County Executive Falk and Supervisor Eggert Announce Plan to Save $23 million in Borrowing for Wisconsin Retirement System Funds
For more information contact:Sharyn Wisniewski (608) 267-8823
FOR IMMEDIATE RELEASE 11/7/2002Issued By: County ExecutiveView only releases from County Executive
Dane County Executive Kathleen Falk and County Board Supervisor Don Eggert, today announced a plan to save the county over $23 million by re-financing a debt the county owes the Wisconsin Retirement System (WRS).
“We work hard in county government to find ways to save tax dollars,” said County Executive Falk. “Supervisor Don Eggert deserves a lot of credit for this plan, which is based on his suggestion. It is a big win for Dane County citizens.”
The Wisconsin Legislature and Governor have, over time, enacted into law retirement benefit improvements for local government, school district and state workers who belong to the Wisconsin Retirement System. If the new, higher benefits also apply to workers who have already retired, it creates a “prior service liability” on the part of the county, which then owes the state more money to pay the increased benefits to retired county workers.
Dane County’s “prior service liability” to the state was $19.9 million as of January 1 of this year. The state charges 8% interest on this balance, and each year collects from the county an amount equal to approximately 1.2% of the salaries of the county’s 2,000 workers, or about $1.15 million in 2001, to pay towards the balance.
The plan, proposed by Falk and Eggert, takes advantage of the current low interest rates on borrowing to pay off the entire $19.9 million balance in retirement benefit dollars it owes the state. While the state charges 8% annual interest on the balance, the county’s Department of Administration expects to bond for the dollars at a rate below 7%. This savings and reducing the repayment schedule from 31 to 23 years will save Dane County $23.2 million, according to Dane County Controller Charles Hicklin.
Falk said Supervisor Eggert has championed the idea since learning about the funding mechanism at a Wisconsin Counties Association conference this year.
“This sounded like a great idea. It has both long term and short term savings. It shortens the number of years that we pay back the funds, and lowers the annual payment at the same time,” said Eggert. The bonding is on track to be completed before the end of the year, saving the county $1.5 million in interest charges, because the state only charges interest if there is a balance owed the state on December 31.
The County Board’s Personnel and Finance Committee voted Wednesday (11/06/02) to support Resolution 173, which appoints an underwriter to handle the sale of the taxable bonds for the county. The full board votes Thursday (11/07/02) on the measure.
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