Part 1 of this topic reviewed the history of the PERS Pick Up. Part 2 looks at how the PERS Pick Up decision is made and the economic impact of that decision on the people of Oregon.
A public employer’s decision to Pick Up employee PERS contributions is usually made by the administrators who run that public employer. Those administrators are PERS members and when they decide to Pick Up employee PERS contributions, that decision includes the Pick Up of their own employee contributions. Not surprisingly, most Oregon public employers have opted for the PERS Pick Up.
In evaluating the PERS Pick Up, it must be kept in mind that the Pick Up is the exclusive creation of PERS members. The law permitting the Pick Up was enacted by legislators, many of whom were PERS members who have financially benefitted from the Pick Up law. The decision to Pick Up employee contributions is made by PERS administrators who personally benefit from that decision. In 1994, the people of Oregon passed Ballot Measure 8 which eliminated the PERS Pick Up but in 1996 the Oregon Supreme Court, made up of PERS members whose own employee PERS contributions were being picked up, invalidated Ballot Measure 8’s elimination of the Pick Up by a 4 to 3 vote.
Since its inception in 1979, the PERS Pick Up has cost the people of Oregon billions
of dollars. Without the Pick Up, those dollars could have been used to benefit all Oregonians but, as a result of the Pick Up, they have been set aside by PERS members to solely benefit PERS members. Today at least seventy percent of employee PERS contributions are Picked Up by public employers and PERS projects that during the 2011 – 2013 biennium, the Pick Up will cost $874,000,000. See: www.oregon.gov/PERS/docs/ cost_allocation_12-1-10, page 3. That $874,000,000 estimate includes $750,000,000 in Pick Up contributions, plus $124,000,000 in additional employer contributions that will be required as a result of including the Pick Up amount as part of the final average salary for PERS members hired before August 29, 2003.
While the PERS Pick Up is a legitimate option for funding retirement benefits, it
does not follow that Oregon’s existing Pick Up law is legitimate. The Oregon Supreme
Court has recognized that the legitimacy of government action depends on the consent of the people. The people of Oregon have never consented to the PERS Pick Up. When they passed Ballot Measure 8 in 1994, the people of Oregon specifically rejected the PERS Pick Up. The Pick Up exists today only because PERS members in the Oregon legislature have given themselves and other PERS members total control over all PERS laws. Those PERS
legislators have used that control to protect their own personal financial interests to the direct financial detriment of the people they represent. Until the Pick Up is approved by the people of Oregon, its legitimacy is questionable.