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Mendocino County Today: October 8, 2012

THAT POTENTIAL TRAIN WRECK in the person of Rich White, the County’s recently hired Retirement Administrator who wants to hire a $110k per year (including benefits) full-time “financial officer” to do much of what White himself should do, was “resolved” a few weeks ago in a typically Mendo manner. According to retirement board member John Sakowicz, who volunteered to update the Board of Supervisors on the subject at the Supervisors' September 25 Board meeting, the retirement board decided on September 19 to authorize the hiring of a three-day a month high-powered CPA named Scott German of Fechter & Co. out of Sacramento for $75,000 in place of the full-time financial assistant White wanted.

Rich White

ACCORDING to the retirement Board agenda for September 19, Mr. White asked the retirement board “to authorize the retirement administrator [White] to contract for accounting services with a qualified outside accounting provider for the needed bookkeeping, monthly financial statement preparation, and other general accounting services. Staff [Mr. White] recommends that the board approved the scope of service for Galena LLP to prepare and produce the CAFR [Comprehensive Annual Financial Report] for the retirement association and compare the report to the GFOA Certificate for Excellence Award. The retirement administrator will report back to the board on the status of accounting services and the CAFR.”

Sakowicz said the CPA charges $150 per hour for 24 hours a month which will include Mr. German attending retirement board meetings, as well as preparation of a few routine reports to the State.

Pinches: “Was that a unanimous vote?”

Sakowicz: “No, it was not.”

Pinches: “What was the vote?”

Sakowicz: “The two fiscal hawks voted against it.”

McCowen: “I guess we’ll scratch our heads guessing who those were.”

Sakowicz demurred, presumably including himself as one of the “fiscal hawks,” pointing out that payments like this eventually come out of the County’s general fund. Sakowicz added that the Retirement Board has a “fiduciary responsibility” to make sure things are done right for its members and that technically the retirement board is spending less than they could on administration and that they could be considered “under

budget.”

Pinches: “Being under budget is just a polite way of saying you’re going broke.”

McCowen: “At a slower rate.”

Hamburg: “So we’re getting somebody for three days a month.”

Sakowicz: “At $150 per hour.”

Hamburg: “Which is $75,000 a year.”

Sakowicz: “Correct.”

Hamburg: “Instead of getting a full time person for $110k per year.”

Sakowicz: “That’s my understanding.”

Hamburg: “Ok.”

Supervisor Pinches wanted to ask a few more questions but Chair McCowen cut him off saying, “This is not a discussion item. We will have Mr. White reporting to us at some point in the future.”

Pinches: “Apparently they don’t have to report to us! They can just go around us and do what they want.”

McCowen. “Well, please. We have the report. I think County Counsel is looking a little nervous.”

Supervisor Carre Brown laughed nervously.

OBVIOUSLY, if Mr. German can do whatever the job is in three days a month, the Retirement Board could have found a local, cheaper CPA who didn’t need to be paid to commute.

AND MR. SAKOWICZ WAS WRONG when he replied “Correct” to Hamburg’s question about $150 month translating to $75,000 a year. 24 hours per month times 12 months is 288 hours. $75,000 divided by 288 hours is $260 per hour, not $150 per hour. Something doesn’t add up — not a good sign from the people who are supposed to be responsible for the County’s pension numbers. It looks like the Retirement Board and Mr. White are simply sticking their thumb in the eye of the Board of Supervisors for denying White his personal assistant.

WITH ALL THE TALK LATELY about the problems caused by Ukiah area street people, Supervisor John McCowen, does more than talk. He spends much of his scant free time in the physical clean-up effort and just as much energy trying to persuade the homeless to clean up after themselves and/or abandon their camps in the more ecologically sensitive areas of the Ukiah Valley, especially those camps bordering the Russian River. McCowen happened to mention a couple of tense encounters he's had with squatters, one of whom pointed out to McCowen during one face off in a hidden spot that the Supervisor was not only outnumbered but that they could finish him off and “no one would ever know.”

THE TRUE STATE OF THE NATION: “Bankers don’t care if someone borrowed $250,000 against a house that is now only worth $100,000 — the loan amount to be repaid is $250,000. But because the house price has declined to $100,000, bankers can now buy two and one half of these houses for the original loan amount. And because the borrower must repay the full $250,000 plus interest and fees for a house now only worth $100,000, this represents a transfer of their future economic production to bankers of $150,000 plus interest and fees. When this is aggregated across all of the borrowers and all of the bank loans, it represents a massive transfer of wealth from the people who produce it to a group of people who have been given the right to create money at the push of a button: Wall Street. Finance capitalism can’t be fixed because of its inherent contradictions. There is no ‘natural’ reason why banks, rather than public institutions, have the right to create money — that is a political outcome. And the political power of finance capitalism is more than just capture of the political system, it lies in the everyday power over the way that the world is set up — the relation between ‘natural’ needs like shelter, transportation, education and healthcare and the debt system used to ‘buy’ them that converts an increasing proportion of the product of our work to financial profits. It is this last point that mainstream economists, liberals and most progressives don’t get. By focusing attention on the nominal political system, the politics surrounding economic conditions are left hidden. The calls to ‘get the money out of politics’ also need to get the politics out of money. Finance capitalism, and capitalism more broadly considered, is a system of economic domination. And economic domination is political. As the saying goes, ‘economic democracy is a prerequisite for political democracy.’ And economic democracy requires institutions in the public interest.” (— Rob Urie)

