Kitzhaber at odds with Tina Kotek on PERS reform

Kotek Kitz thb Kitzhaber at odds with Tina Kotek on PERS reform

by NW Spotlight

Tina Kotek isn’t even the House Speaker yet, and she’s already gotten crosswise with the Governor.

After last Tuesday’s election, Kotek said in a Eugene Register-Guard article “What people want to talk about is schools and jobs. They don’t want to talk about PERS.”

Oops.

It looks like people, notably Governor Kitzhaber, DO want to talk about PERS. Over the weekend, the Oregonian ran an article that reported that Gov. Kitzhaber had declared “that reform of Oregon’s Public Employee Retirement System will be a top priority as he seeks to boost support for the state’s ailing public schools.”

Kotek’s remarks show that’s she’s either completely out of touch with the state’s finances or that she’s so beholden to the public employee unions that she doesn’t dare talk about the painfully obvious need for PERS reform.

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Posted by at 02:11 | Posted in Gov. Kitzhaber, Oregon House, PERS, Public Employees Retirement System | 27 Comments |Email This Post Email This Post |Print This Post Print This Post
  • http://twitter.com/ChristianaMayer Christiana

    It is clear that Tina is out of touch.

  • David from Mill City

    Wrong on both counts, it appears she is a realist. PERS has been “fixed” for some time now. The current State Employees’ retirement program is a 401k like program. The State still has a contractual obligation to current and retired employees that were enrolled under Tiers I and II that will continue until they die. Like it or not the State Supreme Court has ruled that it is a contractual obligation that can only be changed through the agreement of both parties. Something that is unlikely to happen. And as the assets of the State of Oregon exceed its liabilities, (including PERS) bankruptcy is not a viable solution. While there maybe some tweaks that could be applied around the edges of the program they would most likely result in acrimonious political fights and extended and expensive legal wrangling.

    And she is right that what the public is concerned about is Jobs and Schools. That is what the Public wants Salem to actively work on, make our schools better and increase the number of family wage jobs in Oregon.

    Our flawed PERS system may be a significant contributor to our state wide financial woes, but it is also a dead horse the beating of which gains nothing.

    • marvinmcconoughey

      I concur with Mr. Sizemore that contracts can be changed. I don’t agree with the view that the PERS system is “a dead horse the beating of which gains nothing.” There is much to gain and ample judicial history to prove that courts can and do reverse, override, or negate past decisions that time has proven to be unwise or unbearable.

  • Tina’s Kotex

    …or that she’s another arrogant prog intoxicated at the prospect power.

  • Bob Clark

    I don’t believe much will come of Kitzhaber’s PERS reform, seeing how he caved at the bargaining table over wage increases two years ago with the state employee union. PERS really is a problem still because of the legacy 8% per year return guarantee in a world of near zero interest rates and a stock market which is generally trending sideways overall since the Tech boom of the late 90s and early ought ought. In fact, education spending is actually continuing to trend higher belying the popular notion of school budget cuts. As the article on Kitzahaber and PERS points out, the squeeze on education is coming mostly because of escalating teacher retiree pension and health benefit costs. The latter are draining school budgets. So, hope this fantasy about Kitzhaber fighting the PERS cost squeeze has some legs.

  • bill sizemore

    John Kitzhaber knows the score. He’s fully aware of the legal and political challenges he faces in attempting to reform PERS. The fact that the governor is willing to make this a priority is encouraging. Don’t forget that Democrat Governor Ted Kulongoski signed on to a PERS reform agenda and pushed reform efforts far enough to see several of his fixes tossed by the Oregon Supreme Court, which by the way has been as much the source of this problem as the public employee unions that drove the system to such excess.
    Too many conservatives misunderstand liberal policy makers. Many or most of them are indebted to the public employee unions for campaign funds that put them into office. Yet, at the same time, they believe strongly that government can improve society. They have faith in the institutions of government. That being the case, they want to see that the resources they have available are spent in a manner that improves the quality of education and other government services – and they recognize that PERS is crippling their ability to do that.
    When I wrote the PERS reform measure that voters approved in 1994, I and a handful of other conservatives, predicted what PERS would eventually do to state finances. PERS is now devastating the state’s ability to provide services – and it is likely to get much worse. John Kitzhaber and others were a little late to the game, but their efforts now should be encouraged. Their are still things they can do – and it is not entirely impossible that the unions could be publicly shamed into behaving reasonably for a change. In fact, the newspapers across the state could bring that about all by themselves if they wanted to.

