Employer Incentive Fund has attracted $480 million to PERS trust; subcommittee to send report to full committee

The General Government Subcommittee discussed the status of the employer incentive fund and related programs created by Senate Bill 1566 (2018) and voted to forward the agency report to the full committee on Feb. 20.

Richard Horsford, chief financial officer at Oregon PERS, told the committee the employer incentive fund has contributed materially to side-account deposits since the statute took effect. "Since its inception, this fund has brought in $480,000,000 to the PERS trust: $383,600,000 from employer deposits and $96,400,000 of matching funds," Horsford said. He said 110 employers in 26 Oregon counties have used the match.

PERS staff reported the employer incentive fund's current balance is about $27.6 million; the agency identified the Oregon scoreboard lottery (sports betting) as the ongoing revenue source for the match program. PERS said the next matching application period begins April 1, 2025, and the agency expects to be able to distribute about $40 million in matching funds for the April 1, 2025to March 31, 2026 application cycle. The agency said the program structure gives employers with UAL greater than 200% of payroll first access during the first three months of the application period; after that window the process is first-come, first-served.

Committee members asked how employers fund lump-sum side-account deposits. PERS staff explained statute requires matching funds be applied only to qualifying lump-sum cash deposits; "these must be cash on hand. They cannot be funded from pension obligation bonds in order to receive the matching funds," Horsford said. Legislators raised policy and equity questions: several members asked whether districts or other employers might reduce operating budgets or staffing to accumulate cash and obtain the match and how ports or other entities could both place large sums into side accounts and pursue other funding requests.

PERS also briefed the committee on the School Districts' Unfunded Liability Fund (SDULF), a pooled side-account intended to provide rate relief to school districts, charter schools and education service districts. The agency said SDULF received $77.2 million in January 2025 from the one remaining statutory revenue source (interest on unclaimed property administered by the Department of State Lands) but that other originally identified revenue streams have been removed or sunset. PERS said the SDULF balance (about $166.5 million) is substantially below the level required to generate a meaningful rate-offset; PERS estimated a side account larger than about $580 million would be needed to achieve a 1 percentage-point rate offset, so the agency does not expect to deploy the pooled side account this biennium.

Agency staff said they sponsored Senate Bill 849 in the current session to provide flexibility for using SDULF money in a way that could give more immediate relief to school districts (for example, by supporting a mid-year contribution-rate change). PERS also described the Unfunded Actuarial Liability Resolution Program (UALRP) resources it has published to help employers plan and budget for PERS liabilities and noted that a small number of employers have used amortization options to shorten schedules or defer offsets.

Department of Administrative Services and LFO recommended the committee acknowledge receipt; the committee approved a motion to send the report to the full committee (motion moved and approved on voice vote). PERS said it will continue administrative preparations for the April 1 matching cycle and follow up with written materials for legislators about program details and payment timing.