HomeMy WebLinkAboutFinal Report of 2015-16 Butte County Grand Jury 777sY 0n'-Un[A;QP SUPERIOR COURT OF CALIFORNIAN COUNTY OF BUTTE
4 11 11LILtc County Courthouse 0 North Butte County Cotrrrhouse
one Court Street 1775 Concord Avenue
° Oroville,CA 95965 Chico,CA 95428
(530)532-7002 (530)532-7002
June 6,2016
Butte County Board of Supervisors
25 County Center Drive, Suite 2.00
Oroville, CA 95965
Dear Butte County Board of.Supervisors:
"I'lre Final Deport of the 2015-2016 Butte County Grand Jury was filed Oil June 2, 2016 and will be released to the public at the
2016-2017 Grand Jury Inipanelment ceremony on June 24,2016.
Per Penal Code§933.05(f):"A grand jury shall provide to the affected agency a copy ofthe portion ofthe grand jury report relating
to that person or entity two working days prior to its public release and after the approval of the presiding ludge. No officer,agency,
department, or governing;body of a public agency shall disclose any contents of the report prior to the public release of the final
report."
As an affected person or entity narned in the Final Deport,please fund enclosed a copy of the relevant sections of the report. This
information remains confidential until the public release of the report in its entirety at the 201.6-2017 Grand Ju
Im oanelmeut ceremony,scheduled for Friday,June 24 201.6 at 9:00 a.m.
The complete report will be posted to the Butte County website for viewing..
Please note that all agencies listed as Rcgtrtirccit Rcsvl)oiidctris must adhere to the regUirenrents of Penal Code§933/933.05.
Please direct responses to: Hon.Robert A.Glusman,I'residing Judge
c/o Court Administration
Superior Court of California,County of Butte
One Court Street,Oroville,CA 95965
Sincere y,
Kira Dionne
Court 'Services Specialist.
Superior Court of California, County of Butte;
Eric.
murrF
^w\
2015/2016 Butte County Grand Jury Report °oux •
How Does Butte County Employees' Compensation
Compare?
SUMMARY
The 2015/2016 Grand Jury's investigation into the salary and benefits being paid to Butte
County employees was prompted by a newspaper article reporting a recent employee survey and
the first-ever strike conducted by County employees.
The Grand Jury found County employees are paid 10-15% less than those in comparable
counties. We also learned premiums for health insurance plans offered to employees have
increased over the last five years; in some cases they went up over 500%. Low wages and the
increase in health care costs have had a negative impact on the retention of employees and the
recruitment of qualified candidates to fill vacancies.
There are several reasons that make increasing employees' salaries a complex matter. They
include limited revenue due to low property taxes and high expenditures for services such as fire
protection. Even a 1% increase in wages across the board would cost the County an estimated
$1.5 million.
No County representative denied there was a problem and both County administrators and union
members openly shared their thoughts on this dilemma. All were in agreement that a solution
must be found and seemed to be working cooperatively towards that goal.
The Grand Jury's recommendations include that the Board of Supervisor (BOS) support a plan to
improve Butte County's ability to retain and attract new employees and that an alternative to the
current insurance plan be explored. We also recommend a standard system be used to determine
and track the reasons for increased turnover of County employees.
BACKGROUND
On September 24, 2015, the Chico Enterprise-Record reported, "A survey of Butte County
government employees conducted by county administration in May 2015 showed heavy
dissatisfaction with compensation". The article went on to say the results showed 61% of the
employees who responded to the survey were dissatisfied with their salaries and 75% were
equally dissatisfied with their health plan contributions.
Shortly thereafter, on October 26th and 27th, the newly formed Skilled Trades Unit, a
bargaining unit which represents Butte County employees in public works, animal control,
telecommunications, and other classifications, held an informational strike to demonstrate their
frustration over lack of progress at the bargaining table. This was the first public employee
strike in Butte County. The main issues in the contract negotiations were salaries and health
insurance costs.
The Grand Jury investigated these issues: How does Butte County government employees'
compensation compare to employees in other nearby counties, cities, and towns? Has the net
income of employees decreased as the cost of living has increased?
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APPROACH
Documents
The Grand Jury reviewed the following documents:
❑ Butte County Employee Survey Summary;
http://www.buttecounty.net/Portals/I 7/LaborRelations/SurveResults. df
❑ Chico Enterprise-Record:
o Survey shows most Butte County government employees unhappy with wages,
health care cost; September 24, 2015;
o Butte County public works employees to strike next week; October 19, 2015;
o Butte County supervisors pick three options,for possible fire service change.
February 23, 2016
❑ Butte County Finance Review Fiscal Year 2015-2016, January 2016;
❑ Butte County Management Employee's Association (BCMEA) Memorandum of
Understanding 2005-2008, 2008-2010 & 2014-2016;
❑ Board of Supervisor meeting video; February 23, 2016: Cal Fire Options 4.08;
http•//buttecounty.pranicus.com/MediaPlayer.php?view_id=2&clip id=303
❑ Government Compensation in California; http://transparentealifornia_.com
❑ Butte County Salary Ordinance and Position Allocation March 8, 2016;
https://www.buttecounty.net/Poltals/17/LaborRelations/Salary Ordinance. df
❑ California Property Tax Information: http://www.lowtaxrate.com/california;
http://www.tax-rates.orcalifornia/ ro ert -tax
Interviews
The Grand Jury interviewed employees from Butte County's Administration and Human
Resources departments, and representatives from the County's labor units.
DISCUSSION
Butte County is managed by five elected members of the Board of Supervisors and consists of 23
departments including Administration, Employment and Social Services, Assessor, Behavioral
Health, and Sheriff. As of March 2016, there were 2,428 allocated positions that fit into 517
classifications. Employees are represented by twelve official labor groups/bargaining units which
negotiate individual contracts for their members. These contracts may have slight differences in
their details, including compensation, but are similar in overall content.
Employees' Dissatisfaction with their Compensation
In May 2015, County administration conducted an anonymous online survey of Butte County
employees. The survey was sent to about 2,000 employees and 992 employees responded. The
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2015/2016 Butte County Grand Jury Report ° U�w't{�uTrE.
`
areas addressed by the survey included job satisfaction, recognition by management and peers,
job training, opportunities for advancement, management, communication, and compensation.
The results, which were released in September 2015, were generally favorable in many areas.
However, on the subject of compensation, 61% reported being dissatisfied with their salary and
75% with their health plan contributions. The Sheriff and District Attorney departments
conducted a separate survey. Those results are not included in this report.
