Image provided by: University of Oregon Libraries; Eugene, OR
About The Blue Mountain eagle. (John Day, Or.) 1972-current | View Entire Issue (Aug. 3, 2016)
A8 State Blue Mountain Eagle Wednesday, August 3, 2016 Report lays groundwork for higher PERS rates By Peter Wong Capital Bureau State and local govern- ments will soon know how much more each of them will have to pay into Oregon’s public pension fund in the next two-year budget cycle. Combined, they will have to come up with some $885 million more, due to a court decision overturning most of a pension benefi ts cut passed by the Legislature, plus tepid investment returns. Based on a report present- ed last Friday to the Public Employees Retirement Sys- tem Board, their total contri- butions to the fund will jump from $2 billion in the current cycle to $2.9 billion in 2017- 19. Board Chairman John Thomas warns there will be similar jumps in at least the next two budget cycles — through 2021-23 — be- cause government agencies would be unable to absorb the full increases in a single cycle. “There is only so much we can assess (employers),” Thomas says. “The rest is kicked down the road. That is the reason this is not going to go away for probably the next 20 years.” The pension cost increases are likely to eat into money available for other programs and for employee pay increas- es. The report says the pro- jected increases amount to $260 million for state agen- cies, $335 million for schools, and $290 million for all other government employers. However, the possible hit to the 2017-19 state budget is likely to be close to $500 mil- lion, if the state continues to pick up two-thirds of the oper- ating costs of school districts. Senate Republican Leader Ted Ferrioli of John Day re- newed his call for legislative action to curb future public pension costs. “Unsustainable and esca- lating PERS costs will not lead to reducing class sizes, adding school days, or mak- ing our communities safer,” he said in a statement released before the PERS Board heard the report. “We need fair and constitutional PERS solutions that reduce costs, ensure the long-term stability of the sys- tem to protect retirees, and allow for investments in edu- cation.” Individual rates due Based on the report pre- pared by Milliman, the sys- tem’s actuarial consultant, the board is scheduled Sept. 30 to approve specifi c contribution rates for each of the 925 gov- ernment employers, which will take effect when the new two-year cycle starts on July 1, 2017. The rates paid by each government will vary based on three factors: the number of workers hired before and after August 2003, when law- makers set less generous pen- sion benefi ts for new hires; their share of public safety employees, who qualify for greater benefi ts, and whether they have set aside money, known as “side accounts,” to cover part of their future pen- sion liabilities. School districts are likely to face higher-than-average rates, and most state and local governments less than the av- erage. State and local government employers received prelimi- nary rates several months ago, in an earlier report by Milli- man based on 2014 data. Friday’s report, which is based on an analysis of 2015 data, will lay the groundwork for the fi nal rates. “Most employers, partic- ularly in the state and local government retirement pool, do not pay the average,” says Milliman’s Scott Preppernau. The system’s average “collared” net rate will rise by roughly one-third, from 10.61 percent to 14.23 per- cent of payroll. That’s rough- ly the same cost as giving employees a 3.6 percent pay raise. Ninety-fi ve percent of state and local governments’ 200,000 employees are cov- ered by PERS. The rate is “collared,” be- cause government employers will face similar increases spread over the next two bud- get cycles, through 2023. The practice of collaring cushions the effects of a big increase over two or more budget cy- cles. Unfunded liability grows Oregon’s PERS obliga- tions had been funded at 86 percent at the end of 2013 — among the best in the na- tion — but two years later, it’s down to 71 percent. (With side accounts included, the numbers are 96 percent and 79 percent.) PERS’ unfunded actuarial liability over the next 20 years — the shortfall in funding fu- ture obligations — more than doubled. At the end of 2013, it had been $8.5 billion — ex- cluding the money in side ac- counts — but Milliman says it is now $21.8 billion as the end of 2015. A big chunk of the new liability ($5 billion) result- ed from a 2015 decision by the Oregon Supreme Court, which ruled that lawmakers cannot retroactively pare cost-of-living increases to 130,000 retirees based on benefi ts earned before 2013. That’s when the Legislature agreed to make those reduc- tions. The court decision did not affect 2015-17 contributions by government employers, whose rates were set by the PERS board in 2014, before the court ruling. Although post-August 2003 hires account for just un- der half of Oregon’s 200,000 public workers, greater pen- sion costs are incurred for those hired before then — including virtually all of the current 130,000 retirees. According to the Milli- man report, most of the new increase in unfunded liability ($2.6 billion) came from weak returns on PERS investment. The fund gained 2 percent in value last year, far short of the assumed rate of 7.5 per- cent used to set pensions. The PERS Board reduced