Orange County’s pension fund down by $5 billion, says Supervisor Moorlach
By Jack Dean
Yesterday, Orange County Supervisor John Moorlach sent out his regular e-mail update and commented on the supportive editorial that appeared in the Long Beach Press-Telegram. As always, it contained interesting new information:
The Long Beach Press-Telegram weighs in this morning with their editorial on our efforts to rescind the granting of unfunded retroactive pension benefits.
Our pension system, in round numbers, was to be at $11 billion at the beginning of last year. It was at $8 billion and our annual contribution was $306 million. After last year’s tough market declines, the system is at $6 billion. To pay this new $2 billion obligation off, like a mortgage, over 30 years at 7.75%, will cost the County an additional $170 million per year.
A defined benefit pension plan can have a huge appetite. Especially when you change the formulas mid-stream and make them retroactive. This is why defined benefit pension plans are being closed down in the private sector and being replaced with defined contribution plans.
We may have an economic recovery in a year or two, but any upswing in tax revenues will be going first toward pension plan contributions, as it is a debt. We will not be out of the woods for quite some time.
Our efforts to right a wrong should at least provide some taxpayer relief.
One can only hope.
Jack Dean is president of FACT and also editor and publisher of PensionTsunami.com.