Morrow County debates capital‑improvement procedure; new pension valuation raises near‑term budget gap

Morrow County commissioners and staff discussed a draft capital‑improvement planning process and an actuarial valuation of the county’s legacy defined‑benefit pension plan during the same work session.

On the capital plan, County Administrator Matt Jensen and staff presented a multi‑phase proposal to inventory county assets, solicit input and produce a prioritized 5‑to‑10 year capital investment plan for board review. Commissioners debated whether to rely on an advisory committee that includes public and sector representatives or to keep initial prioritization as an internal staff process tied to the budget committee. Commissioners asked staff to reconcile two competing drafts and return with a hybrid proposal that would permit public input while ensuring timely inclusion in the upcoming budget cycle.

Why it matters: the county’s CIP process establishes priorities and timing for high‑cost capital projects (facilities, major equipment and infrastructure). Getting a shared process in place affects budget preparation and the timing of major acquisitions or projects.

Pension valuation and budget impact

County staff presented the actuarial valuation of the legacy defined‑benefit plan. The actuary calculated an annual contribution requirement that, when expressed as a percentage of participating plan members’ payroll, implied a rate near 65 percent for fiscal year 2026—higher than the 54.5 percent figure previously used in preliminary budget estimates. Staff said the difference would create roughly a $500,000 budgetary shortfall in the coming fiscal year if the budget is not adjusted.

County staff described two practical responses:

- A one‑time budget adjustment to cover the immediate increase in the actuarially determined contribution (staff suggested using a portion of a supplemental contribution budgeted in the general fund to avoid adding near‑term operating burden).

- A permanent methodological change that spreads legacy plan contribution costs across all county payroll rather than only the dwindling set of plan participants. Under the alternative allocation, the plan’s cost would be recorded as an employer overhead rate applied to all employees’ wages (staff estimated an alternative allocation rate of about 27.4 percent). That approach reduces the extreme per‑employee burden that can arise when the closed plan’s fixed liabilities are spread over a shrinking pool of participants.

Staff also recommended removing the line on pay stubs that currently prints the county’s calculated pension contribution for individual employees; staff argued the memo line can mislead employees because the pooled legacy plan funds benefits for all participants and retirees, not solely the individual worker.

Board discussion and next steps

Commissioners asked for time to reconcile competing CIP drafts and to identify a schedule that allows capital priorities to feed into the budget committee by January–March next year. Staff recommended a reconvened work session after staff and a commissioner liaison create a compromise CIP draft. On pensions, staff will prepare a budget adjustment to cover the FY2026 actuarially determined contribution and return with a formal proposal for a methodology change to be adopted as part of the next budget cycle.

Ending note

Commissioners agreed to continue work on a reconciled CIP proposal and to receive the formal pension budget adjustments and methodology recommendation before finalizing the 2026 budget.