Politics & Government

Pension Obligation Bonds: What's Next?

The Legislative Council approved bonding $125 million to boost up the Pension Fund, but it won't happen overnight.

Although the Legislative Council has given the go-ahead for the town to bond up to $125 million to restore the depleted Pension Fund, it's not likely there will be any money to deposit for months.

Bond Counsel David Panico outlined for the counsel the process now that the approvals are in place.

First, the town has to submit a detailed plan to the state as to how the money will be generated and used, Panico said. The state in turn will form a committee to review the plan, and has 15 days to request more information from the town, he said.

"They're going to want to see a lot of different scenarios under different market conditions," he said.

The state will then have 45 days to respond to the town with its recommendations, Panico said. It doesn't have the power to approve the plan, he said, but the town will have to incorporate those recommendations in its final plan.

"They don't have approval rights, but their recommendations are important to the rating agencies," Panico said.

Once the town has the state's report, it can go out to bond the money, he said. That can take 60 to 90 days, he said, in order to get the best interest rate. All of the bonds will likely be sold at one time, he said.

The cash from the sale will be deposited into the Pension Fund and then used to buy stocks, Panico said. The decision where to invest the money will be made by the town's investment consultants, he said.


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