The Bend Bulletin published the following Guest Editorial on July 1, 2012.
PERS funding is the reason behind Bend police cutbacks
By Daniel C. Re
Published: July 01. 2012 4:00AM PST
A June 17 Bulletin news story by Hillary Borrud reported on possible drastic cutbacks in Bend police services. Whether those projected cutbacks actually occur will depend on how much money is available after expenses have been paid, and while it is impossible to know how much money will be available, one fact is certain. The cost of providing services will increase. Unless revenues increase at least as much as costs, services must be cut back. A major cost for the city of Bend and for most other Oregon public employers is PERS funding.
A review of Bend’s budget for the 2011-13 biennium shows the consequences of the PERS funding burden. For 2011-13, the personal services budget which pays employee salary and benefits was increased by $4.2 million. But that increase in funding did not allow city services to be maintained. Bend still had to eliminate 12 employee positions for 2011-13, including two patrol officers. This happened because Bend’s PERS assessment for 2011-13 increased by $4.6 million. Because the PERS increase exceeded the funding increase, city services had to be reduced.
Neither the Bend Police Department nor the city of Bend is responsible for this problem. The problem is the result of actions taken by Oregon legislators after they were first allowed to join PERS in 1971. From the start of PERS, in 1945, through 1970 legislators could not join PERS and PERS retirement benefits remained constant at 50 percent of final average salary after a full career and each PERS employee was required to contribute to his or her retirement benefits. By 1981, just 10 years later, PERS legislators had doubled the retirement benefits, allowed public employers to require the people of Oregon to pay the PERS employee contributions for the employees and made the people guarantee that every PERS member’s employee account would never earn less than a minimum rate each year and they let PERS members decide what that minimum rate would be.
By 1983, 84 of the 90 legislators had joined PERS and to protect the PERS increase they had made from 1971 to 1981, they required Oregon judges join PERS. That stacked the deck 100 percent in favor of PERS since every PERS lawsuit would be decided by PERS judges whose own retirement benefits would depend on the outcome of the case. Prior to the 1983 change, Oregon judges had their own independent retirement plan and their retirement benefits were not affected by the decisions they made in PERS cases. In 1994, the people of Oregon passed Ballot Measure 8 which eliminated certain PERS benefits made by the PERS legislators. But in 1996, at the request of PERS members, PERS judges declared Ballot Measure 8 unconstitutional. As a result, the reductions in PERS benefits made by the people of Oregon were invalidated and the increases in PERS benefits made by the PERS legislators were restored.
Today we are paying the price for the actions of the PERS legislators. On July 1, 2013, new PERS employer rates go into effect. According to a June 18, 2012 Oregonian article, by Ted Sickinger, PERS estimates that the PERS employer rates will increase by another $1 billion for the 2013-15 biennium. That is the same amount the employer rates increased for the 2011-13 biennium. Unless government revenues for 2013-15 increase by at least $1 billion dollars, the new PERS employer rates will result in more service cutbacks in addition to the cutbacks made during 2011-13.
PERS legislators deliberately made PERS funding Oregon’s highest financial priority. They made sure that public services cannot be provided until PERS has been funded. As a result, the Bend Police Department’s projection of drastic service cutbacks may be very close to reality unless there is a huge increase in government revenue. Today, most legislators are still PERS members. The first opportunity to change that situation occurs Nov. 6.