  • bill sizemore

    I would add one more thought and this one is for editorial boards. If they wanted to see PERS reform, they could put pressure on the courts. Newspapers have been reticent to attack legal opinions. They have acted as if judges are not politically biased, even though that mask was torn off in the Florida hanging chad debacle in the Bush v. Gore race.
    The decision the Oregon Supreme Court made regarding Measure 8, the PERS reform measure, was not legally sound. It violated previous precedent in several ways and was based on an absurd legal theory. In other words, it was a political decision. I could elaborate, but I have done so elsewhere.
    Courts change their minds. They reverse themselves. The Oregon Supreme Court should do so now. They should reverse their decision that an employee is entitled to whatever retirement package was available the day they were hired and that that package can be enhanced but never diminished. No such contract existed when the employee was hired. The court said it was an implied contract. That is not legally sound. Contracts such as PERS can be changed for work not yet performed. In other words, an employee is entitled to whatever pension benefits they were promised for the work they have already performed and those benefits cannot be taken away. But, those benefits can be changed for work done in the future and the employee can decide whether to stay and work under the new conditions.
    If the court would simply recognize that fact, PERS could be reformed. The legislature’s hands would not be tied. The voters’ hands would not be tied. Responsible and realistic reforms could take place.
    If newspaper editorial boards would stop giving the courts a free ride and educate their readers about the legal nuances of decisions regarding PERS, the tide could be reversed. They might want to start by reading the dissent in the 1994 Measure 8 decision, which I believe came out the following year.

    • 3H

      I’ve got bad news for you, PERS has been reformed. Even long-time employees, or their employer, contribute to the new PERS. Tier 1 an Tier 2 accounts continue to accrue interest and earnings, but they are not contributed to by employee or employer.

  • Rupert in Springfield

    She is largely right. The average Oregonian is far more aware of and concerned with schools and jobs than with PERS reform. However so what? That doesn’t mean that PERS is not a huge problem. People not being concerned about it does not make the problem go away.

    Really the single biggest thing that people are both aware of and that government could really do something about is schools. The past weekend was a five day weekend for many kids. Why? Teacher furlough days, weird teacher conferences where likely little of value really happens and a holiday that while important to the memory of those who served is one few outside of government get off.

    We really need to look at our schools and especially turn a deaf ear to the cacophonous sounds of the “just throw money at it crowd”.

    If you have 20 kids in a classroom at an average expenditure of $10k per kids thats $200k per classroom. The teacher is costing you an average of around $80k. Where is the other $120k going?

    Building maintinance and construction? Overhead? OK, eliminate the building costs, that brings you down to about $8k per student. We still have $80k difference going down a sink hole.

    OK – special needs kids are making that an inflated figure? Alright, eliminate that and you get down to an average of $6k per student. Thats no special needs, no building construction and upkeep costs. You still have a $40k overhead, or 50% of the teacher cost. It simply does not cost $40k to provide administration for one classroom of 20 kids.

    Cut the ridiculous overhead in schools. Restore the funds saved to the classroom.

    • David from Mill City

      Rupert

      Where are you getting that $10K figure? I ask because I often see people use a per student cost figure derived from a “all funds budget” amount being divided by the number of students. Because of the practice of internal billing the all funds budget figure is badly inflated as many costs are included more then once.

