DALLAS — The city of Dallas will apply to invest $200,000 in an account meant to reduce the cost of the city’s unfunded Oregon Public Employees Retirement System costs.
If approved, $200,000 will be matched up to $50,000 by the state after the passage of Senate Bill 1049, which provided $100 million in state funds as an incentive to local government bodies to invest.
The bill created the Employer Incentive Fund, which will create accounts for local governments to invest amounts that will be matched at a 25 percent rate with state funding.
Cecilia Ward, Dallas’ finance director said the city could invest a minimum of $25,000 and up to a maximum of $1.84 million. She recommended a pledge of $100,000, based on her estimation for the city’s “ending fund balance,” or the amount of money left unspent from the previous year’s budget.
“We went with that due to the fund balance of the general fund, and what we are projecting in the next couple years for the general fund,” Ward said. “We thought the $100,000 would be possible.”
Investing $100,000 would mean the city would receive $25,000 from the state, and based on the city’s calculation, would save the city $198,299 over 16 years. The savings would take effect in the 2021-23 biennium.
The city has $9.2 million in what is called “unfunded liability” in its PERS contributions. That is the difference between the assets the city has to pay for PERS and the amount it is responsible to pay. Currently, the city pays 9.84 percent of its payroll toward its unfunded liability.
Councilor Kelly Gabliks said the investment was a “no-brainer.”
“We would be taking that money, and either be spending it or putting it somewhere to get a return ourselves, right?” Gabliks said. “I just don’t see a big negative. PERS costs are only going to go up, and if we get the state to pay 25 percent of it, I see that as a win. That’s 25 percent that we can use on something else.”
Councilor Jackie Lawson said she believed the city should invest more.
“I understand that there’s actually a $200,000 (ending fund) surplus,” Lawson said. “I would be more inclined to invest higher, because I know how much PERS is going to go up, so it makes a lot more sense to get a bigger return.”
City Manager Brian Latta cautioned against investing the higher amount, saying the city won’t officially know the amount of carryover until the audit is final.
“By taking most of that money away, you are going to be impacting your budget. Now it would be impacting the ending fund balance for fiscal year 2021-22,” Latta said. “That budget cycle would be a lot tighter on the beginning fund balance.”
Lawson said PERS costs are predicted to increase, so the city should take advantage of a program to cut into what it owes.
“My understanding is that we have more than enough for a rainy day fund, which is what we’ve always budgeted for, so we are in a safe zone in regards to that,” Lawson said. “I’m normally a conservative, but I would also push for a bigger return on the dollar because I’m also a capitalist.”
Gabliks said the city should keep in mind a possible downward turn in the economic or other unexpected expenses.
“I think definitely that we need to go forward and do this, but I’m very concerned about taking all of the money to go into this,” Gabliks said. “Maybe the compromise is $150,000 but I’m just worried about doing the whole $200,000 if we don’t have the final numbers from the auditors.”
However, the council voted on Lawson’s proposal, unanimously approving investing $200,000.
The city will send the application to the state on Dec. 2.
“That gets us, what, $50,000?” said Mayor Brian Dalton. “Fifty thousand of the state’s money.”