Grand Jury

MARIN COUNTY CIVIL GRAND JURY 2014-2015 • AUGUST 2015 MARIN COUNTY CIVIL GRAND JURY REPORT SUMMARY 4 PENSION ENHANCEMENTS: A Case of Government Code Violations and A Lack of Transparency Report issued April 16, 2015 Unfunded pension liabilities are a concern for county and city governments throughout California. Reviewing this problem in Marin County, the Grand Jury examined four public employers that participate in the Marin County Employees' Retirement Association (MCERA): County of Marin, City of San Rafael, Novato Fire Protection District, and the Southern Marin Fire Protection District, hereaer collectively referred to as "Employer(s)". e Grand Jury interviewed representatives of the County of Marin, sponsors of MCERA administered retirement plans, representatives of MCERA, and members of the various Employer governing boards and staff. It also consulted with actuaries, various citizen groups, and the Grand Jury's independent court- appointed lawyers. In so doing, the Grand Jury found that those Employers granted no less than thirty-eight pension enhancements from 2001- 2006, each of which appears to have violated disclosure requirements and fiscal responsibility requirements of the California Government Code. e Government Code contains specific requirements that must be met before local governments can increase the pension benefits for public employees. At the time of consideration of the enhancements at issue, the Employers were required to: (a) provide notice to the public of any potential pension increases on the Employer's board meeting agenda for public discussion; (b) obtain an actuarial evaluation of the future costs of the enhancement; (c) present that actuarial analysis at a public meeting two weeks before approving the increase; (d) explain the impact of the proposed increases on the pension's financial health and funding. e Grand Jury found that the public Employers appear to have violated these requirements in a variety of ways—providing little, if any, notice to the citizens of Marin County that they would be responsible in the future for hundreds of millions of dollars of pension costs. In each case, the public Employers appear not to have provided proper public notice about the proposed pension enhancements. Not only were no public meetings noticed two weeks prior to approval, those meetings were never held. Most of the pension increases were approved through a consent agenda item at each Employer's board or council meeting. (Consent agendas are typically used for approving items that may not merit any discussion at the meeting and the consent items are approved together as a package through a single vote.) So, even if members of the public were in attendance at the board or council meeting, they might not realize that a pension increase was being approved or not realize the financial impact thereof. e public Employers com- missioned a single generalized actuarial study and then used that same study for a variety of different pension enhancements for multiple, diverse bargaining groups. e Employers continued to use the same study to justify pension increases even when that study was up to four years old. is financial information was not provided to the public. Additionally, although the Employers were required to disclose to the public the financial implications of each study two weeks prior to the public meeting at which the increases were approved, they appear not to have done so. e Grand Jury learned that, through a citizens Public Records Act request, this study was released in 2013. It is not known by the Grand Jury if a public request was made prior to this date. All of these actions appear to have violated the legal obligations of the public Employers under the Government Code and the Continued on page 5

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