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Recently I have shifted my attention back to our Santa Barbara County Employees Retirement fund. Last week I created 4 new postings dealing with our SBCERS fund and in them I really tried to emphasize just how important it is that we give the whole California Public Pension system our attention.
As you all know I post these stories on my blog @ www.santabarbaracriminalcourtcorruption.blogspot.com . But what you might not know is just how popular the subject of our Santa Barbara County pension has become. In the last week the links to my blog and stories has grown from 7100 to 8250 with the SBCERS postings being the number one linked subject. It had taken me almost two years to see my link totals climb to 7100 but to see an 1150 link increase in just 7 short days I don’t even know what to think.
Every time I attempt to understand a pension fund report no matter whose fund or how the fund has performed for that year there always seems to be numerous inconsistencies with the math. Now most people would look at the value of the fund and how that value performed. Not me I look at the math involved and if that matches up with all the movement of the fund.
In 1988 the SBCERS fund obligation was 290 million dollars with a fund value of 220 million dollars. Ten years later the fund obligation had grown over 300% to 950 million dollars. The fund value had increased by over 400% to 938 million dollars. Now I cannot tell you what is right or wrong about this but when you only have an 8% assumption rate how did the pension obligation grow so vast? The obligation side is defined and limited to how it will grow in the future.
Up until 2001 the SBCERS pension reported there fund value on the California State Controllers Audit ending 12/31/and the year.However on the same audit sheet they would also give the “net assets available for benefits” as of 06/30 and the year.Below is a simple version of what the California Controllers Audit report looks like. The report first gives you assets held in trust as of 06/30 and the year of the report. Than further below you are given the fund value as of 12/31 and the year.
Well what struck me as odd was that from 1997-2000 the fund value was always higher in June and lower in December. The fund always had a positive growth from December to December and from June to June but never from June to December. In fact the SBCERS pension fund lost over 400 million dollars from June to December in 97, 98, 99 and 2000. Than consider that during the 1999 2000 year there was also 180 Million dollars removed from the pension fund under the “Excess Funds “umbrella. Now we are talking about a total close to 600 million dollars or 50% of the total fund value disappearing behind smoke and mirrors. Even though the fund consistently lost money from June to December it was still able to report an average return on investments of 10.2% for the four year span.
I hope after all this you too will now have some serious concerns with how our County’s funds seem to vaporize right before our eyes but you have not seen anything yet. The fund value differences that exist in other Counties can be as high as 700 million dollars from June to December. In some cases over a 3 or 4 year span we could be talking about 2 Billion dollars disappearing. I will be putting together some more examples of other Counties. I have been waiting for my additional pension audits to arrive from the State Controller which will go back to the seventies, Than I can create a complete 3 decade history of fund activity.
Below is a very simple example of what the Controllers audit report looks like. See the pictures below for a more complete view.
Public Retirement Systems Annual Report Fiscal Year 1999-00
Santa Barbara County Employees Retirement System
As of 06/30/2000 ……………………………….Beginning of Year Net Assets
Net Assets Available for Benefits………………..Held in Trust for Pension Benefits
……….1,252,219,393……………………………1,176,896,699..(06/30/1999)
Summary of Funding Position……………………………………………..Average Yield
12/31/2000 ……….1, 171,138,000………………102.2% Funded…………...6.6%
12/31/1999………..1,068,357,000……………….100.1%Funded…………...11.8%
12/31/1998………..938,295,000…..….…………..98.7%Funded……………21.6%
12/31/1997……….799,539,000…………………..91.5%Funded……………10.2%
I placed the December values over the June values below as well as the lost value between the two.
……………………Actuarial Value/ Net Assets
12/31/2000 ……….1, 171,138,000………………102.2% Funded
06/30/2000………..1,251,219,393……………….
Loss from 06/ 30 to 12/31 = - (80,081,000)
12/31/1999………..1,068,357,000……………….100.1%Funded
06/30/1999………..1,176,896,699………………
Loss from 06/30 to 12/31=-(108,539,000)
12/31/1998………..938,295,000………………..98.7%Funded
06/30/1998………1,062,931,561……………….
Loss from 06/30 to 12/31=-(124,636,000)
12/31/1997……….799,539,000………………..91.5%Funded
06/0/1997………...888,876,118………………..
Loss from 06/30/to 12/31=-(89,337,000)
Below are 3 SBCERS Audits from the California State Controllers reports
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