Sierra Madre has a fiscal year ending June 30.
That means that under Governmental Accounting Standards Board No. 68, Sierra Madre will be required this year (for the first time) to record a “net pension liability” on its balance sheet. The liability is the difference between the total pension liability and the value of the assets that have been set aside to pay benefits to current employees, retirees and their beneficiaries.
It also requires the recording of interest on the liability.
Sierra Madre’s financial statements are typically completed by mid-January so it is likely that the amount of the liability has already been calculated.
It could be more than $9 million.
For June 30, 2014, Sierra Madre had a total fund balance in its governmental funds of $11,131,838.
So if the adjustment is large enough it’s possible that by recording this liability for this fiscal year (the first year it is required), Sierra Madre will be nearly insolvent in its governmental funds.
The city would still own approximately $200 million in hard assets like roads and sewers / etc, but you can’t pay a pension with asphalt.
So somebody should call the city and find out what the GASB No. 68 adjustment is and if it is large enough you can be the first to report Sierra Madre is nearing insolvency ... something that will not be revealed until January ... after the filing period for ballot measures has closed.
The Reckoning Part II
Mod: This is what I was going to go with today before I received the above e-mail.
You need to step back and take a look at what is lining up for next April's election. Earl Richey and his small band of utility tax fighters are out gathering signatures and seem well on their way to fulfilling the requirements to get their measure on the ballot. This is in direct contrast to what the City Council will be discussing this evening about raising utility taxes back up into the double digit range.
The Sierra Madre Police Department, under the cover of whatever their union might be these days, is trying to get the voters to approve a ballot measure that would guarantee them complete suzerainty over law enforcement in Sierra Madre. Effectively eliminating the money saving Sheriff's Department option. This at a time when nobody wants to be a cop anymore, and Sierra Madre can't even get retirees to put in a little time on its force anymore. Nobody wants to be a member of the SMPD despite all of the community love.
Which is another reason why the City of Sierra Madre needs to bring in the Sheriff's Department. They could be the only law enforcement personnel around that would be willing to work here.
This also sets up the following possible scenario. What if the City Council's UUT increase fails, and the Police Department measure passes. Something that would make it virtually impossible for the city to find less expensive options for law enforcement such as the Sheriffs. With only a 6% utility tax in place almost everything would have to go to paying the Police Department. There would no longer be the money necessary to fund anything else. Like the Library, which would have to close.
All of that on top of a City Council election. Kind of a perfect storm if you think about it.
Mod: To that you can now add potential pension debt fueled insolvency.
The Reckoning Part III
Mod: Yesterday there was a minor ruckus over the lack of an attached UUT increase argument to a staff report that was about just that very thing. City Hall claimed to anyone who cared to listen that this was not a potential Brown Act violation, but what else could they say? If somebody wanted to hire a lawyer they'd have a case in my opinion. Anyway, it finally showed up on the city website late yesterday. Or about 48 hours later than it should have. Here is a portion of that, and as you will see it is pretty standard UUT ballot initiative material. After all, it will be the third time in three elections that we will have seen this stuff.
Mod: It goes on like this for a while. To see the rest click here.