Finance and accounting hounds would have loved this meeting
If you're a nerd for numbers, then you belonged at the Lebanon County Courthouse on Wednesday afternoon.
There, the county commissioners listened to seven men dissect just about every number they could to put the county’s crumbling pension plan back on solid footing, thanks to an upcoming windfall.
It was accountants, consultants, advisers and just general money men laying it all out on the table, explaining where the county needs to go to fix the pension fund.
In fact, it’s easier just to call the group “The Money Men” from here on in. In the group:
• Jay Wenger, from Susquehanna Group Advisors Inc. in Harrisburg, who has been advising the county on certain aspects of the sale of Cedar Haven Nursing Home.
• Brian Bradley, of RBC Capital Markets, who currently is not under contract with the county but is a specialist in municipal bond buying.
• Mark Zettlemoyer of Lancaster-based accounting firm Reinsel Kuntz Lesher LLC.
• Hank Stiehl of the Hay Group Inc., who works on the county’s pension plan.
The windfall is from the $25.5 million sale of Cedar Haven Nursing Home, which has been under county control and operation since its opening. But with rising health care and operating costs, the county sold the nursing home in June to Complete HealthCare Resources-Eastern Inc. of Dresher.
The deal is expected to close Sept. 30. When it does, the county has a stack of bills that could have many future destinations, and the commissioners want to make sure they’re being used correctly. Hence, The Money Men.
The county has made it clear that a heavy portion of the $25.5 million will fix the county’s ailing pension fund. The fund sits at about $112 million right now and is only about 72 percent funded.
Healthy pension funds are at about 80 percent or more, according to The Money Men. The county has said that’s where it wants to be.
To get there, it needs to make the annual payment of about $4.6 million that was missed this year, and then make up for more than 10 years of annual under or ignored funding.
That will take an additional payment of about $13 million, The Money Men said. That’s $17.6 million total, or just over 68 percent of the entire sale price.
That will get the county to its stated goal of between 80 to 85 percent funded.
The goal of this is to fix the pension issue and increase Lebanon County’s municipal bond rating. In March, Standard & Poor’s Rating Services downgraded the county’s long-term rating and the underlying rating three notches, from an A-minus to a triple B-minus.
Each downgrade results in higher interest rates should the county need to float a new bond and higher rates for bond insurance. Over the term of the bonds, the increases could cost millions of dollars. In the downgrade report, the rating agency specifically cited the underfunded pension fund and the stranglehold the costly Cedar Haven operation held on the county.
By selling Cedar Haven, the county eliminated the current and future costs the facility carried with it and can fix the pension issues with this one-time infusion of cash.
Chief Clerk/County Administrator Jamie Wolgemuth had said he would be on the phone with Standard & Poor’s the day the deal closed to get consideration for a better rating, but The Monday Men advised against it. Wenger said while the sale alleviates a number of pertinent issues, the county still would be missing one thing — a plan. The Money Men said wait until the end of the year to contact Standard & Poor’s so the county can show an approved budget.
“They’re going to want to see that this isn’t going to happen again,” Wenger said. “You need to show them a map with some degree of certainty.”
An upgrade of the rating isn’t a slam-dunk just because many of the problems have been taken care of, Bradley said.
“What I’ve found is that ratings agencies are quick to downgrade but not quick to reinstate,” he said. “You want to show them as much as you can.”
The Money Men have spoken, and the Lebanon County Board of Commissioners has listened. Now to digest it and to make a responsible plan for one of the biggest decisions this group of commissioners will make in their time in office.