Here is my written testimony submitted to the PERS Board for their June 4, 2021 meeting.<\/p>\n\n\n\n
Members of the PERS Board:<\/p>\n\n\n\n
Some of you may recall I addressed the board in 2019 to offer input into your deliberations on setting the system\u2019s assumed rate of return. I noted that the current assumed rate was far above what PERS investments had returned from its peak just before the 2008 financial crisis to the present. I urged you to continue reducing the assumed rate as had been done by previous boards over three rate-setting cycles before 2019, which you declined to do.<\/p>\n\n\n\n
I further urged you to consider the actual long-term returns on PERS investments in your decision-making process and not rely solely on projections of future returns, which have been notoriously inaccurate.<\/p>\n\n\n\n
I am back today to re-iterate these concepts, but with the added perspective gained from the latest information provided by Milliman in today\u2019s board materials.<\/p>\n\n\n\n
We now see that both Milliman and the advisor to the Oregon Investment Council have sharply lowered their projections. The OIC advisor has slashed its prediction by nearly 0.75 percent, down to 6.8 percent. And Milliman is all the way down to 6.27 percent, which is almost exactly what PERS investments have actually returned 2008-2020.<\/p>\n\n\n\n
All the data before the board today, along with Milliman\u2019s pointed recommendations, overwhelmingly call for a substantial reduction in the assumed rate.<\/p>\n\n\n\n
I note two other factors that are present today that were not in 2019. When combined, they give the board an opportunity to do something truly historic.<\/p>\n\n\n\n
First, PERS investments have had a fabulous two years, rising over $10 billion. This huge valuation is already showing in Milliman\u2019s preliminary calculation of the uncollared base rate for employer contributions, which shows a rare reduction at the current assumed rate.<\/p>\n\n\n\n
And second, 2021 revenue projections for Oregon call for a massive $1 billion in additional revenue, most of which will flow to the budgets of public employers.<\/p>\n\n\n\n
These factors work together to provide an exceedingly rare opportunity for the board: slashing the assumed rate without causing a rate increase that employers would have difficulty absorbing.<\/p>\n\n\n\n
Please do not miss this chance to bring the assumed rate into the realm of reality and greatly enhance the actuarial health of the PERS system.<\/p>\n","protected":false},"excerpt":{"rendered":"
Here is my written testimony submitted to the PERS Board […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-203","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts\/203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/comments?post=203"}],"version-history":[{"count":0,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts\/203\/revisions"}],"wp:attachment":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/media?parent=203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/categories?post=203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/tags?post=203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}