Oregon PERSThere and back again

2009 OASBO Summer ConferenceEagle Crest Resort

July 31,2009

Oregon PERS - There and back again

1. 2009 Legislative Update

2. Actuarial Assumptions

3. Board Decisions – what will they cost?

4. Rates – up, up, & away!

5. Retire – now or later?

6. PERS Board Meetings – yes you can help!

7. Questions

2009 Legislative Update

Many PERS-related bills introduced

19 bills considered

8 bills adopted

Effective on January 1, 2010 – unless the bill includes an emergency clause – then bill is effective upon signing by the Governor

2009 Legislative Update

Housekeeping bills (signed by Governor):

HB 2157 Federal Tax Reconnect

HB 2704 Elimination of Workers’ Comp Offset

SB 112 Return to Work Retirees (emergency clause; retroactive back to 2004)

SB 5539 PERS 2009-11 Budget

2009 Legislative Update

Housekeeping bills (awaiting Governor’s action):

HB 2873 Public Employees Retirement Benefits (emergency clause)

SB 399 Trustee to Trustee Transfer for Eligible Purchases at Retirement

SB 897 PERS Coalition Omnibus (emergency clause)

2009 Legislative Update

Important bill for K-12 (awaiting Governor’s action):

HB 3401 Use of Excess Amount in Side Accounts (emergency clause)◦ Will require an IRS ruling ◦ Would allow use of excess side account dollars to offset IAP

contributions◦ Losses in side accounts since December 2007 make this an

unlikely resource

Actuarial Assumptions

Mercer (PERS Actuaries) presentations to PERS Board:

May 29, 2009:http://www.oregon.gov/PERS/section/financial_reports/Financial_Modeling_52909.pdf http://www.oregon.gov/PERS/section/financial_reports/Exp_Study_52909.pdf

July 16, 2009:http://www.oregon.gov/PERS/section/board_information/board_information_index.shtml

Actuarial Assumptions

May 29, 2009 – Economic assumptions considered for adjustment:

Regular investment return (deferred to 7/16)Variable investment return (deferred to 7/16)Health cost trend ratesOPSRP admin expenses

Actuarial Assumptions

May 29, 2009 – Actuarial methods considered for adjustment:

Eliminate PUC amortizationShorten certain amortization periodsAllocation of liability for service segments

Actuarial Assumptions

May 29, 2009 – Actuarial methods considered for adjustment:

Clarify adjustments to contribution rate collar

Clarify amortization of new side accounts & new transition liabilities

Exclusion of negative rate guarantee reserve

Actuarial Assumptions

July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:

Regular investment returnVariable investment returnGenerational mortality tableRetirement service levels

Actuarial Assumptions

July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:

Merit salary increasesDisability ratesTermination rates

Board Decisions

July 16, 2009 – Board action:

Approved generational mortality tables

Opposed reduction of assumed investment rates (saved us 1.5%)

Approved other adjustments as recommended by Mercer

Board Decisions

Impact of changes (ignoring rate collar):

Mortality assumptions

Other Assumptions and Methods

Total

Tier 1/Tier 2 OPSRPNormal

Cost Rate

UAL RateNormal

Cost Rate

UAL Rate

0.2%

0.0%

0.2%

0.5%

(3.0%)

(2.5%)

0.2%

(0.3%)

(0.1%)

0.0%

0.0%

0.0%

Rates - up, up, & away

2009-11 Biennium (school pool rates):

Reduced by ~3.6% - 14.1%

Some districts with large side accounts have negative PERS rates

If system funding level does not exceed 80% by 12/31/2009, rate collar could double to 6% (pool rate = 20%)

Rates - up, up, & away

2011-13/2013-15 Biennia (all employers):

Modeling indicates rates will increase 6% for 2011-13

Modeling also indicates an additional increase of 6% in 2013-15

Strong likelihood of PERS rates = 26% of payroll before 6% contribution to the IAP

Rates - up, up, & away

Other rate considerations:

Side account rate relief expected to drop from an average of 8% down to 2% - 4% over the next 18 years

Unlikely to have side account resources available after 2027

Modeling projects future rates exceeding 30%

Retire – now or later?

Board approved methods and assumptions impact the 12/31/2008 & 12/31/2009 actuarial valuations

Board will adopt actuarial equivalence factors for 2010 & 2011 at its November meeting

Retire – now or later?

Many changes effective January 1, 2010

Check “Benefit Estimate Calculator” often

PERS Board Meetings

Meetings held at PERS Headquarters in Tigard

Meetings begin at 1:00 PM

Agendas available on PERS website (click “Board” tab, then meeting date)

Remaining 2009 meetings:◦ September 25, 2009 – system-wide actuarial results◦ November 20, 2009 – adoption of actuarial equivalence

factors for 2010 & 2011

Questions?

PERS Headquarters:11410 SW 68th ParkwayTigard, OR 97223

http://www.oregon.gov/PERS/index.shtml

Phone: 503-598-7377Toll free: 888-320-7377Fax: 503-598-0561

Thank you!

C. Lance Colley, Chief Operations Officer

Roseburg Public Schools

541.440.4027

lcolley@roseburg.k12.or.us

Janice Essenberg,Director, AdministrativeServicesDavid Douglas SD

503.261.8212

janice_essenberg@ddouglas.k12.or.us