The Associated Press
SALEM - The board of Oregon's public employee pension system is redistributing its reserves, which will reduce the payments due from state government, cities, counties and school districts.
The decision would save Oregon's public sector more than $100 million a year starting in 2007, said officials of the Public Employees Retirement System. The PERS board will meet March 31 to make the decision final. Late last month, it voted 3-2 in favor of the idea.
The majority on the PERS board and staff members said the system's finances have stabilized after a round of reforms in 2003 and two 2005 Oregon Supreme Court rulings on challenges to those reforms.
The board voted to shrink its all-purpose contingency reserve from $1.4 billion to $250 million and to empty its $450 million capital-preservation reserve.
Some money will be shifted into a third reserve as insurance in case PERS investments don't earn enough to pay the 8 percent annual increase guaranteed for veteran workers' pension accounts. That reserve will grow from $311 million to $968 million, said Dale Orr, a PERS finance manager.
The decision reflects renewed health in the pension system.
In 2003, the long-term shortfall between pension resources and obligations stood at $14.8 billion. PERS actuary Bill Hallmark said this week that reforms, a stronger stock market and the reserves decision will help to reduce the shortfall to $4.4 billion, with the potential for a further reduction as a result of last year's investment returns.
Despite the financial relief that the board decision brings, local government officials asked the PERS Board not to cut the reserves so deeply.
"I wish they would have left more in the contingency reserve, because they have six lawsuits pending against themselves," said Jim Green of the Oregon School Boards Association. "We know the litigation that's out there has the potential to cost in excess of $6 billion," said Green, speaking on behalf of schools, cities, counties and special-service districts.
Orr said the exact rates for employer contributions next year haven't been set, and they could be reduced further if the board adopts proposals to change the way it calculates benefit costs and to spread investment gains and losses across multiple years.
Information from: Statesman Journal, http://www.statesmanjournal.com