A decade after Orange County declared bankruptcy, it is once again confronting a threat to its finances: the swelling cost of its pension system.
County officials are looking to slice as much as $84 million in the next fiscal year -- and potentially cut services -- so they can use the money to shore up the pension fund.
No cuts have been finalized, but options include layoffs, a hiring freeze and postponing construction and repairs, the county's executive officer, Thomas G. Mauk, said in an interview this month.
"Obviously, services throughout the county have the potential to be affected, but we have not made those decisions yet," he said.
Every county department has been asked to trim expenses. For example, probation department officials said they may cut as many as 62 of the 1,015 beds in juvenile detention facilities. Other departments declined to comment or didn't return calls.
Some officials said the increased pension cost was only a fraction of the county's $4.94-billion budget and would have little effect.
"I don't think the public is going to see much in the way of degradation of services," said Bill Campbell, chairman of the Board of Supervisors. "I think we are going to be able to manage through this."
The proposed cuts are in response to a consultant's finding this year that the Orange County Employees' Retirement System was underfunded by $2.3 billion, about $1 billion more than previously realized.
As a result, beginning with the fiscal year that starts July 1, the county will have to pay an additional $84 million per year into the pension system, bringing its total contribution to about $210 million per year. The additional $84 million is nearly as much as the county spends each year to retire its bankruptcy debt.
The county is examining other ways to cut pension costs. It has asked the statewide California Public Employees' Retirement System for an estimate of the cost of taking over management of the pension fund. In addition, the county retirement board last month adopted changes that reduced the financial burden in the short term but could be costly in the long run.
For example, one change means the county will contribute less upfront, but that means losing out on the larger investment return the money could generate.
After the county filed bankruptcy 11 years ago, it curtailed services to repay creditors.
