Jim Pehrson, county finance director, is asking the county to give no more than $5 million to the pension funds drawn by retired county employees. The amount would be paid at the end of the fiscal year, Sept. 30, if the money is available.
Commissioners will consider the expense at 9 a.m. today at 100 Cherokee St., Marietta, during their regular meeting.
Cobb already must pay $32 million toward the pension fund as its annual contribution, but Pehrson says that extra cash will help pad the account in case any unexpected market changes cause the fund to plummet.
“We should make that ($32 million) contribution without any problem, without this $5 million,” Pehrson said.
Pension funds are invested and are vulnerable to changes in the economy. The fund was doing well in the late 1990s but suffered during the Great Recession, said Gary Bottoms, a volunteer member of the board of trustees that oversees the Cobb County Government Employees Pension Plan.
“We’ve had a period of subpar returns in the economy,” Bottoms said. “It’s not due to anything that Cobb County has done. It’s just investment returns.”
Funds have been below projections for the past few years, but Bottoms says the fund is healthy compared to the issues other local governments face.
There won’t be any immediate effect if the county opts not to spend the extra money. The request is a long-term approach, Bottoms said, to bringing the fund back to its pre-recession levels.
“The extra money will be helpful,” Bottoms said. “It will help hold down the employees’ required contribution and help hold down some of the county’s required contributions.”
An economy still recovering has made planning for the unexpected difficult, but Pehrson says Cobb has consistently been able to fund its pensions because it is paid for by current employees.
“The bottom line is every employee contributes and the county has a match component,” Pehrson said.
Another $1 million is needed, Pehrson says, to maintain the county’s retiree health care plan.
This is the first year Cobb has given retired employees a monthly stipend to offset their Medicare premiums.
“The county is now giving a stipend to the employee for them to go out through Extend Health and basically purchase their own Medicare insurance,” Pehrson said. “They can shop for what Medicare program is best for them.”
Bob Ott, who represents southeast Cobb on the Board of Commissioners, says it’s not a small amount of money but he believes Pehrson’s reasoning is sound.
“We decreased liability in one place and increased it in another,” Ott said.
Pehrson says the system has saved the county about $3 million.
Still, it needs $1 million to offset the reduction in payments made directly on behalf of retirees.
County pensions took the spotlight during part of the campaign for Cobb chairman last year. Candidate Mike Boyce accused Chairman Tim Lee of mismanaging the fund saying the county’s pension and health care funds have more than $500 million in unfunded liabilities.