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Glub, Glub, Glub

The Mendocino County Board of Supervisors made some history at their July 24 meeting. At the urging of Board Chair John McCowen, they formally discussed their responses to the Grand Jury report, item by item, instead of perfunctorily putting the usual abbreviated bureaucratic boilerplate prepared by staff on the consent calendar for final burial. Traditionally, criticism from the Grand Jury has been blown off with replies like, “We disagree with this finding.”

Unfortunately, outside of the Board members and staff, no one took the Board up on their offer to publicly discuss the responses. The only citizen to comment simply told the Board she liked the idea.

The Grand Jury’s pointed criticisms of the County’s Mental Health System — “Going, Going, Gone” — said the County's mental health system was a “drastic failure” which “fails to meet the needs of its citizens.”

The Board focused, however, on a single recommendation that the County restore psychiatric services at the jail to 20 hours a week. Their responses to the rest of the report say, in effect, We’re broke so we can’t spend general fund money on mental health like we used to.

Board chair John McCowen questioned Mr. Tom Pinizzotto, Mental Health Branch Chief, and Jail Commander Captain Tim Pearce, about the current depleted state of affairs.

McCowen: “I am aware from reading the responses from Mental Health that there has been no reduction in juvenile mental health services.... but the hours of psychiatric service available at the jail have been reduced from 20 hours to 8 hours. And that's what I understand the Grand Jury to be calling for a restoration of. Based on the Mental Health Department response to some of the findings, the provision of Mental Health services in the jail has been reorganized and restructured with a reduction to eight hours of psychiatric services.”

Pinizzotto explained that the reduction to eight hours occurred before Dr. Rosoff resigned in early 2011 and with Rosoff’s consent and that psychiatric services since have been provided by contracted shrinks.

“The level of service is the same as one year ago,” said Pinizzotto. “The Sheriff is contracting with California Forensic Medical Group (CMFG) to provide some consistency and a stable direction in service for jail mental health services. Dr. Rosoff’s role at the jail was primarily medication support. (I.e. a robotic sign-off on cheap generic prescription meds.) The contract with CMFG includes support services around the position and as we move forward with AB-109 [prisoner realignment which sentences most “non-serious, non-sex and non-violent offenders to county jails rather than state prison to reduce prison overcrowding] we have been directed to recruit two positions for care management and drug and alcohol services. So you could say services have been enhanced.”

McCowen noted that those positions would be funded by “realignment” funds, not the general fund, and Pinizzotto added that his department would “continue to work on re-entry from jail into the communities. … We still have a crisis worker who is available to go into the jail as well.”

Pinizzotto made a passing reference to an earlier discussion about the highly unlikely possibility of setting up a Mental Health or Homeless Court as an alternative to implementing the stricter, more costly requirements of Laura’s Law.

McCowen: “Our draft response to this Grand Jury item currently says that this recommendation will not be implemented because the Sheriff determines what level of services are appropriate. But I don't believe the Sheriff made a decision to reduce Dr. Rosoff’s hours from 20 to 8. I think that was more of a decision of the [mental health] department probably in consultation with the Sheriff.”

Pinizzotto: “And in consultation with Dr. Rosoff as well.”

McCowen: “We are all aware that the Sheriff is an independently elected constitutional officer and the Board sets the Sheriff's Office budget and the Jail budget but cannot direct the Sheriff in how he will deploy his resources. But I think it becomes a little less clear when we are talking about the provision of mental health services in jail. It seems like the mental health department had a pretty significant role in determining just how those services will be provided and who pays for them potentially.”

Pinizzotto: “We are very involved. In the world of psychiatric medications, psychiatric medications are a tool to help people help themselves and I think the support services will wrap around the delivery of psychotropic medications which are as potent and as powerful as a psychiatrist being there more than eight hours a week.”

Which, in a way, is true. Zombo-ize crazy inmates and you don't need someone trying to figure out what might actually done to get the guy more or less functional.

But this was the first time we’ve ever heard anyone suggest that a psychiatrist without drugs is as “powerful” as a psychiatrist with drugs.

