|No happy ending for state retirement plan|
|April 02, 2011 05:00 am|
Once upon a time, the state of Oregon created a pension system for its state employees. There has been no happily ever after. It’s been a fairy tale that state investments would always go up and always cover the costs.
The board of the state’s Public Employees Retirement System got a financial update Monday. The tale has taken another dark turn and the Legislature needs to act.
School districts, city and county governments and the state can expect to be paying more for PERS, again. That increase comes as tax revenues have shrunk. And that increase is going to be on top of PERS increases scheduled to kick in July 1. The July increase will double PERS costs across much of the state.
Here’s one example of what that July increase is doing to schools: About 65 percent of the employees in Bend schools in PERS fall into the older Tier 1 and Tier 2 retirement plans. In 2009-11, the district’s employer contribution was about 2 percent of employee payroll. In 2011-13, the district will pay about 11 percent. Other contributions for PERS employees are going to jump from about 7 percent to nearly 10 percent. The bottom line is about $5.8 million more for PERS for 2011-13. Millions more for PERS means less money to hire other teachers and staff and buy equipment.
It’s not clear yet how much more PERS rates will go up in 2013-15. The employer contribution rates won’t be set until closer to 2013. It depends on how the market treats the $56.7 billion in PERS investments. As we know, the market doesn’t always cooperate.
The financial turmoil in 2008 gutted returns. Even the July increases that the PERS board has already passed along are not enough to catch up. PERS rate increases are limited so they don’t jump too much at once.
To keep PERS from snatching an ever-increasing percentage of state dollars, Oregon must make changes. One proposal in the Legislature would reduce what’s called the 6 percent pickup. The state “picks up” the 6 percent employee’s contribution to PERS in many cases. That’s different than the employer contribution. Oregon might save more than $360 million if the pickup was eliminated. That’s not going to solve Oregon’s budget or PERS woes. It’s a start.
Legislators are already hearing from state employees. They need to hear from you.
– Wescom News Service (Bend Bulletin)