Riverside County Plans to Reduce Its Pension Deficit by Issuing About $345 Million in Bonds

The Riverside County Board of Supervisors voted Tuesday to issue hundreds of millions of dollars in bonds to make up for a massive shortfall in the county’s pension fund.

The fund faces a $460-million shortfall, meaning roughly 15% of future pension costs are unfunded.

The county needs to issue about $345 million in bonds to make up for the deficit, county officials said. The exact figure needed won’t be known until the supervisors cast a final vote in January. A pension-advisory committee recommended that a bond be issued to cover 75% of the shortfall.

“Riverside County, we have a problem,” said Supervisor Marion Ashley before the 5-0 vote. “We’ve got to move on this, and move now.”

Once the bonds are sold, the money raised will be sent to the state-run CalPERS pension program, which invests the money and also pays county pensioners. If the investments flourish, the county will be able to retire the bond debt early, Treasurer-Tax Collector Paul McDonnell said.

The county could save $150 million over a 20- to 30-year period, he said. The only risk is if the stock market falls for the next two decades, which is unlikely, he said.

Supervisors said that in addition to the bonds, the county must overhaul its pension system, possibly by reducing benefits to future hires or even abandoning the CalPERS pension program.

In the late 1990s and early 2000s, a strong stock market meant the county’s pensions were well-funded. During such times, counties can elect to postpone paying their annual contributions, and the county did this for two to three years, while it also increased pension benefits.

The county is paying $119 million into the pension fund this fiscal year, with nearly $25 million earmarked for the shortfall.