Public Employer

Link to law: http://arcweb.sos.state.or.us/pages/rules/oars_400/oar_459/459_009.html
Published: 2015

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The Oregon Administrative Rules contain OARs filed through November 15, 2015

 
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OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM









 

DIVISION 9
PUBLIC EMPLOYER

459-009-0020
Public Employer
(1) A "public employer" shall have the same meaning as that term is given in ORS 238.005 and shall include all public school districts and educational service districts.
(2) The employing entity (public employer) is that entity having the final authority to direct and control an individual in the performance of assigned work or duties. This authority may be active or reserved; expressed or implied. In determining who is the employing entity, the following factors shall be used:
(a) Who has or had the authority to select and engage the employee;
(b) Who has or had the power of dismissal; and
(c) Who has or had the authority and responsibility for directing and/or supervising the individual's work and for controlling the individual's conduct at work.
(3) The source of payment for labor or services is not of itself a controlling factor in deciding the identity of the employer.
Stat. Auth.: ORS 238.650

Stats. Implemented: ORS 238.005 & 238.205

Hist.: PERS 7-1992, f. & cert. ef. 11-9-92; PERS 1-1996, f. & cert. ef. 3-26-96; Renumbered from 459-010-0034; PERS 21-2005, f. & cert. ef. 11-1-05
459-009-0050
Payment of Cost Estimates
A public employer entering the system established by ORS 238.600 may be charged for any cost estimates prepared by the regular office staff PERS, and shall pay the cost of estimates computed for it in advance by the actuaries employed by the Public Employees Retirement Board.
Stat. Auth.: ORS 238.650

