Updated with politics: Moffitt’s PERS arithmetic problem

3/28/2013 update: SB 822, the Democratic response to the PERS cut proposals from Kitzhaber and the Republicans, has passed out of committee on a 3-2 vote. It is the weakest of the 3 proposals, and, according to the fiscal analysis, even it is enough to completely offset the “30% increase” in PERS costs that Jamie Moffitt has been scaring the faculty union with:

Composite employer contribution rates for state agencies are slated to increase from 15.57% for the  current biennium to 19.84% for the 2013-15 biennium. This measure, coupled with the action of the  PERS Board, would reduce the composite rate to 15.47%, or by 4.37% [Sic. They mean 4.37 percentage points.] Local government, the Oregon University System, and other PERS entities should see similar reductions in employer contribution rates.

That’s a 0.6% *decrease* in PERS costs. Presumably the other bills would significantly cut UO’s costs. It will be interesting to see Moffitt’s new math.

There’s now some log-rolling going on with the Republicans, on cuts to the amount of federal deductions allowable on Oregon income taxes. Follow the Statesman Journal’s Hannah Hoffman’s tweets for more.


3/22/2013: It looks to me like UO’s retirement costs are set to increase by 10%, or about 0.6% of UO’s total budget, not by the 30% for PERS that Moffitt claimed. And even that increase may well not happen.

At union bargaining session XI UO’s VPFA Jamie Moffitt said she’d been told to budget for a 30% increase in PERS costs, and that this limited UO’s ability to make raises. 30% sure sounds scary.

Here are the numbers, taken from the OUS guide here, and including FICA.

Currently (until June):
29.65% for Tier 1/2 members: 16.14% employer contribution + 6% pickup + 7.51% FICA
19.72% for Tier 3 members: 6.21% + 6% pickup + 7.51% FICA

In July:
34.41% for Tier 1/2 members: 20.90% employer contribution + 6% pickup + 7.51% FICA
19.93% for Tier 3 members: 6.42% + 6% pickup + 7.51% FICA

Tier 1/2 means hired before 2003. Pay in the bargaining unit is roughly split 50/50 between Tier 1/2 and 3. So variable benefits costs currently are about

0.5*29.65+0.5*19.72 = 24.7%

Not the 35% number Moffitt claims. They are scheduled to increase to 

0.5*34.41+0.5*19.93 = 27.2%

or by 2.5 percentage points or 10%, not the 30% Moffitt claims. (Excluding FICA would change the 10% increase to 15%. There are also some smaller costs for unemployment insurance and worker’s comp, maybe 1%, I’m ignoring them unless someone shows me where to find them.)
Extrapolating to UO’s ~$200 million payroll, these PERS increases will cost UO in total about $5 million, or about 0.6% of UO’s total ~$800 million budget. Not so scary. About half of that 0.6% is for bargaining unit members. And it’s ignoring the fact that the IRS now prohibits UO from paying PERS or ORP for the part of salaries over $205K to $255K (depends on plan. Too bad that law wasn’t in place for Bellotti and Frohnmayer). This binds for Gottfredson, Bean, Espy, the Moffitts, and many (most?) coaches and assistant coaches, and drives the cost increase down a bit more.

But is even this 0.6% cost increase going to happen? Not if Kitzhaber and the Legislature have their way. Still, couldn’t their PERS reforms fail in the courts, so UO might have to pay more later? HLGR attorney Bill Gary recently did a legal analysis of this, and he thinks the COLA cuts are legal. And Gary charges $500 an hour, not Rudnick’s pitiful $400.

So I’m going to go with the really, really expensive lawyer, and conclude that this is all a red herring. Nice try though, Jamie.

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5 Responses to Updated with politics: Moffitt’s PERS arithmetic problem

  1. Awesome0 says:

    Maybe her and Bean have the same person crunching numbers.

  2. Anonymous says:

    Tier 1 = hired before 1996

  3. Anonymous says:

    Love it. Straight up arithmetic and the admins look like fools again.

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