Advisory PERS school district rates show 1.5 percentage point increase
The latest Public Employees Retirement System analysis predicts a modest rate increase for 2021-23, despite terrible 2018 investment returns. If booming 2019 returns continue at their current pace, rates could even fall, according to the state’s actuary, Milliman.
School districts’ average PERS net rate is calculated to increase 1.5 percentage points for 2021-23, according to a Milliman report posted Friday that factors in savings from Senate Bill 1049. The system-wide net rate increased 3.7 percentage points.
School districts’ average advisory collared net rate, which includes side account offsets and structural limits on rate changes, would be 19.8%. School districts’ total contribution would go up $210 million to $1.52 billion.
The PERS Board will meet Friday, Oct. 4, to discuss the advisory rates, as well as implementation of SB 1049 and participation in an employee side account incentive fund.
SB 1049, among its many PERS changes, lowered rates by lengthening the payback time for some PERS debt. It also redirected some employee benefit contributions to paying down the debt. The Milliman report said that if that redirect is used as an offset for employers, rates and total contributions could be further reduced.
Oregon is still on the upward slope of a projected rise in benefit payments. That slope will keep climbing for another two decades, as people in the plan’s most lucrative top two tiers retire. SB 1049 flattens that slope a bit.
Milliman built the advisory rates using 2018 investment returns, which were a meager 0.5% for the year. The system’s funded status, not counting side accounts, fell by 4 percentage points, to 69%.
PERS’ unfunded actuarial liability, its debt, rose nearly $5 billion to $27 billion. Including side accounts drops the total liability to $21.8 billion.
The official rates, which will be released next summer, will be based on the 2019 valuation. So far this year, the fund is up 8.9%, beating the 7.2% assumed rate. Milliman’s report cautioned that if 2019 can’t maintain that pace, rate increases could be larger.
Employee-specific advisory rates will be released in December.
- Jake Arnold, OSBA
jarnold@osba.org