MEMORANDUM July 17, 2017

TO:

RPEA

FROM: Marketplace Communications

RE:

Daily Media Clips

Following are today’s news clips:

DATE PUBLICATIO

N TITLE & LINK AUTHOR

7.17.17

Calpensions Social Security, a pension booster, faces shortfall

https://calpensions.com/2017/07/17/social-security-a-pension-booster-faces-shortfall/

Ed Mendel

7.17.17

Barron’s CalPERS is Doing Alright, but not Great

http://www.barrons.com/articles/calpers-is-doing-alright-but-not-great-1500313513

Crystal Kim

7.17.17

Transparent California

DWP trio cleared over $1 million in pension pay, new data shows

https://blog.transparentcalifornia.com/2017/07/17/former-dwp-general-managers-356000-pension-among-highest-

statewide/

Robert Fellner

7.17.17

The Hill Poll: Americans see healthcare as most important issue

http://thehill.com/policy/healthcare/342336-poll-americans-see-healthcare-as-most-important-issue

Rachel Roubein

7.17.17

The Hill

Study: US healthcare system is worst among 11 developed nations

http://thehill.com/policy/healthcare/342308-study-us-healthcare-system-is-worst-among-11-developed-nations

Rebecca Savransky

7.17.17

Washington Examiner

Americans aren't buying what Obamacare is selling http://www.washingtonexaminer.com/americans-arent-buying-

what-obamacare-is-selling/article/2628849

Sally Pipes

7.17.17

Fox Business

From $2 billion to zero: A private-equity fund goes bust in the oil patch

http://www.foxbusiness.com/features/2017/07/17/from-2-billion-to-zero-private-equity-fund-goes-bust-in-oil-patch.html

Dow Jones

Newswires

7.15.17

Marin Independen

t Journal

Marin County agency stuck with $584,000 pension bill http://www.marinij.com/government-and-

politics/20170715/marin-county-agency-stuck-with-584000-pension-bill

Richard Halstead

7.15.17

You Tube "Happy Days are Here Again!"

https://www.youtube.com/watch?v=gqsT4xnKZPg

7.15.17

Modesto Bee

$100K Club: Top wage earners at Modesto-area counties, cities, irrigation districts

http://www.modbee.com/news/local/turlock/article161616213.html

Garth Stapley

7.15.17

Modesto Be More evidence of lavish Modesto Irrigation District

compensation http://www.modbee.com/news/article161615468.html

Garth Stapley

7.15.17

Modesto Bee

One reason your electric bill is high: bountiful pay for MID workers

http://www.modbee.com/news/article161615463.html

Garth Stapley

Calpensions

« Old cause of pension debt gets new attention

Social Security, a pension booster, faces shortfall https://calpensions.com/2017/07/17/social-security-a-pension-booster-faces-shortfall/

Retirees who receive federal Social Security in addition to their California state and local government

pensions got mixed news last week.

Social Security trustees project a 2.2 percent increase for recipients next year after little or no increase

the last two years. And the Social Security trust funds are projected to run out of money by 2034,

triggering a 23 percent cut unless Congress takes corrective action.

Benefits could be reduced (extend the retirement age or cap cost-of-living adjustments) or revenue

increased (raise the payroll tax or raise the $127,200 cap on wages taxed). But the Trump administration

is not advocating direct action to solve the growing problem.

“To help make these programs sustainable into the future we should focus on strengthening the

economy today,” U.S. Treasury Secretary Steven Mnuchin said last week. “Compounding growth will

help ease projected short-falls. To this end, it is essential for us to implement tax and regulatory

reform.”

If the trust funds run dry in 2034, Social Security payments would be cut (a projected 23 percent) to an

amount low enough to be paid by the Social Security payroll tax, currently 12.4 percent, split equally

between employer and employee, 6.2 percent each.

About 40 percent of California state and local government workers have Social Security in addition to

pensions, according to the Public Plans Data website maintained by three nonprofit organizations.

In a higher estimate of coverage, a report by the watchdog Little Hoover Commission in 2011 said

“nearly half of all public employees in California, including teachers, police and firefighters, remain

outside of the federal supplemental program.”

The influential Little Hoover report (quoted in a key pension-cut appeals court decision awaiting a

Supreme Court hearing) also explained why the original reduction in the CalPERS pensions of

government employees who receive Social Security went awry.

Legislation in 1961 allowing state workers to begin receiving Social Security made an offsetting cut in

state pensions. The final pay used to set pensions was reduced by a third of the Social Security payroll

tax, resulting in a 24 percent pension cut for high-income employees.

But the law making the cut used a dollar amount, $133.33, instead of a percentage of monthly pay. Now

the 1961 dollar reduction is still the law, even though its percentage of final pay plummeted over the

decades.

“With rising benefit levels, a rank-and-file state worker who retires at age 63 with 30 years of service

now can expect to receive 107 percent of pre-retirement income, when adding in full Social Security

benefits (available at age 67),” said the Little Hoover report.

“Without the $133.33 reduction in the benefit calculation, the worker’s pension would equal almost the

same pay, about 109 percent of pre-retirement salary.”

In 1982, the last state budget proposed by Gov. Brown during his first eight years in office said state

workers could retire at age 62 and receive more than 100 percent of their final salary from CalPERS and

Social Security.

Brown proposed lower pensions for new hires, arguing that 70 percent of final salary is a “common

standard” for maintaining a standard of living in retirement that is similar to the one when working.

He signed a budget in 1982 calling for a “two-tier” system giving new hires a lower pension, but it was

not enacted. After returning to office nearly three decades later, Brown did get pension reform

legislation that gives new hires in CalPERS and county systems lower pensions.

