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About The nugget. (Sisters, Or.) 1994-current | View Entire Issue (Aug. 8, 2018)
Wednesday, August 8, 2018 The Nugget Newspaper, Sisters, Oregon Higher uension costs loom By Ted Sickenger The Oregonian/OregonLive PORTLAND (AP) — The actuaries for Oregon’s pub- lic pension have released the most up-to-date valuation of the retirement system, a good news/bad news report that will play out statewide in 2019, when the system resets con- tribution rates for government employers. The actuary, Milliman Inc., recalculates those required contributions every two years based on the value of the sys- tem’s assets, liabilities and the resulting funding gap that employers must backfill. The changes are largely depen- dent on the system’s invest- ment returns in the two-year interim period, as well as any new economic assumptions adopted by the PERS Board, such as changes in mortality rates or its assumed invest- ment returns in the future. The good news first: Last year’s 15.4 percent return on the Public Employees Retirement System’s invest- ment portfolio was more than double the system’s assumed return. That windfall, among other adjustments, helped trim the system’s unfunded liability by $3 billion, from $25.3 bil- lion in 2016 to $22.3 billion in 2017. The system now has 73 cents in assets for every $1 in liabilities, compared with 69 cents at the end of 2016, according to Milliman. The stock market bounty will shave the pension cost increases projected to kick in July 1, 2019, and could do the same in 2021 if investment returns live up to the system’s assumption — 7.2 percent a year — in 2018 and 2019. Now the bad news: The coming rate increases are still huge. According to the actu- ary, the 900-plus agencies that participate in PERS — includ- ing schools, cities, counties and special districts — can expect to make nearly $4 bil- lion in pension contributions during the 2019-2021 bud- get cycle. That’s about 7 per- cent less than the actuary had been projecting based on last year’s interim valuation. But it will still be a 38 percent, or $1.1 billion, increase in con- tributions from the current biennium. Here’s how that breaks out: Schools will see their contri- butions go up by $375 million over Oregon’s two-year bud- get cycle; state agencies will kick in an extra $305 million; and all other employers will pay out an additional $410 million. “Even with a good run of strong returns, it’s a very challenging funding situa- tion,” said Matt Larrabee, the Milliman actuary. Finally, Milliman’s analy- sis suggests that participat- ing employers can expect to see more cost increases in 2021, albeit lower ones than previously forecast. PERS employers are still digesting cost increases tied to the 2008 global financial crisis, and contribution rates are expected to take one more jump in 2021 Rare Opening in Sisters before leveling off at record levels and remaining there for a couple decades. The actual increases in 2021 will depend on PERS’ investment performance in 2018 and 2019. The system is assuming they will grow by about 15 percent over that two-year period. Six months into it, as of June 30, they were up 1.75 percent. Meanwhile, the Oregon Business Council and employer groups represent- ing cities, counties and school boards submitted a joint letter in which they expressed deep concern with the system’s record-high contribution rates. They asked Milliman to under- take a more granular review of the system and examine poten- tial savings from a variety of benefit changes that might be proposed for the 2019 legisla- tive session. They include: • Extending a federal sal- ary cap used in benefit calcu- lations (now $275,000) to Tier 1 employees. • Establishing a 6 per- cent pension fund contribu- tion from Tier 1 and Tier 2 employees and a 3 percent contribution from Tier 3, or OPSRP employees. • Transition Tier 1 and 2 employees to lower OPSRP benefits. • Establishing an early retirement program that allows eligible Tier 1 and Tier 2 employees to retire any time after age 50 and start collect- ing a benefit while continuing to work for a PERS-covered employer for five years. 19 STUNTMAN: Planning a trip to Valencia, Spain Continued from page 7 they not only participated, but excelled. That’s my pri- mary goal.” The training to become recortadoras will take place in Valencia, Spain, this winter, where Ramsey and his associates will intro- duce their fledgling team of recortadoras to fighting cows, and begin the long pro- cess of training them to leap over the horns of dangerous fighting bulls. 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