The Associated Press
SALEM Oregon governments may have to pay 40 percent more for employee pensions because a $9.72 billion shortfall exceeds earlier estimates, according to the actuary who reviews pensions.
Mark Johnson released his annual review of Public Employees Retirement System accounts, providing a snapshot of where the pension fund stood at the beginning of 2002. Next month he'll release PERS rate increases for each school district, city, county and the state, to go into effect next July.
The annual valuation is expected to provide fodder for high-level PERS reform talks that recently began between labor and government delegates. Negotiators hope to present a cost-cutting plan to the 2003 Legislature.
Any legislative fixes, combined with a recent court decision and a pending policy change by the PERS Board, could reduce some of the dramatic pension rate increases for state and local governments expected by mid-2003.
Nearly all the increase in PERS shortfall can be traced to the stock market slide of 2000 and 2001, Johnson said. He stressed that Oregon's plight is not unique.
"Every pension system in the country is experiencing almost the same situation," he said.
Employers have been bracing for the punishing PERS rate increases since getting a warning last spring.
"I think it probably adds a couple of million dollars a year in additional employer costs to Lane County without adding a single body or program or service," said Anthony Bieda, a county spokesman.
Lane County, which has relatively high PERS costs, now has a payroll of about $75 million, and must pay out about $10.3 million for PERS.
Johnson's calculations show that could nearly double over the next few years to $20 million, Bieda said.
A hoped-for legislative fix isn't the only change in the works that might reduce taxpayers costs for PERS.
A recent PERS Board decision called for revising the pension systems outdated life expectancy assumptions, although that decision won't be finalized until December or later. PERS failure to use realistic life expectancies means members' pension accounts aren't lasting long enough, and taxpayers have to make up the difference.
A recent court decision by Marion County Circuit Judge Paul Lipscomb also ordered the PERS board to boost its reserves retroactively, which means taking money from workers pension accounts. And he ordered PERS to revise its outdated mortality tables immediately. The decision also could serve to reduce PERS costs.