Employees hired on or after Jan. 1, 2013, when the reform took effect, can still receive Social Security.

And the final pay used to set their lower pensions is not subject to the $133.33 reduction.

The Social Security trust funds grew to $2.8 trillion during several decades, roughly 1990 to 2010, when

the payroll tax revenue was higher than payments to recipients, as this chart from the Committee for a

Responsible Federal Budget shows.

After payment costs began exceeding tax revenue around 2010, the shrinking trust funds are expected

to run out of money and trigger a 23 percent payment cut in 2034, when a person now age 50 reaches

the normal retirement age of 67.

Meanwhile, trust fund assets have been loaned to the rest of government through special bonds, called

a “raid” by some. In their calculations, the fund trustees assume the loan will be repaid with interest,

costing the rest of government about $4.4 trillion through 2034.

“Many argue that these Social Security surpluses masked other deficits in the rest of the government,

and thus allowed policymakers to enact more deficit-financed tax cuts or spending increases,” said the

Committee for a Responsible Federal Budget.

Delaying a solution adds to the cost or benefit reduction, said the committee. To make Social Security

solvent, for example, the 12.4 percent payroll tax would need to increase to 15 percent today, 16.4

percent if delayed until 2034.

Social Security and California public pensions differ in a number of ways. The federal program is

intended to be a modest supplement, not a full retirement plan, and it provides a relatively larger

payment for low-income persons.

It’s a pay-as-you-go program, not expecting like California retirement systems to get nearly two-thirds of

the money needed to pay pensions from investments that can be risky and unpredictable.

Social Security costs are shared equally by employer and employee. In California plans, only the

employer pays the debt or “unfunded liability” (usually from investment earnings shortfalls). So, the rate

paid by employers is usually much larger than the employee rate.

While Social Security recipients face cuts, members of California plans are protected by the “California

rule,” a series of state court rulings that the pension offered at hire becomes a vested right, protected

by contract law, that can only be cut if offset by a new benefit.

Congress, unlike the California Legislature, has taken a dim view of adding Social Security to pensions.

Two laws can be a problem for members of the California State Teachers Retirement System, who do

not receive Social Security.

The Windfall Elimination Provision reduces Social Security earned by CalSTRS members on other jobs.

The cut is intended to avoid giving a more generous Social Security payment based on low income to

someone who has a pension from a higher-paying job.

The Government Pension Offset reduces spousal Social Security payments by two-thirds of the pension

received from a government job. The cut for surviving spouses with a pension is intended to be similar

to the cut for those with Social Security.

CalSTRS in the past has given Congress a detailed analysis showing why the two Social Security laws are

unfair and arbitrary, emphasizing the impact of the spousal offset on its membership that is 70 percent

female with longer expected life spans.

A bill to reform or repeal the two laws, which are said to harm teacher recruitment, has been introduced

in every session of Congress since 2001. None got out of committee, said a CalSTRS analysis of two

current repeal bills.

Teachers in 35 states receive Social Security, putting California in the minority on the issue. Another

problem is the cost of repeal, estimated by Social Security last year to be 0.13 percent of payroll over

the long term.

A repeal of the two laws, rather than a reform, might revive the inequity issue and lead to calls to

require Social Security for all government employees, said the CalSTRS bill analysis. Members of CalSTRS

voted “almost four to one” in 1955 to remain out of Social Security.

“The (CalSTRS) board has opposed mandatory Social Security participation for CalSTRS members, citing

studies that show the move would increase costs or reduce total retirement benefits,” said the bill

analysis.

“Additionally, there are potential costs associated with the overlap of CalSTRS’ disability and survivor

benefits and comparable Social Security benefits.”

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the

San Diego Union-Tribune. More stories are at Calpensions.com. Posted 17 Jul 17

Barron’s

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

http://www.barrons.com/articles/calpers-is-doing-alright-but-not-great-1500313513

• FOCUS ON FUNDS

CalPERS is Doing Alright, but not Great California's biggest pension fund reported a 11.2% preliminary return for the fiscal year ended June 30. By Crystal Kim

July 17, 2017 1:45 p.m. ET http://www.barrons.com/articles/calpers-is-doing-alright-but-not-great-1500313513

The California Public Employees' Retirement System reported early return figures on investments for the trailing 12 months ended June 30 on Friday. The state's largest pension fund, which held $323 billion at the end of its fiscal year, generated a net return of 11.2%.

The fund's stock sleeve did much of the heavy lifting, garnering a 19.7% return. Private equity returns were around 14% and real estate, 7.6%.

Photo by FREDERIC J. BROWN/AFP/Getty Images

"I am proud of our investment team for achieving double-digit returns this year," said Ted Eliopoulos, CalPERS, chief investment officer in a statement to the press. "Our globally diversified portfolio performed well across most asset classes, and we were able to take advantage of what the market gave us. However, I want to emphasize that as pleased as we are with this one-year return, our focus is always on the long-term. We invest for decades, not years."

Over decades, the fund's performance isn't so hot. In the last decade, it returned 4.4% compared to the S&P 500's 7.1% and in the last two decades, it returned 6.6% compared to the market's 7.2%.

CalPERS recently lost a case against a number investment banks at the U.S. Supreme Court late June. The pension fund blamed banks for putting it in Lehman stock, bonds and other securities that led to losses of around $300 million. CalPERS chief Marcie Frost said that with the pension fund just 68 percent funded is "vulnerable to a downturn in stock markets" and that they are focusing on asset allocation over the next six months.