      For example, take a state agency who needs a new car, they put the cost of that car on their budget, but rather then buying the car direct from a dealer they “buy” the car from the Department of Administrative Services at a discounted fleet rate, DAS posts the money from the State Agency on its books as income and the cost of the car as an expense. An all funds budget total would reflect the car purchase twice. It is further complicated when the labor of state employees is included. Consider a oil change for that same car done at the state motor pool. DAS “bills” the agency for the cost of the oil change which the agency takes from the vehicle maintenance part of its budget, DAS pays for the oil and filters and it also “pays” the state office that issues pay checks for the mechanic’s labor. In addition to paying the state employee that office also makes payments for the employees health care and retirement. Each of these transactions are reflected in each of the involved agencies as income and expense entries. So the mechanic’s wages are included three times in a “all funds budget”

      While internal billing does make getting a handle on total state expenditures difficult it does make determining the real cost of providing a given service relatively easy while still allowing the State to take advantage of its buying power. And while we are on the subject of buying power, through the Oregon Cooperative Purchasing Program school districts and local governments can buy goods and services through DAS at the same prices the state pays.

      One last thing regarding school district budgets, non-academic items are often included in them. For example, the School Lunch Program and the use of school athletic fields by youth sports programs. In both cases the district is receives additional outside funding to pay for the expenses that it accrues, so they are not reducing the amount of money going to academics, but again the “all funds budget” provides a less then accurate figure.

      • Rupert in Springfield

        >Where are you getting that $10K figure?

        It is the standard figure for total cost. Here ya go, take a look for yourself. Yes, I know the Oregon Ed Dept. is a biased source.

        > I ask because I often see people use a per student cost figure derived
        from a “all funds budget” amount being divided by the number of
        students.

        Right, that’s why I then went on to use the $8k figure and $6k figure which are often used as the actual cost under the assumption school buildings magically pop up out of thin air.

        Even low balling it with the $6k figure and a 20 pupil class size, which I would not think anyone would dispute, you still wind up with an astonishing administrative costs (cant include building or maintenance since you excluded them in the per pupil cost already)

    • DavidAppell

      You are making up numbers here — do you have *any* supporting evidence for them? Or is this math you do as a Republican to make yourself feel better (gotta love that line — and from Fox News, no less).

      • Rupert in Springfield

        David, these numbers are widely known and reported, I know them by heart. The $6k lowball figure was one the OEA used on their own website some months back. For you to not know them, and yet join in in this discussion is very odd.

        Anyway, since you apparently do not know the numbers, here ya go:

        http://www.ode.state.or.us/sfda/reports/r0051Select2.asp

        Yes, yes, I know, the Oregon dept. of ed is a biased source.

        • DavidAppell

          These numbers are *not* “widely known,” and the link you provided gives none of them.

          Frankly, I don’t trust any of them that you have claimed, without real evidence.

    • Oregon Engineer

      Not bad guesses Rupert, you did your research. as for DA and D in MC here is at least one source. http://datacenter.kidscount.org/data/acrossstates/Rankings.aspx?ind=5199
      you will have to scroll down to Oregon, it is for expenditures for 2009
      you can also go to Oregon.gov for current expenditures but you will have to do some work to get the average, or do a web search, after you are done playing head games.

      • DavidAppell

        Clearly you have not done any of these calculations for yourself, and are just looking to divert criticism. I want to see the actual numbers that support these claims — do you have them or not?

    • Rupert in Springfield

      I’d kind of like to get off disputing the per pupil cost figures mostly because it is somewhat silly. Cost per pupil figures are readily available from any number of sources, look them up if you don’t know them. The nationwide average is right around $11k, Oregon is right in the middle, I used $10k. I then discounted it 40% down to $6k in the anticipation of the figure disputers and then went with a low class size as well. There simply is no getting around the fact that even if you low ball class size and per pupil expenditures you still have 50% overhead. That’s unreasonable in anyone’s book.

      • DavidAppell

        Why is 50% “unreasonable?” Students need classrooms, and gymnasiums, and cafeterias. Books and paper and computers. Schools need janitors and administrators and maintenance. Teachers need health care and retirement benefits.

        I see no a priori reason that 50% is inherently unreasonable, or that Oregon’s education costs are out of line. It depends on what things cost. Education costs. I can’t think of a better way to spend money. Lots of people spent lots of money on my education, and I am happy to now do my part.

