UKIAH 1/11/2017 — The Mendocino County Board of Supervisors was off to a bit of a slow start in its first meeting of the new year, focusing largely on appointments and procedural matters. Re-elected supervisors were sworn in for their new terms. The board also heard a detailed actuarial analysis, which expanded briefly into a discussion of Brexit and the effect of the global market on the Mendocino County employees’ retirement fund.
Mendocino County CEO Carmel Angelo conducted the swearing-in ceremony for Supervisors Carre Brown, of the First District, Dan Gjerde, of the Fourth District, and John McCowen, of the Second District. Brown announced that she will not seek re-election at the end of her four-year term. McCowen reflected that, “I didn’t really face stiff competition. I was able to fend of nobody,” in a race in which he ran unopposed. In keeping with the system of rotating the position of board chair, McCowen replaced Gjerde as the chair. Fifth District Supervisor Dan Hamburg replaced McCowen as vice-chair.
Public comment on non-agenda items consisted of remarks on parvo and gunfire. Rich Molinari, the manager for the animal shelter on Plant Rd. in Ukiah, offered his customary update on conditions at the shelter. He told the board that on Dec 30, 2016 the dog kennel area of the animal shelter was placed in quarantine due to a dog testing positive for parvovirus. This is the second recent occurrence of the disease at the shelter. The latest instance was traced to an incident on December 21, when the sheriff’s animal control unit brought in 29 dogs from three properties in the Covelo area. Molinari said the shelter will re-open on January 18, if no more dogs test positive for parvo, and that the shelter is working with the officers in the sheriff’s animal control unit on developing a protocol for cleaning their vehicles as a preventive measure.
Dennis Teigeson, who identified himself as a resident of Deerwood Park, told the board that he had filed a formal complaint with the Mendocino County Planning Department about the sound of shooting from the nearby firing range on Vichy Springs Road. In recent years, he said, there has been “an explosion of activity, so that it’s 10 hours per day, 7 days per week, 365 days per year. There is no limit, other than dusk til dawn.” He made his written complaint available to the board, and concluded by saying that “I’ve never made a complaint about anything in this county, to this government, before.”
During a presentation about the actuarial valuation of the Mendocino County Employees Retirement Association (MCERA), Supervisor Hamburg referred to uncertainty in the global markets.”People keep saying the market is ‘frothy,’ and what that means to me is it’s overvalued,” he said. “If we’re under zero in a bull market, what happens when this market turns bearish?” According to the presentation, MCERA is currently deferring a $24.7 million loss.
MCERA is a defined pension benefit plan for county employees. The retirement benefit is defined by a formula, and is not dependent on investment returns. Members contribute to the retirement system at different rates, based on factors like age at entry and date of membership. The employer, in this case Mendocino county, also contributes to the retirement benefit fund. Investment returns as of June 30, 2016, were negative 2.2 percent, with a 12-year return of 6.86 percent.
James Wilbanks, MCERA retirement administrator, agreed that “Financial markets do not like surprises,” such as the one markets suffered immediately after Brexit, when Britain exited the European Union. “The markets were not prepared for that,” he acknowledged, though he assured the board that the the county’s retirement fund recovered fully from the shock.
Hamburg said his “Central fear is that all of these assets [in the retirement fund] are in Wall Street. Wall Street is not stable…I don’t believe this is a stable economy, and I don’t think putting all our eggs in one basket, as we have, is a very smart thing, going forward. But please go forward.”
McCowen interjected that, “I think technically all of our eggs aren’t really in one basket…when the stock market is rising, why we don’t see better results is because everything isn’t in the stock market. We have some allocations of bonds and different things, but I share the concern that what goes up must come down.”
Wilbanks replied that “The what-goes-up-must-come-down phenomenon is not always true when you’re looking at investments.” He added that the MCERA board is “very, very strategic,” planning for the long term rather than the short term. “Studies have shown that if you invest for the long term you will get paid,” he declared.
Hamburg countered that “Brexits are brewing in other countries in Europe,” and that he believes the United States has never been as indebted as it is now. “I hope that our sanguine attitude is borne out over time,” he concluded.
Wilbanks agreed that “We certainly feel a negative 2% return…we’re not dismissive of that, but we do have to think strategically and plan for the long term. Our one competitive advantage as investors is, we have an infinite lifespan…we don’t try to be the smartest person in the room. We try to be the most patient person in the room.”
Sarah Reith firstname.lastname@example.org