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City Club of Portland PERS Report 2011

City Club of Portland PERS Report 2011

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Published by Statesman Journal

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Published by: Statesman Journal on May 19, 2011
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05/19/2011

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Owyhee Irrigation District, headquartered in the Eastern
Oregon city of Nyssa, provides water for 67,171 acres of cul-
tivated farmland. A board of fve elected representatives
governs the district, with day-to-day operations run by a
manager and one administrative person. The organization
currently employs 29 workers, a reduction from 40 just a
few years ago. Owyhee is an example of a “special purpose
governmental entity” within the PERS system.

Owyhee was formed after the federal government con-
structed the Owyhee Dam, and it continues to receive
federal funding. In recent years, however, the district has
relied primarily on assessments on its farmer members for
funding. Personnel costs make up over 51% of its annual
operating budget of over $3.6 million. Over 25% of those
personnel costs are PERS contributions, which are expect-
ed to rise.

The rising cost of PERS, over which the district exercises no
control, places a squeeze on its fnances. Further increases
in assessments on farmers in the community are not
tenable. Owyhee has reduced the number of employees,
sometimes by electing not to replace employees who
have retired. Today, approximately 45% of the Owyhee
PERS members are retired. This means that Owyhee’s total
payroll costs have declined, driving up its PERS contribu-
tion rate when expressed as a percentage of payroll costs.
This trend is expected to continue, as in 2010 fve employ-
ees were over the age of 60 and four were age 55-59 with
over 15 years of service. Owyhee cannot exit the PERS
system without legislative action, leaving the district no
choice but to fund PERS before other obligations.

At the same time the district is faced with PERS increases,
operations have become more difcult. The district pro-
vides irrigation water during the growing season through
over 500 miles of waterways, mainly from three reservoirs.
In addition, three hydro generators produce 14 megawatts
of electricity. The reservoirs, tunnels, steel and concrete
pipes, ditches and concrete lined waterways are for the
most part 80 years old. Proper maintenance has become
more difcult due to:

1. Infrastructure age and continuous exposure to a harsh
environment.

2. Higher cost of supplies and equipment.

3. Increasing burden of environmental regulation, inva-
sive plants, and aquatic life.

4. Changing technology and crops that demand more
staf time to micro-manage water delivery.

Increased costs with little ability to raise revenue will lead
to further staf cutbacks and more deferred maintenance,
ultimately threatening the viability of the irrigation system.
The district staf is committed to doing its best to continue
to deliver the necessary water. This PERS employer may
eventually face costs that
cripple its ability to deliver
on its mission.

As a special purpose
entity, Owyhee could,
under current law, declare
bankruptcy. Your commit-
tee emphasizes that the
district is not contemplat-
ing this catastrophic move,
but rather uses this as an
illustration of what could
happen to small employ-
ers who face rapidly rising
PERS costs and an inability
to increase revenue.

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