FLORENCE — Pinal County will finance $87 million in public safety pension debt with a bond issue, officials have decided.
The Pinal County Board of Supervisors was surprised to hear Friday that since it held a public hearing on this matter Sept. 30, the county’s pension debt had grown by $10.8 million. Bond underwriter Mark Reader said actuaries working for the Arizona Public Safety Personnel Retirement System (PSPRS) reported updated figures last week.
These new liabilities will be added to the county’s three pension plans — for deputies, detention officers and dispatchers — over the next four years.
If the county does nothing, its annual pension payments will steadily increase in coming years, topping out at more than $19 million in 2038 before steeply falling. Instead, financing these obligations with a taxable bond issue at approximately 3% interest will result in level annual payments of $6.6 million for most of the next 18 years, Reader said.
County taxpayers will save $47.6 million in “present-value dollars.” Stated another way, there will be almost $67 million in savings over the next 22 years, Reader told the board.
Supervisor Todd House, R-Apache Junction, commented that refinancing at a lower rate “makes total sense,” and he was glad to see this opportunity brought before the board.
“It basically makes our job easier — going forward with budget processing, there’s no surprise,” House said.
“Overall, this is a really good move for the county to have the forethought do this up-front,” he added
House continued that he was a little concerned about the effect on the county’s bond rating, although it shouldn’t affect it that much. House said it also assures Pinal County’s public safety employees that their pensions are funded.
Vice Chairman Pete Rios, D-Dudleyville asked for an explanation in layman’s terms for the $10.8 million increase in debt since Sept. 30.
Omar Daghestani, managing director of Stifel Financial, replied that investment return for a pension fund varies year to year. The fund typically doesn’t present the entire loss or gain in one year, but “smooths it out” over five years. “The same is true with actuarial adjustments,” Daghestani said.