To answer this question, first, let’s look at what percentage of current and future costs are funded. According to its latest financial report for FY 2016, the state Public Employees Retirement System had a funded ratio of 71 percent. This figure, down from the previous year, reflects a deficit of $22.8 billion in its unfunded liability.

These are alarming numbers, but they’re even more worrisome when you consider what assumption they’re based on. The calculation depends on what the assumed rate of return on its investments is. Four years ago, it was 8 percent, and has gradually been reduced to 7.5 percent by the PERS board, to be more realistic. CalPERS in California, the largest public pension fund in the country, last December lowered its assumed rate from 7.5 to 7 percent, which will put pressure on other public pension funds to do the same. But even this lower rate, according to most economists, greatly overstates the long-term rate because it depends heavily on volatile (risky) assets.

Why does this matter? Because PERS requires that liabilities not covered by investment returns must be covered by employer contributions. As this assumed rate is lowered, it puts a heavier burden on government employers to fund the mounting liabilities.

The resulting impact on local districts in Deschutes County has major consequences. According to Wayne Lowery, the county’s finance director, the total PERS bill will increase by nearly 40 percent next year. By 2024, that bill will be more than $23 million. Although the county has been building a PERS reserve fund to cover fluctuations in PERS assessments, the $13M fund will likely be depleted within the next six years, after which “we will have to rethink how we provide services,” Lowery told me.

The city of Bend is in a similar situation. According to Sharon Wojda, the city’s finance director, the current-year bill of $9.6 million is due to increase by 19.7 percent next year. With a tight budget and high General Fund needs, clearly, city services will be negatively impacted.

And then there’s the Bend-La Pine school district. Despite a growing student population, teaching positions are being cut, resulting in ever-increasing classroom sizes and curriculum changes, according to longtime board member Cherie Helt. With a PERS contribution projected to go up by $4.5M this year, the district is facing the loss of 67 teachers, Helt said in a public meeting in Salem last December. Even without lowering the assumed rate, employer contributions will increase again in 2019 and 2021, exacerbating the problem for all school districts, as well as cities, counties and other municipal districts.

So just how serious is this PERS issue? It turns out it is very serious and has the potential to devastate the state’s education system, its municipal governments and ultimately its economy, with far-reaching and long-lasting impacts on every aspect of life for Oregonians.

Although the situation sounds dire, it’s not without possible solutions. State Sen. Tim Knopp, R-Bend, has come up with a list of possible changes that may survive legal challenges. Other legislators have publicly expressed the importance of dealing with this issue now before its impact on the state’s economy and government services becomes irreversible.

So what can we, as concerned citizens, do to kick-start the reform process? As was mentioned repeatedly at the two Salem public meetings, our legislators need to hear from us that this problem must be fixed now. The current session of the Legislature is only a couple of months from ending, and the next regular session won’t begin until 2019 — which might be too late to make meaningful changes.

— David Light lives in Bend.

It turns out it is very serious and has the potential to devastate the state’s education system, its municipal governments and ultimately its economy, with far-reaching and long-lasting impacts on every aspect of life for Oregonians. Although the situation sounds dire, it’s not without possible solutions.