Butte County administrators were well aware of employees' dissatisfaction. They estimated that
current salaries were 10-15% below salaries of their benchmark counties. These counties are
determined by County administration and union representatives to be comparable to Butte
County in organizational structure, geography and socio-economic factors. The labor unions'
representatives also expected these survey results. The graph below shows the median wage for
full-time employees in the benchmark and nearby counties and in local jurisdictions.
Government Employee Wage
by Jurisdiction 2014
;$90,000 -
:$s0,00a
m Median Wages
,$50,000 -.._..
$40,000
$30,000 ....
E
$20,000 E
�E
$10,000 ..
...
$a
\OA ��� \yeo as Get ay Awa c° ��t opo
�� ��aO Lr tea too taa oto eya Q�a ��� `c`a ora �� y �� L�\� �\2
CitiestTowns Benchmark Counties Nearby Counties
Butte County's median wage was not only less than seven of the benchmark and two of the
nearby counties, but also four of the County's five jurisdictions.
Part of a County employee's benefit package includes health insurance which covers medical,
dental, and vision. Employees who work 50% or more must use the insurance offered by the
County or show proof that they are enrolled in another comparable insurance plan. California
Public Employees' Retirement System (CaIPERS) is the provider of the insurance plan options.
An employee can choose from four plans and may cover themselves, themselves plus one family
member, or their entire family (family Plan). The County and the employee share the cost of the
insurance. According to a 2005-08 Memorandum of Understanding, the County's contribution
towards the cost of the employee's insurance was 80%. The same was true for most bargaining
units at that time. When contracts were renegotiated in 2010, during the recession, the
contribution was not increased to meet the increased 2010 insurance cost. The County's
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2015/2096 Butte County Grand Jury Report °o�u�°
contribution was a fixed dollar amount, referred to as a flat rate formula, instead of a percent.
This formula is still in effect. The chart below uses the example of a Family Plan to show the
cost increase in the plans and the cost to the employee between 2011 and 2016.
CalPERS Healthcare Monthly Premium for Family Plan
CalPERS 2411 2016 Increase to
Plans Employee's Cost
Family Total County Employee Total County Employee Monthly Increase
Plan Premium Cost Cost Premium Cost Cost Increase Percent
HMO $1,906 $1,262 $644 $2,413 $1,263 $1,150 $506 79%
Select $1,371 $1,262 $109 $2,017 $1,262 $755 $646 592%
Choice $1,550 $1,262 $288 $2,194 $1,262 $932 $644 223%
PORAL $1,377 $1,262 $115 1 $1,914 $1,269 $645 $530 461%
weG':'e 1x, x}.- ya:�y �n i"<t'':1.i �YY"°•93>'Yn-••-'":3"`.yv.. .,_}..'<f(F '•�5`rx"•`.4'' '%fis�":i::'E;rFy,e:?'t.`y S: r-Y'�'�T�az,. ry=>�ga' ..3si��?&� �;.3:.;�?.Vq�i•- ;E
'+.F3� rCsR: 1• i. .ii �'�.S .L,r 7�'Sr ? h - '§ '� 3 3 v,a r'e r Yy ys c `
:f.� r5 s z. y,Ys�u � t
:A�ea1 ssa $ sz; $28,9. $21351isa � s7� sszN ig
a n�v. s�- �tx.h?ur z,? .�v ,:E;fxxa�s�T�mZ�<.�;�l�L�=7ssJ�� �a:�"��t2i�,.Nv�.t!na::�rdd�:-i-x�..,-+<!rrrx-'n`v`]: �+L,�;tXtu:,.•tmri.'e,ra ., �:dt:o-i.t3:•:�,a.:a h:;=ci.'.A*a`l..vaKz'�sr:.nrsf:
On average the healthcare plans offered by CalPERS increased $582 per month since 2011. Due
to the flat formula, the entirety of the increase is paid by the employee. Not only have
employees incurred the increase in health care cost but, since 2013, they have been contributing
7% of their salary towards their CalPERS retirement fund. Prior to 2013, Butte County had paid
both the County's and employee's portion towards retirement. The increase in health care
coupled with the 7% for retirement has substantially impacted employees' net salary or take-
home pay, especially for those whose salaries are on the lower end of the pay scale.
As shown in the graph below, the County's flat rate formula and decreased retirement
contribution has resulted in a total compensation package lower than most other jurisdictions.
Government Employee Total Compensation
by Jurisdiction 2014
$140,000 _ ........
U Median Wages 9 Median Benefits
$120,000
$100,000
$80,000 ....... ...
$60,000 .
$40,000 .t.. z.....
$20,000 .,
$0
O`a, J-- AO ��,pa O\Jy \��� 4a�0 aySy�^h`�`ta�a�a
Cities[Towns Benchmark Counties Nearby Counties
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2015/2016 Butte County Grand Jury Report
How did Butte County get to this point?
The fact that Butte County's total compensation is lower than other jurisdictions was
acknowledged by all those interviewed. They also agreed on several reasons for this. One was
Butte County's low revenue from property taxes. The revenue collected from property taxes
makes up approximately 64% of the County's General Fund. The General Fund supports 20% of
the County's total budget and funds various departments, most notably public safety. The
remaining 80% of the County's budget comes from State and Federal sources. The State
Controller's office places Butte County 53 d lowest out of 58 counties based on property tax
revenue per resident. Butte County's low ranking stems from decisions made prior to the passage
of Proposition 13 in 1978. Previously the County had reduced its property tax rate several times.
When Proposition 13 went into effect the tax rates were fixed at no more than 1% of the 1975-76
tax bill. This amount could only increase if the property was reappraised due to sale or new
construction. Although property sales and new development have resulted in some increases in
tax revenue, the property tax reductions prior to Proposition 13 still result in Butte County
receiving less overall revenue than most other counties. Without a sufficient revenue source, it is
difficult to increase salaries and/or benefit packages. It is estimated a wage increase of I% for all
employees would cost the County $1.5 million; of that, $500,000 would come from general
purpose revenue.
Another issue was the high cost of fire protection which is provided by Cal Fire. The 2015-16
Cal Fire contract with the County is over $15 million. This expense heavily impacts the General
Fund and is currently being examined by the Board of Supervisors. At the February 23, 2016
BOS meeting there was a presentation by a consultant who outlined six options to the Cal Fire
contract. The options were discussed, and the BOS requested additional information on three of
the options to be presented at a future Board meeting. A decrease in the cost of fire protection
could result in an increase in the General Fund resources.
