County pays down pension liability, saves nearly $30 million for taxpayers

Oct. 20--The Coconino County Board of Supervisors approved a one-time payment of $10 million to pension liabilities that will result in a $30 million savings to county taxpayers over the next 20 years.

The $10 million comes from the county's Capital Facilities Fund and will go into the Public Safety Personnel Retirement System to benefit county public safety employees upon retirement.

The board also approved the transfer of $5.5 million from the county Jail District Fund to go into the Arizona Correction Officer's Retirement Plan.

According to a Coconino County release, over the past several decades, pensions have been impacted by lower-than-expected investment returns, unanticipated impacts from benefit increases, and factors such as life expectancy and population growth. The impacts have created a pensions system that is substantially underfunded.

But recent court cases have reinforced the Arizona Constitution language that protects changes to pension benefits, and encourages entities like Coconino County to ensure all of their pensions are funded. In order to fully fund the pensions at what contracts state, pension liability is created, which generates a debt that will be paid. If not paid in the immediate, the debt will be paid in the future at a higher cost to taxpayers.

Coconino County adopted a financial planning process in 2007 to address financial risks and opportunities as investments for the county over a long period. The decision to move internal funds into these pension plans is in line with with the county's financial planning goals.

"We've chosen to fund these pension obligations without taking taxpayer money to fund them," said Art Babbott, Board of Supervisors chair. "The funds are all internal, and this decision was based on fiscal strategic planning."

The action the board took stems from a couple perspectives, Babbott said.

"First and foremost is that when public safety personnel became employees of the county, we made a commitment to them, and that commitment was that the county has the privilege and the obligation to provide them with a pension," he said.

While every department in the county has a pension fund, the only department this decision relates to is public safety, which Babbott said was the most drastically underfunded.

Each pension system is different, he said, and there are normally both public and private obligations.

"I can't compare this pool to other employee pools," he said. "But this one went from 25 percent funded to 71 percent funded, and that reality saves significant long-term, ongoing money for the taxpayer."

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