Palomar Borrows from Retirement Benefits to Balance Budget

At last Tuesday’s Governing Board Meeting, trustees approved the Tentative Budget for 2019 - 20. In order to mitigate the projected $6.8 million budget shortfall for the coming year, the administration recommended, and trustees voted to transfer $5 million from fund 69 to the general fund. Fund 69 is the retiree health care benefits account.

Here’s the relevant language from the Tentative Budget:

Based on current assumptions of revenues and expenses, the 2018 – 19 Budget forecasts a net reduction in our fund balance of approximately $2 million and the 2019 – 20 Tentative Budget forecasts an additional net reduction of $6.8 million. For 2019 – 20, it will be necessary to transfer $5 million from Fund 69 OPEB reserves to cover short-term needs and balance the operating budget as required by law. Because of the one-time nature of this transfer, the money transferred has to be made up in subsequent budgets if there is a year-end surplus.

Note: OPEB stands for Other Post-Employment Benefits and refers to benefits beyond pensions, primarily health benefits.

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