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Approve an Appropriation Transfer Request (ATR) in the amount of $142,000 utilizing Fund Balance within the Pension Debt Service Fund to recognize an increase in interest expense on County pool (4/5 vote required)
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The Auditor Controller’s Office (ACO) recommends that the Board of Supervisors Approve an Appropriation Transfer Request (ATR) in the amount of $142,000 utilizing Fund Balance within the Pension Debt Service Fund to recognize an increase in interest expense on County pool (4/5 vote required).
SUMMARY/DISCUSSION:
In July 2019, the Pension Advisory Committee approved the lump-sum prepayment of the FY2019/20 Employer Unfunded Accrued Liability (UAL) to CalPERS which resulted in net savings to the County. The prepayment resulted in the Pension Debt Service fund carrying a negative cash balance longer than anticipated (through April or 85% of the fiscal year), thus, incurring higher interest expense from the County pool. Also, the increase in interest expense is due to higher interest yield in the County Treasury.
The ATR is necessary to recognize the increase in interest expense on County pool covered by the Fund Balance.
FINANCIAL IMPACT:
The Pension Debt Service Fund will exceed its current appropriations for interest expense on County pool by $142,000 but will be covered by the Fund Balance.
ALTERNATIVES:
The Board of Supervisors could choose not to approve the Appropriations Transfer Request; however, this alternative is not recommended as the interest expense on County pool will exceed appropriations.
OTHER AGENCY INVOLVEMENT:
The County Administrator has reviewed and recommends the approval of the ATR.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION