The Grand Jury Just Issued a Second Warning Nevada County Cannot Ignore

The Grand Jury’s core finding is simple and deeply troubling. At the end of Fiscal Year 2015 Nevada County’s unfunded pension liability stood at approximately $117 million. By the end of Fiscal Year 2024 that figure had increased to approximately $223.6 million. In the Grand Jury’s own words: “Since 2015, the County’s unfunded liability amount has almost doubled.” At the same time, Nevada County’s annual interest payment to the California Public Employees’ Retirement System increased from approximately $9.5 million in 2015 to more than $22.7 million annually for Fiscal Year 2026. The Grand Jury’s response was blunt: “That is not progress.”

This report matters because it directly challenges years of official assurances that the County was responsibly managing long-term pension obligations. In response to an earlier Civil Grand Jury report issued in 2024, the Board of Supervisors stated that the County would produce a comprehensive pension reduction plan within one year. Yet the new report states: “As of October 2, 2025, there was no plan.”

Questionable Timing and Official Responses

Ironically, at the May 12 Board of Supervisors meeting, the County adopted several pension-related policy items immediately before formally responding to the Grand Jury report. County officials also pushed back against portions of the report, suggesting the Grand Jury oversimplified the complexity of pension funding and long-term actuarial forecasting. Yet the timing itself raises uncomfortable questions. If these policy changes and revisions were important enough to adopt now, why did they not occur earlier after repeated warnings dating back years?

The County’s response appeared designed to reassure the public that Nevada County is in a comparatively reasonable position relative to other California counties. Yet that presentation was difficult to reconcile with the County’s own prior public disclosures. Last October, County materials publicly acknowledged that Nevada County’s pension system was approximately 63% funded based on then-available actuarial data, implying roughly 37% of projected obligations lacked funding. That level placed Nevada County among the weaker-funded county pension positions in California based on publicly available comparisons at the time.

During this week’s Board discussions, however, County officials appeared to present more favorable comparative figures suggesting the County was closer to the middle of California counties rather than near the bottom. If actuarial assumptions, valuation dates, calculation methods, or funding measurements materially changed, the public deserves a clear explanation of precisely what changed and why. Instead, the discussion often seemed framed around best-case interpretations while simultaneously criticizing the Grand Jury for allegedly lacking sophistication regarding pension complexity.

But the Grand Jury never claimed pension systems were simple. In fact, the report repeatedly acknowledges the complexity of actuarial forecasting, investment markets, staffing levels, salary growth, and CalPERS assumptions. The Grand Jury’s criticism was not that pensions are easy to understand. Its criticism was that despite years of worsening liabilities and repeated warnings, County leadership failed to materially alter the long-term trajectory until renewed scrutiny forced the issue back into public view.

Leadership, Compensation Growth, and Spending Priorities

That timeline matters because the current leadership structure has now overseen a substantial portion of this worsening trend. Alison Lehman served as Assistant County Executive Officer beginning around 2012 and became Nevada County’s County Executive Officer in September 2018. The County Executive Officer is the highest-ranking administrative official in County government and oversees executive operations, budget coordination, staffing structures, and policy implementation. Supervisor Heidi Hall took office in January 2017 and has participated in the budget and compensation decisions that shaped the County’s current position.

During this same general period, compensation costs increased substantially, median pay rose sharply, and the County continued making staffing and salary decisions that directly affect long-term pension obligations. The Grand Jury specifically noted that employee growth, salary levels, and salary increases all directly contribute to pension liabilities. That point is critically important because pension obligations are not isolated from compensation policy. They are directly connected to it.

During the same period, the compensation increases were not limited to line staff. CEO Alison Lehman’s total compensation rose from approximately $250,000 in 2018 to nearly $500,000 annually today. Supervisor compensation followed a similar pattern. Heidi Hall’s total compensation increased from roughly $40,000 in 2017 to nearly $100,000 annually for county supervisors today. These increases matter because they show the compensation structure grew dramatically at the very top while the County’s unfunded pension liability was also growing.

The report also raises serious questions about County priorities. Between Fiscal Year 2019 and Fiscal Year 2026, Nevada County maintained General Fund balances ranging from approximately $34 million to nearly $48 million. Yet according to the Grand Jury, the County allocated zero dollars in voluntary additional payments toward reducing unfunded pension liabilities. The Grand Jury’s conclusion was unusually direct: “The Board’s passivity in the face of dramatic increases in the County’s unfunded pension liability is unacceptable.”