McCowen: “I'm not advocating for one position or another. I just want to clarify who has what role and what authority. The Sheriff's Office response to the Grand Jury recommendation to restore services to 20 hours is that they agree to restoring services. I'm sure that the board were to allocate those services, they probably would be restored. But we are saying in our response here that we are not implementing that recommendation because it's not our call, it's the Sheriff’s. But would the Sheriff increase those services without the board saying we are going to fund it? Maybe I'm just asking a series of rhetorical questions, but I would invite responses from either you Mr. Pinizzotto or Captain Pearce. I'm trying to narrow in on who has the authority to make the decision and who would pay for it if we were to restore services to the previous level?”

Captain Pearce responded with a line from, of all people, Vladimir Lenin which, until recently, had graced the front page of this newspaper.

“You can only be as radical as reality,” said Captain Pearce.

That's right. We gave up the quote because reality had out-realed us.

Pearce seemed to be saying that the reality is that there’s no money for increased services. Lenin would have armed the inmates and let them run their own affairs.

McCowen: “Part of the trade-off was that people in the community who are not in custody were waiting six weeks or longer for appointments to see the doctor. Whereas, if they were in the jail they got daily service?”

Pearce: “The key to the jail services is the registered nurse. That person is the key for the entire system. She or he is inside the jail 40 hours a week communicating with all these folks, the 23% of the inmates.”

Supervisor Dan Hamburg: “Dr. Rosoff did apparently agree that the psychiatric needs of inmates could be taken care of in less than 20 hours. I don't know that the idea of this so-called Doc in a Box was an idea that Dr. Rosoff would have signed off on.”

Hamburg was referring to the recent County contract which has a psychiatrist chatting with inmates via the internet, a sort of “PsychoSkype” if you will, amounting to eight hours a week for an ever-larger number of disturbed persons, so disturbed that they're in jail because there is no other place for them.

Captain Pearce explained that there are no available psychiatrists willing to see the incarcerated mentally ill eight hours a week “in this market.”

Hamburg: “It seems to me it's a little different to have somebody, a human being there in the flesh, as opposed to something on the TV. It's just not the same. I guess it's the best we can do but it's — I mean, I've never gone to the doctor and had him or her on a TV screen. I realize that's done and can have efficacy. But especially in situations when you are dealing with emotional and psychological services, doing it through the medium of a television screen just seems to me to be not as effective as human-to-human interaction.”

But if you're a bloodless opportunist who just happens to have the requisite credentials picking up easy money long-distance is very attractive. After all, in person a psychiatrist just might encounter a “client” still sane enough to lunge for him.

Supervisor Brown commented that telemedicine is becoming common, adding, “For me, I feel it’s satisfactory.”

It meets the letter of the law, for a fact.

After considerable back-and-forth about whether the response should say that the recommendation “will not be implemented” or that it “requires further study” (which is the same thing), the board finally voted 4-1 to say that the Grand Jury recommendation (to restore psychiatric services to 20 hours a week) would not be implemented.

Supervisor Kendall Smith voted no, saying that there was some chance that the subject might be revisited when the Board discusses the upcoming mental health court someday, maybe.

Next, the Board discussed their response to the Grand Jury’s retirement system report, or, more accurately, they discussed one specific item in the report. (The overall report was titled, “Time to take the next step.”

The Grand Jury said that the Retirement Association and the County were being unrealistically optimistic in their projected rates of return, a statement of the obvious in an imploding economy. But it’s necessary to pretend that future investment revenues will cover the funding gap in the fund so that the County won’t have to pony up any more than it does now out of its depleted general fund.

The Grand Jury report concluded, “It is time for the BOS to ‘step up’ to actively manage the County’s pension obligations into a sustainable state. There is an abundance of research and advice on how to create sustainable pension benefits. The BOS must provide the political will for County Counsel, the CEO, and MCERA to work on pension sustainability and to advise the BOS on enacting financially successful pension strategies. The time has come to get out of the cul-de-sac and stop wishing for unrealistic market returns to restore pension sustainability. Proactive benefit management and timely adjustments to changing economic conditions are required.”

Supervisor Pinches took the opportunity to complain about the response prepared by the County's retirement system administrator, Richard White and his “advisor,” former retirement administrator Jim Andersen, who, Mr. White explained, was retired, but “is back with us working with us on a part-time or contract basis.” At a very lucrative hourly rate, no doubt.

“This question may be a little off track,” said Pinches, “but it's under Finding Number 25.”

