Written by: Seth Gordon, Newberg Graphic 

District's Tier 1/Tier 2 rate increases precipitously

Like school districts across the state, the Newberg School District has been bracing for a significant increase in its PERS rates, but local officials were still surprised at the size of the jump after official rates were approved Sept. 30 at the Oregon PERS board meeting.

Based on projections provided to the district, chief financial officer Gwen Gardner estimated that PERS costs would rise approximately $1.1 million for the 2017-2018 school year.

The cost increase from this year is now projected to be between $1.7 to $1.8 million after the district saw its Tier 1/Tier 2 rate more than double from 5.64 percent to 11.69 and its OBSRP rate skyrocket from 0.95 percent to 6.36.

The increase is roughly equivalent to the cost of 25 employees or 10 school days, according to Superintendent Kym LeBlanc-Esparza, who commented on the situation at the Oct. 11 school board meeting, noting that there is not much the district can do at the moment. Newberg currently employs approximately 613 people.

The district will first have to see whether voters approve Measure 97, which could boost state revenue for education. No matter the result from the November election, district officials will then look to see how the Legislature will approach school funding for the upcoming biennium.

LeBlanc-Esparza said she was confident the Legislature will do something to reduce the burden on districts statewide, but doesn’t expect it to cover the full cost of the increase in Newberg’s case. Ultimately, that means the district will have to make cuts in the 2017-2018 budget.

“We’re going to have to do some reduction work going into next year,” she said. “I just don’t believe it’s going to be the full magnitude of what that cost increase is. There will be some work done at the state level, but stay tuned. We’ll keep watching it.”

As one of 97 districts in the state that has an established “side account,” created solely to make payments toward unfunded retirement liability, Newberg could be in a better position than other districts as its new rate would have been even higher.

The district used a 2003 bond to fund that account, which now sits at $38 million after $3.7 million was put toward the unfunded liability this year while accruing just more than $879,000 in interest.

The Legislature and school districts will not only have to scramble to deal with increased costs from PERS in the short term, but will need to be forward-looking from now on because PERS rates are set to increase at similar rates in both 2019 and 2021, as the state board has staggered the overall increases over three funding biennium.

LeBlanc-Esparza said at the board meeting that there is no reason to panic, but admitted that the state, which already ranks among the worst in the nation in public education funding, will have to take drastic action moving forward.

“We’re going to keep talking about it and obviously we’ve got time between now and then to pay attention to where the political aspects of things go, whether that’s through elections or through the Legislature doing (its) work,” she said. “But our cost is sizeable, certainly.”