The Greenlee County Board of Supervisors unanimously voted last week to take steps to pay down a large chunk of its unfunded pension liability when it comes to its police officers and judges.
The Public Safety Personnel Retirement System pays current and future pension benefits to police officers, firefighters, judges, lawmakers and correctional officers.
However, the system has been struggling for years due to economic downturns and poor asset management.
Because of the issues, public entities have been forced to contribute more in tax dollars to fund retirements. PSPRS currently has less than half the money it needs to pay those who pay into it. An audit conducted last year showed such poor record keeping on the part of the trust that state and local governments may have overpaid or underpaid their mandatory pensions payments for two years.
As of June 30, 2020, Greenlee County’s unfunded pension liability stood at more than $3.4 million, said Derek Rapier, county administrator.
Last week, Rapier asked the board to consider paying off a significant portion of the unfunded liability using $900,000 from the county’s capital projects fund, $574,263 from the general fund that came from CARES ACT funds and just under $26,000 from vacancy savings in the sheriff’s office budget.
He said the best analogy is a home mortgage. By paying off a large portion of your mortgage early, the more you’ll save in interest.
The board unanimously approved Rapier’s recommendation.
“The board’s actions will allow Greenlee County to save a lot of money toward taking care of our officers’ pensions and it will give us more budget capacity in years to come,” Rapier said.
Although no impact will be seen in the next two years, the county will start seeing an impact by 2024, he said.
“If we’re able to make our pay-offs, by 2025 we’ll just be paying the normal costs, we won’t be paying for the unfunded liability or the interest on the unfunded liability,” Rapier said.
In April, the Graham County Board of Supervisors voted unanimously on Monday to take $2 million out of the general fund this year to start paying off a $4.1 million dollar funding gap in the county’s pension plan for public safety employees. The board also agreed to take out $600,000 every year for four years to help accomplish the same goal.
Flagstaff’s city government borrowed money against some of their city facilities, including their city hall, to finance their $112 million dollar debt in June of 2020.
In other board action, the supervisors tentatively agreed to provide a 6% pay increase to the county’s 180 employees for a total annual cost of $395,000, Rapier said. The additional expense is expected to be covered by better-than-expected sales tax revenues.
They also agreed to set aside $150,000 to hire a jail consultant to help them determine if the jail should be remodeled or if a new facility needs to be built.