Today, the Children and Families Commission unanimously voted to pay off its unfunded pension liability – more formally referred to as Unfunded Actuarial Accrued Liability (UAAL) – in the defined pension plan administered by the Orange County Employees Retirement System (OCERS).
By taking this action the Commission will save more than $1.2 million immediately in interest, and a minimum reduction of $160,000 to the annual budget in benefit costs.
The one-time payment of nearly $1.8 million for the UAAL will be funded from the Commission’s reserve held for long-term, sustainability commitments. The reserve balance, at more than $13 million, remains well above the required 25 percent of the annual budget that was established to ease the financial impact to programs as tobacco tax revenue declines.
In the era of declining tobacco tax revenue, a smart fiscal management decision like this will help the Commission continue its leadership in responding to and its funding of programs and policy best practices for young children’s health and development.
“It’s very uncommon for agencies to be in a position to accelerate payment for their unfunded pension liabilities, however we have worked tirelessly to remain fiscally sound making prudent long-term financial decisions,” said Sandra Barry, Chair of the Children and Families Commission. “This decision will lead to substantial savings in the long run. I’m extremely proud of the Commission’s approach to fiscal management. This was an opportunity to realize significant savings that can be used for important programs to support children’s health and school readiness.”