By DAVID BATES
Of the News-Register
In January, as John Krawczyk surveyed the wreckage that Oregon's Public Employment Retirement System was creating in Yamhill County, the county's chief administrative officer took some consolation in the fact that, bad as things were, it could be worse.
On Monday, it got worse. A lot worse.
On the final afternoon of the 2002-2003 fiscal year, the county received a letter from the consultant that calculates PERS employer contribution rates for participating governments.
According to these latest calculations, Yamhill County is one of only three counties, joining Crook and Wallowa on Oregon's dry side, for whom PERS rates will actually increase this year.
The rate hike comes despite recent legislative reforms intended to lower them, and it is a big one here.
Late last year, PERS told the county to plan on paying a rate of 11.8 percent of payroll. With the county also picking up its employee's 6 percent rate, that would have put the county's total PERS rate at 17.8 percent of payroll.
In preparing this year's budget, Krawczyk told department heads to plan on 16.8 percent in PERS costs. He figured legislative reforms would probably lower the county rate. Any increase above projected levels could probably be covered by dipping into a self-insurance fund, officials said.
However, PERS notified the county Monday, the very last day of the 2002-03 fiscal year, that the county's PERS rate for 2003-04 would actually be 14.2 percent. Adding the 6 percent pickup makes it a daunting 20.2 percent.
Not counting any savings from anticipated PERS reforms in Salem, county officials were expecting their PERS outlay to go up about $423,000 this year.
That they will - plus another $500,000, officials say.
In this case, the timing is particularly bad.
"We got this rate the day before it went into effect," Krawczyk said. "The normal lead time is six months."
State lawmakers approved a package of PERS reforms this spring intended to stem the retirement system's hemorrhaging costs, which were running into the billions of dollars - up to $16 billion by some calculations. Gov. Ted Kulongoski signed the bills in May.
For most cities, counties, school districts and other taxing entities, it appears to have worked.
According to a June 30 memo from PERS staffer David Crosley, the average employer contribution rate for 2003-04 is 10.6 percent, lowest since 1995. That doesn't include the employee contribution, which is generally paid partly or wholly by the employer.
But there are exceptions. It's not clear from the variables that Crosley describes in the memo how they affect specific jurisdictions, but three counties on the list show an increase - Yamhill, Wallowa and Crook. So do three local cities - Lafayette, Willamina and Yamhill.
The rate calculations are from PERS' actuary, Milliman USA.
Krawczyk said officials should have a better understanding of what happened, and why, after the county receives more detail from PERS next week.
For the county's 220 office staffers, accountants, clerks, road workers and others covered by the Yamhill County Employees Association, the news from PERS represents a major setback.
The YCEA's contract expired June 30.
Though the negotiating teams have reached tentative agreement on the economics of a one-year contract, it has not yet been ratified by either side. Final consideration was awaiting settlement of some language issues.
The devastating economic news will, inevitably, force renegotiation of economic terms. However, the two sides have pledged to work together constructively as they return to the bargaining table.
"It's been a pretty horrendous week," said YCEA President Sonja Olheiser, who works in the county's accounting office. "It was nothing that we expected.
"We're back to dealing with PERS. It's just changed the whole picture for us."