The following article was published in the Bend Bulletin on January 2, 2012.
PERS took turn for the worse when legislators were enrolled
By Daniel C. Re
Published: January 02. 2012 4:00AM PST
An editorial in The Bulletin on Dec. 18 noted that while school funding in Oregon during the 2011–13 biennium has increased, the education services provided to our children are being cut back. The Bend-La Pine School District is receiving $300,000 per year more from the state than it received during the prior biennium, an increase dwarfed by the district’s $5,000,000-per-year increase in PERS assessments.
This is a direct result of Oregon legislators being allowed to join PERS in 1971. From 1945, when PERS was created, through 1970, legislators could not join PERS. During those 25 years, PERS benefits remained constant: 50 to 60 percent of final average salary for general service employees after 30 years, and for police and firefighters, after 25 years. That total benefit came from three sources: an employer-funded pension; an employee-funded annuity and Social Security.
But after legislators were allowed to join PERS, this is what they did:
• 1973: They authorized unused sick leave to increase the employer-funded pension.
• 1975: 1. They allowed any person who had ever served in the legislature to retroactively join PERS, and they kept this retroactive right open for twelve years.
2. They allowed themselves to earn PERS retirement credit for service after age 65, and they were the only elected officials who could do that.
3. The PERS Board, dominated by PERS members, passed the “guaranteed minimum rate of return” law that forced Oregonians to guarantee that the PERS legislators and all other PERS members would never earn less than a certain return on their PERS accounts. If actual earnings were less, the people of Oregon were required to make up the difference. The PERS Board increased the guaranteed rate twice in 1975 and today it is 8 percent per year.
• 1979: 55 of the 90 legislators were PERS members. They passed the PERS pick-up law, which was to expire two years later. The PERS pick-up allowed PERS members to make the people of Oregon pay their employee PERS contributions for them. It also created fictional income that increased their employer-funded pension. Then, to make sure their own employee contributions could be picked up, they passed another law that allowed the Executive Department to pick up the PERS contributions for the governor and PERS legislators.
• 1981: They made the PERS pick-up permanent.
• 1971–81: During this 10-year period, the PERS legislators increased the employer-funded pension 150 percent so that it, alone, provided a pension equal to 50 percent of the employee’s final average salary. In addition, retired PERS members would also receive the employee-funded annuity and Social Security. This resulted in total PERS retirement benefits that could exceed 100 percent of final average salary.
• 1983: 84 of the 90 legislators were PERS members. They put Oregon’s judges into PERS.
1. Persons becoming a judge for the first time after 1983 automatically became PERS members if they were less than 72 years old. PERS judges had a 7 percent employee contribution, but that contribution was required to be picked up for them.
2. Existing judges were able to join PERS or stay in their original retirement plans and pay 7 percent of their salary to that plan. If they joined PERS, their 7-percent contribution would be picked up, giving each judge who joined PERS an immediate 7-percent raise.
• 1989: 82 of the 90 legislators were PERS members. They passed a law allowing the state to withhold all money owed to a public employer until that employer’s PERS assessment was fully paid, making PERS funding Oregon’s top financial priority.
PERS laws enacted after 1971 force all Oregon public employers who participate in PERS to reduce their services even when they receive increased state funding. Those laws cannot be changed without PERS legislators and Supreme Court justices. This situation did not exist before legislators were allowed to join PERS.
— Daniel C. Re lives in Bend.
Published Daily in Bend Oregon by Western Communications, Inc. © 2011