Transparent California

DWP trio cleared over $1 million in pension pay, new data shows

July 17, 2017July 17, 2017 Robert Fellner 2017, Press ReleasesDWP, Los Angeles

https://blog.transparentcalifornia.com/2017/07/17/former-dwp-general-managers-356000-pension-

among-highest-statewide/

Today, TransparentCalifornia.com released 2016 pension payout data from the Los Angeles Department

of Water and Power (DWP) — the nation’s largest municipal utility district.

Today’s release is the first time that this information has ever been made available to the public, which

was provided to Transparent California in response to multiple records requests spanning nearly 3 years.

With an aggregate cost equal to 50 percent of employee pay, the DWP retirement plan is one of the

most expensive nationwide — with this year’s annual cost estimated at $465 million, according to the

plan’s most recent actuarial valuation.

In other words, for every $100 in payroll, the DWP must spend an additional $50 on retirement costs.

Transparent California research director Robert Fellner highlighted the compounding effect this has in

conjunction with salary increases:

“An exceptionally generous — and expensive — retirement plan means that the DWP’s famously above-

market salaries end up costing ratepayers twice.”

Factoring in retirement costs boosted average employee compensation at the DWP to roughly $170,000

last year.

Engineering associate’s $363,000 pension tops list

Former DWP electrical engineering associate Nevenka Ubavich’s $363,061 annual pension was the

largest of any DWP retiree and the 3rd largest of the over 500,000 public pension payouts surveyed

statewide. After Ubavich, the next four largest DWP pensions went to:

2. Former general manager Ronald Deaton: $356,806.

3. Former assistant general manager Frank Salas: $336,432.

4. Former assistant general manager Thomas Hokinson: $239,885.

5. Former assistant general manager Gerald Gewe: $231,348

The average pension for a full-career DWP retiree was $72,643.

In addition to receiving fully-paid medical benefits while working, most DWP workers also receive

healthcare benefits in retirement. When those costs are included, the average pension and benefits

package for a full-career DWP retiree was $84,811.

Former DWP audio-visual technician Thatcus Richard — who was recently sentenced to five years in

state prison after pleading no contest to nine felony counts of embezzlement — received $67,688 in

pension and health benefits last year, according to the data.

DWP salaries, benefits well above market average

“While it is not uncommon for California public workers to receive dramatically richer retirement

benefits than the taxpayers who must fund them, DWP workers are unique because every component of

their compensation is so far above their private sector peers.”

In a previous analysis, Fellner found that the average DWP worker received wages 67 percent greater

than their comparable, Los Angeles-area peers.

This gap increased to 155 percent after accounting for the DWP’s atypically generous health and

retirement benefits. Of course, DWP employees also receive significantly greater levels of job security

and favorable overtime pay provisions that would increase this disparity further.

The study estimated that the DWP could save nearly $400 million annually by reducing pay to market

levels.

A city-commissioned study also found that the DWP’s payroll costs — on both a per-customer basis and

as a percentage of total assets — were among the highest of the comparable utility companies

surveyed.

Lowering the DWP’s payroll to the median level of the utility companies surveyed in that study would

reduce costs by roughly $320 million a year.

The recent contract that provides DWP employees with a significant pay raise over the next five years

highlights the importance of transparency, according to Fellner.

“Far too often taxpayers are provided misleading or incomplete information regarding the

compensation costs that they are required to pay for. By providing complete and accurate pay data,

Transparent California empowers the public with the information necessary to make informed

decisions.”

To view the entire dataset in a searchable and downloadable format, please visit

TransparentCalifornia.com — the state’s largest and most accurate public pay and pension database.

To schedule an interview with Transparent California, please contact Robert Fellner at 559-462-

0122 or Robert@TransparentCalifornia.com.

Transparent California is California’s largest and most comprehensive database of public sector

compensation and is a project of the Nevada Policy Research Institute, a nonpartisan, free-market think

tank. Learn more at TransparentCalifornia.com.

The Hill Poll: Americans see healthcare as most important issue By Rachel Roubein - 07/17/17 11:40 AM EDT http://thehill.com/policy/healthcare/342336-poll-americans-see-healthcare-as-most-important-issue Americans view healthcare as the most important issue facing the country but are doubtful Congress will pass legislation that will lower premiums and cover more people, according to a Bloomberg poll released Monday.

With the GOP push to repeal and replace ObamaCare serving as the poll’s backdrop, 35 percent of Americans surveyed indicated healthcare was their top issue, more than twice as many as any other option. The other leading issues included unemployment and jobs (13 percent), terrorism (11 percent), immigration (10 percent) and climate change (also 10 percent).

A majority, 64 percent, disapproves of how President Trump is handling healthcare, compared to 28 percent approving.

Senate Majority Leader Mitch McConnell Mitch McConnellGOP senator:

McConnell Medicaid comments a 'breach of trust'The Hill's 12:30 ReportPoll: Americans see

healthcare as most important issueMORE (R-Ky.) has delayed a vote on healthcare legislation that

leadership hoped would be this week, as Sen. John McCain John McCainNY

attorney general threatens suit over ObamaCare repealThe Hill's 12:30 ReportArmed Services

hearings to proceed while McCain recovers from surgeryMORE (R-Ariz.) recovers from an

unexpected surgery. Without McCain, Republican leadership didn’t have enough votes to begin debate

on the bill because Sens. Rand Paul Rand PaulGOP senator: McConnell Medicaid

comments a 'breach of trust'Poll: Americans see healthcare as most important issueSenate Dems:

Use ObamaCare repeal delay to hold public hearingsMORE (R-Ky.) and Susan Collins

Susan CollinsGOP senator: McConnell Medicaid comments a 'breach of

trust'Poll: Americans see healthcare as most important issueSenate Dems: Use ObamaCare repeal

delay to hold public hearingsMORE (R-Maine) said they would vote against a motion to proceed.

