Douglas County seeks loan to pay off pension liabilityDouglas County is ending a longstanding pension liability with a loan that comes with a lower interest rate.
By: Shelley Nelson, Superior Telegram
Douglas County is ending a longstanding pension liability with a loan that comes with a lower interest rate.
The Douglas County Board on Thursday approved borrowing $6 million from the Wisconsin State Trust Fund to pay off the liability owed to the Wisconsin Retirement System.
The loan comes with a 3.75 percent interest rate, 3.5 percentage points lower than the 7.25 percent interest rate the county was paying to the retirement fund.
That’s a bit of savings, said County Administrator Andy Lisak.
Twenty years from now, the loan will be repaid.
Managing the liability the way the county has in recent years — paying the interest and a little bit more — the county would have still been facing a $2 million debt for pension in 20 years.
“It’s great,” said Supervisor Nick Baker, a longtime advocate of borrowing money at a lower interest rate to pay off the pension liability created when the Wisconsin Legislature improved retirement benefits for public employees, then calculated what each unit of government that utilizes the plan would owe to pay for those additional benefits.
While the board had originally planned to review the proposal next month, Supervisor Dan Corbin said the WRS advised the county handle the loan sooner to make sure the money is available by January.
The first month of the year is when interest accrues on the pension liability.
Douglas County Board Chairman Doug Finn thanked Baker and former Superviser Jack Sweeney for their persistence in addressing the issue sooner rather than later.
Baker said he was happy to see the county addressing the issue that dates back to 1989.
“I’m pleased to have this happen,” Baker said.
The first payment on the loan will be made in 2014.