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Home My WebLink AboutPERS Prepayment Presentation2014/15 PERS Discussion Deschutes County January, 2015 Outline of Discussion •Long term projection of County PERS rates •PERS Reserve •Alternative uses of the PERS Reserve Recent Developments •Reduced earnings assumption to 7.75% •Change in Actuarial method •SB 822 delayed portion of rate to 2015/17 •Rate collar adjustments •Re -amortization of UAL’s from previous years •Hangover from 2008 PERS Investment Losses •2015/17 Rates issued September 2014 •Future Projections issued November 2014 PERS Earnings Since 1989 -30 -20 -10 0 10 20 30 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Assumed Earnings Earnings From PERS Projections Nov 2013 PERS Projection November 2014 Projected Deschutes County PERS Rates as % of Payroll 8 10 12 14 16 18 20 PERS Rates PERS Rates Deschutes County PERS Reserve •Balance at 12/31/14 $10,204,000 •County rate of return .73% •Earnings Estimate per year $75,000 •Total Appropriated for 2015 $10,226,000 PERS Reserve Options 1.Keep funds for future use 2.Apply funds internally starting in 2016 to smooth future PERS rate increases expected 7/1/15 and 7/1/17. 3.Lump Sum payment to PERS to create a side account to reduce future rates. Option 2 - Apply funds over next 9 years •Earnings through 2023/24 $1,100,000 •Funds left at end of period $2,721,000 •Benefit to County $8,642,500 Projected PERS Rate Smoothed with Reserves beginning in 2015/16 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 11 / 1 2 12 / 1 3 13 / 1 4 14 / 1 5 15 / 1 6 16 / 1 7 17 / 1 8 18 / 1 9 19 / 2 0 20 / 2 1 21 / 2 2 22 / 2 3 23 / 2 4 24 / 2 5 25 / 2 6 26 / 2 7 27 / 2 8 28 / 2 9 29 / 3 0 30 / 3 1 31 / 3 2 32 / 3 3 PERS Rates Dept Rates Option 3 - PERS Lump Sum Payment •Creates “Side Account” •Side accounts are amortized over 20 years •Side accounts receive PERS fund Earnings and Losses each year •Contributions are irrevocable •The County has one side account already with an offset of 1.06% of payroll Pension Bond Side Account Beginning Ending Rate Balance Earnings Contributions Balance Relief 2004 6,761,232 774,394 271,236 7,264,390 1.35% 2005 7,264,390 960,352 499,525 7,725,217 1.43% 2006 7,725,218 1,206,679 574,538 8,357,359 1.47% 2007 8,357,359 843,608 552,597 8,648,370 1.45% 2008 8,648,369 -2,221,797 660,283 5,766,289 0.95% 2009 5,766,289 998,850 687,406 6,077,733 0.99% 2010 6,077,734 715,777 664,734 6,128,777 0.99% 2011 6,128,776 166,717 652,415 5,643,078 0.93% 2012 5,643,078 792,361 525,756 5,909,683 0.96% 2013 5,909,683 901,103 530,502 6,280,284 1.06% Total 5,138,044 5,618,992 Lump Sum Payment to PERS •Assume payment of 75% $ 7,500,000 •Earnings through 2033 $ 7,443,000 •Funds left in County Reserve $ 2,700,000 •Benefit to County $14,943,000 •Rate Reduction .98% of Payroll Projected PERS Rate With Lump Sum Payment to PERS 8 10 12 14 16 18 20 PERS Rates PERS Pre-Pay Option 1 – Keep funds for Future •Low Investment Yield •Projected PERS rate increases on 7/1/15 and 7/1/17 are not addressed. •Questions as to under what conditions funds will be used? Option 2 – Apply funds to PERS Increases Beginning 7/1/15 •Low Investment Yield (.7%) •Hold Back $2,721,000 for future use •Earnings generated through 23/24 $1,100,000 •Dept PERS rates declining through 23/24 Option 3 – Lump Sum Payment to PERS Beginning 4/1/15 •PERS Assumed Investment Yield (7.75%) •Hold Back $2,700,000 •Earnings generated through 2033 $7,443,000 •Dept PERS rates decrease by estimated .98% of payroll Comparison of Options 1, 2 & 3 8 10 12 14 16 18 20 PERS Rates #1 PERS Pre-Pay #3 Apply Internally #2 SLGRP Transition Surplus Beginning Ending Rate Balance Earnings Contributions Balance Relief 2004 33,361,488 2,499,289 2,120,377 33,740,400 6.26% 2005 33,740,401 2,521,538 2,221,171 34,040,768 6.28% 2006 34,040,768 2,527,299 2,449,531 34,118,536 5.98% 2007 34,118,536 2,514,876 2,682,591 33,950,821 5.68% 2008 33,950,821 2,474,210 3,023,195 33,401,836 5.48% 2009 33,401,836 2,438,423 2,921,543 32,918,716 5.35% 2010 32,918,716 2,400,121 2,917,203 32,401,634 5.24% 2011 32,401,634 2,356,164 2,949,584 31,808,214 5.24% 2012 31,808,214 2,308,532 2,951,570 31,165,176 5.06% 2013 31,165,176 2,192,185 2,878,922 30,478,439 5.16% 24,232,637 27,115,687 Questions/Discussion