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Brown Weighing Moves to Reduce School Pension Costs

Gov. Kate Brown is reportedly considering selling the state's workers compensation insurance corporation or tapping its substantial capital surplus to hold down future pension costs for school districts around the state.

Posted: Feb 19, 2019 11:45 AM

PORTLAND, Ore. (AP) — Gov. Kate Brown is reportedly considering selling the state's workers compensation insurance corporation or tapping its substantial capital surplus to hold down future pension costs for school districts around the state.

The Oregonian/OregonLive reports that according to documents it obtained via a public records request the idea is still tentative, and it's not clear it would raise enough money to accomplish the goal on its own.

Chris Pair, a spokesman for the governor's office, said Monday "our office will not be providing comment."

The proposal to tap SAIF, the state's 100-year-old employer-funded workers compensation agency, was initially floated in 2017 by a task force Brown set up to look for ways to reduce PERS' huge unfunded liability. That liability now stands at about $26.6 billion.

At the time, the idea of selling SAIF or tapping its surplus was staunchly opposed in some quarters of the business community. Oregon businesses enjoy some of the cheapest workers compensation rates in the country, and employers who are policyholders of SAIF receive large annual dividends from investment earnings on the capital surplus that the governor may look to tap.

Transferring that surplus or selling the company might raise costs for workmen's compensation, erasing one of the few competitive advantages that Oregon offers business, opponents have said.

At the same time, schools, municipalities and public agencies around the state face large pension debts and the relentless cost increases they are driving. Collectively, school districts have a funding deficit with PERS of more than $9 billion. They face a $375 million increase in their pension costs in the next two-year budget cycle and potentially much larger cost increases in the following biennium

This at a time when Brown has been promising to increase school funding to lengthen the school year, bring down class sizes and address Oregon's high school graduation rates, which are the second lowest in the country. Critics have said it would be a mistake to pump billions more into schools when much of that money would go to increased pension costs, not to the classroom.

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