Agenda

Return

C. 86

To:	Board of Supervisors
From:	David Twa, County Administrator
Date:	November 7, 2017

Contra

Costa

County

Subject:

Contra Costa County Department of Child Support Services Interest Earnings - Pension Pre-Pay

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 11/07/2017

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:	Lisa Driscoll (925) 335-1023
cc:	Melinda Self, Director of CCC Department of Child Support Services

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: November 7, 2017
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

AUTHORIZE the Auditor-Controller to make pension prepayments for employees in the Contra Costa County Department of Child Support Services from the General Fund (100300) beginning July 1, 2018.

FISCAL IMPACT:

It is estimated that the general fund will lose approximately $15,000 per year by subsidizing DCSS's pension prepayment. The Contra Costa County community will positively benefit by saving approximately $100,000 per year. These funds will be used by DCSS to provide client services.

BACKGROUND:

The County has prepaid the employers’ share of pension costs for the Contra Costa County Department of Child Support Services (DCSS) since DCSS’s inception. The County benefits from pension prepay with a current savings of just under one percent (0.9696). DCSS has benefited by spending less on pension costs, which allows the department to spend more for services.

BACKGROUND: (CONT'D)

The County’s practice has been to charge the DCSS the full cost of the department’s share of pension prepay at the time of prepay and refund the charge each month when actual expenses are known. This is the same prepay mechanism used for all departments. This charge is made to the CCC Department of Child Support Services (Fund 113400).

Because the DCSS fund is charged the full prepay at the beginning of the year, and there are not sufficient monies available in the fund to cover the full cost, there is a negative interest calculation to reimburse the general fund the cost of use of money. Recently the California Department of Child Support Services (State) informed the DCSS that charging for cost of money would no longer be reimbursed. Although staff explained that the small charges associated with the negative interest calculation resulted in a large pension saving for department, the State reiterated that the charges were not appropriate. Staff reached out to other counties and confirmed that all of the other counties used general fund dollars for pension prepay.

Because the negative interest is very small (under $15,000 per year) and the saving is relatively large (over $100,000 per year), it is recommended that Contra Costa conform to the State norm and cover the interest costs from the general fund. Due to the timing of the State’s notification, the State agreed that we can make the change effective July 1, 2018.

CONSEQUENCE OF NEGATIVE ACTION:

The Contra Costa County community would lose approximately $100,000 per year in services.