The Associated Press
PORTLAND - Oregon schools and governments are confronting a big increase in pension costs because of last year's meltdown in the financial markets.
The Public Employees Retirement System fund lost 27 percent of its value last year. The losses mean that the funded status of the system - the percentage of liabilities covered by the system's assets - declined from 98 percent at the end of 2007 to 71 percent at the end of 2008.
To help put the system's funded status back in balance, state and local government agencies, school districts and municipalities will have to devote a higher percentage of their payroll rates to pension obligations.
Contribution rates differ by employer. But systemwide, payroll rates to fund pensions will jump from an average of 4.7 percent of payroll to 13.1 percent starting July 1, 2011, according to a new report from the pension system's actuary.
News of the forthcoming increase comes at a time when government budgets are absorbing recession-related cuts.
"Just reviewing the valuation report, I started quaking in my boots," said Michelle Morrison, business manager for the Yamhill Carlton School District.
Paul Cleary, executive director of PERS, told members of the Oregon Investment Council on Wednesday that he expected similar reactions around the state when PERS sends out new advisory rates to employers at the end of October.
PERS has a contribution rate collar that typically limits the change in employer rates from one period to the next to 3 percentage points. But it can exceed that increase if the system is less than 80 percent funded, as it is now.
Information from: The Oregonian, http://www.oregonlive.com