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Oregon PERS There and back again

Oregon PERS There and back again. 2009 OASBO Summer Conference Eagle Crest Resort July 31,2009. Oregon PERS - There and back again. 2009 Legislative Update Actuarial Assumptions Board Decisions – what will they cost? Rates – up, up, & away! Retire – now or later?

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Oregon PERS There and back again

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  1. Oregon PERSThere and back again 2009 OASBO Summer Conference Eagle Crest Resort July 31,2009

  2. Oregon PERS - There and back again 2009 Legislative Update Actuarial Assumptions Board Decisions – what will they cost? Rates – up, up, & away! Retire – now or later? PERS Board Meetings – yes you can help! Questions

  3. 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

  4. 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

  5. 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)

  6. 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

  7. 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

  8. 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 rates OPSRP admin expenses

  9. Actuarial Assumptions May 29, 2009 – Actuarial methods considered for adjustment: Eliminate PUC amortization Shorten certain amortization periods Allocation of liability for service segments

  10. 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

  11. Actuarial Assumptions July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment: Regular investment return Variable investment return Generational mortality table Retirement service levels

  12. Actuarial Assumptions July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment: Merit salary increases Disability rates Termination rates

  13. 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

  14. Board Decisions Impact of changes (ignoring rate collar):

  15. 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%)

  16. 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

  17. 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%

  18. 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

  19. Retire – now or later? Many changes effective January 1, 2010 Check “Benefit Estimate Calculator” often

  20. 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

  21. Questions? PERS Headquarters: 11410 SW 68th Parkway Tigard, OR 97223 http://www.oregon.gov/PERS/index.shtml Phone: 503-598-7377 Toll free: 888-320-7377 Fax: 503-598-0561

  22. Thank you! C. Lance Colley, Chief Operations Officer Roseburg Public Schools 541.440.4027 lcolley@roseburg.k12.or.us Janice Essenberg, Director, Administrative Services David Douglas SD 503.261.8212 janice_essenberg@ ddouglas.k12.or.us

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