Inyo County press release
The Inyo County Board of Supervisors took proactive steps Tuesday to address major, unavoidable employee cost increases that will confront the County in coming years.
The Board voted to select a 20-year amortization plan offered by CalPERS, the State of California’s manager of its employee pension and health benefits, in order to pay down $59 million in unfunded accrued liability for both miscellaneous and safety employees’ retirement plans. The Board also decided to make a lump-sum payment on what is owed next Fiscal Year, rather than make monthly payments over the course of 12 months.
The decision to select the 20-year payment plan instead of the minimally required 30-year plan will save Inyo County taxpayers an estimated $14,688,059 in interest costs. The decision to make a lump sum payment instead of monthly payments will save the County $118,594 in next year’s budget.
Because of the way in which CalPERS structured the County’s payment options, the annual cost of the 20-year plan is only higher than the 30-year plan for the first five years; after five years, the 30-year plan would actually cost the County more each year.
Inyo County is one of hundreds of counties and cities throughout California that CalPERS will be billing for their estimated share of growing pension debt resulting from investment earnings falling short of forecasts. Estimates from January placed the unfunded liability at $139 billion.
Inyo County must begin paying off its unfunded liability in Fiscal Year 2017-2018 and, as a result of today’s Board action, will do so via a lump-sum payment of $4,496,890 in July.
Savings aside, these increased pension costs will add stress on the General Fund and mean Countywide belt-tightening, as well as the possibility of reductions to service and staffing levels over the short-term. The County hopes the short-term budget impacts over the next five years will pay dividends by saving the taxpayer money on interest payments over the long-term.
By taking action to select a fiscally prudent long-term payment plan Tuesday, the Board of Supervisors hopes to minimize negative impacts to the County and give departments sufficient time to plan their upcoming budgets accordingly.