A PERS reporting error by the City of Keizer could cost hundreds of thousands of dollars, according to City Manager Adam Brown.
The issue is an underreporting of the city’s contributions reportable wages to employee PERS accounts dating back to the early 1990s associated with the City’s matching contribution to employees 457 retirement accounts.
The error was discovered recently in a meeting between Finance Director Tim Wood and the city’s labor attorney, who identified a potential difference in the formula used to calculate what is reported to PERS as reportable or subject wages and pointed out that some contributions had not been reported.
The city is working with PERS to discover if it was a conscious decision not to report the missing information which includes overtime hours for the Keizer Police Department and the City’s matching contribution to employees’ 457 retirement accounts. Each city employee’s PERS obligations are current, said Brown. An employee’s benefit is based on their three highest compensated years, if they are missing the city’s contribution, their compensation averages will be lower than it is supposed to be.
To make retirement benefits correct for retired city employees the city will need to engage the services of an actuary to good back and look at each employees compensation and update, if necessary, for the three highest compensation years. The process could take months to untangle the data going back decades.
Employees of the police department were the only ones to have PERS contribution until 2009 when all city staff was eligible.
It is a fluid situation because the city is waiting to hear from PERS if it does indeed need to update years of employer contributions.
Regardless, Adam Brown says the city is committed to correcting any errors and assuring its retirees receive their full benefits.
If the city is on the hook for hundreds of thousands of dollars, the money would come from several pots of money: the general fund and the street, sewer, stormwater and other funds that will be divided up just as the employees from different departments.
Brown said no retirees are at risk of losing money. “We’re going to do the right t h i ng,” he said.