Finally, there is the high cost of health insurance. The Grand Jury looked at two issues that make
the CalPERS plans so expensive. The first is that all the options are for"Cadillac" plans offering
a high level of coverage with low deductibles. Adding the choice of a high deductible
"catastrophic" plan might be an alternative for some employees. The second reason is that
CalPERS assigns counties to one of five regions. Each region pays a different premium rate
based on location, available competitive healthcare services, and their utilization of services (cost
to the insurer). Butte County has been placed in the Northern California Region with the smallest
counties which have very limited access to medical providers. Although this is not the case for
Butte County residents, CalPERS has been resistent to moving the County to the Sacramento
region which pays a lower premium. Butte County Administrators and Union representatives
have met with CalPERS and have been attending their Board meetings to request a review of
Butte County's rates. They have also asked CalPERS to provide the County with utilization data.
At this point CalPERS has refused these requests citing proprietary reasons.
Butte County is not locked into using CalPERS' plans and any bargaining unit may vote to opt
out and select another insurance pool. However, this poses a few challenges. In June CalPERS
announces the rate for the next year and a county is given sixty days to opt out. If that decision is
made, the unit is locked out of CalPERS plans for five years. Without access to utilization data it
is difficult to know if switching to another pool would result in lower premiums.
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2015/2016 Butte County Grand Jury Report �9yTrf,
In July 2015, Butte County Administration formed a Health Insurance Options Working Group
composed of County management staff and employee members from all of the bargaining units.
They have been researching and analyzing health insurance options. The group has conducted
several meetings with alternative insurance pools used in this area, as well as meeting with
CalPERS representatives. The Working Group expects to present information on the options to
the Board of Supervisors and employees by May 2016.
How does this affect the Butte County Workforce?
One consequence of lower compensation is the negative effect on retention and recruitment of
quality employees. Retention is challenging when local cities and counties offer higher total
compensation. Butte County has become the training ground for other agencies' workforces. In
the last four years, the County has experienced a doubling of the employee turnover percentage
(8.4% in 2011 to 17.5% in 2015).
Percentage of Turnover
in Butte County Employees
20.% - .. ......... ........
5.%
0.%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
The Human Resources Department reported that data collected from its Employee Separation
Statements showed the number of people leaving for alternative employment has gone from a
low of 20 in 2011 to 92 in 2015. This statistic is telling, but may not give the entire picture.
Human Resources has an exit interview process that is available for departments to use but its
use is inconsistent. Improvement is needed in this process to allow for standardized data
collection and the ability to track trends.
Number of Butte County Employees
Leaving to Accept Alternative Employment
100 .,..... _..._ ......... ..
60
20
An ..........
0 y..
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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2015/2016 Buffe County Grand Jury Report �OurrF.
'
The Grand Jury was told that department heads are having difficulty recruiting qualified
employees to fill vacancies. This is especially true for specialized, professional, or supervisory
classifications. Some positions have remained vacant for months. For job classes that are in high
demand throughout the state, such as sheriff's deputies, the only solution was a wage increase.
As experienced employees leave, productivity suffers, institutional memory is lost, and services
are compromised. Remaining employees are asked to take on more responsibility as vacancies go
unfilled. There is also the time and cost of providing orientation and training for new employees.
These factors not only affect efficiency, service delivery, and the cost of doing business but also
employee morale. If Butte County departments are expected to continue to provide the caliber of
service the public has grown to expect, it must took for ways to retain current employees and
attract new ones.
What have we learned?
The Grand Jury was impressed by the transparency of the County administrators and their efforts
to explore avenues of cost reduction and new revenue sources. The bargaining unit
representatives ably presented the employee perspective and were knowledgeable of the
challenges being faced by County administrators. All parties were in agreement regarding the
problem, the major causes and that the solution is not an easy one.
The Grand Jury thought it was important to investigate these critical issues and by doing so bring
awareness to the citizens of Butte County. The services provided by our County government are
vital and should not be compromised. Finding our way through this complex issue will take a
cooperative effort by the Board of Supervisors, County administration, department heads,
employees, and the public.
FINDINGS
F 1. Employees are dissatisfied with their wages and health insurance cost.
F2. Employees' net salary has decreased over the last 5 years due to their increased
contribution towards health care cost and Ca1PERS retirement.
F3. The Cal Fire contract has a significant impact on the County General Fund resources.
F4. Ca1PERS Health insurance plans are expensive and offer limited affordable options.
F5. Current compensation levels are affecting retention and making recruitment difficult.
F6. The Butte County Human Resources department does not have a standardized way to
collect and track data on employees leaving County employment.
F7. Butte County administration has reached out to the employees in various ways to solicit
their views and involve them in finding solutions including creation of the Health
Insurance Working Group.
RECOMMENDATIONS/CONCLUSION
RE The Board of Supervisors should support the development of a plan to improve Butte
County's ability to retain and attract new employees.
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201512016 Buffe County Grand Jury Report 0
R2, The Board Of Supervisors should continue to explore less expensive alternatives to the
current Cal Fire contract.
R3. The Butte County Administration Office should support the Health Insurance Options
Working Group as it continues exploring ways to reduce high health insurance costs. Its
findings should be presented to the Board of Supervisors,
R4. The Human Resource Department should develop and require the use of a standard exit
interview tool that allows the collection of consistent and comparable data. Results
should be regularly distributed to department heads.
RESPONSES
Pursuant to Penal Code section 933.05, the following response is required:
Li The Board of Supervisors: respond to F6 and Rl- R4 within 90 days.
The Grand Jury invites the following individuals to respond,
Ll The Chief Administration Officer: respond to F4 and R3 within 60 days.
L3 The Director of Hurnan Resources: respond to F6 and R4 within 60 days.
Responses are to be submitted to the Presiding Judge of the Butte County Superior Court in
accordance with the provisions of Penal Code section 933.05.
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2015/2016 Butte County Grand Jury Report
BUTTE COUNTY PUBLIC WORKS
REGIONAL WASTE FACILITIES
SUMMARY
California law mandates that Butte County's Grand Jury investigate county government agencies
to ensure they are being administered efficiently and in the best interest of the residents. The
2015-2016 Grand Jury carried out an investigation of the Solid Waste Division of the Public
Works Department. This division operates the Neal Road Recycling and Waste Facility
(NRRWS), including septage ponds. They oversee the local waste collectors, and facilitate the
proper disposal of Household Hazardous Waste (HHW).
The Grand Jury concentrated on household waste with emphasis on HHW. It conducted site
visits and interviewed management and staff at all three HHW facilities which are responsible
for HHW services located in Butte County: Chico, Paradise, and Oroville. The Grand Jury found
that HHW was managed effectively at these facilities and regulations are being enforced.
Nonetheless, many citizens of Butte County still do not properly dispose of hazardous waste
materials.
