County finance officials are scrambling to figure out the fiscal impacts of a decision by the Orange County Employees Retirement System earlier this month to lower investment assumption rates.
On Tuesday, Board of Supervisors Chairman John Moorlach asked interim CEO Bob Franz to come return next week with a presentation on how the county’s annual payments to the retirement system could change.
Last week, the OCERS board voted 5-4 to lower their investment assumption rates from 7.75 percent to 7.25 percent on the county’s multibillion-dollar investment portfolio that funds retiree benefits.
The main issue facing county budget managers is the expectation that the county’s annual payments to the retirement system will increase. The question is: How much?
“We’re trying to get an estimate,” said Frank Kim, the county’s deputy CEO for budget matters. He said that county finance managers are communicating with the retirement system.
Kim noted that the retirement system usually sets rates for future county pension payments 18 months in advance, which largely dictates annual payments.
Because those rates have already been set for this fiscal year, last week’s decision won’t be felt until the fiscal 2015-2016 budget.