Sean C. Morgan
Of The New Era
An Aug. 11 ruling by the Oregon State Supreme Court in a lawsuit against the Public Employees Retirement System (PERS) may save the district some money.
That court?s decision will reduce projected PERS rate increases by about 2 percentage points in 2007, district Business Manager Kevin Strong told the District 55 Board of Trustees at its monthly meeting Aug. 15.
Strong explained the decision this way: In 1999, PERS had a good year with strong markets and the PERS Board had to make a decision whether to keep the money to cover years with poor market performance or credit the money to the accounts of its members, Strong said. The PERS Board listened to special-interest groups, who said, ?if you have it, spend it,? and credited the money to its member accounts.
From 2000 to 2003, the stock markets performed poorly, Strong said. The PERS Board had created no reserve, but it guaranteed its members at least 8 percent and created an unfounded liability that has continually increased employer contribution rates.
The PERS rate skyrocketed, Strong said, and when the city of Eugene sued, arguing that the PERS Board improperly distributed money it should have set aside, a lower court agreed. The decision was appealed to the Supreme Court.
PERS rates will still increase in the 2007-09 biennium, Strong said, but if the ruling stands, then it will be about 2 points less than has been estimated.
For School District 55, the ruling means that the district will still pay more than a half million more dollars than budgeted now for retirement, he said.
Before the decision, rates were expected to increase by up to 6 percent, Strong said. He anticipated with the decision that the rate increase would be closer to 4 percent.
The current PERS rate for District 55 is 14.23 percent. District 55 is part of a bond sold to try to cover the district?s unfounded liability at a lower overall rate. Districts outside the special bond are paying 16.97 percent.
District 55 also picks up the employees? contribution to their retirement accounts, 6 percent, for a total rate of 20.23 percent.
In July 2007, districts not participating in the bond are projected to pay 22 percent, not counting employee PERS pickups, Strong said.
School Board Member Dave VanDerlip warned that the case could be appealed to a federal court.
?It?s not over yet, and I don?t think we should act as if it is over,? VanDerlip said.
Strong also reported to the board that he expects state funds to be available this year as budgeted.
The Oregon Legislature and the governor passed a budget of $5.24 billion statewide for education during the 2005-07 biennium.
That works out to about $5,100 per student.
The key issue in funding will be enrollment, Strong said, noting that the district has budgeted for stable enrollment.
An enrollment increase will provide more funding for each student while a decrease in enrollment will net a loss in funding from the state, Strong said.