Actuaries report improved returns; PERS ADEC rises to 25.98% and SLURP funding change recommended
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Summary
CABMAC actuaries told the board PERS had strong investment returns (market ~11.2%, actuarial value ~9.1%), raised the actuarially determined employer contribution to 25.98% (roughly $2.0 billion on a full-year basis), showed multi-scenario funding options and recommended changing SLURP to level-dollar funding with a proposed $894,000 contribution next year.
Actuarial consultants from CabMac presented the PERS valuation as of June 30, 2025 and projection studies for related plans. They reported a strong investment year (about 11.2% market return; a 9.1% actuarial value return after smoothing) and said those gains improved funded-status metrics: the PERS funded ratio rose to about 56.7% on the actuarial basis.
Using the board-adopted funding policy and layered amortization methods, the actuaries calculated an actuarially determined employer contribution (ADEC) of 25.98% of payroll. The consultants said that level is equivalent to roughly $2.0 billion on an annualized basis if applied to current payroll levels and that, if the ADEC were paid each year, the valuation would approach full funding (~99%) by the policy horizon (2047) and reach 100% shortly thereafter under the projection assumptions. Under the statutory phasing into a 19.9% employer rate (the current SCR), actuaries projected a longer payoff horizon (about 42 years) and a funded ratio that remains below preferred targets.
The presentation included sensitivity and multi-scenario funding runs. Scenarios ranged from a $1 billion one-time or staged additional contribution to larger, multiyear add-ins (for example, $200 million annually) and showed materially different funded-ratio outcomes. The consultants warned that a large upfront lump sum can be vulnerable to a poor investment year but that consistent additional funding improves the projection more predictably.
The team also reviewed the actuarial impacts of Tier 5 and recent ORP reforms under House Bill 1: Tier 5 (a hybrid DB/DC design) and ORP changes shift some payroll and contribution dynamics; actuaries estimated Tier 5 would direct additional payroll toward unfunded liability payoff (the consultants discussed an approximate incremental 1.89% of payroll effect but noted modeling sensitivities).
Because the supplemental legislative retirement plan (SLURP) is closed to new members, actuaries recommended changing SLURP's amortization method from level-percentage-of-payroll to level-dollar to avoid rapidly increasing percentage rates as payroll declines. They presented an initial level-dollar ADEC of about $894,000 for the next fiscal year (the report and policy revision would be finalized after board action and recorded in February). Consultants emphasized legislators and staff should receive timely, written summaries so the legislature can consider funding decisions during the session.
Board members asked for further analyses (staff said they could run scenarios such as $200 million over 10 years) and discussed legislative responsibilities for funding changes. The board approved the actuarial reports for PERS, Highway Patrol and the Municipal Retirement System as presented; SLURP was held for follow up and a formal funding-policy revision expected in February.
