By PETER WONG/Oregon Capital Bureau
Oregon’s projected unfunded liability for public pensions apparently shrunk significantly last year, mostly attributable to healthy investment earnings that pushed the fund past the $100 billion mark for the first time in its 75-year history.
A final accounting will come later this year, but preliminary numbers for 2021 peg the unfunded liability at either $19.7 billion or $14.4 billion, depending on whether “side accounts” are excluded or included. Side accounts are amounts of money that participating governments set aside to cover part of their future pension liabilities, but not all of the 900 government employers in the Public Employees Retirement System have set up such accounts.
The comparable figure for 2020 was $28 billion.
The PERS fund was at $85.4 billion in December 2020; the preliminary figure one year later is $100.4 billion. Its investments go beyond common stocks, which PERS started back in 1973, to other things. Oregon has one of the nation’s largest public pension funds.
“It’s a good marker to know what the investment returns of last year did,” said Scott Preppernau of Millman, the firm that does the actuarial work for the system, in a Jan. 31 report to the PERS board. “Clearly a strong asset year makes a significant improvement in these results over a one-year time frame.”
A decade ago, under then-Treasurer Ted Wheeler, the Oregon Investment Council changed its strategy so that the PERS fund will not grow as much when financial markets surge, but also does not drop as much when markets plunge. The change emerged after the Great Recession, when the PERS fund lost 28% of its value as it declined from $66 billion in December 2007 to a low of about $48 billion in March 2009. It took several years for the PERS fund to get back to its pre-recession level.
PERS Board Chairwoman Sadhana Shenoy said Oregon’s long-term liability for public pensions hasn’t gone away, given that the funded status of the system is still below a target of 90%.
“We have a long way to go,” she said. “But this shows that one good year gives us a little bit of respite.”
