The Salem-Keizer School District will have to spend about $20 million more next year to cover expected pension costs for current and former employees, significantly eating into the money available to pay teachers and achieve educational goals. Salem isn’t alone. The state’s investments to help fund pensions haven’t increased as expected. That means a bigger share of retirement costs will have to be covered directly by school districts, cities, counties and other government employers across Oregon. Many will see large hikes in 2025 for the amount they pay into Oregon’s Public Employee Retirement System, usually called PERS. Superintendent Andrea Castañeda announced the figure as part of a financial update during a Nov. 12 school board meeting.  “This is causing a low-grade panic throughout the state,” she said. The increased pension costs would more than wipe out any extra money the school district would get under Gov. Tina Kotek’s proposal to increase school funding. Kotek’s plan, which requires legislative approval, calls for about $515 million more per year to go to school districts. That would give Salem-Keizer about $18 million more per year. Castañeda’s announcement of the cost to Salem-Keizer underscores the degree to which pension debt and obligations are contributing to budget crises in local governments across Oregon. Local governments in Oregon pay a percentage of their payroll costs to the state’s pension system. That provides money for retirement checks for retirees and for current employees when they retire. That figure for Salem-Keizer equals just over one-fourth of the total payroll cost now. This year, the district budgeted about $395 million for salaries and an additional $100 million for pension obligations. The pension spending will be north of $120 million next year. The grim announcement about pension costs came at the tail end of an otherwise positive budget update for the district. Castañeda said the school system was in a strong financial position following deep cuts last school year. The district ended last school year with $9 million more in its accounts than expected thanks to receiving slightly more from the state. And even following layoffs last year, 3.5% of district jobs are vacant, Castañeda said. If the trend continues, the district will not spend about $20 million  in wages it had budgeted to pay this year. The current budget anticipated drawing down the district’s savings, spending about $27 million more than the district takes in. Instead, Castañeda said Salem-Keizer is on track to spend just $5 million of its savings, and end the year with about $90 million saved. “This is the financial picture that every school district in Oregon wishes they were looking at right now. And we have it, but we have it because we experienced significant pain as an organization,” she said. Castañeda said the district is in shape to avoid additional cuts next year, assuming legislators approve a school fund increase. Beyond that, she said, is difficult to predict. “Every year our expenses go up and our functional revenue does not keep pace,” she said. Contact reporter Rachel Alexander: [email protected] or 503-575-1241. A MOMENT MORE, PLEASE– If you found this story useful, consider subscribing to Salem Reporter if you don’t already. Work such as this, done by local professionals, depends on community support from subscribers. Please take a moment and sign up now – easy and secure: SUBSCRIBE. The post Growing pension costs for Salem-Keizer would eat up proposed state school funding increase appeared first on Salem Reporter.