Oregon PERS unfunded liability swells to $21 billion
This week, Oregon’s Public Employee Retirement System Board received an earnings report on the status of the PERS fund investment. The report said Oregon’s PERS fund fell by 4 percent in 2015, a loss of nearly $3 billion — and a Central Oregon lawmaker said that means major reforms are more urgent than ever.
“The blow to PERS from the Moro court case left Oregon with an additional $5 billion in unfunded liability,” Sen. Tim Knopp, R-Bend, said Tuesday. “Now PERS is an additional $8 billion short of its target.”
In that ruling nearly a year ago, the state Supreme Court overturned the vast majority of the PERS reform cost-saving provisions enacted by the 2013 Legislature.
Last June, after that ruling, Knopp said, “The only long-term solution to eliminating crippling PERS liability is to establish a market-based fair retirement plan for new public employees that mirrors retirement plans found in the private sector.”
In Tuesday’s statement, Knopp said, “This miscalculation in the rate of return on PERS investments is another hit that leaves Oregon pension holders less secure. “If we don’t reform PERS now, Oregon won’t be able to honor its commitment to hardworking PERS recipients in the future without massive cuts to schools, senior programs and healthcare.”
The current unfunded PERS liability now exceeds $21 billion, up from $18 billion last year, he noted.
PERS Communications Director David Crossley said while the PERS fund earned just over 2 percent last year, it did not achieve the “assumed savings rate” of 7.75 percent, so the liability increased by about $3 billion.
He noted that PERS had positive earnings, but lost value because it pays out about $3.5 billion in benefits a year.
PERS rates for school districts and local governments will rise in July 2017, Knopp said, forcing school districts to lay off teachers, reduce school days, increase class sizes, and cut programs like art and PE. Local governments will also have to make cuts to public safety and other critical services.
“The best reason to reform PERS is to protect our valuable public employees that will otherwise lose their jobs to budget cuts because of the PERS crisis,” Knopp said. “It will take courage to do the right thing for all of Oregon, and it’s time for the legislature to do what it can to fix PERS.”
“Oregon’s PERS mess won’t just affect public employees,” the lawmaker added. “With unfunded liabilities growing exponentially, our kids and most vulnerable citizens will also suffer. If schools have to direct even more of their budget to pay for PERS, our classrooms and students will suffer and graduation rates will get worse. It’s time to get serious about reforming PERS before the hole gets too deep.”