Stats. Implemented: ORS 238.015 & ORS 238.620

Hist.: PER 8, f. 12-15-55; PERS 1-1996, f. & cert. ef. 3-26-96; Renumbered from 459-010-0120; PERS 5-1999, f. & cert. ef. 11-15-99
459-009-0070
Actuarial Pooling of Employer Liability
(1) Definitions. Definitions as used in this rule:
(a) "Pooled" or "pooling" means the combining or grouping of public employers participating in PERS for the purposes of determining employer liability for retirement or other benefits under ORS Chapter 238.
(b) "Political subdivision" means any city, county, municipal or public corporation, any other political subdivision as provided in Oregon Law, or any instrumentality thereof, or an agency created by one or more political subdivisions to provide themselves governmental service. Political subdivision does not mean a school district or a community college.
(c) "Local government" shall have the same meaning as in subsection (1)(b) of this rule.
(d) "School district" means a common school district, a union high school district, or an education service district, including chartered schools authorized under Oregon law.
(e) "Liability" or "Liabilities" means any costs assigned by the Board to a specific employer or to a pool of employers to provide PERS benefits.
(f) "Actuarial Surplus" means the excess of the fair market actuarial value of assets over the actuarial liabilities.
(g) "Unfunded Actuarial Liabilities" or "UAL" means the excess of the actuarial liabilities over the fair market actuarial value of assets.
(h) "Transition Unfunded Actuarial Liabilities or Surplus" means the unfunded actuarial liability or actuarial surplus, attributed to an individual employer for the period of time the employer was not participating in a pool, prior to entry into the Local Government Rate Pool or the State and Local Government Rate Pool.
(i) "Consolidation" means the uniting or joining of two or more political subdivisions into a single new successor political subdivision.
(j) "Merger" means the extinguishment, termination and cessation of the existence of one or more political subdivisions by uniting with and being absorbed into another political subdivision.
(2) Two employer pools. In accordance with ORS 238.225 and only for the purposes of determining the amounts that are actuarially necessary to adequately fund the benefits provided by the contributions of PERS participating employers, employers will be pooled as a single employer as follows:
(a) The State and Local Government Rate Pool, which consists of the following employers:
(A) The State of Oregon, excluding the state judiciary under ORS 238.500;
(B) All community colleges; and
(C) All political subdivisions which elect to join the pool; or
(b) The School District Pool, which consists of all school districts of the state.
(3) The Local Government Rate Pool established as of January 1, 2000, and certified by the Board on June 12, 2001, for political subdivisions was dissolved as of December 31, 2001.
(4) Political subdivision participation. Political subdivisions may elect to participate in the State and Local Government Rate Pool by the adoption of a resolution or ordinance by the governing body of the political subdivision and submitting a copy of the resolution or ordinance to the Board. The effective date of the election is established as follows:
(a) If the election is received, in accordance with OAR 459-005-0220, by December 31, 2001, the political subdivision will join the pool effective January 1, 2002. Its liability as a member of the pool, from the effective date of entering the pool, will be based on the actuarial valuation period beginning on January 1, 2002; or
(b) If the election is received, in accordance with OAR 459-005-0220, on or after January 1, 2002, the political subdivision will join the pool effective the first day of the next actuarial valuation period following the date of receipt of the election.
(c) Prior to entering the pool, any unfunded actuarial liabilities or surplus of such employers will be actuarially accounted for as provided in section (9) of this rule.
(d) Participation in the pool, as provided in section (4) of this rule, is irrevocable by the employer.
(e) Political subdivisions that do not elect to participate in the State and Local Government Rate Pool, as provided in section (4) of this rule, shall be regarded as individual employers for actuarial purposes.
(5) Employer rates. The basis for any actuarial computation required under ORS 238.225 or this rule will be the actuarial report on PERS prepared in accordance with ORS 238.605.
(6) In determining the amounts to be paid to PERS by a public employer pooled as provided in section (2) of this rule, the PERS consulting actuary will express those amounts as a rate or percentage of PERS covered payroll.
(7) In determining the amounts to be paid to PERS by employer participants in the Local Government Rate Pool, the State and Local Government Rate Pool, and the School District Pool, the PERS Board will issue rate(s) representing the amount necessary to provide benefits as provided in ORS 238.225, for all members of that pooled group. The rates, at a minimum, shall include:
