No PERS Member Left Behind

Daniel Re is an attorney in Bend who has undertaken a one-man fight to restore sanity to Oregon Public Employees Retirement System (PERS).  He has begun a series of lawsuits to demonstrate that the current state of PERS affairs are a direct result of politicians and judges who are direct and substantial beneficiaries of the system that they created, regularly enhance and protect against taxpayers.

Periodically, I turn this column over to Mr. Re for his well researched and documented reports.  The following report is stunning in its clarity and its demonstration of a system that is corrupt from top to bottom:

“On August 2, 2011, the Oregon Department of Education issued a news release with the headline “Student Achievement Increases but Fewer Oregon Schools Meet Federal Standards Under New Adequate Yearly Progress Targets”.   Those targets were formerly part of the law known as No Child Left Behind.  The latest tests fell far below the target, only 54% (645 of 1200) of Oregon schools met the standards, compared to 71% in 2009-10.  Those statistics, however, do not tell the real story.  The fact that more than half of Oregon’s school met the standards is actually a remarkable achievement because in the 1970’s the Oregon legislature adopted another plan that has been given the state’s top financial priority.  That plan, No PERS Member Left Behind, always gets funded first.  In financially difficult times, money that could have been used to educate Oregon’s children must instead go to PERS. 

“Governor Kitzhaber’s 2011 – 2013 proposed budget shows the consequences of No PERS Member Left Behind.  That budget included $7.5 billion for PERS.  That represented a $1 billion increase from the prior biennium.  That extra billion was needed to make up for the PERS stock market losses in 2008.   That same proposed budget allocated $5.5 billion for the K–12 education, approximately the same amount as the prior biennium.  The Superintendent of Public Instruction stated that the $5.5 billion was $1 billion less than what was required to maintain the instruction Oregon’s children had received during 2009-2011.  Unfortunately, there was nothing the Governor could do about that.  No PERS Member Left Behind mandated that $1 billion go to PERS and that meant it was not be used for  K-12. 

“The objective of No PERS Member Left Behind is simple.  It guarantees PERS members that they will receive their retirement benefits, no matter what.  If governmental agencies are forced to cannibalize themselves in order to make their PERS payments then that is what they must do.  No PERS Member Left Behind made PERS payments their primary function.   Providing the services that those agencies were originally created to provide became a secondary function.  At the end of 2010, the PERS fund held approximately $56 billion.  If every last cent of the $56 billion is lost through bad investments or any other reason, No PERS Member Left Behind requires the people of Oregon to repay it, with interest. 

“The No PERS Member Left Behind program was created by Oregon legislators who joined PERS after they were permitted to do so by an Attorney General opinion in 1971.  These are a few of the actions taken by those PERS legislators that made No PERS Member Left Behind the successful program that it is today:

“1.   In 1975 the PERS legislators gave anyone who had ever served in the legislature the right to retroactively join PERS and then they kept that retroactive right open for the next sixteen years. 

“2.   In 1979 they created the PERS pickup which allowed PERS members to require non-PERS members to pay their employee PERS contributions for them.  Originally, the pickup was intended to last for just two years but by 1981 those PERS legislators enjoyed having other people pay their PERS contributions for them so much that they made it permanent.  PERS estimates that during the 2011–2013 biennium, the pickup will cost $874 million.

“3.   In 1983, 84 of the 90 legislators were PERS members and they forced Oregon’s judges to become PERS members and they gave the judges a larger PERS Pick Up benefit than any other PERS members.  The pickup amount for judges was 7% of salary, while other PERS members received a 6% pickup.  In 1994 the people of Oregon passed Ballot Measure 8 which eliminated the PERS pickup.  In 1996, the PERS judges on the Oregon Supreme Court decided that the elimination of the PERS pickup was unconstitutional, by a 4 to 3 vote.  Since January 1, 1995, the effective date of Ballot Measure 8, billions of dollars have been used to pay pickup contributions rather than to provide services to all Oregonians.

“4.    In 1989 they increased the sanctions against public employers who do not pay their PERS assessments on time.   This law, the keystone of the No PERS Member Left Behind program, clearly established PERS funding as Oregon highest financial priority.