About 60 percent of those surveyed believe it’s unrealistic legislation will pass in the next several years that both lowers premiums and leads to more people with health coverage.

Conservative lawmakers have consistently pushed for a bill lowering health insurance premiums. A

provision from Sen. Ted Cruz Ted CruzPoll: Americans see healthcare as most

important issueSenate Dems: Use ObamaCare repeal delay to hold public hearingsThis week:

ObamaCare repeal faces latest setback in SenateMORE (R-Texas) that was added to the revised

version of the GOP plan lets insurers sell plans that don’t comply with ObamaCare’s coverage regulations as long as they also sell a plan that does.

But the measure has received pushback from healthcare experts and insurers. In a strongly worded letter sent Friday, America’s Health Insurance Plans — the major insurance trade group — and the Blue Cross Blue Shield Association warned that it is “simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market.”

Bloomberg surveyed approximately 1,000 people over the phone from July 8 to July 12. The poll has a margin of error of plus or minus 3.1 percent.

The Hill Study: US healthcare system is worst among 11 developed nations By Rebecca Savransky - 07/17/17 08:48 AM EDT http://thehill.com/policy/healthcare/342308-study-us-healthcare-system-is-worst-among-11-developed-nations

© Getty Images The U.S. healthcare system is ranked the worst among 11 developed nations, according to a new study.

The Commonwealth Fund measured elements including care, access, administrative efficiency, equity and healthcare outcomes in Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States.

Its analysis found the U.S. spent the most money on healthcare and also ranks poorly in terms of access,

equity and healthcare outcomes. Nearly half of low-income Americans, 44 percent, were found to have trouble getting access to healthcare coverage, while just 26 percent of high-income Americans were found to have issues getting coverage.

The study comes as the GOP struggles to repeal and replace ObamaCare.

Senate Majority Leader Mitch McConnell Mitch McConnellGOP senator:

McConnell Medicaid comments a 'breach of trust'The Hill's 12:30 ReportPoll: Americans see

healthcare as most important issueMORE (R-Ky.) announced this past weekend that the Senate

would delay its consideration of the healthcare bill while Sen. John McCain John

McCainNY attorney general threatens suit over ObamaCare repealThe Hill's 12:30 ReportArmed

Services hearings to proceed while McCain recovers from surgeryMORE (R-Ariz.) recovers from

surgery.

Two GOP senators — Rand Paul Rand PaulGOP senator: McConnell Medicaid

comments a 'breach of trust'Poll: Americans see healthcare as most important issueSenate Dems:

Use ObamaCare repeal delay to hold public hearingsMORE (R-Ky.) and Susan Collins

Susan CollinsGOP senator: McConnell Medicaid comments a 'breach of

trust'Poll: Americans see healthcare as most important issueSenate Dems: Use ObamaCare repeal

delay to hold public hearingsMORE (R-Maine) — have already spoken out against the revised Senate

GOP legislation.

Washington Examiner OPINION Americans aren't buying what Obamacare is selling by Sally Pipes, contributor | Jul 17, 2017, 12:50 PM http://www.washingtonexaminer.com/americans-arent-buying-what-obamacare-is-selling/article/2628849

Premiums on HealthCare.gov are now 105 percent higher than average individual market rates from 2013. (AP Photo/Pablo Martinez Monsivais) Health Plan Hinges On The Young In America

A new Gallup poll provides yet more evidence that Obamacare is collapsing. According to the survey, the share of people without health insurance jumped to 11.7 percent in the second quarter of this year — up from 10.9 percent at the end of 2016.

Obamacare is spending billions of taxpayer dollars subsidizing insurance coverage for millions of people — and even offering it for free to millions more. Yet an increasing number of people are rejecting the offer.

By expanding Medicaid eligibility to everyone earning up to 138 percent of the federal poverty level, Obamacare added more than 14.4 million people to the program's rolls. The law has also subsidized insurance for more than 10 million people through the exchanges.

As if that weren't enough, Obamacare's individual mandate penalized individuals who remained uninsured, charging them a fine of the greater of $695 or 2.5 percent of income. Finally, the law's guaranteed issue provision made it illegal for insurers to turn away patients because of their health status.

Despite these drastic reforms, the number of people forgoing insurance is on the rise, as the Gallup survey makes clear. Moreover, enrollment in the insurance exchanges actually fell from 12.7 million in 2016 to 12.2 million this year.

There's a simple reason for this trend. Obamacare's heavy-handed regulation of the health insurance market has made coverage either unaffordable or unattractive for many.

Indeed, premiums on HealthCare.gov are now 105 percent higher than average individual-market rates from 2013 — before the exchanges opened for business.

An insurance market in which a shrinking number of people are willing or able to buy coverage can't last for very long. Unfortunately, the Senate's latest healthcare bill (the Better Care Reconciliation Act, which was released on July 13) preserves many of Obamacare's key provisions and does little to help people purchase coverage.

Senate Majority Leader Mitch McConnell, R-Ky., has since postponed a vote on this bill because of Sen. John McCain's, R-Ariz., absence from the senate due to surgery. The official CBO score could come by the end of this week, but it is unclear whether they will have a score of the Cruz/Lee amendment that would allow exchange enrollees to purchase non-compliant, cheaper plans if one compliant plan is available on the exchange.

It's up to Republicans in Congress to completely repeal Obamacare and replace it with policies that foster a competitive insurance market — where Americans can secure high-quality health coverage that's also affordable.

