The Singing River Health System pension fund scandal continues to worsen as it becomes clear the pension fund was ignored and allowed to fall apart since 2009. Scenes of scared retirees dominate the news as politicians scramble for cover as these same retirees and reporters look for answers. The Jackson County Board of Supervisors claim ignorance as a "reason" for allowing the financial disaster to take place. However, the hospital system submitted an audit every year to the Jackson County Board of Supervisors. JJ obtained copies of the audits from 2009 to 2013 through a public records request. The auditors stated that Singing River had quit funding the pension but no one paid attention. The auditors did not do anyone any favors as they buried the details deep in the audits and did not make a serious effort to warn the Supervisors and Chancery Clerk. What emerges from reading the audits is a picture of a pension fund that was cut off and allowed to die by the Singing River health system administration.
The 2009 audit covers the years 2009 and 2008. 2008 was the last good year for funding the pension system. The audit states Singing River was required to contribute $2.65 million to the pension fund. Singing River did so and everything was fine. Net pension liability at the end of the year was $1.325 million (see footnote 8 on p.39 of audit posted below.). However, things began to go wrong for the pension system in 2009.
The auditor states Singing River was required to contribute $4.5 million to the pension fund. However, Singing River only contributed $2 million. The net pension liability more than doubled to $3.8 million. There was no mention of his shortfall or increase in liability in the opening statement of the audit. It was just buried back on page 39. The plan assumed a rate of return of 9% (PERS assumes a rate of 8%.). Thus, the system began to quake. Keep in mind these audits were submitted to the Jackson County Board of Supervisors and Chancery Clerk every year.
The 2010 shows the problems in the pension fund just grew worse. The plan required Singing River to contribute $4.4 million but the health care system provided no contributions. The net pension liability skyrocketed from $3.83 million to $8.24 million. The liability doubled each year for two straight years. However, KPMG provided no significant warning to this problem in the beginning of the audit. This stocking of coal was buried on page 41 in footnote 8.
KPMG finally provided a warning in the 2011 audit on page 7 in one sentence at the end of a paragraph:
In fiscal year 2011, the net pension liability was $15.4 million, compared to $8.2 million in fiscal year 2010 as a result of a downtown in investment returns and a change in actuarial assumptions.That statement is the only red flag raised by KPMG as it merely mentioned market returns and a change in the estimates. KPMG did not mention in that statement that Singing River had ceased making contributions to the pension fund. The snowball of debt just grew larger as it rolled down the Singing River hill towards a collision with the future of the retirees. The audit states on p.49 in footnote 9 that Singing River was supposed to contribute $7.28 million to the pension fund. The hospital system provided zero contributions in 2011. The net pension liability again doubled to $15.445 million. It is a reasonable question so ask if the law of squares applies to this particular liability. It is also important to note that Singing River entered into an information technology contract for approximately $14 million. It paid $3.76 million towards the contract in 2011.
The 2012 audit was merely a repeat of what was written above about the 2011 audit. KPMG didn't mention there was a problem with the pension fund but just said:
In fiscal year 2011, the net pension liability was $24.3 million, compared to $15.4 million in fiscal year 2011, as a result of a change in actuarial assumption.
There is no mention yet again that Singing River is not making contributions to the pension fund. One has to dig plow through the weeds all the way to footnote 9 on page 42 to discover that no contribution was made and that the liability went from $15.445 million to $24.263 million. The audit states Singing River should have made a contribution of $9 million but failed to do so- again. The assumed rate of return was more reasonable: 8.5%.
Singing River switched auditors in 2013 and retained Horne CPA group. However, Horne proved to be no better than KPMG in raising pension warnings as it didn't mention any pension problems in 2011 and only stated:
In fiscal year 2013, the net pension liability was $35.5 million.The pension weeds begin in footnote 11 on page 44 of the 2013 audit. Singing River again contributed nothing to the pension fund even though the audit states it was required to provide $11.434 million. Thus the records reveal a pension fund that was cut off from contributions for five years by hospital administrators and ignored by the supervisors. It is also important to note that the Chancery Clerk is the treasurer and auditor of the county. The Chancery Clerk apparently did not read these audits as they were submitted and if he did, he failed to warn the Supervisors of the impending disaster.
Kingfish note: It is remarkable that MBMC has taken no action against CEO Chris Anderson as Mr. Anderson over saw much of this implosion as CEO of Singing River until earlier this year.
Net pension liability:
2011 Singing River Health System audit
2012 Singing River Health System audit
2013 Singing River Health System audit