“No PERS Member Left Behind was created by PERS legislators who have financially benefitted from it.  It is a major reason why all Oregon schools have cut school days and have fewer teachers.  Multnomah County School District No. 1J’s 2011/12 Budget Overview, page 83, shows that the district will pay PERS almost $5 million more than it did for the 2010/11 school year.  In order to pay that extra $5 million, the district must make additional service reductions.  

“Oregon’s schools did the best they could during the 2010-11 school year to prepare Oregon’s children for the new Adequate Yearly Progress Targets.  While those results were lower than hoped for it is doubtful that anyone could have done better when faced with the insurmountable obstacle of No PERS Member Left Behind.  And besides, that’s not the primary objectives of the schools anyway.  During 2010-11, the schools fully paid their PERS assessments so it was a good year, a very good year.  Oregon’s children and, therefore, its future may have been shortchanged, but no PERS member was left behind.

“Daniel C. Re”

For those wishing to learn more about the work of Dan Re, you can visit his website at Inrethepeople.com/.

 

 

 

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Posted by at 05:00 | Posted in Oregon Government, Public Employees Retirement System, State Budget | 55 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Parentsupporter

    These hard-working educators are not to be blamed for PERS. They work tirelessly almost 175 days each year – sometimes for 5 hours or more each day! And for that they get what? Full medical, dental, vision, an average salary of over 50K, and retirement benefits that exceed the salaries of most taxpayers in Oregon. Are not our childrens worth it?
    Please, stop bashing these tireless folks who work hard each and every day they are there to help our children learn they ABC’s.
    PERS is not the problem. The problem is people who don’t understand that educators in Oregon are overworked and underpaid. The retirement they get is just compensation for them working so hard and so often for so little.
    Sure, they may get all summer off, two weeks at Christmas, a week at spring, every single federal and state holiday, planning sessions, in-service, conference time off, etc., but believe me, when they are actually in the classroom teching (about 4.5 hours a day on average) they are busting a hump!
    Easy big fella!
    They only want what is best for all of us.
    I trust them with my childrens every day.

    • Anonymous

      Ha Ha Ha Ha and Ha. Irony is always appreciated (Except by people like 3H and Real Valley Person who are liberals and by definition have no sense of humor.)

      • Lulz

        Ur funny.

        • Anonymous

          See what I mean? Really, could it have proved my point any better?

          • Lulz

            U rock my funny bone.  Keep it up.  

      • the real valley person

        Yes, of course we liberals have no sense of humor. We do have Saturday Night Live, Letterman, the Daley Show, Colbert,  the Onion, Degeneres, and just about every professional comedian who can get a gig, not to mention our own comedian senator, Al Franken. Conservatives meanwhile have….Bob Dole? On the other hand its hard to think funny when you go around mad at everyone who doesn’t look and think like you do.

        Which reminds me: Judaism, Christianity and Islam all share the Prophet Abraham.  Its the first ever known case of Prophet sharing.

        Ta dum.

        • Dogface

          Not one of the shows you highlighted is funny or even mildly successful.
          Dream on.

          • 3H

            LOL.. the Daily Show, Colbert Report and Saturday Night Live are not successful?   Really?  By what standards?

          • Anonymous

            See my response to RVP for your answer. SNL like The Onion is an equal opportunity offender. You ever see the sketches taking on Bill Clinton and your boy Barry Obozo. (To clarify, boy in this case is not used as a racial slur, I could also say your boy Jon Stewart.)

          • 3H

            Take it up with Dogface – he’s the one that claimed that they aren’t successful. 

            I never said they didn’t lampoon other people, my friend.   Read it slowly.  Carefully.  And next time, pay a little attention.   I realize you like to pretend that you know what liberals are thinking (and they all evidently think the same thing to you) because it’s easier than actually paying attention.  But you don’t.  Not even close.  

          • Anonymous

            Oh, you weren’t saying that The Daily Show, Colbert Report and SNl are liberal funny shows? Maybe you need to go back and reread your post so you understand what you said. Geez, it’s no wonder you are such an Obozo toady.

          • 3H

            Nope.. I was responding to Dogface’s comment that they weren’t successful.  I didn’t address his comment that they’re not funny because, well, funny is in the eye of the beholder.   I wasn’t addressing whether or not they were liberal.  I was just questioning his comment that they weren’t successful.   Read what I wrote Joel instead of trying to tease out some other meaning that you are convinced is there.   Because you just aren’t very good at it. 