(a) Rates representing the amount necessary to provide benefits as provided in ORS 238.225, for all Tier One and Tier Two police officer and firefighter members of that pooled group.
(b) Rates representing the amount necessary to provide benefits as provided in ORS 238.225, for all Tier One and Tier Two general service members of that pooled group.
(c) In addition to the rate(s) in this section, the State of Oregon will be charged the additional amount necessary to fund the Retiree Health Insurance Premium Account as provided in ORS 238.415(5).
(8) For each participant in the State and Local Government Rate Pool:
(a) Each employer's police officer and firefighter payroll as reported for the actuarial valuation will be multiplied times the rate described in subsection (7)(a) of this rule;
(b) Each employer's general service payroll as reported for the actuarial valuation will be multiplied times the rate described in subsection (7)(b) of this rule.
(c) By dividing the sum of the amounts in subsections (a) and (b) of this section by the employer's total payroll as reported for the actuarial valuation, a composite employer contribution rate is derived, which will be the basis for the employer contributions.
(9) Unfunded actuarial liabilities or surplus.
(a) If a political subdivision elected to join the Local Government Rate Pool described in section (3) of this rule, any transition unfunded actuarial liabilities or surplus as of December 31, 1999, will remain part of the actuarial calculation of employer costs for the individual political subdivision, until fully amortized, and will not be pooled with other public employers. However, the political subdivision will continue to be pooled for the purpose of funding the resulting unfunded actuarial liabilities associated with the Local Government Rate Pool from January 1, 2000 to December 31, 2001.
(b) If a political subdivision elects to join the State and Local Government Rate Pool as provided in section (4) of this rule, any transition unfunded actuarial liabilities or surplus as of the day immediately preceding the effective date of entering the pool will remain part of the actuarial calculation of employer costs for each individual political subdivision, until fully amortized, and will not be pooled with other public employers in the State and Local Government Rate Pool.
(c) The pooled unfunded actuarial liability or surplus for the community colleges and the State of Oregon as of December 31, 2001, will remain part of the actuarial calculation of employer costs for community colleges and the State of Oregon combined until fully amortized, and will not be pooled with any political subdivision.
(d) Any unfunded actuarial liability or surplus for the State and Local Government Rate Pool that accrues during a valuation period occurring after December 31, 2001, will become part of the actuarial calculation of employer costs for only those employers who participated in the pool during that valuation period.
(e) Any unfunded actuarial liabilities or surplus of individual employers being amortized as provided for in subsection (9)(a), (9)(b) or (9)(c) of this rule, will be amortized based on the Board's adopted assumed earnings rate and amortization period. If at the end of the amortization period a surplus remains, the surplus will continue to be amortized as determined by the Board.
(f) If the PERS Board should change the assumed earnings rate, as it applies to ORS 238.255, in effect at the time of the amortization provided for in subsection (9)(a), (9)(b) or (9)(c) of this rule, the actuary will recalculate the remaining liability or surplus being amortized using the new assumed earnings rate. The amortization period provided in subsection (9)(e) will not change due to this recalculation.
(10) Employer UAL lump-sum payment. If an employer elects to make a UAL lump-sum payment to offset the unfunded actuarial liabilities under section (9)(a), (9)(b), (9)(c) or (9)(d) of this rule, or as provided under ORS 238.225(8), the payment shall be made in accordance with ORS 238.225 and OAR 459-009-0084.
(11) New employers and integrations. Political subdivisions entering PERS, as provided in ORS 238.015(3), 238.035, or 238.680, will be pooled upon election to join the State and Local Government Rate Pool as follows:
(a) To join the pool upon entering PERS, the election as well as the methods and effective date of entry, must be included in the coverage agreement or contract of integration. If the election is made after the effective date of joining PERS, the political subdivision will join the pool effective the first day of the next actuarial valuation period following the date of receipt of the election.
