This Article was published in the Eugene Register-Guard on July 21, 2011.
Forty-three separate bills were introduced into the 2011 Oregon Legislature that dealt with PERS. Many of those bills would have reduced the costs required to fund PERS benefits. By reducing the amount of money that must be used exclusively for the benefit of PERS members, those bills would have made more money available to benefit all Oregonians. Seven of the bills would have reduced or eliminated the pick up of employee contributions by the people of Oregon.
Out of those forty-three PERS bills, one bill, HB 2456, made a substantive change to PERS benefits. It prohibits PERS from paying increased benefits intended to offset Oregon income tax to PERS retirees who do not pay Oregon income tax. This reduction in benefits only applies to persons who have an effective PERS retirement date after 2011 or who first receive PERS retirement benefits after 2011. As a result, existing PERS employees who are eligible to retire have until the end of the year to do so and still receive that tax payment if they move to another state.
When you look at the members of the 2011 legislature, it is not surprising that no meaningful changes were made to PERS. In fact, it’s surprising that HB 2456 was even voted on. That’s because most of legislators are PERS members and someday they will receive PERS benefits. A reduction in those benefits would negatively affect them and their families and it is contrary to human nature for people to take such actions. That is probably why legislators were not permitted to join PERS for the first twenty-five years that PERS existed. That all changed, however, in 1971 when the Attorney General withdrew a 1963 opinion and ruled that legislators could join PERS.
It is this financial conflict of interest that most legislators have that caused the 1989 legislature to establish PERS funding as the State’s highest financial priority. That year eighty-two of the ninety legislators were PERS members. Most of the legislators who have taken office after 1989 have also joined PERS and, like their predecessors, their personal financial stake in PERS benefits has made them reluctant to make PERS changes. If government cutbacks are required, those cutbacks must be made to the services that are provided to the people. Cutbacks cannot be made to public employee benefits.
You just have to look around to see the consequences of the PERS priority. Look at the Lane County Sheriff. To eliminate a $3.2 million dollar deficit he is reducing patrol hours and jail beds. These service reductions degrade public safety while at the same time the Sheriff’s Department will be spending $1.39 million for PERS pick up contributions and over $3.9 million in employer contributions and PERS bond payments. Look at School District 4J. Its website states “4J plans to reduce staff and spending, close schools, spend reserves in 2011–12 to address $21.7 million budget shortfall.” These reductions all have a negative impact on the education of children yet, during the same period, the District will be paying over $4 million in PERS pick up payments and millions more in employer contributions and PERS bond payments. Neither the Sheriff nor the School District has suggested reducing PERS benefits in order to maintain services. One reason they have not made this suggestion is because it is against the law. No matter what happens to the people of Oregon, PERS legislators have made sure that PERS benefits cannot be modified without the consent of the PERS members.
Even if the PERS legislators wanted to reduce PERS benefits they saw what happened to Greg Macpherson. They know they would incur the wrath of the public employee unions if they tried to make PERS reductions and that can be politically fatal. According to the March 7, 2010 Willamette Weekly, “Macpherson’s role in the 2003 PERS reform cost him dearly when he ran for Attorney General in 2008. The public employee unions punished him by throwing extensive financial support to the eventual winner, John Kroger”. PERS legislators understand that message and it is another reason why legislative PERS reform is unlikely as long as PERS members control the legislature. And besides, the PERS legislators had more important matters to attend to in 2011. They had to make sure that Oregon had its very own official State Dirt.