McCowen: “That's one we agreed with.”

Pinches: “I just have a question, it says MCERA [the Mendocino County Employees Retirement Administration] projects a return rate of 7.75% which has a 54% probability of fulfillment over the next 28 years. I read where our retirement system indirectly or directly basically hires 33 different consulting firms to get to this. Basically, what this is saying is, Well, we are half right and we are half wrong. 54%. Is that what you are paying 33 different consulting firms to give you half right answers and half wrong answers? Is that the best you can do, 54% probability?”

McCowen: “It's called a roll of the dice.”

Pinches: “Is that — am I reading this correctly? I mean, hell! I can get three guys off the street to get me a half right and half wrong answer!”

Andersen and White smiled like Cheshire cats, as if Supervisors Pinches’s accurate assessment of the consultant process was some kind of joke.

White: “What we said, what the MCERA Board of Retirement responded to, we have a lengthy response and I can read the whole thing to you, but the question that you are asking Supervisor is [and at this point Mr. White began reading from his own prepared response], despite the volatility of the economy and other factors, MCERA’s experts have advised and we agree that long-term experience and future economic modeling tells us that 7.75% is an appropriate median rate of return for the future and that over a 15-year period there will be a 54% chance that MCERA will achieve an average return on its investments of at least 7.75%. So it's a modeling for the future, looking into the future, and again that 54% chance, we restated it from what the Grand Jury response was to make it more accurate to what our advisers are telling us.”

Pinches: “But there is a 46% chance that they are wrong.”

McCowen tried to rein in his colleague: “And again…”

White: “It's an average. It's a probability analysis that on average over 15 years we will achieve the actuarial rate of return.”

Pinches: “I don't know if I would be willing to invest $350 million [the approximate size of the County’s pension reserves] in something that has an almost 50% chance of being wrong.”

White: “To your point, Supervisor, to get to a different probability requires different actuarial assumptions and in some of the information that I hear and am aware of to get to a higher probability you end up with a much different actuarial rate of return and in fact a much lower actuarial rate of return so it's what the decisions that we are trying to make, that the Board of Retirement is trying to make, especially in the actuarial science on probability, if we are trying to— Again, it's, it’s an average return over the next 15 years. A 54% chance that the actual rate of return will be achieved.”

Pinches was still unsatisfied: “Then where did this 28-year figure [mentioned in the Grand Jury report] come from?”

McCowen: “Supervisor, we are getting way off track.”

Pinches: “Well, we don't have any other opportunity after today to talk about these assumptions.”

McCowen: “No, but we have had this item in front of us when it was on our agenda at the joint meeting and we had every opportunity to go into detail then about this exact same issue. And we did discuss it. But it’s the Retirement Association’s responsibility to determine what is the appropriate actuarial assumptions and that's what they've done. We can agree or disagree. But it's within their purview to set the projected rate of return which they have lowered from 8.00 to 7.75. We can advocate that they lowered it to six or five or four. The probability probably goes up but the contribution rate would probably double or triple. But again it's the decision of the Retirement Board to accept these assumptions.”

White (relieved): “Thank you Mr. Chair. It is a balancing act the Board of Retirement has to consider as well. If you set an actuarial rate of return in either direction you are going to either overcharge your current taxpayers and undercharge the future, or the other way around. So it's not — it's difficult to reach an exact position there. You have to balance that. Where the actual rate of return is and how low or how high you set it.”

Supervisor Smith said she didn’t want to hear any more discussion of the item.

“We could get into a lengthy policy discussion about every one of these items,” she said, making it clear that the only person she’s interested in hearing from is herself and, being the Supervisors’ representative on the Retirement Board, she certainly didn’t want to hear any more complaints from Pinches. Smith then moved to accept the Retirement Board’s response. Nobody else had any interest in what Pinches was talking about so the item passed unanimously.

Pinches wanted one last word: “My point has been overlooked or surpassed or whatever. But the point I'm trying to make is, I'm not so sure it's necessary to have 33 different consulting firms involved in a process that we compensate at some level for. I'm just not sure all these firms, to come up with basically a projection of something like 54% assuredness of what they are doing is right. I think you could do that with three or four people living under a bridge and not necessarily hirin’ 33 different consulting firms. That's my only point.”