Waste Collection Areas in Butte County
Butte County is divided into three
collection areas for waste with one
hauler exclusively serving each
3 ,jL# area.
Waste Management (WM), shown in
green, serves the northwest area of
WAST[MANA6EMEN1' ' the County. Call Waste
Management at 893.4777.
Northern Recycling & Waste
Services (NRWS), shown in yellow,
A serves the Paradise Ridge area. Call
NRWS at 876.3340.
r.'
r Recology (RBOC), shown in blue,
�..__......... serves the southern portion of the
County. Call Recology at 533.5868.
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2015/2016 Butte County Grand Jury Report
BACKGROUND
The Grand Jury focused its investigation on HHW for this report. Since HHW cannot be
disposed of in home waste disposal carts, it must be done at a certified waste disposal site. There
are three HHW disposal sites in Butte County:
❑ Butte Regional Household Hazardous Waste Facility (BRHHWF) in Chico at 1101
Marauder Street. This facility is owned and operated by Butte County.
http://www.chico.ca.tis/general services department/solid waste and rec clip /re-
cyclinp,/household hazardous_waste.asp
❑ Recology Butte and Colusa Counties (RBCC) facility at 2720 South 5`t' Avenue in
Oroville. RBCC is a private enterprise, although it receives some funding from the City
of Oroville.
http://www.recologybuttecolusacounties.com/
❑ Northern Recycling & Waste Services (NRWS) facility located at 920 American Way in
Paradise. This facility is privately owned and seeks out grants for special projects and to
meet HHW disposal costs.
http://www.northernrecycling.bi
All three facilities also accept hazardous waste from businesses located in Butte County.
Businesses must schedule an appointment and are charged a fee based on the type and amount of
waste collected. The facilities' websites contain information such as days and hours of operation,
as well as some information regarding the types of HHW that they will accept.
Grand Jury goals were:
❑ To learn how the various hazardous waste facilities collect, separate and dispose of
HHW.
❑ To assist in educating the public in identifying hazardous waste and how to dispose of it
properly, so that less ends up at the landfill.
❑ To provide information to the public about where and when they can dispose of any
hazardous and reusable materials.
❑ To help citizens find answers to questions about hazardous waste disposal.
APPROACH
The 2015 --- 2016 Grand Jury conducted tours of all three waste facilities:
❑ Viewed all logs and manifests used to identify type and quantity of waste
❑ Inspected the individual bays where waste is collected and stored
❑ Discussed required special training to work at the facility
❑ Viewed policy and procedure manuals
❑ Interviewed the following personnel:
The General Manager at each site
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2015/2016 Butte County Grand Jury Report
The Facility Manager at each site
The Foreperson at each site
The Public Outreach Coordinator at the Paradise site
The Butte County Recycling Coordinator at the Chico site
We also conducted research into the present conditions and future prospects of septage ponds at
NRRWS (landfill):
❑ Interviewed the Director of Public Works for Butte County
❑ Attended a public meeting on November 3, 2015 regarding the septage pond issues
❑ Reviewed local newspapers
http://www.chi coer.com/art is I e/N A/20151103/NEWS/15 1109 929
http://www.paradisepost.com/general-news/20151106/septage-meeting-sparks:-
conversation-about-landfill-ponds
The Grand Jury also consulted the Butte County Public Works Department's website:
htt ://www.buttecouDt .net/rec clebutte./Householdhazardouswaste.as x
DISCUSSION
HHW Process:
When Butte County customers arrive at a HHW facility, they are asked to complete a survey
regarding who they are and what materials they are bringing. This helps the facility compile data
about use of the facility on a daily and long term basis.
Materials are separated by employees who have been trained in proper handling and safety
procedures. The employees log in all material received. Each bay has posted what, when, and
how much material is in each drum. The Grand Jury found all drums and waste storage
containers in the bays to be in good condition and the labeling to be in plain sight with easy-to-
read, pertinent information regarding dates and contents. There are safety procedures for any fire
or accident which may happen; there have not been any safety incidents thus far.
There are four bays which contain wastes separated by type: acids, flammables, toxins, and
alkalis. The Oroville facility bays have concrete floors sloped toward a secondary containment
sump to collect and aid in capture/clean up, should a spill occur. The Chico and Paradise facility
bays have metal grate flooring, and beneath that is a concrete secondary containment area. This
containment allows for capture and clean-up of materials should a spill occur.
Waste containers can only be stored for one year on site, although some are transported to
regional facilities before the deadline. All three facilities are required by Certified United
Program Agencies (CUPA) to be inspected; Butte County Environmental Health is the inspecting
agency.
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2016/2016 Butte County Grand Jury Report 0
The types of HHW brought to the facilities are labeled: "Caution," "Warning," "Dangerous," or
"Poisonous," and therefore it is essential that they do not go to the landfill. All facilities also take
in universal waste which is more common and poses a lower risk to the public and the
environment. Universal waste can include fluorescent lighting tubes, batteries, electronics, and
products containing mercury.
In discussion with each facility it was learned that it is commonly estimated that only about 15%
of HHW in Butte County is properly disposed of at HHW facilities. The rest is either improperly
disposed of or improperly stored.
Chico and Paradise accept pharmaceuticals for disposal. Those facilities ask that pills be
removed from their containers and placed in a sealable bag. Liquid prescriptions should be left in
the original containers with all personal information removed. Oroville does not accept
prescription pharmaceuticals, due to restrictions by the City.
All three facilities accept "sharps" (hypodermic needles, etc.).
Paradise, through a grant from CalRecycle, accepts car tires for recycling.
REUSE CENTER: Paradise offers a"Reuse Center" where the public can select, free of charge,
new or nearly-new condition HHW products such as cleaners, paint, car wax, fertilizers,
pesticides, etc. http://paradiscrecycIes.com/Reuse%20Center.html
PAINT CARE PROGRAM: All three facilities participate in the Paint Care Program. Latex
paints are sent to a facility which recycles the paint for commercial sale and usage.
http://www.painteare.orp,/paintcare-states/california/
Hours of operation:
Chico Residents: Fridays 9AM to 1 PM and Saturdays 9AM to 4PM
Businesses: Wednesdays 9AM to I PM.
Oroville Residents: The first and third Fridays of the month, 9AM to 2PM.
Businesses: By appointment only
Paradise Residents: on rotating Wednesdays and Saturdays, 9AM to I PM.
Schedule for specific items: www.paradiserecycles.com/Schedule.htmi
Businesses: Paradise recommends that businesses use Chico for their HHW because it
is more cost effective for the customer. It will take HHW for businesses, if needed, by
appointment.
