The Associated Press
PORTLAND - Managers of the state Public Employees Retirement System want to redeploy much of the pension fund's reserves, a plan they say could save $111 million annually in the pension benefit costs paid by state and local governments.
After being taken to task by a Salem judge for not putting enough into reserves, the PERS board put nearly $1.9 billion in two previously empty reserve funds in 2003 and 2004. The goal was to stockpile those reserves, until the Oregon Supreme Court ruled on challenges to the Legislature's 2003 pension reforms, according to Paul Cleary, the PERS executive director.
But two recent court decisions have helped clarify, and narrow, the pension fund's legal and financial liabilities, he said.
Accordingly, the new plan would shift all but $100 million of that money, effectively reducing government payroll costs by 1.8 percent statewide, Cleary said.
The proposed change comes as state and local governments are paying record-high employee pension costs, with the prospect of still-higher benefits costs by this time next year.
Reaction to the proposal has been mixed: Some say it makes sense, while others say it leaves PERS financially vulnerable.
Greg Hartman, an attorney representing a broad coalition of public employee unions, backed the proposal.
"The only thing that is being accomplished by putting money into these reserves is artificially driving up rates," Hartman said. Moving the reserves into other funds will keep the dollars in the system, he said, but allows the money to be used to relieve employers.
But Jim Green, who represents the Oregon School Boards Association, worries that $100 million won't be enough in the contingency fund. By its very nature, a contingency is something that you don't expect, Green told The Statesman-Journal newspaper.
PERS Board member Brenda Rocklin said she might want to see more than $100 million left in the contingency reserve.
The PERS Board is expected to rule on the proposal by March.
Information from: Statesman Journal, http://www.statesmanjournal.com