Saturday, May 25, 2013
Covering Dallas, Monmouth, Independence, Falls City and surrounding areas since 1868
Government entities around Polk County will all see an increase in costs due to a change in the 2013-15 biennium employer contribution rates to PERS and OPSRP, the state's public employee retirement plans.
October 16, 2012
POLK COUNTY -- The impact of rate increases for Oregon's Public Employees Retirement System (PERS) won't become a reality until July 2013.
But many government bodies are already considering the fallout from the 2013-15 biennium rate hike, which was approved by the PERS board Sept. 28.
PERS is the retirement system for most public workers in Oregon, including state, local government and school district employees. Created in 1945, it now serves 346,000 members, 113,000 of them retired.
Rates vary widely, but many local Polk County government entities will see a significant increase in employee costs as a result of the new rates.
PERS employers pay three separate rates: Tier 1 employees (those hired before 1996), Tier 2 employees (those hired between Jan. 1, 1996 and Aug. 28, 2003) and Oregon Public Service Retirement Plan (OPSRP) or Tier 3 employees (hired on or after Aug. 29, 2003). As OPSRP was created after PERS reforms in 2003, it typically has the lowest rates.
Central School District is projecting PERS costs to nearly double from $852,600 to an estimated $1.65 million in 2013-14.
Still, according to Central Superintendent Buzz Brazeau, the school district's 6.07 percent average rate increase is on the lower end than that of most school districts. The rate increase translates to a $753,000 impact to the budget.
"We are in a pretty average situation," he said. "We are probably in the lower third for school districts."
Dallas School District will have to negotiate an estimated $840,000 increase as a result of the rate hikes, Dallas Business Manager Tami Montague said.
PERS costs will grow from $3.125 million to nearly $4 million in the next fiscal year.
"That's going to be a pretty big bump in cost," she said at a recent school board meeting.
Polk County may have received "good news" when the rates were approved. County Administrator Greg Hansen was anticipating a 5 to 6 percent average increase. It wasn't that much -- more like between 3 and 4 percent, he said.
The bad news is that every percentage increase represents about $130,000. That means the new rates will cost the county about $400,000 or more in the next fiscal year's budget.
Hansen said despite the sizable hit, the county was fortunate when compared to other government bodies that saw more dramatic increases.
"We fared better than almost all other entities," he said.
On the other hand, the county has cut so many positions and services in recent years that there isn't much left to spare, Hansen noted, adding it will make finding $400,000 to cut that much harder.
Falls City Administrator Amber Mathiesen said the city costs will jump $10,500 per year with the rate increases. It seems like a small amount, but with a total budget of $1.747 million and only $257,331 in the general fund, it will likely result in cuts.
Based on the September payroll, the total cost of the PERS rate jump would be $224,189 for the city of Dallas; of that, $183,745 would be in the general fund. The remainder is spread across the street, sewer, water and fleet funds.
Public safety will be hit the hardest.
"That's where the people are in the organization, so logically they would have the most cost," said Jon Nelson, interim city manager.
Dallas' current PERS expenses are $960,123. The additional $224,189 represents more than a 20 percent increase.
Most entities are in a wait-and-see mode for other economic indicators -- such as the state revenue forecast -- to offer a clearer picture of overall funds before deciding plans to deal with PERS rate increases.
Much remains to be seen, but with most government costs associated with personnel, the likely target for reductions will be employees.
Brazeau said Central's board has about $200,000 in reserves designated to offset PERS increases, but it's up to the board to decide how it will be used.
"I don't think it is a time to panic or make any statements about what will be cut," Brazeau said. "We will work with the community, our unions and our principals and come up with a plan that will work for the entire district."
He said Central has joined other districts to lobby state lawmakers.
"We and other districts have been reminding legislators what our situation is," Brazeau said. "We are hoping that legislators will give us some relief."