Once Bankrupt Orange County Borrows to Pay Bill Others Shirk
- Home of Disneyland was felled by derivative deals in 1994
- County borrows to pay pension bills early to save $17 million
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California’s Orange County, which went bankrupt in 1994 after losing derivative bets, is resorting to a less aggressive financial tactic to save money. And it’s for something many governments neglect: The annual bill to the employees’ pension fund.
The county Thursday sold $334 million in taxable pension-obligation bonds that mature in June 2017. Unlike typical pension debt, which reinvests borrowed money for decades in hope of turning a profit, the short-term securities will allow it to receive a discount by making its full retirement contribution up front.