Today a full 11 years later the LACERA pension fund claims to be in trouble with a value of just 38 Billion dollars. See my new research at the bottom of this posting.
In my earlier research I have shown that in the time period from 1996 to 2000 16 California county pensions had an average on investment returns of 14.84% a year for the entire 5 year period. Or in other words enough return in just 5 years to more than double there value from the entire previous 50 years of there fund. Now the document that I used to come up with this finding has since been pulled from it's spot on the Santa Barbara Grand Jury's web page. Luckily for us all I have the site where that reference material can still be pulled from @
http://www.sbcgj.org/2000/aud_fin.htm
Well as it has turned out many times before even with my great detail to research there is ton of contradicting information out there. Based on these 3 reports I am referring to in to the SBCERS Pension fund more than doubled and did so in just 4 years! According to these documents the SBCERS fund value grew from a total of 586.7 million on 12/31/95 to 1.23 billion on 12/31/99 or in just 4 quick years. In fact the Grand Jury had a rough value exceeding at least 800 million and was reported to actually be in excess of 1 billion dollars. So even the Santa Barbara County Grand Jury could not pin point the exact value of the SBCERS Pension Fund. What might really surprise you is this; if you take the 1.23 Billion dollars SBCERS pension fund value from 12/31/99. Than add the total employer employee contributions for the last 11 years you come out with a current value of 1.9 billion dollars today. How can that be I ask because that value is without any investment returns for the same eleven year period from the SBCERS pension fund? In other words in order to reach our current SBCERS pension fund value we need zero contributions from investments for the fund itself! All that comes after the SBCERS pension fund value had actually grown over 4oo% from 1989 to 06/2000
This great when you realize the SBCERS fund was shooting for an 8.16% benchmark rate of return. But wait a minute with a Consumer price index assumption of 4.75 included in the 8.16% assumption value. That same 5 year period our fund actually did more than doubled it's required rate of return. You see of that 8.16 assumption 4.75% was eaten up by the C.P.I. So 4.75 %- 8.16% = 3.41% real rate of return needed for our SBCERS fund to remain solvent. Think of the C. P. index as an adjustable mortgage rate index factor and you will understand this all just fine. So 14.84 - 4.75 C.P.I. = 10.09% real rate of investment return per year. Than divided 10.09 by 3.41 = 2.96 times greater Or in other words the pension funds actual performance on a yearly basis (1996-2000) was 3 times greater than required per year.
Now stop and go back over that again until you see what I am saying. How can a pension perform 15 times greater than the real rate of return of 3.41 in a 5 year period and now be under funded by 1,000,000,000 dollars? I have enclosed two 20 year charts provided by the SBCERS pension fund for your review.
You see we only have to subtract the C.P.I. index once per year against actual performance regardless of high much it over performs.
Combined the Counties below had a yearly investment rate of return over a 5 year span of 14.84%
In other words during this 5 year window the funds in these Counties out performed there previous 50 years !
Counties With Assets In Excess 0f $800 Million
Annualized Returns for Period ending 6/30/00
| COUNTY | ACTIVE PARTICIPANTS | FUND BALANCE (market value) | 1 YR RATE OF RETURN | 3 YR RATE OF RETURN | 5 YR RATE OF RETURN |
| Los Angeles | 88,420 | $30.3 billion | 15.2% | 14.6% | 15.7% |
| Orange | 20,357 | $4.8 billion | 11.85% | 12.70% | 14.46% |
| San Diego | 16,910 | $3.7 billion | 15.75% | 14.59% | 16.02% |
| San Bernardino | 15,529 | $3.6 billion | 9.74% | 12.70% | 14.12% |
| Sacramento | 10,547 | $3.3 billion | 9.54% | 13.19% | 15.41% |
| Alameda | 9,859 | $3.8 billion | 10.88% | 13.10% | 15.36% |
| Contra Costa | 8,475 | $2.5 billion | 6.6% | 13.0% | 15.7% |
| Kern | 6,853 | $1.4 billion | 9.43% | 11.4% | 13.62% |
| Ventura | 6,840 | $2.1 billion | 7.2% | 12.9% | 14.8% |
| Fresno | 5,899 | $1.3 billion | 8.4% | 11.8% | 14.0% |
| San Joaquin | 4,835 | $1.3 billion | 7.93% | 10.17% | 13.71% |
| Santa Barbara | 4,500 | $1.2 billion | 6.7% | 12.1% | 14.5% |
| San Mateo | 4,400 | $1.2 billion | 6.8% | 10.5% | 15.3% |
| Stanislaus | 4,281 | $900 million | 6.58% | 10.86% | 13.49% |
| Sonoma | 4,236 | $928 million | 8.78% | 12.92% | 15.81% |
| Marin | 2,885 | $955 million | 10.7% | 12.7% | 15.2% |
The above chart shows that the Los Angeles County Employees Association had a value of over 30 Billion dollars on 06/2000. The bond document below shows that on 06/30/1990 the LACERA pension fund value was 9.4 Billion dollars. Wow what rate of return on investment was needed over the ten year period to achieve a tripling of the LACERA fund value? I ask this because currently for the year 2010 the LACERA is said to hold a fund value of just 38 Billion dollars. Before we can go forward we must regain a solid foundation of facts to save our California economy!
Do you really think just the SBCERS Pension is the only California County to have committed fraud? How stuck on stupid is America? Read the top right portion of the following page to see the LACERA pension fund value for June 1990.
In my next posting I will expose a 5 Billion dollar question of value for the LACERA we are only just getting started.
Magic
273 postings and counting!
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