Sunday, November 11, 2012 – 09:00 p.m.
Last modified: Monday, November 12, 2012 – 10:40 a.m.
San Bernardino County pension pressures have worsened once again.
The latest actuarial report studying the performance of the county pension fund and its solvency for the latest fiscal year ending June 30, 2012 is full of not so good news for county supervisors, as well as the plans participants.
The report, prepared by Segal and Company for the San Bernardino County Employees Retirement Association, takes into account policies put in place by plan trustee’s that are designed to; phase-in the impact of investment performance on the plan’s funding level; and phase-in, over three years, higher employer contributions to the system.
The investment practice is referred to as “four-year smoothing”.
In other words the report on its face sugar coats the bad news. But when one looks under the covers at the foot notes, the numbers are alarming.
Using the smoothing approach the pension system is currently funded at 78.9%.
Fully recognizing the investment performance of the pension system takes the funding level down to a alarming 71.9%. A level that has the pension plan in a seriously underfunded condition.
A modified employer contribution practice also allows the county to contribute less into the system than it should.
As stated on page iv of the report, the current proposed employer contribution rate of 23.89% would increase to 27.38% of pensionable compensation.
The sugar-coated unfunded pension liability is $1.82 billion, compared to $1.71 billion as of June 30, 2011.
The actual unadjusted unfunded pension liability is a staggering $2.43 billion, compared to $2.05 billion as of June 30, 2011.
The market value of current pension fund assets is stated at $6.17 billion as of June 30, 2012.
Interestingly, county employee unions have vigorously fought attempts by county supervisors to try and rectify the pension shortfall, and refuse to acknowledge any serious problem exists.
Since 2003, annual employer contribution to the plan have grown from $68,361,000 to $278,090,808 in 2012.