Editorial: Good move to bank uncertain PERS savings


Published Jul 19, 2013 at 05:00AM / Updated Nov 19, 2013 at 12:31AM

Oregon’s schools, cities, counties and other taxing districts will see more money in their budgets this year, at least for now, than they originally had expected, thanks to the Legislature’s permanent and one-time changes in the Public Employees Retirement System.

The savings come in two parts. One is clearly temporary, while the fate of others is in the hands of lawyers and the state Supreme Court.

Some savings from changes to PERS could be permanent if the court rules that the Legislature’s actions to reduce public employees’ retirement income is legal. If some or all of those changes fail to pass muster, however, they would disappear, cutting government savings in the process.

Lawmakers also “saved” money simply by reducing the rate at which agencies must put money into PERS for the next two years. Those rates were reduced by almost 2 percent, though that reduction disappears in 2015. Add a previously projected increase of 2.3 percent and a 0.3 percent increase to cover interest on the delayed payments, and agencies could see rates climb by about 4.5 percent.

Finally, there’s this. If the PERS governing board reduces its earnings expectation on investments, agencies will have to pick up the difference. Not counting savings lost if the court tosses out reforms, agencies could see rates rise by more than 7 percent in 2015.

Unfortunately for school districts, including Bend-La Pine Schools, their budgets have been cut so dramatically in recent years that most will be unable to bank savings for use down the road. Bend-La Pine used that money to restore a full school year for students, and it’s hard to argue against that.

Deschutes County commissioners have not decided what they’ll do with their savings.

Bend, meanwhile, will bank its savings at least until it knows if they’re real, says Sonia Andrews, the city’s finance director. If the high court rules against PERS changes, the money will be needed to fill the gap. Bend’s is a wise choice, one others should adopt if possible.