Paul Van Haute called it “devastating news,” as well a “mind blowing number.”
Van Haute, Baldwin County’s interim manager, informed county commissioners on Tuesday that the county government currently has an “unfunded pension liability” of $20.7 million. In other words, if every retired employee and current vested county employee were to claim their maximum benefits tomorrow, the county would be $20.7 million in the hole.
The pension plan currently is funded at 72.2 percent, according to Van Haute. If that percentage drops below 70 percent, the state of Georgia steps in. Auditors would require the county government budget a certain amount every year to replenish the fund. In other words, property taxes most likely would go up. Also, the county government’s credit rating would take a hit.
Current pensioners’ benefits are not in jeopardy. This is protected by state law.
In theory, if the percentage falls below 70 percent, Van Haute made reference to possible “annuities and a straight payout.” An annuity would mean that the county government turns its pension system over to a private insurance company, which would purchase the pension fund from the county government. An insurance company wouldn’t do this out of the goodness of its heart, however, and the price for the county government would be steep. “Straight payout,” meanwhile, refers to possible employee buyouts and negotiating with current county employees who are vested.
Van Haute warned that a downturn in the stock market and economy “could really cripple” the county government’s pension system.
“If the economy goes sideways, everything could change in the blink of an eye,” he said.