ORS 238.670(1)(a) authorizes the PERS Board to use funds in the Contingency Reserve established under ORS 238.670(1) to “prevent any deficit in the fund by reason of the insolvency of a participating public employer.” Note that the funding for this purpose can only be from earnings from employers; $25 million has currently been set aside in the reserve for this purpose.
The Board has not previously used the Contingency Reserve to address the liabilities of insolvent employers, principally because there has never been a framework to determine that an employer is insolvent. There are a number of PERS employers that have ceased to exist as ongoing entities; many of them have remaining PERS liabilities, whether outstanding invoices or unfunded actuarial liabilities.
The new administrative rule provides a definition of insolvent employer to assist in assessing whether the Contingency Reserve should be for this purpose. A simple balance sheet analysis is not sufficient to determine solvency; PERS should also determine whether there are other potential sources for payment of the liabilities, such as successor entities, or other entities that may have received assets or assumed liabilities of the dissolved entity. Once PERS determines, after making all reasonable efforts to collect as required by OAR 459-005-0620, that there is no resource from which to collect, then PERS will consider whether the employer is insolvent.
Forfeiture and Restoration of Service Rights
OAR 459-011-0050 was adopted to address PERS administration of membership forfeiture and restoration. However, the rule only addresses the voluntary redeposit under ORS 238.105. That rule does not address the restoration of forfeited time by the purchase that is available under ORS 238.115 nor does it clarify that restoration under ORS 238.115 is not available to those who lost their membership rights through LOM. The proposed rule modifications provide these clarifications. Given that these statutes do not use consistent terminology, staff has been inconsistent in applying these provisions to members who are trying to restore their prior service and accounts so the rule modifications draw these distinctions more clearly. Members’ expectations about whether they can restore these rights have also been inconsistently communicated, so the rule modifications will provide that clarity as well. Given the inconsistencies in the statutes, PERS does not intend to review prior purchases but has directed staff to follow these strictures on a going-forward basis.
Disability Definitions and Eligibility
Modify rules regarding disability to update and add definitions; update specialist requirements; address effect of unemployment benefits in determining disability eligibility; clarify when PERS may request evaluations or exams; add physical capacity to independent evaluations; clarify periodic review standard; clarify burden of proof for OPSRP disability.