Safety:
At all facilities, the Grand Jury discussed training of employees, facility policies, and procedures.
The Grand Jury found all three facilities to be in compliance with State regulations.
Employees receive HAZWOPER (Hazardous Waste Operations and Emergency Response)
training as new-hires and eight-hour annual refresher training. This meets the OSHA
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2015/2016 Buffe County Grand Jury Report t{
(Occupational Safety and Health Administration) training requirement. Safety trainings
regarding hazardous materials are held as needed.
At the beginning of each day, the supervisor uses a check list which covers general
housekeeping, the waste storage building, the receiving and loading areas, the container crushing
unit, facility safety equipment, storm water pollution prevention, and any hazard communiques.
This ensures all areas are inspected daily.
Septage Ponds:
A critical issue in Butte County is the potential closure of the septage ponds at the Neal Road
landfill. As an aside to our main investigation of HHW, the Grand Jury felt a responsibility to
inquire into this matter. Our inquiry found that the septage ponds at the landfill are in a
precarious position and face closure, although not in 2016 as was first reported at a public
meeting held in November of 2015. The Grand Jury gathered more information through
attending that public meeting, reviewing local newspaper articles, and having a discussion with
the Director of Public Works. There is a serious effort underway to find ways to make room to
move the septage ponds to another site on the Neal Road landfill property or to a different
location altogether. The landfill receives approximately 4.5 million gallons of septage
annually. If no solution is found, septic haulers will be forced to transport septage to a facility
out of the county, resulting in double or triple the cost to residents and businesses that rely on
septic systems. This issue is in the early stages but the public should be aware of it.
Educating the Public:
All three facilities have websites containing basic information for the public. The Paradise
website contains very detailed information as to the operations of the site and how to use the
facility's services. Paradise also advertises on public media.
FINDINGS
F1. Waste storage containers and bays are in good condition and are labeled correctly
with appropriate hazard indication warnings. The labels are visible and readable.
F2. RBCC in Oroville does not accept pharmaceuticals.
F3. HAZWOPER training satisfies OSHA requirements.
F4. Staff at all facilities is friendly, helpful, and seems eager to educate the community
regarding HHW disposal.
F5. All the facilities are required by CUPA to be inspected by Butte County
Environmental Health. The Grand Jury reviewed current facility inspection certificates and
found them in compliance.
F6. At all three facilities, personnel estimate that only around 15% of available HHW in
Butte County is being brought in to their HHW sites by the community.
15
2,01512016 Butte County Grand Jury Report
F7. Considering F6, the Grand Jury finds there is a need for more public education to
make Butte County residents aware of opportunities to reduce the 111-I W entering the Neal Road
landfill and preserve the environment.
F8. RBCC in Oroville has a website but it can be improved to provide more specifics as
to the services offered. RBCC also does not provide information to the community via local
media advertising.
F9. NRWS in Paradise is to be commended for its very informative and user-friendly
website which contains all the information the public needs to use its facility. It also advertises
widely on TV to make its presence and services known.
FIO. Resolving the issue regarding the septage ponds at the Neal Road landfill needs the
involvement of the community and the Board of Supervisors. This i-natter remains a critical issue
and a tHriely resolution is necessary before Butte County residents are adversely affected with
higher costs for hauling to another location.
FI 1. At present all three facilities have limited days and hours of operation available to
the public to turn in HI- W,
RECOMMENDATIONS
RL All 1-111W facilities should look at ways to increase both days and hours they are open
to the public to try to increase proper disposal of FIHW.
R2. BRIIHWF in Chico should explore ways to increase public awareness of its facility
through advertisement to the community via radio, television, and newspaper.
R3. RBCC in Oroville should explore a change to its city contract to accept
pharmaceuticals,
R4. RBCC in 0roville should do more to make the public aware of its facility location
and the services Offered. RBCC, should also advertise regularly via newspaper, local television,
and radio.
R5. The Public Works Department should continue its efforts to increase the capability of
the Neal Road landfill to continue processing septage at its site or find an alternative which will
have the least economic impact on the residents of Butte County.
R6. The 2015-16 Grand Jury recommends that a future Grand Jury investigate the
septage pond situation at the landfill to evaluate the progress being made toward a solution.
RESPONSES:
Pursuant to Penal Code 933.05, the following responses are required within 90 days:
LJ Butte County Board Of Supervisors: F10 and R5, R6
LJ Butte County Department of Public Works. F`1-11 and RI-5
16
2015/2016 Buffe County Grand Jury Report °�BUT.�f°
�u �`°
❑ Butte Regional Household Hazardous Waste Facility (Chico): F6, F7, F11 and R1, R2
❑ Neal Road Recycling and Waste Facility (landfill): F10 and R5
The Grand Jury invites responses from:
❑ Northern Recycle and Waste Services (Paradise): F6, F11 and R1
❑ Recology Butte and Colusa Counties (Oroville): F2, F6-8, F11 and RI, R3, R4
The governing bodies indicated above should be aware that comment or response must be
conducted subject to the notice, agenda, and open meeting requirements of the Brown Act.
Responses are to be submitted to the Presiding Judge of the Butte County Superior
Court in accordance with the provisions of Penal Code section 933.05.
Reports issued by the civil Grand Jury do not identify individuals interviewed. Penal Code
§929 requires that the reports of the Grand Jury do not contain the name of any person or
facts leading to the identity of any person who provides information to the civil Grand Jury.
17
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2015/2016 Bufte County Grand Jury Report
Cities Report
GASB GASP!
SUMMARY
This is the first year that unfunded pension liabilites must be included on municipal balance
sheets. Butte County and its five Cities have thus reported roughly $275 million in unfunded
pension debt. Annual payments to the California Public Employees' Retirement System
(CaIPERS) are growing, adding additional pressure to current budgets. As annual costs rise, the
pressure to find additional revenue and/or cut current services will grow. Additionally, the
unfunded costs of retiree health care will add a total of$75 million of debt to the balance sheets
in 2017.
BACKGROUND
The Grand Jury is required annually to review the Audit of the County. As part of this process,
the Grand Jury learned of significant changes in governmental accounting policy. The
Government Accounting Standards Board (GASB) issues rules and standards for municipal
financial reporting. This year, GASB statements 68 and 71 required inclusion of unfunded
pension liability in municipal balance sheets. Previously these were in the Notes. A similar
liability is retiree health care costs, listed as Other Post Employment Benefits (OPEB). The
Grand Jury wanted to know how much debt was added to the City and County balance sheets, to
understand how much money was being spent annually on these debts, and to determine the
trendlines for those costs.