(b) An election completed by an integrating employer or a partially integrated employer will apply to all current and future groups of employees who are integrated into PERS by the employer. Upon entering the respective pool, any unfunded actuarial liabilities or surplus of such employers will be actuarially accounted for as provided in section (9) of this rule.
(12) Dissolution of an employer or non-participating employer. In the event a public employer is dissolved, no longer has PERS eligible employees, or is no longer eligible to participate in PERS, the employer or its successor will be required to make the contributions necessary to fund any remaining unfunded actuarial liability, as provided for in subsection (9)(a), (9)(b) or (9)(c) of this rule, for PERS benefits. The Board will determine the method and amount of funding this unfunded actuarial liability or the return of any surplus, as well as the determination of the employer's successor.
(13) Consolidation of political subdivisions. In the event a political subdivision consolidates with another political subdivision, the succeeding employer will determine the status in the pool by election into the pool.
(a) If the succeeding employer has not elected to join the pool as of the effective date of the consolidation, the following will occur:
(A) The pooled and non-pooled assets, liabilities, and employees of the former employers will continue as they were prior to the consolidation;
(B) Any unfunded actuarial liability or surplus of the former employers as of the effective date of the consolidation will be combined and assumed by the succeeding employer;
(C) New hires will not be pooled; and
(D) If the succeeding employer consists of pooled and non-pooled employees, separate payrolls must be maintained for each and reported to PERS.
(E) At any time after the consolidation, the succeeding employer may elect to join the pool and the effective date will be the first day of the next actuarial valuation period following the date of receipt of an election.
(b) If the succeeding employer elects to join the pool as of the effective date of the consolidation, the following will occur:
(A) Any non-pooled assets, liabilities, and employees of the former employers will be added to the pool;
(B) Any unfunded actuarial liability or surplus of the former employers as of the effective date of the consolidation will be combined and assumed by the succeeding employer and provided for as in subsection (9)(a) or (9)(b) of this rule; and
(C) New hires will be pooled.
(c) The succeeding employer must join the pool as of the effective date of the consolidation if it consists of only pooled employers. Any unfunded actuarial liability or surplus of the former employers as of the effective date of the consolidation will be combined and assumed by the succeeding employer.
(14) Merger of political subdivisions. In the event a political subdivision merges with another political subdivision, the status of the surviving employer in the pool depends on its status prior to the merger.
(a) If the surviving employer was not in the pool and has not elected to join the pool as of the effective date of the merger, the following will occur:
(A) The pooled and non-pooled assets, liabilities, and employees of the former employers will continue as they were prior to the merger;
(B) Any unfunded actuarial liability or surplus of the former employers as of the date of the merger will be transferred to the surviving employer;
(C) New hires will not be pooled; and
(D) If the surviving employer consists of pooled and non-pooled employees, separate payrolls must be maintained for each and reported to PERS.
(E) At any time after the merger, the surviving employer may elect to join the pool and the effective date will be the first day of the next actuarial valuation period following the date of receipt of an election.
(b) If the surviving employer was in the pool as of the effective date of the merger, the following will occur:
(A) Any non-pooled assets, liabilities, and employees of the former employers will be added to the pool as of the effective date of the merger;
(B) Any unfunded actuarial liability or surplus of the former employers as of the effective date of the merger will be transferred to the surviving employer and provided for in subsection (9)(a) or (9)(b) of this rule; and
(C) New hires will be pooled.
(15) In the event of any legal mandates or changes adopted by the Board:
(a) If the change provides for an increased or decreased benefit to police officer and firefighter members, but is not applicable to general service members, the PERS Board will direct the actuary to attribute the cost or savings of the change to the rate indicated in subsection (7)(a) of this rule.
(b) If the change provides for an increased or decreased benefit to general service members, but is not applicable to police officer or firefighter members, the PERS Board will direct the actuary to attribute the cost or savings of the change to the rate indicated in subsection (7)(b) of this rule.
Stat. Auth.: ORS 238.650

