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Staff warn of rising unemployment costs and stress PERS reserve planning
Summary
Staff told the Budget Committee that a 2024 change in state unemployment law has increased claims by classified staff during breaks, raising district unemployment costs; the district is also saving into a PERS reserve ahead of expected rate increases in 2028.
Committee members asked about an apparent variance in FY24/25 actuals and why ending fund balances did not match earlier expectations. Shy Chapman explained that expenditures would increase and that the correct ending fund balance is reflected in the document provided to the committee.
Chapman also explained a notable increase in unemployment costs tied to a 2024 change in state unemployment law that allows classified staff to file for unemployment during break periods. "There is a 1 week waiting period then an employee may file for unemployment," Chapman said, and staff have observed more classified staff applying, which has increased costs to the district. On PERS, Chapman reminded the committee that the district currently has a 0% PERS rate due to side accounts and is saving now because those rate credits and related bonds will mature in 2028; Chapman estimated the district could face a rate increase of around 30% without those credits and said the district currently budgets 20% of payroll costs to build a reserve toward that obligation.
