Saturday, June 4, 2011

What is the real Value of our SBCERS pension?

Well I felt really good about yesterdays posting and based on all the positive feed back rightfully so. I sill worry at times that even with all the research I put into my postings I must do a better job of presenting my concerns to all of you. So that it is worthy of your time and effort to not only read it but that it stirs your thoughts into motion about the subject matter.

I feel so strongly that we all must demand accountability and answers from our California Public pension system that I have continued to invest additional long hours into further research. I feel that the negative impact the pension crisis has over California’s economy should make it a priority with everyone. Regardless if you live in San Jose and work hard for public education, or live in Santa Barbara and have a special passion for treating the mentally ill. Our pension system is choking off any funds from ever reaching your interest group and will continue to do so for years to come. We must stop allowing politicians to do our thinking for us and show them that we can think for ourselves.


Which brings me back to the pension issue and why I believe we have additional avenues we could explore. So this weekend will be about two or three postings from me that will use a common sense approach in reviewing the data and presenting it to you. For example below I have added a column to the chart that gives us an updated value for each County. I feel I can highlight the differences between Counties and their performances in a manner that will be quite alarming. The "Fund Balance" column represents the county pension value from 06/30/2000. The "updated value" column I have added reflects the value for the date specified in the box. I stumbled across these updated values from a file I found on the Internet @ http://www.sbcgj.org/2009/response/SBCERS-update.pdf
So I will continue below the chart and start reviewing our SBCERS fund and what jumps out at me.
Annualized Returns for Period ending 6/30/00
http://www.sbcgj.org/2000/aud_fin.htm

COUNTY
ACTIVE PARTICIPANTS
FUND BALANCE (market value)
1 YR RATE OF RETURN
3 YR RATE OF RETURN
5 YR RATE OF RETURN
updated value
Los Angeles
88,420
$30.3 billion
15.2%
14.6%
15.7%
38.7 Billion 06/2008
Orange
20,357
$4.8 billion
11.85%
12.70%
14.46%
6.4 Billion
06/2008
San Diego
16,910
$3.7 billion
15.75%
14.59%
16.02%
8.4 Billion
06/2008
San Bernardino
15,529
$3.6 billion
9.74%
12.70%
14.12%
6.1 Billion
06/2008
Sacramento
10,547
$3.3 billion
9.54%
13.19%
15.41%
5.7 Billion
06/2008
Alameda
9,859
$3.8 billion
10.88%
13.10%
15.36%
3.8 Billion
12/31/07
Contra Costa
8,475
$2.5 billion
6.6%
13.0%
15.7%
3.7 Billion
12/31/2008
Kern
6,853
$1.4 billion
9.43%
11.4%
13.62%
2.Billion
06/2009
Ventura
6,840
$2.1 billion
7.2%
12.9%
14.8%
2.9 Billion
06/2008
Fresno
5,899
$1.3 billion
8.4%
11.8%
14.0%
2.2 Billion
06/2009
San Joaquin
4,835
$1.3 billion
7.93%
10.17%
13.71%
No new
data
Santa Barbara
4,500
$1.2 billion
6.7%
12.1%
14.5%
1.6 Billion
06/30/2010
San Mateo
4,400
$1.2 billion
6.8%
10.5%
15.3%
1.6 Billion
11/2009
Stanislaus
4,281
$900 million
6.58%
10.86%
13.49%
1.05Billion
06/2009
Sonoma
4,236
$928 million
8.78%
12.92%
15.81%
1.07Billion
12/2008
Marin
2,885
$955 million
10.7%
12.7%
15.2%
1.5 Billion
06/2007


Notes:
1. Fund balance information provided by Wagerman Associates
2. Rate of return Information on provided by retirement investment administrators of individual counties
3. Rates of return are gross and do not include management fees

Well as you can see the SBCERS fund value starts out at 1.2 Billion dollars on 06/30/2000, than we fast forward to a fund value of 1.6 Billion dollars on 06/30/2010 this value was taken from the 2010 SBCERS CAFR report.  At first glance one would see a modest gain of 400 Million dollars over the 10 year span. Based on our economy one might never give it a second thought but hold on there tiger. You see over the last ten years our county and its employees have contributed hundreds of millions of dollars as well as some very significant years with high returns on it’s investments.
Over the last tens years ( I may be guilty of rounding off)
County employee and employer contributions equaled……………... …600 Million
The 2010 SBCERS CAFR shows a 1 year investments return of ………188 Million
Between 2003 and 2007 return on investments equals about……………637 million
Our SBCERS fund Loses between 2008 and 2009 were equal to …...... (-540 Million)
Leaving us with a grand total that should be about……………………..2.085 BILLION DOLLARS

Santa Barbara County Employees’
Retirement System
2007 INVESTIGATION OF EXPERIENCE
For the period July 1, 2003 to June 30, 2007
Revised January 2008
SBCERS Plan Assets where as follows
2007 $ 1,806,930,876 (at this point the pension was 100% funded)
2006 $ 1,628,958,000
2005 $ 1,476,188,000
2004 $ 1,346,619,000
2003 $ 1,169,417,000
Please keep in mind that in 1999 an additional 180 million dollars had been removed from the SBCERS pension under the guise of excessive returns! This 180 million dollar reduction represented a 15.5% reduction of assets held in trust for the SBCERS fund.

So what else can I present to the public that would also challenge both the fund value and funded ratio  
I am not that bright so I tend to repeat myself when I think I am onto something good and that is that the math just will not allow for a Billion dollar future under funded SBCERS pension liability.

My next posting will provide some charts and graphs that reflect the SBCERS investments have performed as required to keep the fund solvent.

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