Budget breaker

The Fly in the Ointment

P.E.R.S.

The Oregonian article referenced below says it best.  The PERS system is 20% underfunded, and government entities will face horrendous rate increases necessitating personnel and or service  reductions.  At the current time, Lake Oswego struggles to find Minh for infrastructure maintenance and capital improvements.

Personnel costs (salaries, health, PERS and other benefits) make up the largest part of the city's General Fund.  All other general fund expenses compete with staffing.  With NO staff cuts, the increasing PERS rate increases will engulf more and more of the general fund.  No city, county, school district or any public agency can afford this.

PERS costs to soar in 2017 and beyond, clobbering Oregon
Oregonlive, November 28, 2015, By Ted Sickinger

State public pension officials are holding town hall meetings around the state to warn schools, cities and public agencies that they will be clobbered by an unprecedented string of pension cost increases starting in 2017.

That is expected to be followed by persistently high contribution rates that will strap public budgets for at least a decade. 

In order to bail out, PERS will need to raise public employers' contributions to the system by about 4 percent of their payrolls in each of the next three budget cycles. And that implies public employers will need to tap their budgets for an extra $800 million per biennium starting in July 2017, another $860 million in 2019 and an additional $930 million in 2021.

The size of the financial hit makes it a material problem for every Oregonian. It's billions of additional dollars that will be redirected to the pension fund instead of funding teachers, school days, reduced class sizes, police, firefighters, transportation projects and so on.

All told, statewide pension costs could eventually increase by about $2.6 billion each biennium. That comes on top of the $2 billion employers are paying today. 


Cheri Helt, a restaurant owner and member of the Bend-Lapine School Board, said the last time her district saw significant PERS cost hikes, it was forced to eliminate 100 teaching positions.

"So we're now going into a more vicious downturn and we have not even recuperated yet," she said. "We've never seen anything like what's being proposed." 

All told, statewide pension costs could eventually increase by about $2.6 billion each biennium. That comes on top of the $2 billion employers are paying today. 

For entire article, use link above.  There are also links to related stories.