Sally Pipes (@sallypipes) is a contributor to the Washington Examiner's Beltway Confidential blog. She is president, CEO and Thomas W. Smith fellow in health care policy at the Pacific Research Institute.

Fox Business From $2 billion to zero: A private-equity fund goes bust in the oil patch

Published July 17, 2017 Oil Dow Jones Newswires

http://www.foxbusiness.com/features/2017/07/17/from-2-billion-to-zero-private-equity-fund-goes-bust-in-oil-patch.html

Oil barrels sit empty at a recycling yard in Longmont, Colorado February 2, 2015. (Reuters)

A $2 billion private-equity fund that borrowed heavily to buy oil and gas wells before energy prices plunged is now worth essentially nothing, an unusual debacle that is wiping out investments by major pensions, endowments and charitable foundations.

Continue Reading Below

EnerVest Ltd., a Houston private-equity firm that focuses on energy investments, manages the fund. The firm raised and started investing money in 2013, when oil was trading at more than double the current price of about $45 a barrel. But the fund added $1.3 billion of borrowed money to boost its buying power. That later caused it trouble when oil prices tumbled.

Now the fund's lenders, led by Wells Fargo & Co. (WFC), are negotiating to take control of the fund's assets to satisfy its debt, according to people familiar with the matter.

"We are not proud of the result," John Walker, EnerVest's co-founder and chief executive, wrote in an email to The Wall Street Journal.

The outcome will leave investors in the 2013 fund with, at most, pennies for every dollar they invested, the people said. At least one investor, the Orange County Employees Retirement System, already has marked its investment down to zero, according to a pension document.

Though private-equity investments regularly flop, industry consultants and fund investors say this situation could mark the first time that a fund larger than $1 billion has lost essentially all of its value.

Continue Reading Below

ADVERTISEMENT

EnerVest's collapse shows how debt taken on during the drilling boom continues to haunt energy investors three years after a glut of fuel sent prices spiraling down.

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At its onset, the oil bust was expected to cause widespread losses for private-equity investors. While most funds have been able to navigate the downturn and are hanging on for higher prices, there have been pockets of acute pain. EnerVest's struggles have been among the most severe.

Only seven private-equity funds larger than $1 billion have ever lost money for investors, according to investment firm Cambridge Associates LLC. Among those of any size to end in the red, losses greater than 25% or so are almost unheard of, though there are several energy-focused funds in danger of doing so, according to public pension records.

EnerVest has attempted to restructure the fund, as well as another raised in 2010 that has struggled with losses, to meet repayment demands from lenders who were themselves writing down the value fund of assets used as collateral, according to public pension documents and people familiar with the efforts.

Mr. Walker in an interview last year said he and his partners put $85 million of their own money toward satisfying the banks, but it wasn't enough.

A number of prominent institutional investors are at risk of having their investments wiped out, including Caisse de dépôt et placement du Québec, Canada's second-largest pension, which invested more than $100 million. Florida's largest pension fund manager and the Western Conference of Teamsters Pension Plan, a manager of retirement savings for union members in nearly 30 states, each invested $100 million, according to public records.

The fund was popular among charitable organizations as well. The J. Paul Getty Trust, John D. and Catherine T. MacArthur and Fletcher Jones foundations each invested millions in the fund, according to their tax filings.

Michigan State University and a foundation that supports Arizona State University also have disclosed investments in the fund.

None of these investors commented. It is possible some of them earlier sold their stakes in the fund, paring losses.

In the earlier interview, Mr. Walker said the struggles of EnerVest's 2013 and 2010 funds had sparked ire among his investors: "We've had some chew us out and hang up on us."

EnerVest was launched in 1992 and says it operates more U.S. oil and gas wells than any other company. It started out investing for GE Capital, General Electric Corp.'s (GE) finance arm. Eventually it began pooling other big investors' cash, which it used to buy producing oil and gas wells. EnerVest hunted for fields already producing oil and gas but neglected by big oil companies. Once EnerVest bought them, it made improvements and drilled more to increase output.

The strategy isn't as risky as staking wildcatters or borrowing heavily to buy entire oil companies, but profits are usually lower. To juice returns, however, funds managed by EnerVest and rivals that shared the strategy borrowed money as if they themselves were oil companies, encumbering all of the funds' assets with the same debt.

Doing that eliminates a key protection for private-equity investors, which generally finance each investment independently so that soured deals don't put good ones at risk. The use of fund-level debt effectively cross-collateralizes assets, meaning that good investments can be pulled down by bad ones.

Institutional investors were drawn to these so-called resource funds because they typically pay out steady streams of cash as soon as they make their first investments, unlike other private-equity investments that can take years to bear fruit, said Christian Busken, who advises endowments and other big energy investors as director of real assets for Fund Evaluation Group LLC.

"It shouldn't be something where you can be wiped out. But you are exposed to commodity prices," said Mr. Busken, who hasn't worked directly with EnerVest.

EnerVest's funds historically returned more than 30% or so, which enabled it to raise progressively larger pools of cash. In 2010, it raised about $1.5 billion for its 12th fund and added $800 million of debt. Three years later it raised $2 billion for its next and borrowed $1.3 billion. The fund bought wells in the Texas Panhandle, Utah, outside Dallas and elsewhere, according to securities filings from some of the sellers. The purchases were made largely as U.S. oil prices hovered in the $100-a-barrel range and when natural-gas prices were higher.

