Employer Rate Relief Programs from Senate Bill 1566
The 2018 Legislature passed Senate Bill 1566, which was the result of the Governor’s UAL Task Force last year. The bill provides incentives for employers to make unfunded actuarial liability (UAL) lump-sum payments to PERS to reduce their contribution rates in the future, and also establishes a pooled side account for public school districts.
NEW: PERS is surveying employers to gauge potential interest in the Employer Incentive Fund and to get feedback on the UAL Resolution Program. Please share your feedback.
SB 1566 includes four UAL-reduction programs. Details on each are included below. This page will be regularly updated as new information is available. Sign up for GovDelivery emails on this topic to receive additional information in the future.
- It allows employers making qualifying UAL lump-sum payments into a new side account to select amortization periods of six, 10, or 16 years instead of the default amortization period of 20 years. The PERS Board adopted temporary administrative rules to implement this provision at the June 1, 2018 PERS Board meeting. The shorter amortization period is now available to any employer that:
- Is depositing $10 million or more;
- Is establishing a new side account (deposits into existing side accounts do not qualify);
- Requests and pays for an actuarial calculation as described in OAR 459-009-0084; and
- Is not borrowing to fund the lump-sum payment.
For additional information about this program, or to request an actuarial calculation, please send an email to Actuarial.Services@PERS.state.or.us.
- It establishes the School Districts Unfunded Actuarial Liability Fund. This is a pooled side account that will provide rate relief to all public school districts, public charter schools, and education service districts. The fund will be capitalized with revenue from several sources specified in SB 1566. PERS staff will develop an administrative rule describing how funds will be allocated between individual school districts for rate relief. On October 5, PERS will present the results of the School District Amortization Schedule Survey to the PERS Board and ask for final approval. At this time we do not expect that employers will need to take any action to obtain rate relief from this fund; it will be automatic when the fund is sufficiently capitalized. We do not yet know how much rate relief employers can expect from the fund.
Comments and questions about the School Districts Unfunded Actuarial Liability Fund can be emailed to Side.Account.Legislation@PERS.state.or.us
- It establishes an Employer Incentive Fund (EIF) that will provide up to a 25 percent match of a qualifying UAL lump-sum payment. PERS is developing the EIF application process and will present an outline at the October 5 PERS Board meeting. The agency will also request introduction of a bill for discussion during the 2019 legislative session that may allow for earlier access to the EIF and more closely align deadline dates to critical system valuation dates. We do not expect to take applications until 2019. Making a qualifying lump-sum payment today does not guarantee a spot in the EIF. Applications, when allowed, will be approved on a first-come, first-served basis. However, submitting a lump-sum payment today offers the potential for earnings to accumulate on the payment.
Comments and questions about the EIF can be emailed to Side.Account.Legislation@PERS.state.or.us.
- It establishes the Unfunded Actuarial Liability Resolution Program (UALRP). Through this program, PERS staff will provide suggestions to help employers identify ways they might free up budget resources to fund a lump-sum UAL payment for rate relief. Note that the program will not provide advice on how an employer might delay or avoid paying its PERS obligations. Participation in the program will be required for any employer seeking matching funds from the EIF. PERS expects to present a Notice of Proposed Rulemaking at the February 2019 PERS Board meeting, with the program becoming available sometime in 2019.
Comments and questions about the UALRP can be emailed to Side.Account.Legislation@PERS.state.or.us.
PERS will reach out to our employer partners to help us develop these programs. We value your feedback, especially during rulemaking to ensure these programs meet your needs. We will update this page regularly as implementation moves forward.
Staff will not be able to answer specific questions about implementation beyond what appears on this page; however, we welcome feedback from employers and stakeholders to help us with policy development. Please email questions and comments to Side.Account.Legislation@PERS.state.or.us.
Employers may also want to use PERS' Employer Rate Projection Tool to determine the potential impact of establishing a new side account. The tool allows employers to estimate their own potential employer contribution rates and amounts for planning purposes over the next several biennia.