Hamburg: “What about a ouija board?”

Pinches: “I'm sure a ouija board could produce a number not much under 54%.”

During “Supervisors Reports” Supervisor Smith told the board about her all-expenses paid County-financed $4,000 junket to the National Association of Counties (NACO) conference in Pittsburg last month.

What follows is what the taxpayers got for their $4,000.

“Just briefly reporting on the NACO conference,” Smith began as she launched into one of her patented run-on, free associated nonsensical statements: “I will do a more comprehensive report.” (O hell yes. We all want to hear that one.) “I didn't have time to get that report in place for today's meeting. But the resolution that I sponsored as well as the cosponsors from Oregon, Washington and Hawaii, worked its way through. We had two different sessions at the energy, environment and land use committee related to marine debris and I'm very happy to report that after quite a bit of discussion and some negotiation and a minor compromise on some of the language it actually was adopted and we were not necessarily thinking it would as a first introduction because it includes the component of education and advocacy for issuing bans on single use plastic bags which of course we have done but that doesn't necessarily resonate yet with major portions of the country so we are very happy that there wasn't really much disagreement and it went forward and I just got an e-mail from NACO staff that they have not yet put together a resolution in final order and with their technical review those will be on the website when they are able to complete that process and I will make sure you all get copies of that and I will bring back a more comprehensive report at our next meeting.”

Got that?

Happy that the Supervisors paid her to go?

We've ordered t-shirts that read, “I paid Kendall Smith $4,000 for conference and travel fees and all I got was gibberish.”

Supervisor Brown, who seems to enjoy taking an occasional shot at her wacky colleague, “I would just like to know how the weather was. Was it hot?”

Smith (unamused): “It was wonderful! I thought it was wonderful! It was probably 85-90 degrees and it was probably 75-80% humidity.”

Brown: “Wow!”

Hamburg: “That's pretty good for the Midwest.”

McCowen: “Should we agendize that for further discussion?”

Smith: “Sure.”

Brown: “Yes. Supervisor Smith is interested.”

Hamburg: “The weather in the Midwest.”

But Smith had a more serious report about the Redwood Forest Foundation Board, on which she sits. Redwood Forest owns a 50,000-acre chunk of the Usal Forest north of Fort Bragg. It was purchased via creative Bank of America financing back in 2007. In 2011, Redwood Forest got $19.5 million from the California Wildlife Conservation Board for a conservation easement calling for limited logging on the Foundation’s overlogged timberlands which had belonged to Georgia-Pacific. “We had the Redwood Forest Foundation annual meeting just north of Fort Bragg,” reported Smith. “The Chair and myself did attend that. It was an interesting update on the challenges that the Foundation is facing relative to timber management plans and how you balance the issues of forest management with debt on the property, and it's something that we experience on a parallel level here every day and we are very— the Redwood Forest Foundation is really looking at the concept of carbon credits and going down and embarking upon that path to see about the sale of carbon and that's a lengthy process that will probably take the better part of the next year but it would be a good piece of relief on the debt of the property to allow more conservative management of the forest.”

Translation: The BofA is owed a lot of money the Redwood Foundation has to somehow pay off.

Pinches: “Do they have any timber harvest plans?”

Smith: “Yes. They do.”

McCowen: “They have three planned for next year.”

Smith: “Yes. Three. That they are going forward with. And they’ve been approved.”

Pinches: “What's the estimated yield from those plans?”

Smith: “A million board feet. But they are small. They are small plans.”

McCowen: “It's 100 acres total. But it's a start.”

Smith: “It's only 1 million board feet. You're right. It's a start and it's all being done with selective harvesting.”

McCowen: “The prices still aren't very good.”

Pinches: “How is the debt service being maintained at this time?”

Smith: “As reported by myself and Supervisor Hamburg, there was a conservation easement that we worked very hard to obtain which actually helped with the debt load and I think that was approaching $25 million [according to the RFFI website it was $19.5 million], so it was through the conservation easement that kind of got us to the next juncture. The finances are not good. They are not easy. It's a delicate balance of getting the harvesting in place. But it was never thought there would be aggressive harvesting in any near time frame. So in ten years or so, 15 years, it will get a lot better.

Pinches: “So even with the conservation easement there is still a pretty heavy significant debt load?”