Marin Independent Journal Marin County agency stuck with $584,000 pension bill By Richard Halstead, Marin Independent Journal Posted: 07/15/17, 5:40 PM PDT | Updated: 2 hrs ago

http://www.marinij.com/government-and-politics/20170715/marin-county-agency-stuck-with-584000-pension-bill

Marin-Sonoma narrows project work continues along Highway 101 at the county line near San Antonio Creek. The project is an example of Transportation Authority of Marin work. (Courtesy photo)

Nancy Whelan, the Marin Transit District’s general manager, said her board has not yet decided how to respond to the CalPERS audit.

The Transportation Authority of Marin is assuming more than $584,000 in unfunded liability for the retirement benefits of nine employees who were formerly the responsibility of a joint powers authority that supplies support staff to government agencies.

In April, the California Public Employees Retirement System, CalPERS, determined that the joint powers authority, Local Government Services Authority, known as LGS, had incorrectly enrolled more than 30

individuals in CalPERS membership. An audit by CalPERS also found that LGS improperly reported service credits and reportable compensation for these members.

The individuals were employed by LGS but worked for Transportation Authority of Marin, Marin Transit Authority, Marin Telecommunications Agency, Marin Emergency Radio Authority, Marin General Services Authority, Metropolitan Transportation Commission and South Bayside Waste Management Authority.

CalPERS decided that affected individuals should have been classified as employees of the agencies they worked for instead of LGS, since LGS “did not control the manner and means” of the work they performed.

Cost estimate

Amy Morgan, a CalPERS spokeswoman, wouldn’t say if the employer contributions made by LGS were less than would have been made had the employees been enrolled in CalPERS by the agencies in which they worked.

Morgan, however, did say, “When a new agency joins CalPERS, a cost estimate is provided that takes into account the demographics of the employer’s members and their assets and liabilities.”

She said as a result, it is likely that the cost estimate for these agencies would have been different than the one provided for LGS.

Dianne Steinhauser, TAM’s executive director, said, “Unfortunately, I can’t weigh in on this, it’s a matter between our board and counsel.”

TAM is represented by county of Marin lawyers. Brian Case, a deputy county counsel, confirmed that on Monday TAM’s board voted to accept CalPERS’ offer to enter into a contract to provide retirement benefits for nine LGS employees.

The TAM board also authorized spending $25,000 to temporarily hire an outside human resources consultant to oversee the transition.

Avoiding conflict

County Counsel stressed in its staff report to the board, “it is in TAM’s best interest to avoid even so much as the appearance of a conflict of interest at any stage in resolving these retirement benefit issues.”

According to the County Counsel’s report, in 2005, LGS signed an agreement with TAM to provide staff services for its executive director position and additional positions were added to the agreement as Tam grew. In 2007, LGS entered into an agreement to provide TAM with staff services, human resources personnel and payroll services on an ongoing basis.

LGS executive director Richard Averett said LGS is appealing the CalPERS ruling, but no timetable has been set for resolving the matter. The result of the appeal won’t have any effect on LGS’s future.

“We decided when CalPERS objected to our model that we would not take on any new clients, and we would work down our commitments to clients until LGS was dissolved,” Averett said. “We now have one client, and it is TAM.”

Averett said LGS was able to relieve small public agencies “of a lot of the administrative set up,” and get them group insurance rates for workers’ compensation insurance “right off the bat.”

Averett is also executive director of another joint powers authority, Regional Government Services, which supplies employees to a host of government entities and public agencies for shorter-term projects. RGS’s clients have included the county of Marin and every municipality in Marin County with the possible exception of San Anselmo. Averett said LGS and RGS were both created in 2001.

No easy solution

In its audit, the Office of Audit Services said it was unable to determine definitively whether LGS and RGS are the same entity or separate entities. Dan Schwarz, the city manager of Larkspur, and Ken Nordhoff, the former city manager of San Rafael who now serves as Walnut Creek’s city manager, serve on the boards of both LGS and RGS.

Nancy Whelan, the Marin Transit District’s general manager, said her board has not yet decided how to respond to the CalPERS audit.

“We are exploring a variety of options right now,” Whelan said.

Whelan said the transit district’s situation is somewhat different from TAM’s because it ended its contract with LGS in 2013, after about three years, and transitioned to a defined benefit pension plan at that time.

Whelan said there is no simple solution to the dilemma since each of its six affected employees have different situations. Some have left the transit district employ. Some want to remain in the CalPERS system, others do not.

Whelan said there is a possibility that the transit district will also decide to assume CalPERS’ unfunded pension liability for some or all of these employees.

Averett said Marin Telecommunications Agency, Marin Emergency Radio Authority and Marin General Services Authority all shared a total of just one or two LGS employees.

Mike Popovich of Larkspur, who happened upon the county counsel’s report while perusing TAM’s website, said, “The bottom line is this went on for 10-plus years, and now we know there is this huge unfunded liability for nine people. It’s crazy.

“Will there be any accountability or does it just sail off into the sunset?” Popovich asked

You Tube "Happy Days are Here Again!" (Ben Selvin and the Crooners, 1930) Public Employee Unions Cue the Music to Celebrate CalPERS' Investment Returns (audio - Ben Selvin and the Crooners, 1930) https://www.youtube.com/watch?v=gqsT4xnKZPg (Click link to view video) Modesto Bee $100K Club: Top wage earners at Modesto-area counties, cities, irrigation districts

TURLOCK

By Garth Stapley gstapley@modbee.com JULY 15, 2017 6:06 PM http://www.modbee.com/news/local/turlock/article161616213.html

Here are links to The Modesto Bee’s salary databases that show $100,000 wage earners who work for the Modesto area’s counties, cities and irrigation districts.