            Now.. go back.. reread the comments…  The Real Valley Person implied they were liberal.  I am not The Real Valley Person.  And, here is a shocker for you, not all Liberals are interchangeable.   Sometimes, even frequently, we agree.  But not always.   The Real Valley Person does not speak for me, and I do not speak for him.  You cannot hold me accountable for what he says, and, just to make it fair, you can’t hold him accountable for the things I say.  I realize this introduces a whole area of gray for you, and I understand why you would balk at the idea of having to deal with us individually: it’s too much work and not as much fun.

            Peace

          • the real valley person

            So you are more successful than Colbert or Stewart? Good for you. 

          • Anonymous

            Did I say I am more successful that Stewart or Colbert? No,I didn’t. I am more successful than Stewart and Colbert but I didn’t say it.

          • 3H

            Are you dogface?

          • the real valley person

            No you didn’t. But then you weren’t the one I responded to. 

          • Dogface

            Maybe not, but I sure am more successful than you.

          • the real valley person

            In what way?

        • Anonymous

          Let’s see, Letterman routinely gets his butt handed to him by Leno. Hell, Letterman gets beaten on a regular basis by Jimmy Kimmel….scratch successful.
          The Daley Show…Never heard of The Daley Show…does it feature Carson Daley? Could you mean “The Daily Show?”  If it’s the Daily Show you mean, you’d better check again…it’snumbers are down.
          Colbert…Really it rarely reaches a million viewers and that’s with pretty good time slots on the West Coast.
          The Onion…Hardly a bastion of the left. The Onion is a non-partisan offender.
          Ellen DeGeneres…maybe now that Oprah is retiring she’ll do better.Now she only has to beat Maury Povich and his litany of cheaters.
          Al Franken…Yeah, a funny guy…so funny his show was canceled after a couple of weeks and even though he was on Saturday Night Live for years he never made the Not Ready for Prime Time Players. Yeah, Franken is probably funny to you liberals but then that also proves my point about the liberals lacking a sense of humor.

          Try again RVP, it’s so much fun pointing out how wrong you are.

          • the real valley person

            No, I guess it isn’t fun. I guess all these unsuccessful liberal comics are not making millions at their game.  Now Glen Beck. That man is funny. He is a comic isn’t he?

  • Bob Clark

    Portland Public Schools’ Superintendent routinely says she is performing greatly, choosing to ignore such mundane statistics as declining graduation rates and more of her schools falling below federal quality standards (no child left behind, which the Superintendent routinely derides).  Even some of her schools which are mostly populated by so called students from affluent families are now failing according to these statistics.  It’s time to make public education dollars portable with the student and parent’s freedom to choose their school program (s).  This is the way to break the PERS drain on Oregon education, as the monopolistic lock of the teachers unions would weaken greatly.  It would also break the lock on Oregon governance public employee unions have dominated since the early 80s.

  • Rupert in Springfield

    I like how this article lays out the time line in such a concise fashion. Grasping the timeline of PERS, both how those negotiating about it, and how these were not benefits granted because of any substantial concessions from union members is key here.

    The solution to PERS is found in the paragraphs above. The numbers are astonishing. $7.5B for PERS and $5.5B for education? Were those figures more public PERS would be gone in a heartbeat. People wouldnt stand for it. No one is going to sacrifice their children’s education for some dopey retirement system.

    This looks to me to be a $100,000 fix.

    I would imagine for $100k I could have a sign made and erected in a prominent location, say in Portland, for a year or two.

    The sign would be pretty simple. Along the lines of the National Debt Clock. It would simply have four numbers on it:

    Amount spent on PERS today: $X

    Amount spent on your child’s education today: $(73% of X)

    Your families PERS liability today: $?

    Income tax paid by PERS recipients: $0

    I would imagine the outrage that more was going for PERS than education, brought down to a personal family level would rapidly result in swift and sure PERS reform. People would simply refuse to pay it and rightly so.

