Oregon PERS And The French Revolution

Similarities exist between the economic conditions that existed in France in the 1780’s and Oregon’s current financial situation.   In both cases, a small group of people had absolute power over the government.  The controlling group used that power to give themselves extraordinary benefits which would be paid for by the rest of the population, without regard to the negative financial consequences of those payments.  The only thing that mattered when making government decisions was what was in the best financial interest of the decision makers.

In France, that controlling group was the monarchy.  In Oregon that small group is PERS public officials.  Today, PERS members control every branch of Oregon’s government and no PERS law can be made or changed without the consent of those PERS members.  The controlling PERS members have made it clear that they will not allow any changes to the PERS laws that might reduce their benefits.  The economic consequences of maintaining the current PERS laws are of no concern to them.

A perfect example of this can be found by looking at Bend, Oregon.  According to Bend’s budget information, its 2009-11 personal services budget, which covers employee salary and benefits, was $99 million.  $66.3 million of that amount was for salaries and $10.9 million was for PERS.  The balance was for employee insurance and payroll taxes.  To address the financial downturn for the 2011-13 biennium, the city reduced its employees by 12 full-time equivalent positions.  But, despite having fewer employees, the city’s 2011-13 personal services budget increased to $103.2 million.  That amount includes $64 million in salaries, a $2.3 million reduction, and PERS payments of $15.5 million, up nearly $4.6 million.  Insurance and payroll taxes also increased by $2 million.

The entire 2011-13 increase in the personal services budget is going to the city’s PERS members to fund their pensions.  Not one cent is going to increase services to the people of Bend.  City officials have stated that the financial future for Bend looks bad, but what they really mean is that it looks bad for non-PERS residents of Bend.  For Bend’s  PERS employees who keep their jobs, things look just fine.    For Bend’s non-PERS residents, however, they will be paying more and getting less.

The Bend situation is not unique.  The same problem exists for every other Oregon public employer and the results are the same.  More money must be paid to the PERS employees and that means government services must be cutback in order to make those PERS payments.  That is why school districts are forced to cut back on educating our children.  That is why inmates in the state’s prisons are released early.  That is why low-income seniors who have reverse mortgages will no longer be able to defer their property taxes.  And the government cutback in services is going to get worse, much worse.  Due to the poor financial returns on the PERS investments during 2010-11, PERS contributions are expected to increase significantly in July, 2013.

For King Louis the XVI and the rest of the French aristocracy, things probably looked pretty good in the early 1780’s.  They had compete control over the government and they had used that control to bestow fantastic benefits and privileges upon themselves at the expense of the French people.  After a while, though, the French people had taken all they were going to take and things took a drastic turn for the worse for the French nobility.  They did not live happily ever after.

Oregon is not yet in the position France was in immediately prior to the French Revolution, but it appears to be on a similar path.  Only time will tell how things will turn out, but when the people become feed up, changes can occur very quickly.


About Dan Re

I am an attorney who has lived in Bend and practiced law since 1981. In educating myself about the Oregon Public Employees Retirement System (PERS), I was shocked at how the PERS laws were changed by the legislature, once legislators were allowed to join PERS in 1971, 26 years after PERS was first created. Those changes personally benefitted the legislators who made them at the direct financial expense of the people they were elected to represent. That is wrong and I intend to change it. In 2009, I started a non-profit 501(c)(4) corporation, In RE The People, Inc., for the purpose of informing concerned citizens of what happened regarding PERS and other issues of social and civic importance. I then created this blog to further that objective.
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