Modesto-area irrigation districts

Stanislaus, Merced and Tuolumne counties

Stanislaus County cites, including Modesto

San Joaquin County

Merced County cities

Sonora, south San Joaquin cities

Hefty salaries and lavish benefits: Why it pays (handsomely) to work for MID

A look at the numbers behind Modesto Irrigation District's salaries and benefits, which look much more

than "competitive" to those of city and county employees, as well as most other water agencies in the

region.

Meta Viers/McClatchy for Modesto Bee Read more here: http://www.modbee.com/news/local/turlock/article161616213.html#storylink=cpy

Salary databases

Modesto Bee More evidence of lavish Modesto Irrigation District compensation

NEWS

By Garth Stapley gstapley@modbee.com JULY 15, 2017 5:53 PM http://www.modbee.com/news/article161615468.html

Here’s another way to look at how much Modesto Irrigation District workers are costing people in this area, compared to other employers across the United States, both public and private.

Every quarter, the U.S. Bureau of Labor Statistics publishes a National Compensation Survey with loads of statistics; the latest reflects hourly data from March. They can be converted to yearly numbers – the format favored by The Modesto Bee, Transparent California and the California State Controller’s Office – by multiplying by 2,080, representing 40 hours per week and 52 weeks of costs per employee.

The result?

Private workers across the country are costing their employers an average of $68,869 in yearly pay plus benefits. It’s higher on the West Coast: $76,502.

Those working in state and local governments, meanwhile, cost taxpayers an average of $100,339 in yearly pay and benefits. Benefits, by the way, are more generous in government, accounting for 37 percent of total compensation, on average, compared to 30 percent for the private sector.

But MID blows them all away, costing its customers $145,604 per full-time employee.

Want that broken down?

The average MID wage comes to $43.80 per hour (or $91,105 per year), compared to $30.34 per hour ($63,107 per year) for local and state government agencies throughout the U.S., and $25.75 per hour ($53,560 yearly) for the West Coast private sector.

And, average MID benefits cost us $26.20 per hour for each employee ($54,499 a year), compared to $17.90 hourly ($37,232 a year) for the public sector, nationally, and $11.02 hourly ($22,922 a year) for the West Coast private sector.

Garth Stapley: 209-578-2390

Modesto Bee NEWS

One reason your electric bill is high: bountiful pay for MID workers

By Garth Stapley gstapley@modbee.com JULY 15, 2017 5:52 PM http://www.modbee.com/news/article161615463.html

The Modesto Irrigation District – accused in a lawsuit of overcharging electricity customers – pays its workers more on average than all cities and counties and most other water agencies in the region.

The average MID employee pulled down $91,105 in 2016. That’s 21 percent more generous than the $71,818 average wage for workers at 17 city halls in The Modesto Bee’s area.

County governments in this area – Stanislaus, Merced, Tuolumne and San Joaquin – paid an average wage of $65,298 in 2016, according a Bee analysis of data provided by Transparent California, a project of the Nevada Policy Research Institute whose public compensation database is the largest in California.

$39,969 Average private-sector wage in this area

$65,298 Average county government wage in this area

$91,105 Average Modesto Irrigation District wage

Stanislaus private-sector jobs paid $43,106 last year, on average, according to the U.S. Bureau of Labor Statistics. Throughout the four-county area, the average private wage was only $39,969.

MID uses power profits – $93 million a year, on average, since 2010 – to subsidize farmers’ water prices, to reduce debt and to build its savings account . Residential power customers also subsidize E.&J. Gallo Winery, the world’s largest wine producer, whose contract allows Gallo to consume 11 percent of the electricity sold by MID while paying 6 percent of its power revenue.

$93 million Modesto Irrigation District’s average annual electricity profit since 2010

“We’ve established competitive industry salaries to attract the most qualified candidates in a variety of specialized fields,” MID spokeswoman Melissa Williams said.

The district has not raised electricity prices in five years, Williams noted. Staff proposed an increase in late 2014, but board members – sensitive to the mood of customers – declined.

(Click here to see The Bee’s collection of $100K Club salary databases)

The well-documented subsidy prompted a class-action lawsuit that, if certified by a judge, could draw in MID’s more than 100,000 power customers.

The only government agencies in this area paying their people more than MID are Stanislaus Consolidated Fire District and the Turlock Irrigation District, whose average full-time wages in 2016, respectively, were $103,208 and $96,481.

Health and retirement benefits offered at MID, however – costing the district $54,500 per employee – are pricier than those at Stanislaus Consolidated ($42,008) and TID ($50,575), and all other local government agencies.

City and county labor costs: a bargain, compared to MID

Average wages at the two most visible agencies in The Bee’s area – Modesto City Hall and Stanislaus County – came in at $79,006 and $60,381, respectively; with benefits, average Modesto and county employees cost taxpayers $108,833 and $88,003, respectively, compared to MID’s $145,604.

186 Modesto Irrigation District workers earn more than $100,000 a year

38 percent of MID’s workforce is paid more than $100,000

Of MID’s 488 employees, 186 made more than $100,000 in 2016, not counting benefits. That was 38 percent of MID’s work force.

TID, which has roughly twice the acreage of MID, paid $100,000 or more to 185 of its 521 workers, or 36 percent.

By comparison, 13 percent of City Hall workers in Modesto made it into the $100,000 club.

MID’s wages also appear generous when stacked against other power utilities, according to the American Public Power Association’s 2015 salary survey. For example, a journeyman lineworker at MID made $51 per hour that year; at utilities of comparable size in Western states, the median for that job was $44. An experienced MID dispatcher got $59 per hour, while the median in Western states was $47.

