SB 1566: Reducing Oregon PERS Liabilities with the Employer Incentive Fund
April 16, 2018
The Oregon Legislature and Governor Kate Brown are banking on increased state income tax revenues (due to recent changes in the Internal Revenue Code) to incentivize PERS participating public employers to contribute to PERS. Under SB 1566, signed by Governor Brown on April 10, 2018, participating public employers may have an opportunity to deposit at least $25,000 into a PERS side account and receive up to a 25% matching contribution from the soon-to-be-created Employer Incentive Fund (“EIF”). PERS side accounts track deposits that exceed an employer’s required PERS contribution. Each employer’s deposit and matching contribution will be credited against that employer’s unfunded PERS liability, whereas required contributions to the PERS general fund are used to fund the PERS liabilities of all employers.
The Public Employees Retirement Board (“PERB”) will begin accepting applications from employers for the match once it has determined that the EIF is sufficiently funded to begin distributing the match. For the first 180 days, applications will be accepted only from employers whose unfunded PERS liability exceeds two times the employer’s payroll for PERS members. After the initial 180-day period, PERB will accept applications from all PERS participating public employers. No applications will be accepted after December 31, 2019. Employers who wish to take advantage of the match should consider applying early, as SB 1566 states that PERB will approve applications “in the order in which the applications are submitted” and “continue approving applications as long as moneys in the [EIF] are available.” Matching payments from the EIF will continue until the fund is depleted. If not depleted by January 2, 2025, the EIF will be abolished and any remaining proceeds transferred to Oregon’s General Fund.
Employers must commit to a minimum deposit of $25,000 and employers may not borrow funds in order to satisfy their commitment. Deposits must be completed by July 1, 2023. The maximum match is 25% of the amount deposited, though the maximum match that may be reserved is the greater of $300,000 or five percent of an employer’s unfunded PERS liability. Employers who deposit $10 million or more may elect to offset PERS contributions otherwise required by the employer over a period of six, 10, 16 or 20 years.
SB 1566 does not say exactly how much may be made available for funding the EIF. Employers interested in the Employer Incentive Fund and matching contributions should submit their applications as early as possible to reduce the possibility of the EIF being depleted before their application is approved. If you have any questions about SB 1566 or the application process, please contact Jason Douthit at Bullard Law.
Content ©2018, Bullard Law. All Rights Reserved.