Smith: “Yes. There are still some significant challenges. There is restoration work going on. Funds are being drawn down to accomplish that. But sure, there are challenges. But the timber harvest plans are starting and that was definitely something that people feel very good about. In fact, at the meeting it was said that a number of people in the timber world thought that they would never see that, that it wasn't a serious— it wasn't the serious intent of the Redwood Forest Foundation to actually harvest, so now that has been proven to be true, it is a harvest, a working forest, which was always the intent.”

Hamburg: “How much of that debt load is attributable to MRC’s obstruction?”

The plot thickens.

Mendocino Redwood Company sued to stop the conservation easement for the Redwood Foundation.

McCowen: “Estimates vary from $10-$15 million, I believe.”

Pinches, like the rest of us, hadn’t heard anything about Mendocino Redwood Company’s role in obstructing the Foundation’s conservation easement.

Pinches: “What was that question again?”

Hamburg: “How much of the debt load of RFFI [Redwood Forest Foundation Incorporated] is attributable to the tactics of Mendocino Redwood Company in delaying the issuance of the conservation easement? I believe they put it off between two and three years because of their challenge.”

McCowen: “Mendocino Redwood Company challenged and raised questions about the conservation easement. That delayed it. And it delayed it into the period of economic collapse so that the value of the conservation easement declined perhaps by $10 million. Redwood Forest Foundation had to do a lot of additional studies and consultant work to justify the values that they were still seeking. So there are people within that organization who believe that the Redwood Forest Foundation took a heavy financial hit based on that delay.”

Smith: “Also Mr. Chair there was the interest that was accruing because of that delay, during that two- or three-year delay there was significant interest accruing because those funds could not be delivered according to plan.”

Hamburg: “MRC almost some sunk RFFI before they even got off the ground.”

Assistant CEO Kyle Knopp, sitting in for CEO Carmel Angelo, ended the CEO’s report with an ominous observation delivered in the typically bland, rambling, semi-coherent, run-on Kendall-Smith style that has come to dominate public discourse at all levels of government and which effectively undermined whatever point Mr. Knopp was trying to make:

“Your Board is, I’m sure, well aware when you read about some of the other municipalities in the State of California, that municipal bankruptcies in California are beginning to ramp up. It’s been, and this is an arguable number, but it’s been roughly four and a half years since the start of the current recession which started with, arguably, much earlier but—”

Pinches (somewhat sarcastically): “The recession was declared formally over by President Obama a few years ago.”

Knopp: “Correct. I guess you could call it the economic crisis, the economic situation that this country finds itself in with exceedingly high unemployment and stagnant or declining property values roughly started about four and a half years ago or so and it has had an obviously long lasting impact on any revenues which created a position of fiscal stress where the revenues decreased while the service demands go up. In 2008 the City of Vallejo filed for bankruptcy with what I think generally kind of a consensus that what has emerged out of that, bankruptcy is highly questionable as to whether it’s successful or a wise choice, that was to do bankruptcy. But what we see basically over the last month is at least three cities either filing for bankruptcy or positioning themselves to file for bankruptcy and there are several others rumored which I won’t mention at this time but several other cities are rumored to be moving in this direction, so bearing in mind that there are over 450 cities in the state of California and so three does not necessarily make a huge movement but it is certainly troubling and it is something that we have attached some news articles to the CEO’s report and the Executive Office continues to look forward and explore articles of response to keep this board informed about the situation developing across the state.”

Predictably, since Knopp hadn’t explained why he even brought up this “troubling,” if obvious, bankruptcy item, there was absolutely no response from any Board members.

3 Comments

  1. John Sakowicz August 21, 2012

    More excellent reporting and newsanalysis. Go out and buy the AVA.

  2. John Sakowicz August 18, 2012

    Last year, the rate of return on our Mendocino County’s pension assets was about 1 per cent…not even the 10-year T-bill rate, and certainly less that the target actuarial rate of return of 7.75 per cent.

  3. Trelanie Hill August 15, 2012

    Given that pension plans are typically heavily invested in bonds, and the current 10-year treasury rate is 1.48%, it is going to be damn difficult (most likely impossible) for pension plans to come close to the annualized projection of 7.5%.

    Jim Hill
    Potter Valley

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