Merced County retirement board calls special meeting to discuss $8.4 million real estate payment

The Merced County Employees’ Retirement Association has called a special emergency meeting for Friday morning to discuss a $8.4 million payment due to an investment firm for the purchase of real estate.

The retirement board in November authorized paying $13 million to Greenfield Partners, a private Connecticut-based real estate investment firm, for the purchase of some property.

The board expected to make its first payment in mid-January, but the firm is now saying about $8.4 million is due by next week, said MCERA plan administrator Steven Bland.

“They found the properties and ended up closing a lot quicker than they were supposed to,” Bland said. “Quite frankly, we’re glad we’re putting the money to work. We’re happy this is taking place; we’re just not happy we didn’t get as much notice as we would have liked.”

The staff comments from the meeting agenda state the board signed a contract with Greenfield Partners and is obliged to pay the $8.4 million, but a funding source has not been authorized. The board will not meet again until next week, which wouldn’t be enough time to authorize the payment.

Bland said MCERA has committed about $50 million to real estate investments, including the amount owed to Greenfield Partners. The retirement board has been making a significant effort over the past year to diversify its fund, he added.

“We don’t want to put all our money into stocks and bonds,” Bland said. “We want to spread our money into different things, including real estate.”

The Merced County Employees Retirement Association has 4,567 members, 2,050 of whom are retirees. The system had an unfunded liability of $1 billion as of June 30, 2013, for pensions promised in future years.

The county’s retirement board is also expected to have a discussion about its funding policies during its board meeting Dec. 18.

In August, a state report showed Merced County employee pensions may have the lowest funding level of any public pension system in California, which means the retirement system could face difficulty meeting its financial obligations in the future.

Merced County reported a funding level of 51.4 percent last year, according to the latest annual public pension report from the state controller’s office. The funding level is a retirement system’s percentage of liability versus its assets.

The funding level in Merced County dropped from 70.5 percent in 2008 to 54.7 percent in 2010-11, the report shows. By comparison, Stanislaus County’s funding level was 76.3 percent in 2010-11; Fresno County was 78.6 percent and San Joaquin County was funded at 70.4 percent.

Board members attributed the shortfall to several factors: faulty actuarial work, investment returns not meeting expectations, changes in actuarial standards and an increase in benefits of active members. They also applauded efforts to get the system back on track, including hiring a new plan adminsitrator.

This story was originally published December 11, 2014 at 7:44 PM with the headline "Merced County retirement board calls special meeting to discuss $8.4 million real estate payment."