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Public Agencies Retirement Service representative Matt Spooner repeated a comment he made to county supervisors a month ago, that a Section 115 Trust with his firm was a “savings account on steroids.”

But contrary to a statement one supervisor made at the Jan. 14 meeting, Spooner, County Administrative Officer Neal Lopez and District 5 representative Dean Wilson said Tuesday that Del Norte couldn’t use dollars it places in that trust for anything other than meeting its pension and other post-employment benefit obligations.

Yet, supervisors Valery Starkey and Darrin Short still sought guidance on how the trust funds could be used. Starkey said that any proposal to access money in the Section 115 Trust should come before the Board of Supervisors and be approved with a 4/5ths vote. That way the public could weigh in, she said.

Short asked Spooner if there was any statute or regulation that governs the access of those dollars, using a recent weather-related cost as an example.

“The roof flew off the veterans building the other day,” he said. “That’s an emergency. Do we get to use those pension funds for a new roof? Can you point us to where those limitations are, statutorily, where we can use them only for retirement-related emergencies?”

Short and the other county supervisors unanimously approved the transfer of assets used to meet the county’s other post-employment benefit obligations from CalPERS’ California Employers’ Retiree Benefit Trust (CERBT) to PARS’ Post-Employment Benefits Trust. This action included authorizing Lopez to close the county’s CERBT account following the transfer.

Though he and Spooner reiterated that funds in a Section 115 Trust could only go toward meeting the county’s pension and other employment retirement benefits, or OPEB, Lopez told that he could revise the county’s administrative manual to stipulate that any proposal to use assets from the Section 115 Trust go before the Board for a 4/5ths vote. He said he would bring that revision to the Board for approval.

County supervisors on Jan. 14 backed the proposal to establish a Section 115 Trust with PARS after Spooner said Del Norte wasn’t abandoning the state’s pension program.

On Tuesday, Spooner reiterated that statement, saying that establishing a Section 115 Trust “is another way of setting money aside for a future obligation.” His presentation covered PARS’ Pension Rate Stabilization program and its OPEB pre-funding program, though the Board’s decision Tuesday applied only to its OPEB obligation.

According to Lopez, OPEB can be any retirement benefit that doesn’t include pensions such as dental, vision and health care. Del Norte’s OPEB assets in CalPERS’ CERBT amount to about $1.2 million as of Nov. 30, he told Redwood Voice Community News.

On the pension side, the Board of Supervisors approved seed money for another Section 115 Trust as part of the 2024-25 budget, Lopez said. Del Norte has about $2.4 million available through a return-of-funds that came from an excess in insurance premiums the county paid.

Lopez said he wasn’t sure if the entire $2.4 million would be transferred into the Section 115 Trust. The county’s Proactive Financial Management Technical Advisory Committee will select an investment strategy related to the pension trust at a Feb. 21 meeting, he said.

During his presentation, Spooner said PARS works with dozens of government agencies in Northern California. Those agencies include Crescent City, Humboldt, Siskiyou and Trinity counties and the North Coast Air Quality Management District.

According to Spooner, Del Norte County has a $73 million outstanding liability on the OPEB side of things. The county is just starting to set aside money for those OPEB obligations, he said, and is funded at about 1.4 percent through the CalPERS trust. Moving from CERBT to PARS would be a “great next step,” Spooner said, saying that his firm’s OPEB pre-funding program outperforms CalPERS program.

“We’re here to also encourage the county to think about moving [its assets] over to our OPEB pre-funding program so you can grow your money faster and help you get to a higher funding ratio with the OPEB pre-funding approach.”

On the pension side of things, Del Norte County has a $66.6 million unfunded liability with the county contributing $7.9 million during the 2024-25 fiscal year. According to Spooner, that amount is set to increase by about 28 percent to just over $10 million by fiscal year 2030-31.

“You have to ask yourself the question, ‘Is our budget going to be rising by over 28 percent several years from now?’” He said. “The answer is ‘unlikely.’ So the question becomes, ‘Where will the money come from?’ The answer is from the 115 Trust.”

Part of Spooner’s pitch to the Board was to talk up his firm’s relationship with US Bank as its trustee and PFM Asset Management as the investment professional Del Norte would have access to if it switches to PARS.

He also emphasized the Section 115 Trust’s liquidity. Del Norte County has local control over the money in that trust, he said, and it could be accessed at any point in time.

Before proposing that the Board of Supervisors approve with a 4/5ths vote any proposal to tap into the Section 115 Trust, Starkey pointed out that many in the community are concerned that the CAO could withdraw those dollars.

“Perhaps we need to put more protection mechanisms in place,” she said.

One of those with concerns was Del Norte Employees Association Chapter President Norma Williams, who said some union members were confused. They were uncertain as to whether the county planned to withdraw from the CalPERS pension plan completely — a move Spooner and Lopez said repeatedly wasn’t in the cards.

Williams also brought up a comment District 3 Supervisor Chris Howard made on Jan. 14 about Del Norte being able to tap into the Section 115 Trust in the event of a natural disaster and “we have a need for some of that income that we squirreled away to pay down that unfunded liability.”

“That’s what state emergency funds are for,” Williams said. “Not our retirement. That is also another concern — whether you’re going to use either the pension or OPEB [trusts] to be your little piggybank that you could use at your own discretion.”

Wilson said any expenses using those trust fund dollars must be made through the Auditor-Controller’s office and would be subject to an audit.

“As sheriff, we had many trust accounts,” he said, adding there were checks and balances. “You had to make sure that whatever your money was being spent on … if you go outside [that] when the audit comes, you may end up having to pay that money back. Unfortunately, that’s happened several times in the county where we ended up having to pay that money back.”