Portland schools blame PERS for $65 million gap. Salem-area districts face higher pension bills too
Quick Read
Portland Public Schools projects a $65 million budget gap for 2027-28 and says it may cut up to 450 full-time positions.
District leaders say about $40 million of that gap comes from higher required payments to the state pension system, PERS.
New PERS rates take effect July 1, 2027. Salem-Keizer's main rate rises about 6 percentage points of payroll.
Greater Albany and Corvallis rise by similar amounts. Silver Falls stays lowest among the districts checked.
Portland Public Schools says rising state pension bills are a major reason it may cut up to 450 full-time jobs next school year. New state figures show school districts across the mid-Willamette Valley will also pay more starting in July 2027.
Superintendent Kimberlee Armstrong said this week that the district faces a projected $65 million budget gap for the 2027-28 school year, according to reports by OregonLive and KGW. About two-thirds of the possible cuts would hit positions based mostly in schools. The rest, about 164 jobs, would come from central office and support staff.
Chief Financial Officer Michelle Morrison said the legally required payment to the Public Employees Retirement System accounts for about two-thirds of the gap, roughly $40 million. She said the governor should consider tapping $500 million from the state's Education Stability Fund to lower PERS rates for schools statewide, OregonLive reported.
Why Portland's bill is jumping
Portland's jump stems largely from the expiration of so-called side accounts. Some public employers borrowed money years ago and deposited it with PERS, which lowered their contribution rates. According to PERS figures cited by OregonLive, 183 side accounts belonging to 144 public employers expire in 2027, and the discounts end with them.
PERS rate data show Portland's rate for newer employees in the Oregon Public Service Retirement Plan climbs from 3.74% of payroll to 18.48%. Its rate for longtime Tier One and Tier Two employees rises from 6.92% to 21.07%.
In April, Armstrong told the school board the district's PERS rate had gone "from just over 4% to just over 20%," OPB reported. The district has cut about $115.5 million from its budget since the 2023-24 school year.
What it means for Salem-area schools
The PERS Board adopted the 2027-29 employer rates Sept. 25. They apply to paychecks dated July 1, 2027, and later. The figures below, from the PERS rate table, are for general service employees in the Oregon Public Service Retirement Plan, which covers most newer school staff. They do not include the separate 6% Individual Account Program contribution.
Salem-Keizer Public Schools: 17.65% now, 23.66% starting July 2027, up 6.01 points
Greater Albany School District: 18.64% to 24.97%, up 6.33 points
Corvallis School District: 17.46% to 23.06%, up 5.60 points
Silver Falls School District: 10.97% to 14.96%, up 3.99 points
Eugene School District 4J: 21.86% to 24.97%, up 3.11 points
Portland Public Schools: 3.74% to 18.48%, up 14.74 points
School districts without a side account (shared rate): 24.84% to 24.97%, up 0.13 points
Salem-Keizer's rate for Tier One and Tier Two employees rises from 20.83% to 26.25%.
Districts without a side account pay one shared rate, and that rate barely moves. The steeper increases fall mostly on districts whose rates had been lowered by side accounts. In the 2027-29 table, Greater Albany and Eugene 4J's rates match the shared rate for districts without a side account.
None of the Willamette Valley districts faces a jump as steep as Portland's. Still, an increase of about 6 percentage points is significant for a district the size of Salem-Keizer, where staff pay makes up most of the budget. PERS has roughly $24 billion in unfunded pension obligations statewide, KGW reported.
Sources
Cover photo: McKay High School in Salem. Photo by Aboutmovies via Wikimedia Commons, public domain.
Comments