PERS bill would give board discretion to apply school unfunded-liability funds to districts

Senate Bill 849, presented to the Senate Committee on Labor and Business on Thursday by PERS Director Kevin O'Lennick and agency staff, would change how the Public Employees Retirement Board (PERS board) may use funds in the School District Unfunded Liability Fund (SDULF).

The fund, created by 2018 legislation, has limited remaining revenue sources and a balance the agency described in committee testimony as roughly $89 million. Under current statute the SDULF must be used to create pooled side accounts for school districts; PERS staff told the committee the fund is too small to set up pooled side accounts that would meaningfully reduce employer contribution rates.

Director Kevin O’Lennick told the committee the bill would remove the statutory requirement that the SDULF be used only to create a pooled side account and instead give the PERS board discretion to apply the funds in ways that provide more immediate relief to school-district employers in the school-district rate pool. O’Lennick said applying the roughly $89 million pro rata to the pool would reduce unfunded actuarial liability by a small amount but could be more beneficial if targeted differently.

Education stakeholders voiced general support but urged speed and flexibility in how the funding is applied. Morgan Allen of the Coalition of Oregon School Administrators said the coalition wants the $89 million directed to have maximum effect during the 2025–27 biennium; he suggested options such as an emergency clause, a matching-grant approach, or a capped award so smaller districts aren’t crowded out. Cynthia Bronger Munoz of the Oregon Education Association and Stacy Michaelson of the Oregon School Boards Association echoed support while emphasizing the need for equitable application and stakeholder input.

Oregon School Employees Association Director Iris Hodge said classified staff are often first affected by cuts and that short-term relief would help retain educators and support staff.

Committee members asked whether funds could be applied immediately and how the PERS board would set criteria for distribution. O’Lennick said the board would use rulemaking and stakeholder input to develop criteria and that one straightforward option would be to apply the $89 million pro rata against the school-district pool’s unfunded actuarial liability to reduce employer contribution rates on a 1-time basis. He also said the agency lacks granular financial data for every district and therefore proposed broad discretion for the board to work with stakeholders on allocation criteria.

No formal vote or final allocation decision was made; stakeholders and the agency agreed to continue the discussion so the funds could be directed in a way that maximizes short-term benefit to districts during the next biennium.