the as- sumed rate from 7.75 percent last year. Also, retirees are living longer than forecast, account- ing for a $300 million in- creased gap. As of June 30, the PERS fund held investments valued at $68.9 billion, down from $70.4 billion a year ago, but up from $66.2 billion in Feb- ruary. Investment earnings ac- count for about 70 percent of what PERS pays out to retir- ees, and contributions from government employers sup- ply most of the rest. Although the stock market has improved in 2016, PERS Board Chairman Thomas says the unfunded liability could grow even more if actual in- vestment returns fall short of the assumed rate this year. “Assumptions for the fu- ture of capital markets are not as they were three or four years ago,” Thomas says. “So there could be the likelihood of an adjustment.” Poll: Brown, Pierce in dead heat in governor’s race By Paris Achen Capital Bureau Democrat Gov. Kate Brown and Republican Bud Pierce are nearly tied in the race for the state’s chief ex- ecutive, according to poll re- sults released last week. The poll by Clout Re- search, a right-leaning firm based in Columbus, Ohio, found Brown holds a lead of 43.4 percent over Pierce’s 42 percent. The margin of error is 3.71 percentage points. “What we are seeing in the race for governor is the same as the race for pres- ident,” said Fritz Wenzel, pollster and owner of Clout Research. “Voters across the country are dissatisfied with the status quo.” Pierce’s surge in support comes mostly from indepen- dent voters. About 41 per- cent of independent respon- dents favor Pierce, while 29 percent support Brown, ac- cording to the poll. “The tsunami in Oregon right now is where indepen- dents are heavily supporting Trump and Pierce,” Wenzel said. Pierce, a Salem oncolo- gist, said the results don’t surprise him. “I think voters like my message of being open and transparent with them,” A MAN WAKES UP in the morning after sleeping on... an advertised bed, in advertised pajamas. He will bathe in an ADVERTISED TUB, shave with an ADVERTISED RAZOR, have a breakfast of ADVERTISED JUICE, cereal and toast, toasted in an ADVERTISED TOASTER, put on ADVERTISED CLOTHES and glance at his ADVERTISED WATCH. He’ll ride to work in his ADVERTISED CAR, sit at an ADVERTISED DESK and write with an ADVERTISED PEN. Yet this person hesitates to advertise, saying that advertising doesn’t pay. Finally, when his non-advertised business is going under, HE’LL ADVERTISE IT FOR SALE. Then it’s too late. AND THEY SAY ADVERTISING DOESN’T WORK? DON’T MAKE THIS SAME MISTAKE Advertising is an investment, not an expense. Think about it! Blue Mountain Eagle Dr. Bud Pierce Gov. Kate Brown Pierce said. “Since the pri- mary election I’ve been out in many Oregon commu- nities spreading the word about what I would do to improve Oregon, if elected governor. Kate Brown has basically been an invisible candidate, not attending debates or answering tough questions. The governor has only been accessible to insiders and lobbyists. I’ve tried to make myself acces- sible to the people and the media.” Brown’s campaign was not immediately available to comment on the poll Wednesday. Brown and her campaign director are at- tending the Democratic Na- tional Convention in Phila- delphia this week. About 700 voters re- sponded to the telephone Great deals on men’s & women’s shirts, shorts & jeans! Su e m m more people supportive of the measure than opposed to it, but as people learn more about the measure and who would pay the new taxes, the support appears to be dwindling,” Wenzel said. “Anytime a measures falls below 40 percent support, it is in dangerous waters.” Our Oregon, the nonprof- it behind the corporate sales tax campaign, dismissed the poll as biased. “This is a poll conduct- ed by a consistently wrong, right leaning group,” said Katherine Driessen, Our Or- egon spokeswoman. “That’s clear based on their inaccu- rate results throughout the poll. Every single finding in this poll is without credibil- ity.” Nate Silver’s FiveThir- tyEight, which rates poll- sters on their accuracy, gave Clout a “C minus.” The publication stated that Clout calls races correctly about 33 percent of the time. r acebook FACEBOOK . COM /M Y E AGLE N EWS J UST IN TIME FOR F AIR & BACK TO SCHOOL ! S ATURDAY , A UG . 6, 9 AM -6 PM MyEagleNews.com Don’t get left behind, call today! Kim Kell 541-575-0710 poll, which was conducted July 9-13. The national polling company serves mostly Republican clients, but no one commissioned this poll, Wenzel said. The pollster said he conducted the poll to satisfy his own interest in Oregon politics. Wenzel is originally from southeast Portland. The poll also found that support for a corporate sales tax measure, known as Ini- tiative Petition 28 or Mea- sure 97, is eroding. About 39 percent of respondents favor the measure, com- pared with 44 percent in early May, Wenzel said. The nonpartisan Legis- lative Revenue Office has said the 2.5 percent tax on certain corporate sales ex- ceeding $25 million would act as a consumption tax. The tax would cost the aver- age family in excess of $600 per year in higher prices. “There has always been 234 NW Front St., Prairie City • 541-820-3675 Debbie Ausmus 245 South Canyon Blvd. John Day, OR 97845 OPEN WED. & THUR. 9 am - 5 pm 541-575-1113 24 hrs/7 days wk debbie.ausmus@ countryfinancial.com Every other Monday in John Day at Blue Mountain Hospital 170 Ford Rd. • 541-575-1311 03124