Rep. Cameron introduces bill to require governments to fund retirement obligations
Rep. Kevin Cameron
SALEM, OR – Saying it is time for Oregon’s government entities to actually fund their retirement obligations, Rep. Kevin Cameron (R–Salem) introduced HB 3444 today. While state law requires government entities to determine what the Annual Required Contribution (ARC) would be for retirement benefits, it does not require them to set aside the money. HB 3444 would take that requirement a step further and mandate annual contributions to retirement trust funds.
“As we have seen with the unfunded liabilities from PERS, the cost of retirement benefits are significant to our government entities in Oregon,” said Rep. Cameron. “If local governments and special districts do not begin to adequately fund retirement trust funds, the rising cost of a pay-as-you-go system will eventually cannibalize the general funds of those districts – just as PERS is doing right now.”
Standards adopted by the Government Accounting Standards Board (GASB) require that all units of government undertake a valuation of the retirement obligations every two or three years and state those obligations. These are known as GASB 45. Based on those, they must calculate liabilities for all current and future retirees, amortized over a period not to exceed 30 years. Those calculations then determine what the Annual Required Contribution would be if the government entity paid for current and future retirees. The problem is that governments are not required to actually fund those obligations.
“No one knows the true scope of the problem in Oregon and most governments have no money set aside in retirement trust funds,” Rep. Cameron said. “For example, Tri-Met alone has an unfunded liability of over $900 million. HB 3444 will help ensure that we avoid a PERS-like mistake with future retirement obligations.”