Steve Cohn, Ardor/Valley View

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1 , Ardor/Valley View MOFD s $78 million Underfunded Retirement Plans In the December 25, 2018 edition of the Lamorinda Weekly, an article was published with the headline Latest MOFD financial report shows a $12 million dent in long-term liabilities. In reality, this is not what happened. Retirement plan net liabilities INCREASED by $14 million. The report goes on to claim that MOFD s retirement liabilities are 88% funded (suggesting that being $25 million underfunded is OK). This claim also understates reality: They are only 68% funded. From 2017 to 2018 MOFD s retirement plans * Liabilities increased from $216 million to $245 million. * Assets increased from $153 million to $167 million. * Thus the Net Liabilities increased by $14 million, from $64 million to $78 million. * And the percent funding, $167 million out of $245 million, is only 68%, not 88% as reported. Sorting through MOFD s financials is complex. They do not show the total assets and liabilities for either the Pension or the Retiree Medical Plan (OPEB), only the net liabilities. They show $20 million of long term liabilities, of which $14 million are a loan to the pension plan; another pension liability not identified as such. And then there are accounting entries deferred inflows and outflows of resources that have adjustments to the assets showing up as liabilities. And to top it all off, while it is reported that MOFD is now using a lower, more conservative 6.25% discount rate to discount its Pension and OPEB liabilities, the reported pension liability uses a 7% rate which produces a value $20 million lower than it really is. It is a nightmare to sort out all of these complications and the 111 page annual audited financial statement, what they call a CAFR (Comprehensive Annual Financial Report), makes little attempt to do so. The reporter from the Lamorinda Weekly can be excused for being deceived. But when I submitted a letter to the editor, it was rejected with the excuse that the article accurately reflected what the MOFD financials presented. And THAT is the problem. The official financials, compliant with industry standards, present a false, or at least a very cloudy picture of MOFD s true condition and the Media passes that on to the community. A full report of MOFD s financials, reformatted to reflect the true condition of our fire district, can be seen at 1d ago 41 neighborhoods in Recommendations

2 Reply, Ardor/Valley View 16h ago I want to thank all those (26 so far) who thanked me for this. There have been no "replies" which I understand: what is there to say? However, the way NextDoor works is: If there are no replies the post just goes off the radar screen. If you think it should "hang in there" for a day or two, say Hi. I don't really know how else to disseminate this news if the media won't even post a letter to the editor. Tish Gleason, North Orinda 16h ago Thanks Cathy Reaves, Moraga Country Club 16h ago Steve - I have been reading your posts and paying attention. As you note - what is there to say? I have nothing relevant to contribute, hence the silence. But please keep sending so more and more can be informed! Tania DeGroot, Del Rey 16h ago Have you written to the Orinda News? Maybe they'll publish a letter??, Ardor/Valley View 15h ago Two people have suggested contacting the Orinda News, and I will. The problem is they only cover Orinda. But I will contact them. Tag a business Kathy/Tom Robertson, Ivy Drive 15h ago I wrote to the Lamorinda Weekly asking for them to please print Steve s letter.

3 Gerardo Reza, Oak Springs 15h ago Thank you so much for your informative work. Please keep us informed of any action needed Jeffrey Segall, Estates 15h ago I would also suggest a more concerted effort to publish your letter in the East Bay Times. I would suggest contacting the publisher directly. Another suggestion: perhaps your letter may have more sway if it were co-signed by other members of the community. I would be happy to add my signature. Chuck Everett, Moraga Country Club 14h ago Steve. I m glad to know that someone - you - with financial knowledge and a sincere interest in our community has taken the time to unravel and report this. I m a long term skeptic who believes there is not enough transparency in government, which too often enables spinning information so that it becomes hard for many of us to understand. If MOFD is in debt, then the tax payers should know. If the reason for the debt is foolish decision making, then we should know that too. The good news is that our new governor Newsom says the state has a large budget surplus. So the state will undoubted bail out MOFD..., Ardor/Valley View 14h ago Thanks for the levity Chuck ;-) Joshua Erickson, Corliss 14h ago Thanks Steve! Scott Bird, North Orinda 14h ago Yeah for sure moonbeams shadow Newsome will bail MOFD out. Only after he and the state run out of money bailing out all the other unfunded pension plans in the state.

4 Tania DeGroot, Del Rey 11h ago I'm not sure about protocol, but would a current MOFD board member who is concerned about this issue be able to help?, Ardor/Valley View Just nownew Tanya: I have tried. For years I have suggested that MOFD form a citizen s finance committee like Orinda and Moraga have. We have more than our fair share of residents who are finance professionals. MOFD s $28 million annual budget is large, larger than Orinda s or Moraga s, but for many of these finance professionals it is chump change. A lot of zeros in the number doesn t scare them. If asked, they would stand up. At times, even when a majority of the Directors seemed to privately agree that such a committee should be formed, none had the courage to suggest it. There was always a bigger problem. The City of Orinda and the Town of Moraga talked us into forming this independent district to which we send 25 million tax dollars each year. Somehow, while our cities are relatively debt free, MOFD has dug a $75 million hole despite the money we give it. The Orinda and Moraga Councils are aware of this but refuse to get involved. In 2011, 220 Orinda residents petitioned the Orinda Council to form a task force to review the service provided by MOFD but were turned back (thus was formed). Like this is someone else s safety that is being impacted, and not the 35,000 residents of their towns. Like it is MOFD that is going to burn up and not Orinda or Moraga. Like it is the residents of MOFD which continue to receive no additional service while we pay off the $78 million of accrued debt, and not the residents of Orinda and Moraga. Leaving this mess in the hands of MOFD s five volunteer Directors, who cannot talk with each other (State law) except at monthly Board meetings, obviously does not work. We increase our tax dollars to them at twice the rate of inflation for twenty years and we end up with the same service and $75 million of debt. What do we do to change this? Storm the walls with torches and pitchforks? Probably not. We have three new MOFD Directors. We have two new Orinda Council Members. I think there is at least one new face on the Moraga Town Council. We just have to keep asking, not just me but a lot of us, to do something differently. Here is the list of elected representatives who can effect change. Write them. Point them to the website which attempts to summarize MOFD s financial position. Ask the cities to get involved and ask MOFD to get the citizens involved. Maybe they will respond. I wish I knew that our elected representatives were seeing these discussions by the community. I know that this post does not reach far north Orinda nor far south Moraga. However, I will copy it and put a link to the text in at if you want to refer people to it.

5 Here are our elected representatives. Please write them. Just copy the above if you want. Steven Danziger, President MOFD Craig Jorgens, Vice President John Jex Gregory Baitx Michael Donner Inga Miller, Mayor of Orinda Darlene Gee, Vice Mayor Amy Worth Dennis Fay Nick Kosla Roger Wykle, Mayor of Moraga Kymberleigh Korpus, Vice Mayor Renata Sos Mike McCluer Steve Woehleke Dan DeBusschere, Estates 7m ago No investment portfolio made 7% in 2018 so the assumed increase in investment returns are not realized and the shortfall is added to the unfunded liability estimate. Also, the MTC CASA compact is proposing to take away 45% or the annual increase in property taxes to fund their housing ideas. If there is a 10% increase in property taxes, then on a $28 million base, the $2.8 million increase will be minus 45% or $1.3 million that cannot be used to retire liabilities of meet pay increases. ex-mayor Ami Worth who sits on the MTC voting committee for the compact voted "YES" for this compact knowing that if the City of Orinda loses its 45%, it cannot balance its budget. Where does one appeal to reason? Its all heading south. Our elected officials are still digging the hole deeper.