APPROACH
The Grand Jury recognizes this is a political issue. There are opinion pieces stating this problem
is overblown or that the promises are unsustainable. The Grand Jury does not take a position on
these issues; reconciling those opinions is beyond the scope of this report. It is our intention to
inform the citizens of Butte County of liabilities on their municipalities' balances sheets due to
employee pensions, their annual costs, and the assumptions made to generate these numbers. The
Grand Jury studied the financials of the County and its five Cities. (Although financials for the
City of Biggs were studied, final numbers were not available at the time of this report.) There
are other districts throughout the county that may have unfunded liabilities not included in these
numbers.
Documents
The Grand Jury reviewed the following documents:
❑ Butte County Comprehensive Annual Financial Report (CAFR)
http://www.buttecounty.net/Portals/4/Financial Re orts/2015ButteCAFR Final. df
❑ City of Chico CAFR
27
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2015/2016 Butte County Grand Jury Report e�oU
http://www.chico.ca.us/finance/documents/CAFRFinal.pdf
❑ City of Chico CalPERS Actuarial Issues Presentation
htt ://www.chico.ca.us/finance/documents/2016-17Miseellaneous. df
❑ City of Chico CaIPERS Annual Valuation Reports
http://www.chico.ca.us/finance/documents/BAChicoCi 16-03-
15CalPERS Misc Safety 14.pdf
http://www.chico.ca.us/finance/documents/2016-17Safety.pdf
❑ City of Oroville CAFR
❑ City of Oroville CA : Comprehensive Annual Financial Report CAFR
❑ City of Gridley CAFR
❑ Town of Paradise CAFR
htt ://townofparadise.com/index.phj2/forms-and-documents/finance/I 346-audit-06-30-
15/file
❑ CalPERS CAFR
htt s://www.cal ers.ca. ov/docs/forms- ublications/cafr-2015. df
❑ Upcoming CalPERS Issues Presentation (Bartel Presentation Chico)
http://bartel-associates.com/docs/default-source/articles/l 0-1 9-15---calelra-
(monterey).pdf?sfvrsn=6
Interviews
The Grand Jury interviewed City Managers from the five Cities in the County. Other executives
from the City of Chico were also interviewed as was the County Auditor.
DISCUSSION
What is an unfunded liability? How is it calculated? Who determines the payments? How does
the liability affect the annual budget? How will this shortfall be paid? What are the requirements
to pay this off? And finally, what does this mean for the public?
As the Grand Jury explored the different financial reports, it discovered that municipal
accounting is quite different from corporate accounting. Some rules and terminology may be
different than everyday usage. The Grand Jury will use everyday language as much as possible to
explain these issues.
Every year the County and each City produce annual financial reports along with audited
financials, known as the Comprehensive Annual Financial Report (CAFR). Credit rating
agencies use information found in the financial reports to assign credit ratings which are then
used to determine the cost of borrowing. The annual reports contain both the Statement of Net
Position (balance sheet) and the Statement of Activities (income statement). The Required Notes
to the Financial Statements (Notes) explain unfunded liabilities along with details behind the
calculations. The unfunded pension liability is calculated as the total pension liability minus the
pension plan's net position. Essentially it is the difference between the total actuarial liability
(cost) and the projected total assets of the plan. These totals are included on the entities' year-end
balance sheet.
28
2015/2016 Butte County Grand Jury Report °poli �e�uTrE�
CalPERS is the pension plan for the County and each of its five Cities. Most municipalities have
more than one plan. The safety pension plan includes police and fire, while the miscellaneous
plan includes all other public employees except public school teachers. CalPERS employs
actuarial professionals who analyze and project both the future liabilities and asset value of their
investment portfolios. A summary of the principal assumptions and methods are outlined in the
plans.
One of the critical assumptions in determining future unfunded liabilities is the discount rate.
The discount rate is the long term projected return on investments and is set by the Board of
CalPERS. They recently reduced this metric from 7.75% to 7.5% which projects a reduction in
total asset value and, therefore, an increase in the unfunded liability. The Required Notes on
pension plans include a report on the change to the unfunded liability based on a I% shift in the
discount rate. A 1% decline in CalPERS's portfolio's performance over time would result in a
total unfunded liability of$448,582,980 for the six entities studied, a 63% increase. Last year's
CalPERS's total return was 2.2%; the return over the past 10 years was 7.3%.
CalPERS determines the payments for the pension fiends of each participating municipality every
year through a report called the CalPERS Actuarial Valuation Report. The annual contribution
by each entity is based on a contribution to their unfunded balances and what they call "normal
cost."Normal cost is the annual cost of pension liability without any of the additional charges
added to pay for the plan's unfunded liability. This report sets the next fiscal year's contribution
rate and also gives an estimate of the following year's contribution percentage. Municipalities
are not given a total cost, only a contribution percentage against projected pensionable payroll.
For example, in FY 16 the City of Chico will incur a 39% pension charge against every dollar of
pensionable payroll. In effect, a $100 payroll cost will end up being $139. CaIPERS has been
raising the contribution percentages over time to help pay off the unfunded balances. These
increases are expected to continue.
Pension commitments are considered unchangeable under California law and must eventually be
paid. Recent municipal bankruptcies have not changed or challenged this.
Details on retiree health care coverage and costs can be found in the Notes to the financial
statements Other Post-Employment Benefits (OPEB). An explanation of the specific coverages
and costs are listed, and separate assumptions are described. No prefunding of these costs is
required. Many of these liabilities have been calculated by the County and Cities at a
significantly lower discount rate than CalPERS is using, resulting in a higher total liability. For
uniformity throughout this report we have used the Unfunded Actuarial Accrued Liability
(UAAL). These unfunded liabilities are due to be added to the balance sheets in 2017.