Stats. Implemented: 2005 OL, Ch. 808, Sec. (12), (13), (14), ORS 238.225 & 238.605

Hist: PERS 1-2001, f. & cert. ef. 2-21-01; PERS 3-2001(Temp), f. & cert. ef. 4-19-01 thru 9-30-01; PERS 5-2001 f. & cert. ef. 9-21-01; PERS 6-2001(Temp), f. & cert. ef. 9-24-01 thru 12-31-01; PERS 8-2001, f. & cert. ef. 12-14-01; PERS 10-2002, f. & cert. ef. 7-15-02; PERS 20-2005, f. 11-1-05, cert. ef. 11-4-05
459-009-0084
Unfunded Actuarial Liability Lump-Sum Payments by Employers Participating in an Employer Actuarial Pool
Purpose. The purpose of this rule is to establish procedures and requirements for the adjustment of employer contribution rates when an individual public employer participating in an employer actuarial pool makes an unfunded actuarial liability lump-sum payment.
(1) Definitions. For the purposes of this rule:
(a) "Amortized Amount" means the amount of a Side Account used to offset contributions due from the employer.
(b) "Employer Actuarial Pool" means a grouping of employers for actuarial purposes such as the School District and the State and Local Government Rate Pools.
(c) "Fair Value UAL" means the unfunded actuarial liability calculated using the fair market value of assets.
(d) "Transition Unfunded Actuarial Liabilities" means the unfunded actuarial liabilities attributed to an individual employer for the period before entry into the Local Government Rate Pool, or the State and Local Government Rate Pool if the employer did not participate in the Local Government Rate Pool.
(e) "Unfunded Actuarial Liability" or "UAL" means the excess of the actuarial liability over the actuarial value of assets.
(f) "Unfunded Actuarial Liability Lump-Sum Payment" means any employer payment that is:
(A) Not regularly scheduled;
(B) Not paid as a percentage of salary;
(C) Made for the express purpose of reducing the employer's unfunded actuarial liability; and
(D) Paid at the employer's election instead of at the PERS Board's direction.
(2) Lump-sum payment amount. If an individual employer elects to make a UAL lump-sum payment under this rule, the payment must be at least 25 percent of the individual employer's UAL calculated under section (6) of this rule or $1 million, whichever is less. Alternatively, an employer may elect to pay 100 percent of the individual employer's UAL calculated under section (6) of this rule.
(3) Requirements. In order to make a UAL lump-sum payment, an employer must comply with the process described in sections (4) through (10) of this rule.
(4) Initiating UAL lump-sum payment process. At least 45 calendar days before the date the employer intends to make a UAL lump-sum payment, the employer must notify the PERS Employer Liability Coordinator in writing that it intends to make a UAL lump-sum payment. The notification must specify:
(a) The amount of the intended lump-sum payment;
(b) Whether the intended payment is to be for 100 percent of the individual employer's calculated UAL; and
(c) No more than two potential dates for the payment. PERS staff must notify the employer within five business days of receipt of the notification if the notification is incomplete or the process cannot be completed by the intended dates of the UAL lump-sum payment.
(5) Payment to the actuary. The PERS consulting actuary must provide an invoice charging the employer for the cost of the actuarial liability calculation requested by the employer. At least 30 calendar days before the date the employer intends to make a UAL lump-sum payment, the employer must remit payment for the cost of the UAL calculation directly to the PERS consulting actuary according to the instructions on the invoice. Failure to remit payment according to the terms of this section may result in the PERS consulting actuary not completing the employer's UAL calculation by the proposed UAL lump-sum payment date.
(6) Calculation of the individual employer's UAL. Upon receipt of a complete notification and verification of payment to the actuary for actuarial services, PERS staff shall request that the PERS consulting actuary calculate:
(a) 100 percent of the employer's share of the UAL for the employer actuarial pool in which the employer is participating. This calculation must be:
(A) Based on the fair value UAL of the actuarial pool in which the employer participates, from the most recent actuarial valuation;
(B) Based on the covered salary, as a proportion of the pool, reported by the employer for the year of most recent actuarial valuation; and
(C) Adjusted to reflect the effect of time from the most recent actuarial valuation to the intended date(s) of payment, using generally recognized and accepted actuarial principles and practices.
