Riverside County has sold $719 million in bonds to pay down about 20% of a $3.5 billion pension debt that’s projected to grow and be a constant cloud over an already shaky budget.
By selling the bonds, which took place May 6, the county expects to save $230.8 million over 18 years. That’s the difference between the 3.53% interest rate on the bonds and the 7% cost of what the county would have paid to the California Public Employees’ Retirement System, or CalPERS.
The county relies on CalPERS to oversee pension benefits for current and former employees. Pension debt has long been a concern for county officials, who worry the amount needed to fund pension obligations will eat up money for public services.
In January, a pension review committee put the county’s unfunded pension liability at $3.5 billion. The county’s total budget is about $6 billion. The county’s annual CalPERS payments are projected to grow through the early 2030s as CalPERS lowers its expectations for its Wall Street investments and actuarial changes show retirees are living longer.
To save money, officials suggested the Board of Supervisors authorize the sale of up to $727 million in bonds. A similar bond sale in 2004 saved the county $138 million in interest, officials said.
The board voted 3-2 March 17 to authorize the sale. Supervisor Chuck Washington compared the transaction to refinancing and mortgage and said the money saved can be used to fund public services, but Supervisor Jeff Hewitt, who voted no along with Supervisor Kevin Jeffries, questioned the wisdom of selling bonds during a pandemic.
Another bond-related measure passed 4-1, with Hewitt opposed.
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June 06, 2020 at 03:52AM
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Riverside County sells $719 million in bonds to pay down pension debt - Press-Enterprise
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