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Despite recent legislative reforms and positive market performance, the PERS system continues to be significantly underfunded. When the 2002 Valuation is released later this year, the unfunded actuarial liability is expected to again reach $7 to $8 billion. Every jurisdiction is likely to see its PERS payroll rate increase beginning July 1, 2005 to cover these shortfalls. Historically, School Districts and ESDs have been responsible for approximately 30% of the systemwide shortfall, or $3.2 billion.
A law passed in the 2001 Legislature allows employers to finance this liability through the lower-interest bond market. OSBA has sponsored two series of PERS bond programs in the past to help boards finance the debt, and are establishing the third series for sale. PERS is currently financing that liability at 8% interest annually. OSBA is sponsoring a Pooled Pension Bond program with its partners, Seattle-Northwest, Preston Gates and Ellis and Wells Fargo, to enable districts to collectively enter the bond market and obtain lower cost funds.
Although it is possible that OSBA may sponsor future financing rounds, the current interest rate environment makes the financing particularly attractive at this time. Whether future market conditions will be equally favorable is impossible to predict.
Program Structure Each participating District will issue a limited tax pension bond ("Bond") to finance its allocated share of the collective UAL for all school districts. The bonds will be pooled together by the Trustee, Wells Fargo Bank, and certificated as Obligations. The sale of the Obligations of all participating districts will be coordinated through the OSBA, as sponsor of the program. Districts will enter into an intercept agreement with the Department of Education for purposes of making debt service payments directly from State appropriations. Such funds will be diverted from the existing State appropriation. Each district will be responsible for the debt service on its bond only. No district will be responsible for any other district's obligations under this program.
Materials Provided:
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Description |
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Authorizing
Resolution. Districts interested in participating must have their Boards of Directors approve an authorizing resolution and send a copy of such resolution to Seattle-Northwest.
(Revised March 7, 2005) |
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Payoff
Letter.
This letter authorizes OSBA to request payoff amounts from PERS for each participating District.
(Revised March 7, 2005) |
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Estimated UAL Amortization and Payoff Worksheet.
Estimate of individual district unfunded actuarial liabilities prepared by Seattle Northwest Securities. These estimates are not the actual or official amounts and are intended for discussion purposes only. |
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Intergovernmental Agreement & Milliman Payment
Form. PERS requires each District that wishes to receive a payoff calculation to execute the attached Intergovernmental Agreement. |
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Disclosure
List. This is a list of information Seattle-Northwest will need to receive from each participating district in order to prepare a disclosure circular known as a Preliminary Official Statement for potential bond investors.
(Revised March 25, 2005) |
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Questions
& Answers. This is a piece that provides answers to commonly asked questions. |
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PowerPoint
Presentation. A Seattle-Northwest presentation utilized in regional meetings
Fall, 2003.
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PowerPoint
Presentation. Power Point presentation done by Seattle Northwest Securities and Preston, Gates, Ellis on February 23, 2005 at Willamette ESD..
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ECONorthwest Assessment.
Use of Pension Obligation Bonds to Offset PERS Unfunded Actuarial Liability: Economic
assessment of risks, costs and benefits of the OSBA-sponsored
plan. |
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Pauly
Rogers & Co. Info. A discussion of budget and accounting impact of the OSBA PERS bonding program. |
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Lump Sum Payment Considerations.
An Oregon PERS publication that describes factors that a district should consider in bonding their UAL.
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2001 UAL Projected Savings by District.
A Seattle Northwest calculation which estimates projected savings if PERS retirement bonds are sold, based upon the "original" 2001 valuation (prior to legislative reforms and recognition of 2002 losses). Updated analyses will be made available as soon as the 2002 valuation is released (expected late November - early December).
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2002 Community College UAL Projected Savings Report |
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2002 K-12, ESD Pool Projected Savings Report |
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2001 UAL Allocation by District.
A Seattle Northwest calculation which estimates the 2001 UAL by district, based upon "original 2001 valuation (prior to legislative reforms and recognition of 2002 losses. Updated analyses will be made available as soon as the 2002 valuation is released (expected late November - early December).
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Employer Valuations Actuary Report
(1.2Mb) PERS Employer Valuations Actuary Report as of 12/31/03. |
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Contact information:
Program Sponsor: Oregon School Boards Association
Angie
Peterman
Phone: (503) 588-2800 Fax: (503) 588-2813
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Underwriter: Seattle-Northwest Securities Corporation
Carol
Samuels, Katie Schwab and
Rob Shelley
Phone: (503) 275-8300 Fax: (503) 275-8320
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Bond Counsel:
Preston Gates Ellis LLP
Ann Sherman, Esq.
Phone: (503) 226-5720
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Trustee:
Wells Fargo Bank Northwest, National Association
Alice Garrett
Phone: 503-886-1367 Fax 503-886-3300
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We look forward to your participation. Please do not hesitate to call any of the
participants if you have questions. |