ONE MORE TIME: According to the Centers for Disease Control and Prevention, the Ukiah Valley Medical Center is one of four California clinics to receive and medically deploy steroid shots from a recalled batch linked to an outbreak of deadly meningitis. The recalled shots have been linked to five deaths and 40 confirmed illnesses in other states but none yet in California.

BY SATURDAY AFTERNOON, San Francisco was already looking overwhelmed by an air, sea and ground invasion of weekend visitors in town for the Blue Angels, a billionaire's boat race on the Bay, a huge free bluegrass concert in Golden Gate Park, and two big-time ball games hosted by the Giants and the 49ers. Locals were advised to walk, bike or Muni around town. I did all three. Friday, I biked through the Presidio to the Marina, intending to continue at least as far as Friends of the Library to say hello to my friend, Byron Spooner, an old school book guy, who runs the irresistible operation. Friends runs a terrific used book store with an attached coffee shop in an irresistible setting on the Bay at Fort Mason, a major debarkation point for soldiers and Marines fighting in the Pacific during World War Two, many of whom sailed west under the Golden Gate Bridge and never came back. As soon as the Blue Angels began jetting across Friday's clear skies, people began parking any old where they could pull over, including intersections. I watched a nicely turned out matron from one of the posh homes looking out on Crissy Field confront a fire truck crew. “How can emergency vehicles get through with you sitting here like this?” We are the emergency vehicle, ma'am, a fireman said. A young black cop pleaded with private vehicles to “keep moving,” often adding a plaintive “Please.” No one moved, and the planes roared back and forth, swooping low over the delighted throngs. I've always thought the Blue Angels should add some realism, a reminder of their death function, maybe strafe the crowds with marshmallows to give their admirers some idea what it might be like to be on the kill end of these miraculous machines which, for all their genius, have been defeated by medieval Mohammedans fighting back out of the caves of the Hindu Kush. Saturday, I biked up to the park for a look at how badly the music mobs were battering the botany, thinking about how startled its creator, John McClaren, who envisioned Americans in their Sunday best on sedate strolls through the urban forest he'd created, would be at its present function as, well, an Arcadian nightmare strayed far from its purpose as a leafy restorative. Thousands of people were funneling in from all directions, many of them, sensibly, on bicycles. Young women have never looked better. Young men have never looked goofier in either their clothes for small boys or all-out grunge, and all of them walking heads down, mesmerized by the idiocies displayed on their handheld gizmos. I ran into Aidin Vaziri, a music writer for the Chronicle. “All this great music this weekend and guess where I have to go? Madonna.” Much later in the glorious afternoon, with the engineered thunderers still splitting the skies, I grabbed the 1 California for the Ferry Building and a walk down the Embarcadero to the ballpark for the first playoff game between the Giants and the Reds. People were selling stuff — churros to sliders to wine — the whole way, this gauntlet of miscellaneous free enterprise mostly associated with the boat race underway on the Bay. A rock band pounded away near the ballpark, its lead singer moaning inaudible lyrics. Trash cans were inadequate to the task, invisible beneath mounds of litter, but bonanzas of cash cans and bottles for the unlikely platoons of tweekers and ancient Chinese women who burrow into the detritus for the retrievable nickels and dimes. I bought my first churro from an Hispanic who probably has to sell the things to pay off the slave masters who snuck him across the border. The magnificent churro. The most perfect junk food ever invented — a stick of fried, sugar-dipped white dough. It plummeted to my gizzard like a culinary IED waiting to explode at a sip of Coca Cola. Giants fans are all right. Usually. But there were a lot of bad ones at the ballpark Saturday night. Thousands cheered when Reds pitcher Johnny Cueto somehow hurt himself on his eighth pitch of the game and had to leave the field, a sure sign that too many non-fans were in the house. Foul mouthed drunks were to my rear, two very silly women to my front. The two sillies brandished a view-blocking homemade sign, replete with tiny flashing Christmas lights, “So we can get on TV,” as one of them explained to the drunks sitting next to them. In the last inning as the Giants slipped beneath Game One's outgoing tide, a guy yelled at the Reds lights-out reliever, "You're a punk, Chapman." Shuffling out of the ballpark after Chapman had punked Buster Posey with a final hundred-mile-an-hour fastball, I thought of that poem, “There was a time American faces looked beautiful to me,” but anymore “beauty” isn't the descriptive that comes to mind.

