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Editorial: State leaders need to take PERS fixes seriously


November 8, 2017

PERS is a curse, in many ways, for us Oregonians.

Yes, that’s a sweeping statement, but it’s generally true for all of us, even those who directly benefit from the state’s public pension plan.

Any citizen who’s been paying attention knows that the Oregon Public Employees Retirement System is in deep financial trouble and that means each of us, individually, is too.

Last week a task force created by Gov. Brown to come up with ways to reduce our state’s public pension shortfall released its final report. The mandate for the seven-member panel was to trim $5 billion from the total of $25 billion shortfall Oregon and its citizens face in providing retirement benefits for employees of our state government, counties, cities, school districts and other governmental entities, including the judiciary and the Legislature.

The task force came up with too many suggestions to list here, which included selling off one or more of the state’s public universities or Oregon’s workers comp insurance company, SAIF, using increasing logging in state forests, boosting taxes on alcohol and a lot more. These are smart people – executives in large, successful companies, government employees who know what the real problems are.

Probably not surprisingly, Gov. Brown made it clear in a statement, released after the report was submitted, that she’s not interested in the idea of selling a university or SAIF. She did, however, express interest in one idea the task force listed: Taking excess reserve and risk mitigation funds held by various state-controlled agencies, which the panel estimated could raise as much as $1.5 billion.

Well, that’s a start. Maybe selling off a university isn’t the best idea, but Oregon this year is $1.6 billion in the hole and PERS is a big part of that.

There have been a lot of, well, it’s hard to call them anything but “stupid,” moves in the PERS life story.

For instance, critics have pointed out that since members of the legislature joined PERS in 1975 and judges were added in 1983, courtesy of the legislature, there is no independent oversight of PERS because the lawmakers and the judges all have a financial stake in the system. Why that is a problem becomes immediately apparent with developments we’re living with now.

PERS, founded in 1945, worked pretty well for decades but it has, particularly as Oregon’s public sector grew, become a target for various private groups who sought to “cut the fat” out of government spending.

But the system’s finances began tightening in the early 1980s, while the state’s mushrooming public employee numbers began to produce exponentially more retirees.

In the 1980s, benefits for PERS recipients were improved by legislators, while the system’s investments came under scrutiny and criticism, which was followed by more legislation.

Then, in 1989, new legislation required all public employers, such as the local school district or the city, to make their PERS payments a top priority before any other spending, at the risk of having state funding withheld.

In 1996, the Oregon Supreme Court – all seven of whose justices were, incidentally, PERS members – ruled that state ballot Measure 8, which voters approved in 1994 and which required public employees to pay 6 percent of their salaries toward their pensions, was unconstitutional.

Whether that was the case, isn’t it a little disturbing that the high court ruling on the pot of gold is made up of individuals with their own fingers in it?

In the late 1990s and the 2000s, Oregon saw unprecedented spikes in public employee retirements, along with increased volatility of the stock market, followed by the Great Recession.

As we’ve come out of that, no one is certain what the actual unfunded liability of PERS is. That $25 billion figure is really just an educated guess.

The fact is, PERS is a mess and critics have accused its directors of living in a fantasy world.

Unjustifiably poor decisions made by our elected representatives and their designees along the way have come back to bite us all.

Ultimately, it’s our problem – we who employ the people who work in our public schools, in our courts, in our cities, in our counties, our state – are the ones who have to pay.

State and local governments such as the Sweet Home Unified School District and the city, are constantly on the hook to pay up for PERS, but it’s our tax money on the barrel head.

Oregon’s citizens – justifiably – haven’t shown eagerness to stick it to themselves or private businesses to make up the difference, such as Measure 97, which was soundly defeated last year.

That’s why state leaders muststep up and make hard choices here.

Gov. Brown, her advisers, our legislators and bureaucrats who control PERS need to get their heads wrapped around the fact that after we’ve have our cake and tried to eat it too, somebody has to clean up.


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