I need an accountant who’s not on the public teat

20 May

I had to laugh when I heard Mark Orme telling a news reporter that staff has knocked themselves out to deliver “sunshine” on city finances. When I recently contacted Administrative Services Director Scott Dowell to ask questions about the Pension Stabilization Trust, he made me submit a formal request for public information, threatening to charge me 25 cents for every page they determined had to be printed. What an ass – his name is on the contract, it’s all there, he could have answered me that day off the top of his head, but he chooses to play these little games. Sunshine? I’d call it intimidation and creating a hostile environment for public oversight.

Having already received a 265 page download in answer to my first simple question, I found out the fund is only paying back at 2.7% interest. Here’s that link, it’s on page 264.

https://www.chico.ca.us/sites/main/files/file-attachments/3_march_all_attachments_combined_march_2021.pdf?1619711406

Wondering how much of that was eaten by consultants, I asked who managed the fund and how much they are paid. I had to wait til the following Monday for an answer. And I don’t get it.

The PST is managed by a two-person firm out of Overland, Kansas, Benefit Trust Company. Here’s a link to the contract:

https://www.chico.ca.us/sites/main/files/file-attachments/signed_pension_stabilization_trust_partcipation_agreement_-_keenan.pdf?1621017321

From BuzzFile – “Benefit Trust Company is located in Overland Park, Kansas. This organization primarily operates in the Trusts, except Educational, Religious, Charity: Management business / industry within the Holding and Other Investment Offices sector. This organization has been operating for approximately 14 years. Benefit Trust Company is estimated to generate $275,883 in annual revenues, and employs approximately 2 people at this single location.”

As for fees, the contract states, “Such fees shall not exceed 0.30% (30 basis points) per annum on the value of the assets held in that account. Fees will be collected monthly directly from the account.

Look at page 264 of the city finance report, the numbers are there. They just don’t add up. First of all, the report Dowell sent me showed that a principle of $1,868,005.36 only paid back $3,557 at 2.7% interest. What? 2.7% (.027) of $1.8M is $48,600. But we only saw $3,557 last year? What?

Furthermore, the agency gets 0.30% of the ” fair value” of the fund, determined to be $1,967,775.11. According to my calculator, hat’s $5700. For a payoff of $3,557?

I know I am not going to get any help from Dowell, so I hope there’s somebody out there who can explain all this in Old Lady terms. Helllooooo?

9 Responses to “I need an accountant who’s not on the public teat”

  1. bob May 20, 2021 at 6:02 pm #

    Hah! Good question. Maybe we can get Mr. Sullivan to explain it to us. 🙂 🙂 🙂

    And while he’s at it he can explain it to the clueless council members before it becomes “split milk under the bridge,” although they probably wouldn’t bother to listen.

  2. bob May 20, 2021 at 6:07 pm #

    These bureaucrats and the Council are the crew who can’t shoot straight. We’d probably be better off if they gambled all our money at the new card room they are approving.

    • Juanita Sumner May 21, 2021 at 11:20 am #

      Looking at the market and the agreement they made with the consultant, I’d say they’d be better off at a card room.

  3. pat Jones May 20, 2021 at 8:53 pm #

    I wonder if Sean’s company found this Kansas firm. Supposedly Sean’s company looks for the best investment return. pat

    Sent from my iPad

    >

    • Juanita Sumner May 21, 2021 at 11:14 am #

      Good question. In past I’ve noticed staff hires friends, probably council too.

  4. Dave May 21, 2021 at 6:45 pm #

    Good article about Santa Barbara but it is certainly pertinent to Chico.

    And the title should contain multi-millionaire instead of millionaire.

    https://newspress.com/how-to-retire-like-a-millionaire/

    • Juanita Sumner May 22, 2021 at 6:19 am #

      thanks Dave, it’s like a pandemic! This is happening all over the state. And yes, I think it’s a bigger threat than even COVID.

  5. Dave May 22, 2021 at 1:25 pm #

    Here are some very important points from that article regarding the pensions. Do you think a single one of these important points will even be mentioned in the public finance meeting on June 8 where they are going to try to propagandize us on their POB?

    The truth is, our taxes and fees are so high, local government has this much money to spend, but they are spending it on government employee pensions. And, even then, they are falling farther and farther in debt.

    This pension system is structurally flawed, based on the false premise that taxpayers can guarantee government employees will get paid a significant percentage of their salary for the rest of their life. This system is called a defined benefit retirement. The benefit is guaranteed no matter what. That is, the public sector retirement system relies on stock market returns, but the investments scarcely ever hit the needed rate of return. 

    Conversely, people in the private sector who have a 401k or an IRA have a defined contribution plan. They put in a set amount of money, and they get what they get when they retire depending on the investment returns.

    Hence, while the private sector is left to either a meager social security payout and/or what they themselves managed to save, invest and risk on their own initiative, government employees contribute a mere pittance toward their own pension while being given a guaranteed income for the rest of their lives.

    In some cases, government employees make more when they retire than they did when they were working!

    That is because their retirement pay is based on their highest earnings, not their average earnings over the course of their career, and some of them get social security benefits too, on top of their government pension. 

    If they were in the private sector, they would have had to invest more than 100% of their annual income to earn that return — an impossible dream for government employees and a subsequent nightmare for taxpayers! 

    • Juanita Sumner May 22, 2021 at 1:29 pm #

      thanks, I’m working on next week’s finance committee meeting. Staff is out for the last drop of turnip juice they can get.

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