Fresno County supervisors approved an $8.4 million payment to the state Controller’s Office Tuesday for two years of costs the county owes for refinancing its pension obligation bonds.
Supervisors previously approved paying the federal government $6.2 million for costs for 2015 and 2016. The $8.4 million payment was approved without discussion. Additional amounts, estimated to be $23.3 million, are for the 2017, 2018 and 2019 budget years, documents show.
The issue dates to 2002, when Fresno County supervisors refinanced a pension bond for a lower interest rate to cut its short-term payments, but the deal extended the county’s obligation 10 years, adding to its ultimate cost.
The county didn’t expect that the state and federal governments, which were also on the hook for their share of the bill, about half the costs, might someday balk. The county’s total bill, the federal government says, is about $37.7 million.
Fresno County officials are challenging that, contending that federal officials are relying on a rule put in place after the county’s refinancing was done. By paying partially now, the county preserved its right to appeal and try to get the amount lowered. The case could ultimately land in federal court and the county is expected to hire outside counsel to fight on its behalf.
The amount the county may have to pay for disallowed costs for pension bond refinancing
The pension expenses are for county workers whose costs are covered partly by state and federal dollars – such as social service department workers who handle public assistance programs.
The Fresno County Employees Retirement Association has about 17,600 members. Association officials say retirees’ benefits are unaffected by the dispute surrounding the county’s refinanced bonds.