Friday, August 24, 2012

PERS employer contribution rates set to increase substantially for 2013-15

The PERS board meets next Tuesday where they’ll be receiving the report from the actuary on 2013-2015 contributions.  There is no good news in this report.  In sum, rates on a system-wide average are going to go up about 5% and apparently there is still an additional 2% which has not been recognized under normal collaring methodology.  In other words, if returns for the next two years are precisely 8% we would see an additional increase for 2015-2017 of about 2%, otherwise we will see increases similar to those projected for 2013-15. Here is a segment of the PERS Valuation Results that is driving the increase.  Notice the system-wide increase on page two to 21.4%. This is huge. We expect this is going to cause a media frenzy, public employers to call for changes, and a fresh crop of legislative action to rein in these costs. Needless to say, this is going to have a significant impact on public employee bargaining for the next biennium.

This is still all about the 2008 disastrous investment returns. If anyone wants to delve more deeply into the projections, go to the PERS website

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