The bad news is that Oregon’s Public Employees Retirement System is on shakier financial ground than we thought.

The good news is.... well, there really isn’t any of that.

In fact the outlook for PERS is even gloomier than what its board of directors acknowledged last week when it voted to lower the PERS fund’s assumed rate of investment earnings.

The board trimmed the expected earnings rate from 7.5 percent to 7.2 percent. That boosts PERS’ unfunded liability from $22 billion to $24.1 billion. The change, which takes effect in 2019, will force cities, counties and school districts to spend even more on PERS. The system is taking a bigger bite from local budgets as of July 1 — about $165,000 more this fiscal year from Baker City’s coffers, for instance.

But here’s the trouble with the PERS board’s decision — it’s still overly optimistic about investment returns.

The Oregon Investment Council recommended the board cut the rate to 7.1 percent. Some economists contend PERS should use a different system altogether, one that would slash the return to rate to around 5 percent.

The latter system would more than double PERS’ liability, to nearly $50 billion. That’s unrealistic and would wreak havoc on public agency budgets across the state.

That said, the PERS board’s decision makes it even more appalling to consider that the Oregon Legislature took no meaningful action to try to curb PERS costs during the session that ended in early July.

If nothing else, the board’s recognition of PERS’ perilous position ought to remind lawmakers that, like a fire in cured grass, this is a problem that won’t solve itself.

From the Baker City Herald editorial board. The board consists of publisher Kari Borgen, editor Jayson Jacoby and reporter Chris Collins.