'A cost-saving opportunity': $14M YWA loan to help Yuba County with CalPERS payment

Robert Summa, Appeal-Democrat, Marysville, Calif.
·4 min read

Jun. 22—In what was termed as a "significant savings" to the people and taxpayers of Yuba County, the Yuba Water Agency Board of Directors on Tuesday approved a loan that will help the county with its pension obligations.

With no impact to its general fund, Yuba Water will provide a $14.4 million low-interest loan to pre-pay the county's annual California Public Employees' Retirement System (CalPERS) payment.

"CalPERS changed their billing method for member agencies in FY 2017-18. Previously, agencies were billed a total percentage of payroll which included normal employer costs and unfunded liability," Yuba Water said in a staff report. "The new method separates the normal employer costs and unfunded liability by charging member agencies a percentage of payroll for normal employer costs and a flat lump sum for the unfunded liability portion."

CalPERS offered member agencies an option to either pay the unfunded liability portion on a monthly basis, at an approximate interest rate of 7%, or pay a lump sum payment at the beginning of the year, Yuba Water said.

Now, with the Yuba Water loan, Yuba County will only pay up to about 1-1.5% in interest, saving the county more than $315,000 over the next year.

Over the last five fiscal years, Yuba Water has loaned money to the county from its reserve fund an amount "equal to the county's annual lump sum PERS Unfunded Accrued Liability (UAL) payment" and the "county in turn has made monthly payments to the agency along with the actual pooled interest rate," Yuba Water said.

Yuba Water Agency Counsel Dick Shanahan said Tuesday that the agency had the authority to make the loans under "government code."

Those funds were available again this year for the county's lump sum payment for fiscal year 2022/23. Yuba Water said it currently has the available funds in reserves to avoid any negative financial impact on the agency.

"We will earn the same interest as if the funds remained in the Treasury," Yuba Water said.

Kurtis Crawford, Yuba Water's director of finance, presented the plan to the board of directors on Tuesday.

"What we're doing here is using a county pool rate to create a cost-saving opportunity," Crawford said.

Yuba Water Agency Board of Directors Chairman Gary Bradford, also a Yuba County District 4 Supervisor, made a point during Tuesday's meeting to clear up any public confusion that often occurs when these loans are approved.

"I know sometimes when this comes up, usually on an annual basis, I see a lot of public comments related to the county not being able to fund CalPERS and the water agency bailing out the county. I just wanted to point out that this is in fact a significant savings to taxpayers, not a cost, at no detriment to the water agency," Bradford said. "We are still paid the full interest that we would be receiving if the money was sitting in a county pool and yet the county is able to save (an) estimated $315,000 in interest charges by doing this. By simply paying the money up front in July rather than paying it on a monthly basis. I think it's an amazing opportunity for county taxpayers at no detriment to the agency. I think it's great that we're able to do this."

Other action

Also on Tuesday, the board approved a $3 million line of credit and a grant worth up to $2 million to the Three Rivers Levee Improvement Authority (TRLIA).

"The funds will help TRLIA close out several state and federal grant agreements related to its work to provide a 200-year level of flood protection for south Yuba County, which it recently achieved following years of local, state and federal efforts and more than $500 million in investments," Yuba Water said in a statement. "This level of protection is among the highest in the Central Valley and means there is a one in 200 chance in any given year of a flood occurring that is larger than the system is designed to handle."

The agency said it expected the $3 million line of credit to be repaid in full by TRLIA once it receives reimbursement from the state.

The Yuba Water Agency Board of Directors also on Tuesday granted the South Yuba River Citizens League $350,000 to support a habitat restoration project at Lower Long Bar on the lower Yuba River.

The agency said the project will "create nearly 43 acres of restored salmon habitat" for a total cost of about $3.2 million. The South Yuba River Citizens League needed the grant to start the Lower Long Bar Restoration Project. A budget shortfall had prevented that and the grant is expected to help facilitate the completion of the project this year.

"Considering the challenging conditions for fish throughout the state due to California's ongoing drought, this project couldn't have come at a better time," Jeff Mathews, Yuba Water's habitat enhancement project manager, said in a statement.