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School Services of California, Inc.
Community College Update
December 9, 1996
Copyright© 1996 by School Services of California, Inc.
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PERS Announces School Employer
Rate Drop for January 1997

Actuarial staff at the Public Employees Retirement System (PERS) have determined that the school employer contribution rate for the period January 1997 through June 1997 will be 7.657%. The new rate represents a 0.13 percentage point drop from the 7.787% employer rate in effect from July through December 1996. A mid-year drop in the PERS rate occurs annually as the state's way of reimbursing K-14 school agencies for PERS-related mandated costs such as unused sick leave credit and increased death benefits.

Despite the PERS Revenue Limit Reduction to which K-12 agencies are subject, all school budgets will experience a direct gain from the mid-year rate decrease, because the K-12 PERS Reduction is not recalculated upward to absorb these local savings. The PERS Revenue Limit Reduction is based only on the July rate, and the savings from the lower January rate are not recaptured.

Unfortunately, however, the 0.13 point mid-year drop for 1996-97 is the smallest in some time. Previous mid-year drops were in the range of 0.40 to 0.60 percentage points annually, and thus generated significantly more local savings. PERS staff explain that the lower 0.13 point drop is likely to be typical in the future, because a mandate having to do with pre-1979 retiree allowances has now been fully funded. Without any further need to reimburse the relatively expensive pre-1979 allowance costs, a much smaller rate drop covers the costs of the remaining PERS mandates.

&emdash; Bill Pieper
[Posted 12/9/96]