29
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201512016 Butte County Grand Jury Report
Summary and Analysis
Butte County Gridley Chico Orovill.e Paradise
Assets $ 394,085,263.00 S 41,317,195.00 $ 581,477,622.00 5 99,303,857.00 $ 23,205,572.00
_Pension Liability S (141,255,313.001 S (7,778,821.00) $ {99,448,365.00} 5 (12,987.351.00) $ (12,901,028.00)
Health Care Liabillty(URAL) $ (47,629,292.601 S (2,262,968.00) $ (10,993,717,00) S (972,979.00) S (13,495,020.90)
%of Assets •48% -24% •19% -14% -114%
'Ravenuet 5 94,281,949.00 S 1,901,415.00 $ 53,475.552.00 5 8,734.594.00 S 10,232,314.00
Annua[Pension Contribution S (14,342,603.00) $ (706,316.00) 5 (7,697,008.00) $ (1,646,163-00) 5 (550,258.00)
Annuai Health Care Contribution S (2,403,577.00) 5 (94,644.001 S (255,955.00) S (58,173.00) S {730,496.00)
%of Revenues -1896 •42% -15% -209fi 43%
Butte County
Butte County provided detailed information on its unfunded liabilities in Notes 7 and 8 to its
financial documents. In addition,Note 5 outlines additional liabilities related to Pension
Obligation Bonds that are not included in this report. The County of Butte's unfunded pension
liability is $141,225,313, and is 81% funded. Should the CalPERS discount rate fall to 6.5%, the
liability would rise to $246,338,164; if the rate rises to 8.5%, the country's liability would fall to
$65,935,733. The County's latest reported (2013) OPEB liability is $47,629,292, based on a 5%
discount rate. The total unfunded debt is 48% of current assets. This fiscal year's contributions
for both CalPERS and OPEB are $16,746,180 and are 18% of current revenue.
City of Biggs
Unfortunately, data from the City of Biggs was not available at the time this report went to the
printer.
City of Chico
The City of Chico provided detailed information on these items in Notes III-C and III-D to its
financial documents. The City's unfunded pension liability is $99,448,365 and is 71.5% funded.
Should the CalPERS discount rate fall to 6.5%, the liability would rise to $146,304,775; if the
rate rises to 8.5%, the City's liability would fall to $60,719,118. Chico's current reported OPEB
liability is $10,993,717, based on a 4% discount rate. The total unfunded debt is 19% of current
assets. This fiscal year's contributions for both CalPERS and OPEB are $7,952,963 and are 15%
of current revenue.
City of Gridley
The City of Gridley provided detailed information on these items in Notes 7 and 8 to its financial
documents. Gridley's unfunded pension liability is $7,778,821. Should the CalPERS discount
rate fall to 6.5%, the liability would rise to $11,746,656; if the rate rises to 8.5%, the city's
liability would fall to $4,495,180. Gridley's current reported OPEB Liability is $2,262,968,
based on a 5% discount rate. The total unfunded debt is 24% of current assets. This fiscal year's
contributions for both CalPERS and OPEB are $800,960 and are 42% of current revenue.
30
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2015/2016 Butte County Grand Jury Report
City of Oroville
The City of Oroville provided detailed information on its unfunded liabilities in Notes 9 and 10
to its financial documents. In addition, Note 8 outlines additional liabilities related to Pension
Obligation Bonds that are not included in this report. Oroville's unfunded pension liability is
$12,987,351. Should the CalPERS discount rate fall to 6.5%, the liability would rise to
$22,630,303; if the rate rises to 8.5%, the city's liability would fall to $5,020,511. Oroville's
current reported OPEB Liability is $972,979, based on a 4% discount rate. The total unfunded
debt is 14% of current assets. This fiscal year's contributions for both CalPERS and OPEB are
$1,704,336 and are 20% of current revenue.
Town of Paradise
The Town of Paradise provided detailed information on its unfunded liabilities in Notes 8 and 9
to its financial documents. The Town's unfunded pension liability is $12,901,028. Should the
CalPERS discount rate fall to 6.5%, the liability would rise to $21,563,082; if the rate rises to
8.5%, the City's liability would fall to $5,468,271. Paradise's current reported OPEB liability is
$13,495,020, based on a 4.3% discount rate. The total unfunded debt is 114% of current assets.
This fiscal year's contributions for both CalPERS and OPEB are $1,280,354 and are 13% of
current revenue.
Further Discussion
As the Grand Jury finished gathering these numbers, questions remained unanswered. How much
are contribution rates going up and for how long? With these additional funds coming into
CalPERS, are the unfunded balances shrinking and when will they be fully funded?
The City of Chico recently commissioned a study by Bartel Associates, a pension consulting
firm, to answer questions about retiree medical and pension GASB valuations. On March 15,
2016, Bartel gave their report to the City of Chico. This study only concerned the City's pension
liability; it did not include the OPEB unfunded liability. This analysis is specific to the City of
Chico. However, Grand Jury conversations with other City Managers confirmed the general
trends in their cities are similar to those in Chico. The following graphs address our specific
questions. More information and comparative data are available within the Bartel report.
HISTORICAL AND PROJECTED CONTRIBUTION RATES
The first graph, Contribution Rates- Miscellaneous,plots the historical contribution percentage
from fiscal years 1997/1998 to 2016/2017. Contributions are shown as both the total costs (dark
green squares) and the normal cost (light green triangles). The rates billed for repaying these
unfunded liabilities have risen significantly.
al
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2095/2096 Butte County Grand Jury Report
CONTRIBUTION RATES - MISCELLANEOUS
'15.0°fo . .
'10.0%
35.0%
30.0%
25,0%
20.0%
15.0%
10.0%
0.0°fo 97198 "09 99,00 1 0 2 ❑ 3 ❑3A)4 01,115 05,04 06A)7 07,118 IM9 09F10 Wit 11112 12113 13114 NO 00 16117
MthOMW COO 9.2% 9.3% 8.0% &1% 8.3% S.4% 12.510 12.4'» 13.3% 12.4°. 12.2% 123% 12.5 u 12.5% R.01/6111.8% 12.1% 11.8%. 12.4.1. 13.2:
—0- ToWERCozzR�u 111.3$: 8,8% 1,711. 00% 0,0. OJW 11.4°G 20,❑ap 21.235 !'J,7°/.X1.3%20'r"' 20.r',u ZI.23S d3-34i 23.8°n 26.3°6 :8.t% 31.2%. 19 TA
The Bartel report has graphs for both the safety and miscellaneous plans for the City of Chico.
Overall they show roughly the same trends. For brevity, the Grand Jury has chosen to only
include the miscellaneous plans, but invites a further review of the Bartel report.
The next graph, also labeled Contribution Projections- Miscellaneous, also plots the
contribution rate over time. However this graph now shows the projected long term contribution
rates from FY 2016-2047. Bartel shows Ca1PERS expected rate of return in the bold trend line
labeled 50"i percentile. Bartel also provides projections based on positive and negative
scenarios. These results are shown on these graphs as the 751f1 and 25t' percentiles
32
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2095/2096 Buffe County Grand Jury Report
CONTRIBUTION PROJECTIONS- MISCELLANEOUS
70°1° a
_-�i X54 L� \h. ✓.-
4,eyu 4�. v d'tl
,•i•4 e c Syr c'55�..'i'•!•yn�':.yct.tiw%
60%
50% tl} 3�} �' c\?'meati•
a s ?a yep J•
' \j���6 a�:��l`�•��`•��:�a�}w� Q,�' 3Y�°F\o, xy`•'A�r',b h\>I' y.
