PERS bill contributed to minimal rate increase estimate

The Public Employees Retirement System board met Oct. 4 and adopted preliminary rates projected by the state actuary, Milliman.

Despite terrible investment returns in 2018, the report projected only a modest rate increase for the 2021-23 biennium. If the booming pace of 2019 returns continues, rates could even fall.

The actuary report also showed how Senate Bill 1049 would lower rates.

School districts’ average PERS net rate is calculated to increase 1.5 percentage points for 2021-23. The systemwide net rate would increase 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.

SB 1049 lowered rates primarily by extending 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.

Employee-specific advisory rates will be released in December.

Milliman built the advisory rates using 2018 investment returns, which were a meager 0.5%. The system’s funded status, not counting side accounts, fell by 4 percentage points, to 69%. If side accounts are included, the funded status rises to 75%.

The official rates, which will be released next summer, will be based on a valuation that includes 2019 fiscal returns. So far this year, the fund is up 8.9%, beating the 7.2% assumed rate.

- Richard Donovan
Legislative Services specialist