San Luis Obispo County supervisors have authorized an independent review of the county's pension funding plan, after Pension Trust officials said the fund is $200 million short of the money it needs to pay future pensions for county employees.

The Board of Supervisors on Nov. 20 unanimously approved hiring a Seattle-based firm to audit the pension fund. The firm, Milliman, Inc., will focus on the past five years--"looking at what happened and why," according to a staff report.

The audit will "provide information on the past and current pension situation, as well as recommendations for prudent future actions," the report states.

The $200-million shortfall in the county's pension fund comes on top of another shortfall identified in 2002. At that time, the Pension Trust Board asked for an additional $137 million to pay for the pension benefits already promised to current and future retirees. The county subsequently issued a $137-million public obligation bond, and pays the debt service on the bond with no contribution from county employees.

Milliman will also study possible changes to the county's pension plan to save money, including designing new pension benefits for new employees.

"It would include a projection of the possible cost savings expected over time, as any new tier of benefits with lower costs will take many years before the savings are recognized," according to the scope of services.

The $67,750 contract with Milliman may increase to $165,750 if additional work is needed. An initial report on the issue is expected in February or March of 2008.