Did budgets adopted by the OPS board shortchange the pension fund?
The World-Herald’s occasional series investigating the $771 million OPS pension shortfall continues to ignite questions. Staff writers Erin Duffy and Henry Cordes have the answers.
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Q. Did the OPS school board make all the payments it was supposed to into the pension fund? Isn’t that why there’s a $771 million shortfall?
A. It’s arguable the district did not meet all its obligations over the years, but that’s also a small part of the current problem.
The district each year is required by state law to essentially match the amount of money staff members contribute to the fund from their paychecks, plus make any extra payments that actuaries determine are necessary toward paying down any unfunded liability.
OPS officials have argued the district made all required contributions because they say state law previously did not clearly require the district to make the extra payments. The Legislature disagreed with that interpretation and changed state law in 2017 to leave no doubt of the district’s obligation.
Looking since 2007 at what actuaries determined the extra payments should be and what the district actually paid, the results are all over the board. Some years the district made the full payment, some years it made partial payments and some years none at all. And some years it paid more than the actuaries said was needed.
In the end, the shortfall between the total extra payments actuaries determined over that time and what the district paid was about $9 million. That’s a fraction of the $633 million growth in the pension fund’s unfunded liability during that time. While there are many other factors in that growth, the vast majority has been due to poor investment returns.