A7 THE DAILY ASTORIAN • TUESDAY, JANUARY 22, 2019 Park: People care PERS: Better funded than many state systems about it and value it Continued from Page A1 the park. She has a condo in Long Beach, Washing- ton , and likes to walk the mellow Lewis and Clark River T rail that leads from the far end of the park at the Netul River Landing to the visitor center and the Fort Clatsop replica. She took advantage of sunny weather on Monday to walk the trail. Though she has not noticed any- thing negative in the park due to the shutdown, she feels terrible for federal employees who haven’t been paid . “What are they sup- posed to do now?” she asked. Still, Cain and others are impressed with the state of the park. To them, it is reassuring. It proves people using the park care about it and value it. Continued from Page A1 replica. They had hoped to sit in on a demonstra- tion or two and learn more about Lewis and Clark from interpretive rangers. Instead, they only ran into other visitors like them- selves who walked the trails, stood in front of the empty fort or paused to look at the dark windows of the visitor center. Graham is studying Lewis and Clark in school and they had planned the trip to Clatsop County — their fi rst vacation in two years — specifi cally to visit historic sites in the park. “This is the reason why we came down,” Pickard said. Pam Cain, of Seat- tle, is a frequent visitor to Quakes: ‘Slow slip directly triggers seismic slip’ in earthquakes, can be pre- cursors for quakes in the lay ers above, said co-au- thor John Nabelek. “We see slow, aseismic slips that occur at depth in the fault beneath the Moho and load the shallower part of fault,” he said in a state- ment. “We can see a rela- tionship between mantle slip and crust slip. The slip at depth most likely trig- gers the big earthquakes. The big ones are preceded by foreshocks associated with creep.” The Blanco fault is close enough to the Cas- cadia Subduction Zone, Nabelek said, that action on one could portend action on the other. “A slip on Blanco could actually trigger a Cascadia Subduction slip,” Nabelek said. “It would have to be a big one, but a big Blanco quake could trigger a sub- duction zone slip.” Continued from Page A1 fault, where one plate is sliding beneath another. Still, Kuna’s fi ndings were remarkable. “Slow slip directly trig- gers seismic slip — we can see that,” Kuna said in a statement. “The fi ndings are very interesting and may have some broader implications for under- standing how these kinds of faults and maybe other kinds of faults work.” To see how those faults work, Kuna and other researchers had to look beneath the Earth’s crust, which can vary from 40 miles thick on land to just 2 miles thick on undersea ridges. The boundary area between the crust and the next layer beneath it, the upper mantle, is called the Moho. Slips in the Moho, which don’t always result fund employees’ pension ben- efi ts. Over the same period, it paid out $4.7 billion in pen- sion benefi ts. That $3.3 billion mismatch is called negative operating cash fl ow. That’s not an inherently bad thing. Many mature pen- sion systems are cash fl ow negative. But when PERS writes its monthly checks to retirees, the money needs to come from somewhere. That somewhere is the pension trust fund, and the investment earnings it throws off. In recent years, those earnings have covered nearly three-quarters of the cost of PERS benefi ts. Across the public pension landscape, that makes Oregon’s system more dependent on invest- ment earnings than all but a handful of systems. But PERS’ benefi t pay- ments aren’t static. They are stair-stepping higher every year as more public employ- ees head for retirement. As it stands, about a third of active public employees and inac- tive members entitled to a future PERS benefi t are eli- gible to retire. Consequently, annual benefi t payments are projected to grow to more than $6 billion by 2024, more than $7 billion by 2029 and $8 billion by 2035. The immediate question facing state investment man- agers is whether and how to restructure the portfolio to meet those increasing cash needs. But longer term, the question is the same one fac- ing most retirees: How much cash can it afford to spend every year without dipping into the seed corn, and poten- tially exhausting the fund. Here’s another conun- drum: accomplishing the fi rst objective may undermine the second. But fi rst things fi rst. To date, the PERS portfolio has been structured to maximize returns for the pension fund. Over time, state investment managers have delivered, piling money into leveraged buyouts, real estate partner- ships and distressed debt funds that have generated the excess returns needed to fund PERS’ growing benefi t bill while keeping contributions from employers relatively reasonable. Right now, more than 40 percent of the PERS portfolio is spread across a variety of those “alternative investments.” Optimizing the portfolio for cash needs, says Adams, the Oregon Investment Coun- cil chair, is an entirely differ- ent objective. And by defi - nition, it may mean dialing down investments in the pri- vate partnerships that have traditionally delivered the extra juice on returns. That’s because those are illiquid investments, often locking up cash for 10 years or more. During the last reces- sion, many pension plans were forced to sell their illiq- uid alternative investments at deep discounts on secondary markets to raise cash. Ore- gon’s pension managers want to avoid that kind of “liquid- ity crunch.” — exactly the situation that Brown and other lawmakers are looking to avoid. In fact, Brown has pledged to sta- bilize schools’ contribution rates, though she hasn’t said how. Oregon politicians take comfort in the fact that PERS, unlike many public pension systems around the coun- try, is not in severe distress. It is better funded than many state systems, and its actu- arial assumptions are more conservative. But not all the compari- sons are favorable. Negative cash fl ow Last year, the Pew Char- itable Trusts issued an anal- ysis comparing cash fl ows in public pension systems across the country. It found that Oregon PERS’ negative cash fl ow as a percentage of its assets (before investment earnings) was higher than all but fi ve state pension sys- ‘THE LIQUIDITY AND SOLVENCY RISKS ARE SIGNIFICANT.’ Randall Pozdena | an economist with EcoNorthwest who previously served on the Oregon Investment Council “It’s defi nitely an issue for the council to consider,” said Treasurer Tobias Read. “I feel good about the fact that we’re taking this seriously. We have the capacity to be thought- ful about it. We don’t have to make drastic changes.” If the investment council does shift more of its invest- ments into liquid assets — and it will be looking hard at that question this year — it could put new pressure on the PERS Board this July to reduce its assumption about what those investments will earn. That’s currently 7.2 per- cent annually, an estimate many experts think is infl ated in today’s low interest rate environment. That’s not just an aca- demic exercise. Lowering the assumption would increase the present value of the sys- tem’s future benefi t pay- ments as well as its funding defi cit, requiring higher con- tributions from employers tems, at negative 5 percent in 2016. So, before invest- ment earnings, cash outlays consumed 5 percent of its assets. That number bounces around, but the cash fl ow has been on an increasingly nega- tive trend line. That makes Oregon’s plan more vulnerable to mar- ket volatility, magnifying the impact of poor invest- ment returns. In years of poor investment performance, like last year, the fund eats itself. And if the balance gets low enough, from a big market correction or a series of years with low returns, it might not throw off enough cash to backfi ll the annual cash fl ow defi cit and, potentially, could undermine the plan’s solvency. That’s not an issue yet. But as the Pew study noted, the gap between returns on safe investments and state pension plans’ assumed returns are the highest in decades. “Independent analy- ses suggest that states can assume returns of about 6.5 percent a year for at least the next 10 years; 5 percent or lower returns are a real possi- bility over the next 20 years,” the study said. Oregon’s Legislative Fis- cal Offi ce took its own look at the issue in December. Its analysis noted that Pew had actually underestimated the ratio of PERS negative cash fl ow to its assets in 2016. But it concluded that the system had little liquidity or solvency risk, because PERS is still assuming its investments will earn more money each year — 7.2 percent — than the drain on its assets: 5.2 percent of assets. Assets increased in 2017, for example, when the fund earned 15.3 percent and contributions went up. Randall Pozdena, an econ- omist with EcoNorthwest, previously served on the Ore- gon Investment Council. He was sounding the alarm about the structural defi cit created in the pension system in the run up to the 2000 dot.com bust. He’s unconvinced by the state analysis. “The assumption is that you’ll earn the assumed rate every year as new cash, and that will paper over the neg- ative cash fl ow,” he said. “That’s simplistic logic.” The reality, he says, is that this is the longest bull mar- ket in history. At this point, he says, it’s hard to see where the productivity growth will come from to sustain market returns. “The liquidity and sol- vency risks are signifi cant,” he said. Adams, the Oregon Investment Council chair, said the panel will begin that analysis with a review of its private equity portfolio later this month, then expand to consider liquidity needs, expected returns and the vol- atility of returns. “If benefi ts remain the same, and employer contri- butions plus earnings can- not cover the cash needs of the plan, (we) as responsi- ble investors have to face that reality and manage the assets accordingly,” she said. CL ASSIF IE D M ARK ETPL A CE P lace classified ad s o n lin e at w w w .d ailyasto rian .co m o r call 503-325-3211 107 Public Notices Occasionally other companies make telemarketing calls off classified ads. These companies are not affiliated with The Daily Astorian and customers are under no obligation to participate. If you would like to contact the attorney general or be put on the do not call list, here are the links to both of them Complaint form link: http://www.doj.state.or.us/ finfraud/ Call 503-325-3211 to place a classified ad from the comfort of your own home! 110 Announcements 181 Lost & Found 501 Open Houses FOUND AT PETER PAN MARKET CASH IN ENVELOPE The Sunset Empire Park & Recreation Board of Directors is seeking candidates to fill a vacancy. Interested candidates must reside in SEPRD boundaries. Please contact Executive Director Skyler Archibald at 503-738-3311 for more information. www.DailyAstorian.com COME IN PERSON TO IDENTIFY. 201 Antique & Classic Vehicles 27th Annual Astoria Automotive Swap Meet Vendors Wanted Clatsop Fairgrounds Saturday, March 9th 8am-2pm Contact Fred 503-440-9481 Dorothy 503-468-0006 210 Trucks Ap p -solu tely w e ha ve you covered 1998 Chevrolet Silverado 1500 Engine: 5.7L V8, 93.000 Original miles, 8 Cylinders, automatic. Go. 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To complain of discrimination call HUD at 1(800)669-9777. The toll free telephone number for the hearing impaired is 1(800)927-9275. Bundle Internet with your classified ad package for maximum reach! Call 503-325-3211 for more information. Based in Cannon Beach. Assist w/landscaping and maintenance. Looking for reliable hard worker. Some experience and ability to drive preferred. Starts at $15.00/ hour. Full-time through October or beyond. Contact: triciagatesbrown @iinet.com is hiring PT and FT Kennel Assistant. Cover letter and resume mandatory. Must be available weekends and holidays. Drop off in person or email contact@astoriaveterinarian.com. Jolly Roger Oysters Looking for Seed Bag Loaders. $16 p/hr 40hrs p/week 7am -3:30pm Contact office for questions. 360-665-4111 Apply in person. Terry’s Plumbing now hiring dispatcher, no experience necessary, will train the right person. Please send resume to mikeoien@hotmail.com or drop off at 415 Gateway Ave. SOCIAL ANXIETY? 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