Letter: East Contra Costa Fire Takes Positive Step to Manage Pension Costs

This Letter was issued by East Contra Costa Fire Protection District Board Member Joe Young regarding pension cost controls. The following is a summary he outlined of the actions taken. 

On Wednesday, August 26, The Contra Costa County Employees Retirement Association Pension Board approved ECCFPD’s request to depool from the ConFire Cost Group.

This will result in a significant reduction of pension costs for ECCFPD. The actuary has estimated the annual pension cost will drop by about $1.3 million. The unfunded liability will also go down by about $7 million.

When the County created individual employer groups to more fairly allocate pension costs to individual employers, as of 2002, some small employers were grouped with larger employers in order to reduce volatility in pension contributions. ECCFPD was pooled with Con Fire a much larger employer. Costs were then allocated between the pool members based on employee payroll.

When Director Joe Young, who has extensive past pension management experience, joined the ECCFPD Board he concluded that the cost allocation method was not accurately allocating the costs between the two pooled agencies. Over a period of three years involving two actuarial studies under Director Youngs guidance, ECCFPD requested depooling. After extensive discussion and investigation with the CCCERA Board and ConFire, ECCFPD’s request to Depool was approved on August 26.

The depooling will be done based on the December 31, 2019 year end actuarial assessment. The change in contribution requirement will be reflected in the FY 2021-2022 Budget.

In addition to this depooling effort, ECCFPD has also created a Pension and Rate Stabilization Trust Fund and is making annual contributions of $750,000 to this fund. The Fund balance is currently $1,500,000. The Fund will be used to reduce the impact on the operating budget of future major swings in economic cycles and will further reduce the District’s unfunded pension liability. The depooling coupled with the stabilization fund will strengthen the District’s Balance Sheet, reduce pension costs, and significantly improve the District’s pension cost management process.

Joe Young
ECCFPD Bord Member