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Actuarial questions

Q1: What is the Multnomah Fire District #10 rate?

Q2: Why is PERS so expensive? Will rates go down?

Q1: What is the Multnomah Fire District #10 rate?

Formed in 1947, Multnomah Fire District (MFD) #10 provided service to an unincorporated area of east Multnomah County west of the Sandy River. Over time, other fire districts consolidated with MFD #10, including Gresham, Fairview, Wood Village, Troutdale, and some of Portland. In the early 1980s, MFD #10 was the second largest fire department in Oregon.

By 1983, growth in the area led to city annexations, which shrunk District #10. In 1984, MFD #10 was dissolved, and its employees became members of Portland Fire and Rescue. However, this left behind a $70 million unfunded liability.

In 2003, the legislature passed House Bill 2278, which included a resolution to pay off the debt over 25 years . MFD #10 was allocated $50,000 of the outstanding UAL, which it paid in November 2003. Of the remaining UAL, the City of Portland was apportioned a percentage and the remainder was charged to all Tier One/Tier Two employers in the system. The cities of Gresham, Fairview, Wood Village, and Troutdale were required to pay twice the rate of other employers.

The bill also clarified how future unfunded liabilities or surpluses would be handled when employers merge, split, or transfer employees.

Current MFD #10 UAL rate

All employers who have Tier One/Tier Two employees pay the MFD #10 UAL rate. The MFD #10 debt will be part of the PERS Tier One/Tier Two UAL rate until it is fully paid in December 2027.

Total MFD #10 UAL*$127.4 million
Rates for MFD #10 UAL*City of Portland1.19%
Cities of Gresham, Fairview, Wood Village, Troutdale0.3%
All other Tier One/Tier Two employers0.15%

*As of the December 31, 2021, valuation.

Note: If you would like to see how the rates were calculated, see page 43 of the System-Wide Actuarial Valuation.

Rules to prevent this happening again

The merger, dissolution, and consolidation of employers is now codified in Oregon Administrative Rule 459-009-0350. Employers must appropriately resolve outstanding liabilities before they are approved to merge, dissolve, or consolidate, according to Oregon Revised Statute 238.235. Employers must also work with the PERS Employer Service Center and Actuarial Services to ensure all liabilities are appropriately allocated.

The process for insolvent employers is outlined in Oregon Administrative Rule 459-009-0400.

Questions? Contact Actuarial Services.

Q2: Why is PERS so expensive? Will rates go down?

Your PERS rate pays for your organization’s qualifying employees ’ future benefits. However, that is only part of the equation.

Your rate also covers past debt, shared expenses of other employers in your employer pool, retiree healthcare subsidies, and a transition liability (if your organization has a lower ratio of actuarial assets to actuarial liabilities than those in your employer pool). Employees who receive a greater benefits package (e.g., Tier One members and Police and Fire employees) incur a higher rate than other employees.

The portion of your rate that reflects the difference between the actuarial liability accrued for past service and current actuarial assets (i.e., past debt) is called your unfunded actuarial liability (UAL). Employers’ UAL built over time and will take time to eliminate.

It started with PERS’ first plan, Tier One. Created in 1946, Tier One provided a generous retirement package that, over time, became too expensive to maintain.

In the mid-1990s, the Oregon Legislature took action to control PERS rising rates. The Legislature created Tier Two for employees hired on January 1, 1996, and later. It had a slightly less generous benefits package, which helped but didn’t go far enough.

In 2003, the Legislature added a third tier called the Oregon Public Service Retirement Plan (OPSRP). The structure of the new plan continued to provide a strong benefits package, but it prevented some overly generous retirement packages of the past (e.g., retirees earning more in retirement than they did while working).

Then in 2019, the Legislature passed Senate Bill (SB) 1049, which added programs designed to reduce employer rates.

The creation of OPSRP and the changes implemented by SB 1049 are working as intended. As Tier One and Tier Two employees retire and the scales tip toward more OPSRP members, employer costs are going down. In fact, OPSRP contribution rates are hovering around 9% to 10%. While some employers continue to pay rates as high as 25%, their rates will decrease over time as their Tier One/Tier Two employees retire and OPSRP employees make up a greater proportion of their workforce.

Learn more

To learn more about how PERS works and the benefits it provides, read employer reporting guide 1 Overview of PERS.

Watch the video “How Does PERS Work?” to understand how the Oregon government and employers work together to manage PERS.

To understand costs in your PERS invoice that you can control, read employer reporting guide 28 How to (Potentially) Reduce Your Bill.

To learn about the rate-reduction programs implemented by SB 1049, read the Rate-Relief Programs webpage.