Gov. Kate Brown appointed a task force in 2017 to look at options that could reduce the Public Employees Retirement System’s unfunded actuarial liability by $5 billion over five years. Some of those options are reflected in Senate Bill 1566, which would create an employer incentive fund for contributing to PERS side accounts.
The Legislature and governor are looking for politically viable options to reduce PERS rates, and SB 1566 cleared the Senate Workforce Committee on Thursday.
The PERS costs for public employers, including school districts, are expected to keep climbing for at least the next few budget cycles. Average PERS rates are nearly 15 percent of payroll. The average is expected to climb to more than 25 percent of payroll by the 2021-23 biennium.
SB 1566 would set up a complex strategy to offer matching funds to jurisdictions, including school districts, when they contribute to side accounts to pay down their PERS liability. The bill would put school districts ahead of other jurisdictions for additional financial support because the “school pool” has the largest unfunded PERS liability.
The bill would use various parts and pieces of multiple funding sources for capitalizing the school pool and the employer incentive fund, including:
Excess proceeds from debt collection.
Excess proceeds from capital gains taxes.
Excess proceeds from estate taxes.
Proceeds from lawsuit settlements not dedicated to a specific purpose.
Interest from the unclaimed property account within the Common School Fund.
Excess proceeds from the tax on marijuana, wine, cider and malt beverages.
The bill would also allow employers that contribute more than $10 million to a side account to choose a shorter amortization period.
Several employee unions support looking at other aspects of the PERS problem and not just focusing on cutting retirement benefits.
OSBA is engaging with the governor and legislators about how to fund the programs.
SB 1566, after being amended, has moved to the Joint Ways and Means Committee.