40°fG '���� .\sd• a.�.r•'.gip\n. �` ! �� �aP;�qy. fir.
5S 3
p � ass 3tf fit- :V;,
I.
30%
20°lo ti
i 1\h•
10°f°
0%
Vyob �1
1J `
,111,14♦ tR y0 nti ,y0 y. ,a tie ti^ ,; �• .�� nab �a �y �U� �� yR n� a0 �~ k� sQ a� 4�
75th Percentile 50th Percentile: 50th Percentile-No Rist: Mitlaation 25th Percentile
This graph shows that these rates are projected to rise until roughly 2030.
Our next question was how will the additional contributions work to lower total unfunded
balances?
33
euttF.
2015/2016 Bufte County Grand Jury Report °�oUN�{�
The graph below labeled Funded Status Without Risk Mitigation give us that answer. Here
we have plotted the unfunded percentage of the plan over time.
CONTRIBUTION PROJECTIONS-MISCELLANEOUS
Funded Status Without Risk Mitigation
175%
.150%
125°!° ..... ....... .. ���;+ +.. .
5.
,•F aJr4, 4
„1b�. I t'N 9 mak
ebr• .+. �.?. yl. Ai•iy�;'rb�' b H r' x' �B',SaJ.,4. �
r bZ by 5 y:•V +0, y
•Y•k�,}�icy'rye•0 �~ F
50% �l SS�•�@LNyLhMynh•,i�.Sb.r4tiy ysr'4a'
4
��° \�� \�� \�� ,yo \y� 4' C� `tip yti4 ��� \ya ,y� \�ti .����" \^�� ,�b �Zvie a §A° \a` tP
75th Percantila 54th Percentile 25th Percentile
Based on these projections, the funded debt percentage declines until 2023 when it returns to
today's levels.
The term Risk Mitigation in the title is new. Ca1PERS has recognized that its portfolio's
historical results have been quite volatile. They have proposed several changes to their
investment strategies that they expect will reduce this risk. They call these changes their"risk
mitigation strategy." The next graph plots the funded percentages over time if the risk mitigation
strategies are put into place.
34
•0u?rE•
2015/2016 Butte County Grand Jury Report
CONTRIBUTION PROJECTIONS .. MISCELLANEOUS
Funded Status With Risk Mitigation
175°l0 ......... .._.....
i
150% `
125% ..... ..... ..... ..... . . .. ,:\,�'♦ .
4 4'`a.�' �' •I 4 a
75°/n ,-.�i..., r��A9' na. .��- _-. ....4�� �hM1ahti�h��b>Yfi�'+9} �° a'•gilq,���.c\.i'yS~
i 411
• r
�'' yop Sfi�r�e3 y�.•yyti. Lb'Z' y^h y4
3
25-%
3
3
0%
ok%1a�\hn\1V0'1' C\s�q��Lo��•Yti�,bLp{ ��a��b�pL���,L�4o, pooh°D�^`O�`! �{y�0�'y e,��"s��(`���"$�\�Q�5b°�,aNO�Dc1'�,Sx�0�4�
��� 10t3'' � U�� u01101 ,a,'' �"' � v� 0,11e �. ' c� �' E`� ��. tl�' �`� �� �� vtr�' �^: v�� �''
75th Percentile 50th Percentile 251h Percentile
Chico's funded debt percentage would return to its current level in 2022, a one year
improvement over the current projections.
The last Comprehensive Audited financial Reports have only come out in late spring, and the
Grand Jury has not been able to follow up with the County or other cities mentioned to see what
their projections are for both upcoming contributions and unfunded percentages. Another
presentation by Bartel given with Alan Milligan, Chief Actuary of CalPERS, analyzed all of
CalPERS plans, and provided further information on CalPERS's risk mitigation plans. The
following graph shows the five year outlook for all miscellaneous plans within CalPERS.
35
gurYf
y d o
2015/2016 Bufte County Grand Jury Report
Five Year Outlook for Miscellaneous Plans
Percent Increase starting at 2015-2016 Employer Rates over 5
Years Non-Pooled Public Agency-Miscellaneous Plans
189
160
N
140 .. ... -
rtr
C1.
O 120
a
.fA 100 ._- ____. _.__ _. .' __ _... _. ... ......... .............. .....,.,._ ____ __ .,..
E
Z 80
64 _. ... . -. ... . .. ..... ... ..
40 .
20
i
Decrease Increase 0%to 10% increafe between Increase between Increase between Increase between Increase mono than
10%to 20% 20%to 30% 30%to 40% do%to 5096 5996
Based on these estimates, the Grand .fury anticipates most of the studied entities will be facing
similar challenges to those of the City of Chico. Since we expect the annual contribution rates to
grow over the next two decades, the requirement to manage annual budgets with these additional
costs may result in difficult decisions whether to reduce current services or pursue additional
revenue.
FINDINGS
Fl. Calculation of the unfunded liability is complex and unique to each municipality.
F2. The five Cities in Butte County and the County itself have unfunded liabilities primarily
due to CalPERS pension costs.
F3. Additional unfunded liabilities exist for retiree health care, but these are not yet on the
balance sheets.
F4. Increases in a governmental entity's unfunded liability would impact its financial status
and credit rating.
F5. Municipal contributions to CaIPERS are projected to continue to rise which will result
in pressure to cut services and/or require additional revenue.
F6. The unfunded liability is likely to increase for many years before it begins to decrease.
RECOMMENDATIONS/CONCLUSION
R1. The County and Cities should post their CAFR and CaIPERS Actuarial Valuations
Reports on their websites.
36
201512016 Butte County Grand Jury Report --.- G
R2, The County and Cities should report on their unfunded liabilities, contribution rates and
trend lines.
R3. The County and Cities should conduct an analysis similar to the Bartel report and make
that information available to the public on their websites.
RESPONSES
Pursuant to Penal Code section 933.05, the following responses are required within 90 days:
13 Board Of Supervisors H-F6 and RI-R3
L) Chico City Council F 1-F 6 and RI-R3
13 Biggs City Council F I-F6 and RI-R3
LI Gridley City Council FI-F6 and RI-R3
L) Paradise Town Council F I-F6 and R I-R3)
LI Oroville City Council Fl-F6 and R1-R3
Responses are to be submitted to the Presiding Judge of the Butte County Superior Court in
accordance with the provisions of Penal Code section 933.05.
FOOTNOTES
1 HTTP:IIWWW.FOXANDHOUNDSDAILY.COM/2016/03/DoING-THE-GASB-GASP/
37