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CCSD faces PERS shortfall
Although the school district won’t see cuts as drastic as some, they will still need to make up a $2.2 million deficit for the next two years
November 08, 2012
The second round of rate hikes for the Oregon Public Employees Retirement System since the 2008 downturn has come to fruition in school districts around the state.
No school district is exempt — and although the Crook County School District has fared better than many, they will be facing a $2.2 million shortfall in the next biennium.
Redmond School District anticipates a $2.3 million budget shortfall for the 2013-2014 school year, which would equate to approximately 30 teachers or 13 school days. Bend-La Pine School District estimates that the increase may result in as much as a $4.7 million shortfall for the same time frame.
“This issue and many others point to the opportunity and the importance of our filling the upcoming openings on both the board and the budget committee with persons who are ready, willing, and able to make tough decisions where ‘someone’s ox is always going to be gored,”’ noted CCSD school board member John Lang.
He also emphasized that public forums and budget and board meetings are used to evaluate proposals from the administration and others, which maximizes transparency between the school board and the public.
Crook County School District Superintendent Duane Yecha said that payroll contributions are made monthly. Payments on the PERS bonds are semi-annual and payable in December and June of each year until 2028.
“We have to look at the entire budget before we can make any recommendations to the board,” said Anna Logan, Director of Business and Finance for CCSD, in regards to the next steps for the shortfall.
“If the PERS board were to continue pulling money from the school districts and all the public employers at the same rate that they had been, there would have been a major shortfall,” added Logan. “There would not have been enough money to cover the pensions. That is why they had to raise the rates in order to cover those pensions as people retire.”
She added that the specific rates that are being projected for Crook County are not the same as the average rate hikes. Logan remarked that this can be attributed to financing that was entered into by the district in 2002 and 2003.
“That financing allowed us to set aside money for future PERS obligations,” she said. “Earnings on the investments from that financing help us to cover some of those additional costs.”
CCSD participated in the Pension Obligation Bonds that were offered by the State of Oregon in 2002 and 2003, and this decision has put the district in a better position financially than many of the school districts in Central Oregon.
“Fortunately, we had someone at that time who had the foresight to get in on that in the early days,” said Logan.
She added that the state continued to issue bonds after that time frame, but the districts who entered into those later bonds were subject to the recession.
“No one could have known in 2002 or 2007 that the market was going to crash. We just made the right choice at the right time.”
In spite of the offset that is helping the district, there will be an increase in the PERS obligation of $1.1 million per year for the next two years. Logan commented that this is above and beyond the amount budgeted for in the current budget.
“The district will utilize the typical budget development process to address all financial issues,” commented Yecha.