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District finance staff outline rising PERS costs and planned drawdown of bond-related fund balance
Summary
Finance staff presented projections showing a rise in PERS-related employer costs in 2025–26, the planned use of a bond-related fund balance to smooth debt service impacts, and an anticipated reduction in a PERS rate credit through 2027–28.
District finance staff presented detailed projections of the district’s obligations tied to the Public Employees Retirement System (PERS), showing higher employer costs in the 2025–26 budget and steps the district plans to take to reduce the near-term budget impact.
Jane Noffsiger reviewed three PERS-related cost categories: the unfunded actuarial liability (UAL) payment; the employer pickup percentage; and the district’s bonded portion of PERS debt service from a 2007 PERS bond. She said the combined total the district was planning for 2025–26 is $25,600,000. Noffsiger said the UAL payment is projected to increase about 4% in 2025–26 and that the employer pickup was projected at approximately $4.5 million.
She described the rate credit resulting from the 2007 bond, which had delivered savings in prior years, and said that as the bond principal declines and payroll grows the rate credit will decrease; she projected the credit at about 6.2% in 2025–26 and that the debt-service/credit balance will reverse (a projected negative of $719,000 for 2025–26). To smooth those effects, staff plan to use the beginning fund balance in that fund: $250,000 in 2025–26, $475,000 in 2026–27 and the remaining balance in 2027–28.
Board members asked clarifying questions about payroll totals, the percentage of payroll represented by retirement and payroll taxes (Noffsiger said combined PERS, FICA and Medicare will amount to about 42% of total payroll costs next year), and how often districts can access PERS bond opportunities. Noffsiger said PERS bond opportunities arise infrequently and that the district had previously benefited from rate credits generated when the bond was sold.
The presentation also included a Genuine Foods–related projection that food-service participation and cost assumptions would maintain the district’s ending fund balance in food service; staff noted federal requirements limit the amount of fund balance in federal food programs.
No formal board action on PERS funding occurred at the meeting; staff said they will continue to plan for the higher employer costs in the upcoming budget.
