Under current PERS policy, such a drastic decrease in funding triggers a rate hike of 6 percentage points, double the normally allowed maximum rate increase.
To make matters worse, many local governments sold bonds during financially flush times and invested the borrowed cash in “side accounts” intended to provide supplemental investment income that would reduce their overall pension contributions. That supplemental income has been slashed due to poor investment returns.
The upshot is that employer rates that currently average about 5.2 percent of payroll will increase to an estimated average of 12.9 percent of payroll. Employer contributions of $880 million during the 2009-2011 biennium would balloon to $2.3 billion during the 2011-2013 biennium.
The vast majority of Oregon public employees do not contribute to their PERS benefits through payroll deductions, said Don Loving, spokesman for Council 75 of the American Federation of State, County and Municipal Employees. Instead, the employer makes the full contribution.This has lead some to argue that public employees should begin paying part of the tab.