Legislators must not wimp out on PERS issue

Legislators must not wimp out on PERS issue

The recent news about Oregon’s Public Employees Retirement System was gloomy, but the response was understated – almost as if we’re all getting inured to continuing high cost of questionable decisions made years ago. And yet we should ignore this rollout of bad news only at our peril.

The latest figures from the state Treasury Department show that public employers – including our local governments and school districts – will pay $885 million more next biennium for PERS. The Oregonian reported this will mean a 44 percent increase in what public employers are paying to support the system.

“And the cost is almost certain to continue climbing, which is prompting a renewed outcry from Republic lawmakers for a reluctant legislature to take up PERS reform again,” wrote reporter Ted Sickinger.

We understand the reluctance. Reforms crafted in 2013 were dismantled by court rulings, and clearly all parties realize they can’t simply undo the deal made by negotiators who thought 7.5 percent investment returns would persist into the future. That isn’t happening, and the gap between those assumptions and reality widens each year.

Leading the charge for new talks on PERS is this region’s state Sen. Ted Ferrioli, R-John Day, along with some of his GOP colleagues in the legislature. They suggest bipartisan talks on ideas that, after discussion with legislative counsel, seem to have a chance of success in curbing the costs. A white paper dated July 27 offered a list of money-saving ideas these lawmakers believe will survive a legal challenge.

They argue that allowing the PERS costs to continue surging guarantees more pain for our schools – fewer teaching positions, bigger class sizes, lost programs. Among the talking points they propose: set a cap of $100,000 for the final average salary to means-test retirement benefits; using a market rate for money match annuities to reduce unfairly high payouts; use five years instead of three to calculate the final average salary, a mechanism already adopted by 26 states; have all PERS members contribute up to 6 percent into a fund to pay future members’ benefits; and a series of other tweaks to the deals for future employees.

The list is meaty. The intent is to stabilize the system and put the brakes on what is clearly a runaway train.

That’s not to say it will be a popular idea in Salem even to talk about PERS reforms.

Gov. Kate Brown told the editorial board of the Oregonian/Oregonlive she didn’t see any new reforms that would be of great enough scale to work, or would survive a court challenge. She said “Oregonians cannot afford another round of failed reform attempts.”

Or perhaps, legislators can’t afford that. We think Oregonians can’t afford to have their elected leaders accept failure without trying once again. Would it be hard? Might it fail? Could they take some flack? Of course, PERS is probably as tough as it gets. We get that. But we elect our senators and representatives – and yes, our governor – to tackle all the issues, not just the easy ones. We urge them to take up PERS again, for the state’s taxpayers, workers and retirees. They may not fill the $885 million hole looming in 2017, but they might come up with something to backfill the holes that come in its wake. – SC

Scotta Callister

Scotta Callister

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