At a Public Hearing in Florence on Wednesday, the Pinal County Board of Supervisors were presented with options to pay down the Countyâ€™s entire unfunded public safety and corrections employee pension obligations, which make up the County's largest unfunded and growing debt profile.
The County currently has nearly $75 million of unfunded liabilities for its Sheriff, Detention, and Dispatcher pensions managed by the Public Safety Personnel Retirement System (PSPRS). The Countyâ€™s public safety and corrections pension accounts were negatively impacted by since-replaced unsustainable pension increases and lawsuits in state courts.
The Board heard about cost-saving pension reforms from PSPRS Financial Consultant Clark Partridge, while representatives of Stifel Investment Services presented a plan to refinance the Countyâ€™s pension debt through pension obligation bonds. The bonds would be backed by future excise taxes, state-shared revenues, and vehicle licensing revenues. County manager Louis Andersen said in the hearing that the County plan to increase reserves to a higher amount and not include a contingency in the bond offering like some other jurisdictions have chosen to do.
Doing so would reduce ongoing annual payments and create a more level annual payment structure providing greater budget stability.
Currently, the unfunded pension liability is accruing at 7.3% each year, but with interest rates at an all-time low, Stifel representatives estimated that the County could issue bonds with interest rates below 3% that could save county taxpayers more than $58 million. Such a move would fully fund the pensions of county public safety and corrections officers, although the County would still be required to make ongoing but lower payments to the retirement system for future pension benefits of its public safety and corrections officers.
â€œThe structure of these pension plans, voted into place many years ago, has created significant financial burdens for us today,â€ said District 2 Supervisor Mike Goodman. â€œIt is important for our citizens to understand the long-term ramifications of these decisions, so we can all be better informed when voting. I am grateful that we are taking a proactive approach to address these issues, and feel the plan we have outlined will be beneficial for employees and hardworking county taxpayers.â€
The City of Flagstaff took a similar route in July, facing liabilities of $116 million, and were able to secure a rate of 2.69%, generating $76.3 million in expected present value savings. Likewise, the Gila County Board of Supervisors has initiated a similar plan to save money by paying down its public safety pension obligations at lower interest rates.
The Board will consider a resolution on the proposal at a meeting on October 16, 2020.