Long-Term Risks and the Need for Structural Change

This issue should concern not only taxpayers, but County employees themselves. Pension underfunding is often discussed politically as though it is simply a taxpayer problem. It is not. County employees rely on the long-term stability of the retirement system they have spent years paying into. When unfunded liabilities continue growing faster than they are materially reduced, that creates long-term pressure not only on future budgets, but on the sustainability of future retirement obligations themselves.

One reason these structural problems can remain politically muted for long periods of time is that immediate compensation understandably receives more attention than long-term actuarial risk. Nevada County’s compensation and benefit costs now consume a very large share of the County’s total budget, and total compensation costs for many positions have increased substantially over the past decade, with some classifications seeing compensation levels roughly double over time. But strong current compensation does not eliminate long-term pension risk. In some ways, it can be obscured when compensations are two to six times the median household income in Nevada County of approximately $80,000 annually.

The Nevada County Civil Grand Jury specifically identified employee growth, salary levels, and salary increases as direct drivers of pension liabilities. That means pension sustainability is not merely a future taxpayer issue. It is directly connected to the long-term financial stability of the County workforce itself.

If liabilities continue expanding faster than they are reduced, future Boards of Supervisors may eventually face increasingly difficult choices involving staffing levels, future compensation growth, service reductions, taxes, or pension restructuring pressures. Those realities should concern everyone connected to the County government, including employees who depend on the system remaining stable decades into the future.

Last year, before this newest Grand Jury report was issued, I publicly urged the Board of Supervisors to consider declaring a fiscal emergency, not because Nevada County was in immediate collapse, but because structural warning signs were already becoming increasingly clear. A fiscal emergency declaration is not simply symbolic language. In practice, such declarations can allow governments to implement temporary stabilization measures designed to slow the growth of long-term obligations while preserving essential public services.

Depending on the jurisdiction, labor agreements, and legal constraints, fiscal emergency actions may include hiring freezes, spending freezes, delaying nonessential expansion, reviewing compensation growth, reducing discretionary expenditures, postponing new long-term obligations, and prioritizing reserve protection and debt reduction.

The Nevada County Civil Grand Jury report now makes clear that the County’s unfunded pension liabilities continued worsening while salary growth and long-term obligations continued expanding. The Grand Jury also specifically recommends the County consider staff reductions, limiting salary and pension increases, and caps on executive salaries. Those recommendations would have seemed politically unrealistic only a few years ago. Now they are appearing in a formal Civil Grand Jury report because the structural pressures have become increasingly difficult to ignore.

County officials may argue that the newly adopted pension policies demonstrate the County is now taking the issue seriously. Perhaps they do. But it is also reasonable for the public to conclude that those policies were accelerated precisely because the Grand Jury once again forced the issue into public view. Had the April 2026 report not been issued, it is difficult to know whether these measures would have emerged with the same urgency.

That is why framing the newly adopted policies as evidence the County had already been adequately managing the problem feels incomplete at best and misleading at worst. The sequence matters. The Grand Jury report came first. The political pressure followed. Then the policies appeared immediately before the County’s formal response defending its prior approach.

The most frustrating part is that earlier action would almost certainly have been easier than whatever measures may eventually become necessary if the current trajectory continues.

This is not an argument against public employees. County employees deserve stability and retirement security. Nor is this a claim that Nevada County is on the verge of immediate bankruptcy. In fact, the Grand Jury explicitly states that bankruptcy is not imminent. But the report does make something else very clear: the current trajectory is not sustainable.

The County continues relying primarily on minimum required payments while long-term liabilities continue growing. At the same time, future obligations expand through compensation increases and additional years of employee service. Eventually, those obligations must be absorbed through some combination of higher taxes, reduced services, staffing reductions, smaller future compensation increases, or additional debt.

The most important issue is not whether Nevada County can balance this year’s budget on paper. It can. The real issue is whether Nevada County is reducing long-term structural risk or continuing to add to it.

The Nevada County Civil Grand Jury has now issued its second major warning. The public should pay attention.