Costa Mesa Sanitary District pays off entire unfunded pension liability

The Costa Mesa Sanitary District says it has paid off its entire unfunded pension liability — a decision officials say will lead to substantial savings in the long run.

District board members voted unanimously June 22 to make a lump-sum payment of $320,417 — the amount of the district’s unfunded liability — to the California Public Employees’ Retirement System, or CalPERS.

Payment was made the next day, according to district General Manager Scott Carroll. The money came from “excess reserves,” Carroll said.

Paying off the unfunded liability now will save the district almost $400,000 in interest over the next 30 years, according to a news release Thursday.

With the move, “the Costa Mesa Sanitary District is one of the few public agencies in California that is debt-free for pension and infrastructure replacement,” board President Mike Scheafer said in a statement.

The sanitary district has 18 current employees and five who are receiving a pension, Carroll said Friday.

“As of today, we estimate at least 20 employees could receive a pension from the district in the future,” he said.

The district provides curbside trash collection and sewer services to about 116,700 ratepayers in Costa Mesa, parts of Newport Beach and unincorporated sections of Orange County.

Another agency serving roughly the same area — the Mesa Water District — recently announced plans to use a pension trust to help eliminate its nearly $6.7 million unfunded pension liability.

Mesa Water will open the trust in July with a $1-million contribution, then add $12 million in monthly increments over the following year for a total of $13 million by July 2018.

Money in the trust can be transferred to CalPERS at Mesa Water’s discretion.

luke.money@latimes.com

Twitter @LukeMMoney