 65 percent and 80 percent funded. It is in the “Critical” or “Red Zone” when the funding is below 65 percent. Is the county income stream really strong enough to have the confidence we can disregard these private pension warnings? Would you bet your retirement, or county services, on it?
This is what I have learned from my six years on the county pension board. Don’t believe it when you hear it is getting better; it is getting worse. If we are going to get ahead of this it is going to take a very serious discussion. We are either going to have to put a whole bunch more money into the plan or take a look at cutting benefits. It does not take much analysis to see the current trend is not sustainable. I believe if we are going to try to “fix” this plan the sooner we take action the better. With a private plan it would have already been mandated by law that we cut benefits to save assets for those in the plan. I doubt putting this off until we are at a 40 percent funding level or lower will make the job any easier.
* * *
THE SKY IS NOT FALLING, by James Wilibanks, Mendocino County Pension Administrator.
ED NOTE. And, we might add, that even if you use Mr. Stephens’ more accurate lower rate of return for the stock market, you still have nothing more than a standard pension problem where the projected pension assets and revenue might someday go into net decline. The “unfunded liability” is basically a snapshot in time of the present deficit and is not an actual long-term liability. Many, many things could happen both within the system and without, and the problem, however large, is not high on our list of looming catastrophes. It is a serious problem, but it does not require drastic change, any more than Social Security does.
To the Editor:
The October 2 letter in the Ukiah Daily Journal by Ted Stephens, a trustee of the Mendocino County Employee Retirement System (MCERA), is unnecessarily alarmist.
I'll tell you why. (Like Mr. Stephens, I am also a trustee of MCERA, although I want to be crystal clear that I am not speaking in any official capacity nor on behalf of my colleagues on the Retirement Board. I am speaking as a public citizen only.)
The first thing that the citizens of Mendocino County should know in response to Mr. Stephens is that retiree benefits are primarily paid out of what we earn on our long-term stock, bond, and real estate investments. As such, the sustainability and financial viability of Mendocino County's retirement system -- indeed, any public retirement system -- should be evaluated on a 30-year time horizon, which is the industry standard. Mr. Stephens, however, takes the short-term, very myopic view of year-to-year accounting. He is given to catastrophic thinking based on annual returns on our portfolio. Meanwhile, our actuary, the Segal Consulting Group, uses a 30-year time horizon for planning and evaluation. Thirty years is conservative. Some public retirement systems actually use a 50-year time horizon.
Segal is one of the very best consulting and actuarial services companies in the U.S. with 23 offices across the country. Segal helps us navigate laws and regulations impacting our retirement system. They also understand the unique challenges we face here in Mendocino County as one of their smallest clients. Segal understands that we face pressures of increasing workforce costs and shrinking or flat tax revenues. They understand our need to accommodate a growing population of baby boomer retirees, and the difficulties — and necessity — of adopting new strategies.
Segal is an independent, employee-owned firm, and their to us advice is objective and unbiased -- they are rock-solid.
Segal is joined by our investment advisor, Callan Associates, in advising us here at MCERA. Like Segal, Callan is competent and credible -- also rock-solid. Callan advises retirement systems with total assets of more than $2 trillion for which they are responsible...that's trillion with a T.
Callan has five offices, and 43 years of experience. Callan tailors investment strategies for Mendocino County that are uniquely backed by proprietary research, an industry-leading database, and ongoing fiduciary education. Callan gives Mendocino County many helpful insights and tactics derived from working with hundreds of public sector clients throughout all levels of governments. Callan gives MCERA benchmarking knowledge that enables us to make our decisions in the broader context of what other jurisdictions are doing.
My point? My point is that Mr. Stephens is not saying anything we don't already know at MCERA. At MCERA, we live in the real world, and that means we are working hard with our partners, Segal and Callan, to deliver the retirement benefits that county workers were promised and which are guaranteed by law -- guaranteed, in fact, by the California state constitution.
Everything we do at MCERA is mandated by laws and regulations.
Mr. Stephens efforts are misplaced. Instead of terrorizing the people of Mendocino County and its workers, Mr. Stephens should be lobbying our legislators in Sacramento to change public pension law. Our hands are tied here at MCERA. We do what we are required to do by law. We pay the benefits that we are required to pay and which county workers earned. The county signed contracts with its workers. The county made promises. MCERA is held to those contracts and promises.
The benefits we provide here at MCERA are under constant scrutiny by our critics, like Mr. Stephens and John Dickerson, and that's okay. The landscape is changing constantly with the new legislation. Meanwhile, we do our best with the resources at hand. This was the oath I took as a public trustee and fiduciary -- to do my best with the resources at hand for the sole benefit of the plan's members as required by the state constitution. Five years ago, County Clerk Sue Ranochak administered that oath to me. My wife and two sons were my witnesses. It is a sacred oath.
BRING BACK GLASS-STEAGALL
Editor, Protest our bank deposits.
The primary cause of the 1930s Great Depression was the speculation by commercial banks in the stock market. Because of these abuses by banks, legislation was enacted in 1933 known as the Glass-Steagall Act to erect a barrier between investment and commercial banking.
That Act was wrongly repealed in 1999 when President Bill Clinton signed the legislation to deregulate the banking industry allowing the banks to once again police themselves. As a result, by the end of 2015 the four largest investment banks in New York created derivatives of $186 trillion.
A derivative is an agreement between two parties to pay each other money depending on the performance of some other underlying asset, such as a bond. Large scale trading in derivatives is risky for these banks due to defaults.
Massive derivative losses by these banks will allow them to use deposits to offset losses. This is known as “bail-in” and the depositors can be wiped out. The Glass-Steagall Act must now be reenacted to prevent Wall Street creation of a new class of victims.
Confessions of a Squeezer gizer
The Grange Zydeco Dance Party was a big success!
Per pancake mixing tactics, here’s our recipe:
Take one top Zydeco guy, Mark St. Mary, Lake Charles transplant who couldn’t put dat squeezing box thang down. Include his band. Add in liberal doses of dance lovers. Shop around to get the Coastal/Albion, AV species and inland models. Add in a gifted Cajun Dance teacher and wife, Zydeco Ted Sherod and Joann. Blender with incredible sponsors like Navarro Vineyard and Roederer Estate and add their special juices.
Now, put all in a cool hall with large dance floor and jump back. Very reactive! Allow to bubble and simmer and then add Cajun sausage and jambalaya from Boon Dogs AKA Aquarelle and stand back. Oh Ay Yi! Ah Carumba! Holy cow! Don’t add a cow, it is just an expression. Thirty to 40 determined folks lined up inside the hall in two lines: men and woman, at 7 PM on the floor, Zydeco Ted moved amongst with his cool voice to show folks the first steps in couple dancing. The hall kept filling. Then he turned on his DJ sound with Zydeco. Even this guy with 2 left feet which is Zydeco Teds bs. name, was doing the moves. Then it was time for line dancing. Mark St Mary rushed the stage dumping adrenaline on the crowd. The floor filled with dancers from the git go and it kept churning and churning. The Jambalaya was real good with shrimp in it, Anderson Valley Beer (another patron) savored the Andouille dogs and the night rushed by.
The next day St. Mary text me, to say he had not gotten so much energy from an audience in over 4 years.. and was stoked and ready to return. It is hard to describe St. Mary’s music. He makes his accordions sing, and he has so much zydeco, waltzes and 2 steps under his belt that he has to keep trim or pop. He has been around too, playing with Queen Ida, Fat’s Domino and others. His rub board gal, Myrna was right there with a great rhythm and she belted out a few Southern Louisiana blues herself. The band filled out with guitar, bass and drums.
Gotta thank the supporting patrons for their faith, Navarro Vineyard, Roederer Estate, and Anderson Valley Brewing. Plus the undying support of Lions, who were there as a pride behind the bar plus a parcel of Grangers doing the good deeds. It is clear that Zydeco is loved here, so expect more. Also we expect to do more cool stuff with Tango parties, Reggae/Ska, and piano-centric events.
Old hall president