(b) The effect of the following UAL lump-sum payment amounts on the individual employer's contribution rate using the one or two potential dates for payment specified by the employer in its notification in section (4) above:
(A) 100 percent of the individual employer's UAL calculated in subsection (6)(a) of this rule;
(B) The UAL lump-sum payment amount specified by the employer in its notification, if provided; and
(C) The minimum amount of the UAL lump-sum payment under section (2) of this rule.
(7) Notification of calculation. PERS staff must notify the employer in writing of the results of the individual employer's calculation in section (6) above, including the effective date(s) for the reduced employer contribution rates based on the one or two potential dates for payment. In addition, PERS must send the employer a notification describing risks and uncertainties associated with the calculation of the individual employer's UAL.
(8) Notification of UAL lump-sum payment. The employer or its agent must notify the PERS Employer Liability Coordinator in writing at least three business days before making a UAL lump-sum payment. This notification shall be in addition to the notification in section (4) of this rule and must specify the amount of the payment and the date it intends to make the payment.
(9) Method of payment. A UAL lump-sum payment must be made by either electronic transfer or check payable to the Public Employees Retirement System.
(10) Receipt of UAL lump-sum payment. In order to adjust the employer contribution rate to that reported by PERS in section (7) of this rule, PERS must receive the correct funds no later than five business days after the corresponding intended date of the UAL lump-sum payment specified in the notification described in section (8) of this rule.
(a) If the UAL lump-sum payment is received by PERS on or before the intended date specified in the notification described in section (8) of this rule or within the five business days following the intended date, the new employer contribution rate shall be effective for payrolls dated on or after:
(A) The date specified in the notification; or
(B) The first of the month following receipt of the UAL lump-sum payment by PERS, whichever is later.
(b) If the UAL lump-sum payment is received by PERS more than five business days after the intended payment date, the employer's contribution rate shall be adjusted in the next actuarial valuation based on the date of receipt of the UAL lump-sum payment.
(c) If the UAL lump-sum payment received is other than any amount specified in the notification under section (8) of this rule, the employer's contribution rate shall be adjusted to the rate the payment amount fully funds using the actuarial calculation in subsection (6)(b) of this rule.
(d) If the UAL lump-sum payment received is less than the minimum amount described in section (2) of this rule, the funds will be returned to the employer and no adjustment will be made to the employer contribution rate.
(e) Nothing in this rule shall be construed to prevent the Board from:
(A) Adjusting employer contribution rates based upon the date of receipt of funds or errors in the notification described in section (7) of this rule; or
(B) Taking action pursuant to ORS 238.225.
(11) Actuarial treatment of the UAL lump-sum payment. For actuarial purposes, the UAL lump-sum payment made by the employer shall first be applied to any transition unfunded actuarial liabilities. The remainder of the payment shall be held in a side account to offset any pooled unfunded actuarial liabilities and shall be treated as pre-funded contributions and additional assets for the payment of obligations of the employer under ORS chapters 238 or 238A, rather than as a reduction of those obligations of that employer.
(12) Side Account. The amount of an UAL lump-sum payment shall be held in a Side Account for the benefit of the employer making the UAL lump-sum payment. The amortized amount for each payroll reporting period shall be transferred from the Side Account to the appropriate employer actuarial pool in which the employer is participating.
(13) Crediting earnings or losses. Side accounts shall be credited with earnings and losses in accordance with OAR 459-007-0530.
(14) Nothing in this rule shall be construed to convey to an employer making a UAL lump-sum payment any proprietary interest in the Public Employees Retirement Fund or in the UAL lump-sum payment made to the fund by the employer.
Stat. Auth.: ORS 238.650

