Task force eyes state assets that could reduce PERS liability
PORTLAND — From the state's liquor control commission to its approximately 4,600 parking spaces, a group appointed by the governor is starting to scrutinize ways to make the most of state assets to reduce its pension obligations.
In April, Oregon Gov. Kate Brown, a Democrat, announced she was appointing a "task force" to address the unfunded actuarial liability in the Public Employee Retirement System, which now stands at about $21.8 billion.
The seven-member group, tasked with finding a way to reduce that amount by $5 billion, had its first meeting Monday.
The unfunded actuarial liability of the system is the amount of money that the state's obligations exceed the system's assets currently will be able to pay.
And the $21.8 billion amount may grow, though it's not yet clear by how much. On Friday, the PERS board is expected to adopt rules reducing the rate it assumes investments of the Public Employees Retirement Fund will earn annually.
You can think about PERS like an algebra equation: Since a certain amount of benefits are guaranteed to employees, reducing the assumed earnings rate will increase the amount of money that public employers — such as school districts, cities and counties — will have to contribute to the system to pay those benefits.
Membership in the task force draws on the public and private sector, and ranges from the CFO of Oregon Health and Sciences University to the CEO of the Portland tech company Zapproved.
The group faces one aspect of what's been a pernicious point of contention for state policymakers in the past two decades.
The 2017 legislative session concluded earlier this month without significant modifications to PERS — a casualty of a contentious session where many Republicans called primarily for spending reforms, including curtailing public employee benefits, while many Democrats sought business tax increases.
Legislators, for their part, can only make changes to the system going forward.
The governor's task force, though, is not addressing the issue of what public employees will receive in the future.
Rather, it is looking at how the state can pay down a chunk of what it expects to owe, a sizable amount of which public employees have already earned and lawmakers cannot modify.
The group has divided the system into roughly seven "buckets" — universities and community colleges; K-12 schools; public corporations such as the Oregon Liquor Control Commission; state agencies; cities; counties; and special districts, fire districts and transit.
Brown has suggested selling state assets, although she has said certain properties, such as prisons and state parks, are off the table. Possible assets could include properties such as the "buffer zones" around state prisons or youth correctional facilities.
It's also possible that the state could also enter into public-private partnerships or cut back on property costs in other ways, such as by moving certain state offices to lower-rent areas.
And the task force is also looking at the financial feasibility of specific revenue streams, such as a dedicated surcharge on certain license fees, to help pay down the system's obligations.
Task force members appeared to agree Monday that they should focus their work — expected to culminate in a report due to the governor by Nov. 1 — on big-ticket items that can reduce the liability significantly, in order to get to the $5 billion figure.
The next meeting of the PERS unfunded actuarial liability task force is scheduled for Aug. 28.