Nevada County adopts fund‑balance policy tweaks and a pension management plan framework; staff to return with dollar amounts at budget

The Nevada County Board of Supervisors on May 12 approved a rewritten fund balance reserve policy and endorsed a pension management plan framework intended to begin addressing the county’s unfunded pension liabilities.

During discussion on Item 27, Erin Mettler, deputy county executive officer and chief fiscal officer, explained that the fund balance policy was substantially rewritten after a decade and will be reviewed annually and included with the fiscal workshop. At the meeting the board approved the policy on a unanimous roll‑call vote.

Mettler then presented the pension management plan framework. She told supervisors the county’s combined CalPERS funded ratio was about 67% as of the July 2025 actuarial reports and that the county faces an unfunded actuarial liability in the hundreds of millions. The plan the board endorsed as a framework would: (1) prepay $22.7 million of the unfunded actuarial liability before the July 31 payment deadline; (2) transfer $6 million from current pension assignments and general fund balances into a Section 115 pension trust managed outside the county treasury; (3) apply a new fund‑balance policy that would allocate 25% of unencumbered general fund dollars at fiscal‑year close to the 115 trust; and (4) collect an additional 1% of active payroll during the year (budgeted as roughly $860,000) to be deposited to that trust. Mettler said the trust provides flexibility in timing and typically earns a higher return than the county’s investment pool.

“Prepaying the unfunded actuarial liability saves significant interest cost,” Mettler said, and described the plan as a package of tactical steps that staff will refine after CalPERS releases its next actuarial report in July. She emphasized that the board would see implementation details and dollar amounts during the usual budget adoption process.

Supervisors asked technical questions about how the 25% year‑end sweep would be calculated, whether the trust’s investment return outperforms the county pool (Mettler said the trust historically yields roughly 2 percentage points more), and how the 1% payroll capture would be administered to ensure non‑general funds contributed their share. Mettler explained the auditor‑controller closes the fiscal year and identifies unassigned general fund balances; those unencumbered dollars would then be moved into assignments and to the 115 trust where the board would later authorize specific applications.

The board also considered a civil grand jury report on unfunded pension liabilities. County staff said they disagreed with several of the jury’s numeric findings (citing differing source calculations) while agreeing with other findings and some recommendations. The board voted unanimously to approve the county’s formal response to the grand jury report.

The pension management plan framework was adopted by motion and unanimous roll‑call vote; supervisors were explicit that the budget hearing will include the actual dollar allocations and that staff will return with further analysis following the July CalPERS actuarial release.

Next steps: staff will present a public‑facing pension transparency webpage and return with specific discretionary payment proposals in early FY 2026‑27 budget hearings.