The Associated Press
SALEM - The employer costs of pension benefits for public employees could rise nearly 80 percent starting July 1, according to state estimates.
Final numbers on projected employer costs are scheduled to be released Tuesday from the Public Employees Retirement System, when PERS board members will also consider ways to mitigate the increased costs.
But the increases are projected despite cost-cutting pension reforms enacted in 2003. And even those reforms are facing court challenges.
In December, a preliminary analysis showed that PERS employer rates might have to rise from the current 10.6 percent of worker salaries to 18.9 percent of salaries, on average.
That is a $1 billion increase in employer expenses for 2005-07. Employees covered under PERS include those who work for state, county and city government, and school system employees.
The sharp rise is because PERS delayed much of the impact from its disappointing investment returns of 2000-02 until now. The same policy delays accounting for most of PERS' solid 2003 earnings, and all of its stellar 2004 earnings, until future years.
The higher-than-expected PERS rate could add a $285 million burden for state government, schools and community colleges, putting more strain on the state budget that funds those services.
To soften the blow, the PERS board could recommend phasing in the expected price hikes during four or six years instead of two years, said PERS Executive Director Paul Cleary. Similar tactics are being done, or being explored, by six other public pension funds, he said.
But putting off a known debt appears to violate the "pay as you go" budgeting principle endorsed by Gov. Ted Kulongoski, said Jim Green, a lobbyist for the Oregon School Boards Association.