Stats. Implemented: ORS 238.225 - 238.229

Hist.: PERS 5-2002(Temp), f. & cert. ef. 5-24-02 thru 9-30-02; PERS 13-2002, f. & cert. ef. 9-11-02; PERS 20-2005, f. 11-1-05, cert. ef. 11-4-05; PERS 17-2006, f. & cert. ef. 11-24-06; PERS 14-2007, f. & cert. ef. 11-23-07
459-009-0085
Unfunded Actuarial Liability Lump-Sum Payments by Employers Not Participating in an Employer Actuarial Pool
Purpose. The purpose of this rule is to establish procedures and requirements for the adjustment of employer contribution rates when an individual public employer not participating in an actuarial group makes an unfunded actuarial liability lump-sum payment.
(1) Definitions. For the purposes of this rule:
(a) "Amortized Amount" means the amount of a Side Account used to offset contributions due from the employer.
(b) "Fair Value UAL" means the unfunded actuarial liability calculated using the fair market value of assets.
(c) "Unfunded Actuarial Liability" or "UAL" means the excess of the actuarial liability over the actuarial value of assets.
(d) "Unfunded Actuarial Liability Lump-Sum Payment" means any employer payment that is:
(A) Not regularly scheduled;
(B) Not paid as a percentage of salary;
(C) Made for the express purpose of reducing the employer's unfunded actuarial liability; and
(D) Paid at the employer's election instead of at the PERS Board's direction.
(2) Lump-sum payment amount. If an employer elects to make a UAL lump-sum payment under this rule, the payment must be at least 25 percent of the employer's UAL calculated under section (6) of this rule or $1 million, whichever is less. Alternatively, an employer may elect to pay 100 percent of the employer's UAL calculated under section (6) of this rule.
(3) Requirements. In order to make a UAL lump-sum payment, an employer must comply with the process described in sections (4) through (10) of this rule.
(4) Initiating UAL lump-sum payment process. At least 45 calendar days before the date the employer intends to make a UAL lump-sum payment, the employer shall notify the PERS Employer Liability Coordinator in writing that it intends to make a UAL lump-sum payment. The notification shall specify:
(a) The amount of the intended lump-sum payment;
(b) Whether the intended payment is to be for 100 percent of the employer's calculated UAL; and
(c) No more than two potential dates for the payment. PERS staff must notify the employer within five business days of receipt of the notification if the notification is incomplete or the process cannot be completed by the intended dates of the UAL lump-sum payment.
(5) Payment to the actuary. The PERS consulting actuary must provide an invoice charging the employer for the cost of the actuarial liability calculation requested by the employer. At least 30 calendar days before the date the employer intends to make a UAL lump-sum payment, the employer must remit payment for the cost of the UAL calculation directly to the PERS consulting actuary according to the instructions on the invoice. Failure to remit payment according to the terms of this section may result in the PERS consulting actuary not completing the employer's UAL calculation by the proposed UAL lump-sum payment date.
(6) Calculation of an employer's UAL. Upon receipt of a complete notification and verification of payment to the actuary for actuarial services, PERS staff shall request that the PERS consulting actuary calculate:
(a) 100 percent of the employer's UAL. This calculation must be:
(A) Based on the fair value UAL from the most recent actuarial valuation; and
(B) Adjusted to reflect the effect of time from the most recent actuarial valuation to the intended date(s) of payment, using generally recognized and accepted actuarial principles and practices.
(b) The effect of the following UAL lump-sum payment amounts on the employer's contribution rate using the one or two potential dates for payment specified by the employer in its notification in section (4) above:
(A) 100 percent of the employer's UAL calculated in subsection (6)(a) of this rule;
(B) The UAL lump-sum payment amount specified by the employer in its notification, if provided; and
(C) The minimum amount of the UAL lump-sum payment under section (2) of this rule.
(7) Notification of calculation. PERS staff must notify the employer in writing of the results of the employer's calculation in section (6) above, including the effective date(s) for the reduced employer contribution rates based on the one or two potential dates for payment. In addition, PERS must send the employer a notification describing risks and uncertainties associated with the calculation of the individual employer's UAL.
(8) Notification of UAL lump-sum payment. The employer or its agent must notify the PERS Employer Liability Coordinator in writing at least three business days before making a UAL lump-sum payment. This notification shall be in addition to the notification in section (4) of this rule and must specify the amount of the payment and the date it intends to make the payment.
(9) Method of payment. A UAL lump-sum payment must be made by either electronic transfer or check payable to the Public Employees Retirement System.
(10) Receipt of UAL lump-sum payment. In order to adjust the employer contribution rate to that reported by PERS in section (7) of this rule, PERS must receive the correct funds no later than five business days after the corresponding intended date of the UAL lump-sum payment specified in the notification described in section (8) of this rule.
(a) If the UAL lump-sum payment is received by PERS on or before the intended date specified in the notification described in section (8) of this rule or within the five business days following the intended date, the new employer contribution rate will be effective for payrolls dated on or after:
(A) The date specified in the notification; or
(B) The first of the month following receipt of the UAL lump-sum payment by PERS, whichever is later.
(b) If the UAL lump-sum payment is received by PERS more than five business days after the intended payment date, the employer's contribution rate shall be adjusted in the next actuarial valuation based on the date of receipt of the UAL lump-sum payment.
(c) If the UAL lump-sum payment received is other than any amount specified in the notification under section (8) of this rule, the employer's contribution rate shall be adjusted to the rate the payment amount fully funds using the actuarial calculation in subsection (6)(b) of this rule.
(d) If the UAL lump-sum payment received is less than the minimum amount described in section (2) of this rule, the funds will be returned to the employer and no adjustment will be made to the employer contribution rate.
(e) Nothing in this rule shall be construed to prevent the Board from:
(A) Adjusting employer contribution rates based upon the date of receipt of funds or errors in the notification described in section (7) of this rule; or
(B) Taking action pursuant to ORS 238.225.
(11) Actuarial treatment of the UAL lump-sum payment. For actuarial purposes, the UAL lump-sum payment made by the employer shall be treated as pre-funded contributions and additional assets for the payment of obligations of the employer under ORS chapters 238 or 238A, rather than as a reduction of those obligations.
(12) Side Account. The UAL lump-sum payment shall be held in a Side Account for the benefit of the employer making the UAL lump-sum payment. The amortized amount for each payroll reporting period shall be transferred from the Side Account to the employer's Employer Contribution Account.
(13) Crediting earnings or losses. Side accounts shall be credited with earnings and losses in accordance with OAR 459-007-0530.
(14) Nothing in this rule shall be construed to convey to an employer making a UAL lump-sum payment any proprietary interest in the Public Employees Retirement Fund or in the UAL lump-sum payment made to the fund by the employer.
Stat. Auth.: ORS 238.650