In 2015, MID General Manager Greg Salyer was paid $202,230. The median salary for that job in the

West was $195,458, although the median for general managers of large utilities throughout the United

States was $307,282. In 2016, Salyer got $225,599.

Salyer asked in April soon to step down to senior assistant general manager. The MID board will let him

keep the same salary – now $236,188 – and expects to pay about the same to whomever replaces him.

$25,974 Average annual cost for benefits at city halls in this area

$54,499 Average cost for Modesto Irrigation District benefits

TID General Manager Casey Hashimoto received $235,880 last year. Salyer’s total package was more

costly to taxpayers ($342,266, to Hashimoto’s $329,695), however, because of MID’s lavish benefits.

By comparison, Modesto’s city manager in 2016, Jim Holgersson , cost taxpayers a total of $266,351, including $219,860 in wages. Turlock paid its city manager, Gary Hampton, a wage of $197,880, and with benefits, his package cost taxpayers $261,371.

MID benefits second to none

MID benefits ($54,499 per worker) are second to none, and cost taxpayers more than twice the average of cities in our area ($25,974).

MID pays employees’ entire premiums for vision and dental care and all life insurance and long-term disability insurance premiums. Workers pay 10 percent of health insurance.

MID used to cover employees’ entire pension premiums. After The Bee reported on the district’s alarmingly high rate of unfunded liability in 2011, MID changed terms for its defined benefits plan, and workers hired after January 2013 share the costs.

The unfunded portion continued to grow anyway, from $60 million in 2011 to $68 million now. But MID’s assets have grown even faster; while the district could cover only 70 percent of benefits promised to employees and retirees in 2010, it now can cover 77 percent.

Unfunded pension liabilities among state and local governments amount to $41,219 for every home in the United States, Forbes reports.

MID employees in 1982 opted to leave Social Security; the district replaced that income source with a supplementary retirement plan with defined contributions. Workers put in 5 percent of their pay, the

district matches it and employees can direct how the money is invested. They also can put money into a deferred compensation plan similar to a 401(k).

In 2015, MID paid pensions of more than $100,000 each to 10 retirees and one surviving spouse; TID had

seven in that category. Retirement pay is tied to a consumer price index and continues growing; for

example, former controller Jake Sonke’s MID pension was $113,400 in 2011, and now it’s $124,795. The

district’s highest pension goes to former longtime general manager Allen Short, who retired at the end

of 2012 and was paid $151,000 in 2015.

Pensioners include Larry Byrd, a former lineman and reservoir tender who retired before his election to

the MID board in 2011. In 2015, his pension brought him $42,737, and he also earned the usual $12,000

board pay.

Byrd initially abstained from salary and benefit decisions to avoid a potential conflict because his son is

an MID line construction supervisor. But the California Fair Political Practices Commission cleared him to

participate in late 2012, and he has voted for two pay increases since. The latest granted raises of 2.5

percent in 2014, 2.75 percent in 2015 and 2.75 percent last year. MID paid Byrd’s son $142,077 in 2016,

and his benefits cost another $85,837.

Labor and benefit costs are only 17 percent ($79 million) of MID’s $456 million 2017 budget, Williams noted. The district spends far more – $221 million – to generate electricity, and to buy it from others when needed.

Water districts offer most generous pay

Other notes of interest from The Bee analysis:

▪ Of 26 agencies in The Bee’s analysis (17 cities, four counties and five water districts), more than half (14) are spending more than $100,000 a year on average per employee, in salary plus benefits.

▪ Of the three categories in The Bee’s analysis – cities, counties and water districts – the latter spends far more per employee on salaries, benefits and total compensation. For instance, average total compensation for area water districts came to $125,877, compared to $100,799 for counties and $97,793 for cities.

$248,114 2016 salary of OID General Manager Steve Knell, who oversees 75 employees

$235,880 2016 salary of TID General Manager Casey Hashimoto, who oversees 521 employees

▪ The highest paid executive among local water agencies was Oakdale Irrigation District General Manager Steve Knell, who received $248,114 last year. He manages 75 employees, compared to MID’s 488.

▪ Among counties, San Joaquin Chief Executive Officer Monica Nino – a Modesto native who formerly helmed Stanislaus County – pulled down the highest pay at $306,423. Next came Stanislaus CEO Stan Risen ($296,783), who will retire Aug. 11.

▪ Modesto, population 212,175, has nearly three times more people than Turlock (72,796) and four times more than Ceres (48,278). But city hall employees cost Turlock and Ceres more in salary and benefits ($117,371 and $117,000) than Modesto ($108,833).

▪ Average pay in Stanislaus County government ($60,381) is less than in neighboring Tuolumne County ($64,317), even though Stanislaus’ population is 10 times bigger (541,560 to 53,804). In terms of salary plus benefits, Merced County (population 268,672) pays far more ($106,146) than the larger Stanislaus ($88,003).

▪ Average pay at 17 city halls in The Bee’s area ($71,818) compares poorly with the statewide average of $99,111.

▪ The same is true of counties in this area: $65,298, compared to the $77,276 statewide average.

(Source notes: Transparent California used full-time employment data for this report, which focuses on average pay and benefit costs to consumers. For cities and counties, Transparent California’s website displays median pay and benefits, or the middle value between highs and lows. Pension data for 2016 are not yet available. The California State Controller’s Office recently published 2016 data for cities and counties, but numbers for special districts – including water agencies – won’t be posted until September. The controller does not furnish workers’ names and does not filter out part-time data. Population estimates are from the U.S. Census Bureau.)

Garth Stapley: 209-578-2390

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