After the Oregon legislators passed a law which allowed them to retroactively join PERS in 1975, most of the legislators joined. That PERS majority then began to fundamentally restructure PERS. In the mid-1970s, PERS was intended to provide a general service public employee who retired at age 65 with a retirement benefit of approximately 50% of that employee’s salary. Social security was expected to provide the retired employee with another 25% of his or her salary. By 1995, PERS retirement benefits had more than doubled from the 1970s projections. An Oregon general service public employee was able to retire in the mid-fifties with a retirement benefit equal to 100% of the employee’s salary. This incredible increase in benefits only occurred after the majority of legislators joined PERS.
The following are a few of the changes made by PERS legislators after 1975:
1. In 1979, PERS legislators passed the PERS employee contribution pick-up law. Each public employee is required to make an employee contribution to his or her PERS retirement account equal to 6% of the employee’s salary. Prior to 1979, the public employee had to personally pay that 6% contribution. After the pick-up law was passed, that changed. The new law allowed public employers to make the people of Oregon, rather than the employee, pay the 6% contribution and most public employers did just that. Even the legislature decided to have the 6% contribution of each PERS legislator picked up. That is not surprising considering the fact that the administrators of each public employer who made that pick up decision were also PERS members and their 6% contributions would also be picked up.
2. In 1983, PERS legislators required almost all Oregon judges to become PERS members. This created a conflict of interest for the judges that prevented PERS cases from being decided by independent judges. With both the majority of legislators and all of the judges in PERS, PERS members had exclusive control over the PERS laws. In 1983, 84 out of 90 Oregon legislators were PERS members.
3. In 1989, PERS legislators passed a law which made PERS funding Oregon’s highest financial priority. Under that 1989 law, public employers were required to pay their PERS assessments before they provide the services they were created to provide. That is why a school district, when faced with a budget shortfall, cuts back teaching children rather than reduce its PERS payments. It has no other choice under existing law. In 1989, 82 out of 90 legislators were PERS members.
4. As previously indicated, by the mid-1990s PERS retirement benefits had become so generous that they were unreasonable and unsustainable. Many bills were introduced in the 1995 legislature to address this problem. One bill, HB 2476, proposed lower retirement benefits for all public employees beginning service after 1995. This bill insured that the PERS legislators who would vote on it would continue to qualify for the highest PERS benefits and the cost of those high benefits would be subsidized by all new state employees who would receive lower benefits. The bill passed easily by a vote of 16 to 11 in the Senate and 45 to 15 vote in the House and became effective January 1, 1996.
Part 3 of this series on Oregon’s Legislators and the Ethics Code will discuss the 1995 PERS bill, HB 2477, that did not pass. The failure to pass that bill further demonstrates how PERS legislators have ignored the Ethics Code in order to promote their own personal financial interests.