        As Derek Bok once said, “If you think education is expensive, try ignorance.”

        • valley person

          In the professional consulting world, salaries are about 1/3 of an hourly billing rate. The other 2/3 is mostly overhead, with a small bit for profit. So if teacher salary plus benefit costs are 50% of education cost, that really isn’t so bad.

      • ardbeg

        Rupert, Rupert, Rupert. Did you ever call the CFO at Springfield like I suggested to see the actual per student $ amount your district gets? I thought not, but go ahead and use your numbers. For someone so “experienced” in all things economic and business related this surprises me. I know what the DOE website says, try calling your district and see if they match. They won’t of course and that’s the real question (where does the difference go) but you seemed to have missed that. You can do exactly what I did, look at your local school district website. I found in my district at just one middle school there are 6-instructional assistants , 2- media specialists, a head custodian, an Administrative Assistant, a Learning extension specialist, a Attendance Receptionist, a Counseling Secretary and that doesn’t account for the Principal , Vice Principal or Counselor. Plus, all the people at the district office that are not directly working with students. Or, wait, all the people in maintenance and transportation. Or the cooks who serve the food, or……..And you can’t figure out where the money goes? Wow.

        • marvinmcconoughey

          Note that the average pupil to teacher ratio in Oregon is 19.1, per the 2006-07 NEA Rankings and Estimates. It is likely a bit higher now. Note that class sizes can be as large as each school permits by not assigning teachers to classroom teaching.

    • valley person

      20 kids per classroom? What district in Oregon has that? I would think over 30 is the average.

  • voterid

    True reform is for Oregon to file bankruptcy…contracts become null and void and then you can begin over…problem solved!

    • David from Mill City

      The problem with bankruptcy is the State’s Assets exceed its Liabilities. While the contractual obligation would go a way so would valuable state assets like our state parks, forests and Universities to pay for it.

      Our problem is that because of a flawed and ill conceived pension contract, and turmoil in the financial markets where the PERS money was and is invested, PERS is costing us a lot of money, more money then we would like to spend. But, all the yelling, complaining and finger pointing is not going to change it. PERS is a reality we need to learn to live with.

      Must important we need to stop using PERS as a reason not to do other important things like school and tax reform.

  • oregongrown

    Rupert:

    Re: “The average Oregonian is far more aware of and concerned with schools and jobs than with PERS reform.”

    You’d have to have been living in a cave to not know the impact that the PERS cost explosion is having on not just the schools, but every single government agency budget. Our government is now like a sleazy charity that collects millions but those millions are siphoned off for the administrators of the charity rather than the people that need the charity.

    I hear the same assertions from those in PERS Tier 1 that this is a contract that can ever change. But contracts are broken every day. What about all of the homeowners that refinanced their guts out and now want out of their contracts? They’ve even got the government helping them to renege on those contracts.

    I’m still not sure if the PERS Tier 1 gluttons know how we feel about them. They have swindled Oregonians beyond anything that should have ever been allowed.

    And there is a long trail of conflict of interest decisions. Here’s just one judge that has benefited greatly from the swindle:

    Judge Pamela Abernathy, final annual salary, $117,833.40; PERS Tier 1 annual pension, $142, 605. 48 (last year); now add 2% and it’s $145,457.10, now add another 2% and it’s $148,366.24. Abernathy and no one should be getting pensions that are way above their highest salary when working. We all knew that was never sustainable.

    So, here’s what this one working Oregonian thinks about Judge Abernathy and her bloated pension and every other PERS Tier 1 glutton; they are thieves just like drug dealers, just like wall street raiders, just like anyone else that steals.

    PERS Tier 1 people are successfully, currently, at ripping us off, but don’t think we can’t comment on what lowlifes they are for the theft. I have zero respect for everyone involved the well orchestrated swindle that is PERS Tier 1; that includes every judge that actually had the audacity to make decisions on law that would benefit them, and every legislative member that forgot they should be working for all of the people of Oregon, not just the government class.

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