OREGON HOUSE REPUBLICANS

FOR IMMEDIATE RELEASE September 28, 2012

Contact: Nick Smith 503-986-1351

HOUSE REPUBLICANS CALL FOR PERS REFORMS

TO STABLIZE EDUCATION FUNDING

SALEM— House Republicans today said they’ll introduce reforms to the Public Employee Retirement System (PERS) in 2013 after the state announced higher contribution rates for state agencies, local governments and Oregon school districts.  Republicans say the reforms are needed as the current system continues to direct more money away from classroom education and other critical services.

“The PERS rate increases announced today will have a devastating impact on our already financially strapped public school system,” said Rep. Mark Johnson (R-Hood River), a member of the Hood River School Board. “It’s imperative in this global economy that Oregon do everything possible to make our state and our students as competitive as possible. The increasing cost of our PERS is making that goal much harder to achieve.

“The PERS rate increases announced today have the potential to undermine all of the education reforms that have been passed in the last session,” Rep. Johnson added. “I’m working closely with OSBA, OBA, Stand for Children and the Chalkboard Project to ensure that practical reforms are ready to be considered by the legislature in 2013. The educational future of our next generation depends upon strong leadership on this issue.”

The PERS Board announced today a system wide 4.9 percent increase in employer rates for the 2013-2015 biennium, which comes out to approximately $900 million in increased costs. This brings the total employer rate to 15.7 percent and represents a 30 percent rate increase over the current budget cycle.

Rep. Jason Conger (R-Bend) said he will reintroduce his School Savings Act to help save school districts an estimated $500 million per biennium.

“We need to be doing all we can to protect funding for local classrooms,” Rep. Conger said.  “Every budget cycle, more than $1 billion will be taken out of our schools and put towards paying for our PERS liability. This is forcing us to lay off hundreds of teachers; and ultimately the quality of education offered to our children is suffering for it. The School Savings Act includes comprehensive PERS reforms to significantly reduce the amount of money leaving our schools and ensures that the money stays where we need it the most.”

The School Savings Act includes reforms such as redirecting PERS Tier 1 and 2 contributions from Individual Account Programs and into the PERS Fund; reducing the PERS guaranteed rate of return for money match annuity crediting to six percent; phasing in a maximum PERS benefit cap, establishing a Rate Stabilization Reserve Fund, and more.

Once the reforms are adopted, Rep. Conger said the state government can reevaluate the PERS unfunded liability, lower contribution rates, and divert excess savings to the Rate Stabilization Reserve Fund to help stabilize pension costs in the future and help the state meet its obligations to public employees.

“These reforms would not affect existing retirees nor violate existing agreements with current and former public employees,” Rep. Conger said. “However, they will allow the Legislature and school districts to reinvest in our classrooms and our children’s education.”

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