The rates public employers in Oregon pay into their employees’ retirement fund will be lower than anticipated following the passage of a bill by the Oregon Legislature aimed at reforming the public pension system.

Senate Bill 822 means employers may pay more into the Public Employees Retirement System starting in 2015 than they’d originally planned. Plus, a legal challenge to the bill in the state Supreme Court — by the American Federation of State, County and Municipal Employees and the PERS Coalition on the grounds that the bill is an unconstitutional breach of contract — may wipe out any savings at all.

But for now, the bill’s passage means savings for several local government entities.

“We had already budgeted the increase in for this year,” said Deschutes Public Library Director Todd Dunkelberg. “In the short term we’ll be setting that money aside to make sure the bill doesn’t get knocked out in court.”

Dunkelberg said the library will save about $104,000 per year, and he hopes to use some of that money to purchase books and other supplies.

“It’s a big chunk,” he said. “That’s nearly what we pay in rent for the East Bend Library.”

Public employers pay a percentage of annual payroll into PERS. Those rates are set every two years based on whether the PERS investment fund has high or low returns. If the return rates are high, employers’ rates go down. If return rates are low, the rates go up. The fund lost a substantial amount following the stock market crash in 2008, meaning rates were scheduled to increase in 2011, 2013 and 2015.

The increase for most local employers in 2013 was set between 2 percent and 5 percent, but SB 822 reduced the increase to less than 1 percent by making graduated cuts to PERS cost-of-living adjustments, eliminating a tax credit for retirees living out of state and delaying employer contributions in the current budget cycle.

Though employers are not required to contribute during the current two-year budget cycle, many are choosing to set the money aside in anticipation of an increase in 2015.

“We’ll be setting aside the bulk of it in a reserve fund,” said Sonia Andrews, chief financial officer for the city of Bend.

The city and Deschutes County will each save about $1.3 million a year until 2015. The county hasn’t yet decided what will be done with the money. But County Administrator Tom Anderson said the budget committee will likely recommend the money be put into the PERS reserve fund in anticipation of future rate hikes.

Jefferson County stands to save $177,000 per year and will also put the money in a reserve fund, according to County Administrative Officer Jeff Rasmussen.

Crook County Human Resources Director Michelle Blomquist said the county will save $45,000 per year but said there has been no discussion about where the money will go.

Yearly savings

These Central Oregon governments will save this much per year until PERS rates rise:

Bend: $1.3 million • Deschutes County: $1.3 million • Crook County: $45,000 • Jefferson County: $177,000 • Deschutes Public Library system: $104,000