4 Comments

  1. Jeff McMullin October 8, 2012

    Great observations Bruce, including a rare sensible statement from Vaziri

  2. Jim Hill October 8, 2012

    THE TRUE STATE OF THE NATION: “Bankers don’t care if someone borrowed $250,000 against a house that is now only worth $100,000 — the loan amount to be repaid is $250,000. But because the house price has declined to $100,000, bankers can now buy two and one half of these houses for the original loan amount. And because the borrower must repay the full $250,000 plus interest and fees for a house now only worth $100,000.

    Why do we not mention…
    The seller who sold the house for $250k, can now also buy two and a half houses at $100k each for the 250k he collected.

  3. John Sakowicz October 8, 2012

    With regard to the following comment: : “AND MR. SAKOWICZ WAS WRONG when he replied “Correct” to Hamburg’s question about $150 month translating to $75,000 a year. 24 hours per month times 12 months is 288 hours. $75,000 divided by 288 hours is $260 per hour, not $150 per hour. Something doesn’t add up — not a good sign from the people who are supposed to be responsible for the County’s pension numbers. It looks like the Retirement Board and Mr. White are simply sticking their thumb in the eye of the Board of Supervisors for denying White his personal assistant. ”

    Here’s my take.

    I believe the AVA’s math is right. The AVA is correct in stating that the contract annualized over the next 12 months puts us well over the $75,000.

    But it’s also my understanding that the contract is limited or “capped out” at $75,000. So, it’s $150 an hour for three days a month, etc. , until the money is gone. Anything over $75,000 has to come again before the Retirement Board for another vote for any more money to be approved.

    I’ll get this clarified for AVA readers at the next Retirement Board meeting in October.

    Finally, the truth is the Retirement Board — less the dissenters, including myself, who I would describe as “fiscal hawks” — circumvented the will of the Board of Supervisors by contracting out the job functions of a financial officer who would have otherwise been on staff.

    But I want to make this point crystal clear: It is their legal right to do so . It is absolutely MCERA’s right to contract for services without Board of Supervisors approval. The Retirement Board is autonomous and independent from the Board of Supervisors, per the ’37 Act.

    It is also true that per the ’37 ACT, MCERA is authorized to have about a $2 million budget. But, in fact, our budget is about half of that…a little over $1 million. Indeed, we try to be “fiscal hawks”…very conservative, very prudent.

    That said, we need to continue to be “fiscal hawks” at the Retirement Board. The more the merrier. .Why?

    Because we have a big unfunded pension liability of $126 million. This liability will only get restated upwards when GASB 68 kicks in.

    Also we need to be fiscal hawks because with 300-400 fewer county employees than only few years ago, we will have fewer employees paying into the retirement system even as the number of retirees continues to grow.

    Also we need to be fiscal hawks because stock market returns continue to fall far short of the 7 3/4 percent that is our target rate of return. For example, yields on 10-year Treasury bonds are currently at about only 1.6 percent. And the stock market, in which we are heavily invested, carries considerable risk. Greece. Spain. The huge national debt here in the United State (over $16 trillion). And the budget deficit. And the looming “fiscal cliff” at the end of the year when tax cuts expire. Pick a million reasons why the stock market is risky.

    And finally we need to be fiscal hawks because any money spent now, i.e. the $75,000 for accounting services, gets magnified over time as part of the unfunded liability by the very punishing mathematics of actuarial science. Liabilities “earn” a rate of return…speaking in plain terms. Such is pension fund accounting. Such is actuarial science. It’s true for every retirement system, especially with the reforms coming from GASB. You can’t hide liabilities forever. You can’t roll over forever. You can’t amortize forever. Liabilities compound. And no more smoke and mirrors. No more “excess earnings”. No more “diversions”. All good things, by the way.

    That said, it’s very sad that MCERA only gets a contracted CPA on a very part-time basis….three days a month vs. a full-time employee.

  4. Pete October 8, 2012

    UVMC should be telling us about this, however here is the NYT:

    About 13,000 people may have been exposed to the tainted steroid that has been linked to a growing outbreak of fungal meningitis, a spokesman for the Centers for Disease Control and Prevention said on Monday. The outbreak has killed 8 people and sickened 97 others in 23 states. More cases are expected…

    http://www.nytimes.com/2012/10/09/health/cdc-says-thousands-exposed-to-steroid-linked-to-meningitis.html?_r=1&hp

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