Stats. Implemented: ORS 238.225 - 238.229

Hist.: PERS 5-2002(Temp), f. & cert. ef. 5-24-02 thru 9-30-02; PERS 13-2002, f. & cert. ef. 9-11-02; PERS 20-2005, f. 11-1-05, cert. ef. 11-4-05; PERS 17-2006, f. & cert. ef. 11-24-06; PERS 14-2007, f. & cert. ef. 11-23-07
459-009-0090
Surplus Lump-Sum Payments by Employers
Purpose. The purpose of this rule is to establish procedures and requirements for the adjustment of employer contribution rates when an individual public employer that does not have an existing unfunded actuarial liability (UAL) makes a lump-sum payment. An employer with an existing unfunded actuarial liability must first submit a lump-sum payment for the full amount of that unfunded actuarial liability under OAR 459-009-0084 or 459-009-0085, as applicable, before the employer may make a payment under this rule.
(1) Definitions. For the purposes of this rule:
(a) "Actuarial Surplus" means the excess of the actuarial value of an employer's assets over the employer's actuarial liability.
(b) "Allocated Actuarial Liability" means the actuarial liability calculated using the fair market value of assets.
(c) "Amortized Amount" means the amount of a Side Account used to offset contributions due from the employer.
(d) "IAP" means the Individual Account Program of the Oregon Public Service Retirement Plan.
(e) "Pension Program Contributions" means the total calculated employer contribution due in any reporting period for both the Chapter 238 and OPSRP pension programs, excluding any IAP or retiree health insurance program contribution due.
(f) "Surplus Lump-Sum Payment" means any employer payment that is:
(A) Not regularly scheduled;
(B) Not paid as a percentage of salary;
(C) Made for the express purpose of creating an actuarial surplus or increasing an existing actuarial surplus; and
(D) Paid at the employer's election instead of at the PERS Board's direction.
(g) "UAL" or "Unfunded Actuarial Liability" means the excess of the actuarial liability over the actuarial value of assets.
(h) "UAL Lump-Sum Payment" means any employer payment:
(A) That is not regularly scheduled;
(B) That is not paid as a percentage of salary;
(C) That is made for the express purpose of reducing the employer's unfunded actuarial liability; and
(D) Where the employer has control over the timing or whether to make the payment.
(2) For employers with an existing UAL that wish to make a payment in excess of the existing UAL, the surplus lump-sum payment must be made after and separately from the UAL lump-sum payment and the provisions of this rule apply only to the surplus lump-sum payment.
(3) Limitation on surplus lump-sum payments. An employer may make only one payment per every three calendar years under the provisions of this rule.
(4) Minimum surplus lump-sum payment amount. If an individual employer elects to make a surplus lump-sum payment under this rule, the payment must result in a 50 basis point reduction in the employer's pension program contribution rate based on the individual employer's reported payroll in the most recent actuarial valuation.
(5) Maximum surplus lump-sum payment amount. If an individual employer elects to make a surplus lump-sum payment under this rule, the payment may not be greater than the amount required to bring the employer's lowest pension program contribution rate to zero based upon the individual employer's reported payroll in the most recent actuarial valuation.
(6) Requirements. In order to make a surplus lump-sum payment, an employer must comply with the process described in sections (7) through (15) of this rule.
(7) Initiating surplus lump-sum payment process. At least 45 calendar days before the date the employer intends to make a surplus lump-sum payment, the employer must notify the PERS Employer Liability Coordinator in writing that it intends to make a surplus lump-sum payment. The notification must specify:
(a) Whether the intended payment shall be for the maximum payment amount as provided in section (5) of this rule, or, if other than the maximum amount, the percent of payroll reduction in the individual employer's rate or dollar amount of the intended payment; and
(b) No more than two potential dates for the payment.
(8) PERS staff must notify the employer within five business days of receipt of the notification if the notification is incomplete or the process cannot be completed by the intended date(s) of the surplus lump-sum payment.
(9) Payment to the actuary. The PERS consulting actuary must provide an invoice charging the employer for the cost of the rate reduction calculation requested by the employer. At least 30 calendar days before the date the employer intends to make a surplus lump-sum payment, the employer must remit payment for the cost of the rate reduction calculation directly to the PERS consulting actuary according to the instructions on the invoice. Failure to remit payment according to the terms of this section may result in the PERS consulting actuary not completing the employer's rate reduction calculation by the proposed surplus lump-sum payment date.
(10) Calculation of the individual employer's actuarial liability. Upon receipt of a complete notification and verification of payment to the actuary for actuarial services, PERS staff shall request that the PERS consulting actuary calculate:
(a) The minimum amount of the surplus lump-sum payment under section (4) of this rule;
(b) The maximum amount of the surplus lump-sum payment under section (5) of this rule;
(c) The alternative percentage or dollar amount specified by the employer in its notification under section (7) of this rule; and
(d) The effect of each of the amounts calculated in subsections (a) to (d) of this section on the individual employer's contribution rate using the potential date(s) for payment specified by the employer in its notification.
(11) The calculations described in section (1