Douglas County pension fund at about $458.5 million after 25-year review; funded ratio ~68%

Lori, chair of the Douglas County pension committee, told the Board of Commissioners during the April 29 meeting that the county’s pension assets totaled approximately $458,500,000 as of Dec. 31, 2024 and that the plan’s funded ratio stood at about 68% at the end of 2023. The presentation reviewed 25 years of plan history and recent steps taken to improve funding.

The nut of the presentation: the pension’s funded ratio declined after benefit increases in the late 1990s and early 2000s and the 2008 market downturn, and the county has since taken contribution and policy actions to improve the plan’s health. Lori said the pension distributed roughly $70,000,000 in benefits and expenses net of contributions over the 25-year period and earned about $406,000,000 in investment returns during the same span.

Lori outlined the chief drivers of funding levels: employer and employee contributions, investment returns, plan changes such as cost-of-living adjustments (COLAs) and the so-called rule of 75, and actuarial assumptions (including the plan’s current 7.5% assumed rate of return). She said the plan’s five-year rolling returns net of fees have averaged about 7.5% and the 10-year average is about 8%, while the 25-year average is 6.9%. An actuary provided additional historical data going back 41 years, showing a longer-run average nearer 8.5%.

Lori reviewed key historical steps: the rule of 75 and benefit increases implemented in the late 1990s, repeated COLAs, contribution rate increases for members and the county in the mid-2000s, and the removal of rule of 75 for new hires after June 30, 2011. She described the funded-ratio trajectory: near 100% through the 1980s and early 1990s, declines into the 60s by the mid-2000s with a low near 58% in February 2008, and a recovery into the high 60s by the end of 2023.

The chair noted an administrative consequence of falling below 80% funded: the pension committee chair must testify before the Nebraska Retirement Systems Committee annually to explain the shortfall and measures being taken. “I’m going to be like the mean junkyard dog when it comes to anybody that wants to try to touch that pension until we are at least to the 80%,” Lori said.

Commissioners asked about timing for actuarial reviews and more current investment results. Lori said the county’s actuary (HUB) will present annual actuarial results in May and that the pension committee will provide an updated snapshot on May 22. Commissioner Fahey asked when the rate-of-return assumption would be revisited; Lori said the committee reviews assumptions at least annually and monitors returns quarterly. Several commissioners noted market volatility since January and urged continued caution; Commissioner Morgan asked whether the $458.5 million pot and the current 68% funding rate meant the plan could reach full funding in a multi-decade timeframe under current assumptions.

The presentation and board discussion ended with the chair confirming that a full actuarial update for 2024 will be available at the May pension committee meeting and that staff would publish the presentation materials to the county website after the meeting.