    • 3H

      “Income tax paid by PERS recipients: $0”
      Not completely true.  Benefits earned prior to 1991 are not taxed (unless a “remedy” is provided).  After 1991, those benefits are taxed.  Maybe time to stop beating that particular drum?  Or at least provide a little better, and more up to date, information?

      • Rupert in Springfield

        Not true.

        Prior to 1991 PERS recipients were exempt from state income tax. After that time, in order to avoid a conflict with taxing federal but not state retirees, the system changed. After 1991 PERS recipients were taxed, and then reimbursed by the state 9.8% to cover the cost of those taxes. The result is the same, PERS recipients prior to 1991 pay no state income tax, and after that time have the tax paid for them by the rest of us.

        This was covered in a recent issue near here in Eugene. Recently Eugene tried to pass a local income tax supposedly to fund schools. PERS recipients were to be exempted from this tax precisely due to the no income tax requirement. I do not recall any mention if this only being applicable if prior to 1991.

        I am sure that there are some vagaries involved with the PERS taxation and I do not claim to be an expert on the matter. But to claim that PERS recipients post 1991 pay state income tax is simply not the case.

        >Maybe time to stop beating that particular drum?

        Why? If I have beaten upon this particular drum before in these pages I cannot recall it.  Now seemed like an apropos time to mention it.

        The surprise of many in Eugene during the recent local income tax issue indicated to me that many are not aware of the benefits PERS recipients enjoy. Given how vigorously those recipients defend those benefits in court I would think they would want knowledge of the extent of those benefits to be known by all.

    • 3H

      And, actually, since 2004 PERS has been gone.   Tier 1 accounts do get a guaranteed 8% benefits to their accounts.  But, since 2004, PERS was ended, and replaced with an IAP that can lose money. All state workers are now in the IAP regardless of when they started working.  Workers may have two accounts – the IAP, and then a Tier 1 or 2 account.  People who start their employment after 2003 are exclusively in the IAP.

      http://www.oregon.gov/PERS/MEM/section/general_information/what_is_iap.shtml

      • Nofool

        Well, that will help in about 40 years.

      • Nofool

        Well, that will help in about 40 years.

      • A (future) PERS Beneficiary

        This is not completely accurate.  All “contributions” to an employees account (all by taxpayers of course) prior to the creation of the IAP accounts are accruing earnings just as they did prior to 2004, and will be available for the infamous “Money Match” roll-up (which is how we get PERS retirees with 105 percent of their final working salary in retirement benefits).  The IAP accounts for those who were working prior to 2004 is IN ADDITION TO the pre-IAP regular PERS retirement benefit not a replacement of PERS retirement benefits.

  • Anonymous

    Damn fine report…but couldn’t you just sue the state and have them get rid orf PERS altogether. What I find is that the only people who like PERS are those who get something out of PERS…of course in Oregon, that’s like nine of ten people.

    • 3H

      The plan has been changed since 2004.   It’s now a defined benefit/contribution plan that earns and loses money – like most other retirement plans.  Unless you mean get rid of retirement plans for all state employees.

      • Anonymous

        That’s exactly what I meant. Apparently liberals aren’t just lacking in senses of humor but in senses of logic as well. Overpaid government employees…especially school teachers…don’t need to be gifted with extravagant pension payments to boot.

        • 3H

          You were making a joke?  If that was the case, then I did indeed miss it.  And what logic are we lacking?   Most large employers offer their employees a retirement plan, don’t they?

          • BiteItLibs

            Actually, NO they don’t all offer employees retirement plans. Or are you that clueless about the private sector?

          • 3H

              Read it again.  Do you see in my comment, anywhere, the word “all”?  If you see the word “all” I would suggest you either see an opthamalogist, or take a remedial reading class.  Your call.

          • Anonymous

            It’s not even “most” and you did use the word “most.”

          • 3H

            Indeed I did.   Now, perhaps it’s not most, and perhaps it is.   Do you have any evidence to present that it’s not most?   Or is it what you believe?  And just to keep you from getting your undies all twisted up, I don’t have any evidence myself.  It’s my impression and I’m more than willing to change my tune.  Just not on your say so.   

            But you will agree, yes, that “most” and “all” are not the same?

          • the real valley person

            Even Wallmart offers a 401K, so I think “most” is probably correct.

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