|Pension Fund Raid Falsely
Claimed By City Council Candidate
October 14, 2001
City Council candidate Lynn Wade is challenging Rev. Charles Belcher for the two year Richmond City Council seat. By all appearances, Wade is an intelligent and accomplished professional with a compelling personal story of achievement. Unfortunately, she appears to have fallen under the spell of Darrell Reese, the convicted felon who guides the political strategy of Local 188, the union to which Wade's firefighter husband belongs.
In her opening salvo, Wade, who is an auditor, claimed that a private audit had discovered "$11 million illegally taken from Richmond Police and Fire Pension Fund." She went on to state: "The private audit also confirmed the earlier grand jury investigation that showed City financial records were so poor you cannot trail the money."
What are the facts?
On March 30, 1999, the Richmond City Council passed Ordinance 9-99 authorizing the issuance of taxable limited obligation bonds for the City's Police and Firemen's Pension Fund. The fund is used to pay the pensions of 164 former employees who retired prior to the initiation of the current pension plan administered through California PERS (Public Employees Retirement System). The purpose of the bond was to guarantee the future pension obligations under the old plan while freeing up excess money to contribute to the current PERS plan. The result would reduce the amount of pension money required to come from the general fund and, in turn, allow approximately $3.8 million annually to be used for other purposes, including current salaries and infrastructure. All in all, it involved some creative money management in which all the citizens of Richmond were winners. The City Council voted 6-1 to pass the ordinance, with Butt, Evans, Marquez, Anderson, Powers and Corbin voting yes and Griffin voting no. Bates was absent.
Presumably, the $11 million to which Ms. Wade alludes is the excess amount generated in the pension fund to be transferred to PERS. Since the issuance of the pension bond, the 2001-02 fiscal year budget reflects all tax override funds receipted in a separate fund from the General Fund. These tax override monies will be used for the annual bond debt payment and the balance is reserved pending the outcome of a lawsuit in Huntington Beach that challenges the authority of a public agency collect tax override funds in excess of that needed to service the original pension plan.
In fiscal year 2000-01 The City of Richmond transferred $1.8 million from the General Fund to the Pension Fund. These funds were designated to pay for the employee's share of PERS, however it was determined in March 2001, that this was one of the issues in the Huntington Beach lawsuit. This was conferred with the City Attorney Malcolm Hunter in which he concurred that those funds should be set aside until the litigation is resolved.
If a private audit was conducted, it has never been provided to the City Manager or the City Council. The City contracts with Caporicci, Cropper & Larson, LLP for external audit services. Copies of the audit may be obtained from the city manager's office or the Richmond Library. The 2000-01 fiscal year audit is currently underway. The 1999-00 Audit was completed and provided to the City Council.
A Contra Costa Grand Jury Investigation focused on the Recreation and Parks Department was completed in 1999. The Report, No. 9903, as well as the City's response is old news. A story about it appeared in the April 14, 1999, West County Times and can be viewed at http://www.tombutt.com/media/990414.htm . The entire Grand Jury Report can be viewed by clicking here.