‘Gas-guzzling’ PERS drains effectiveness of our tax dollars

Dan Lucas_July 2012_BW

by Dan Lucas

Imagine every government fleet in Oregon had vehicles that only got 4 miles per gallon (MPG), and that on average private sector fleets had vehicles that got 22 MPG. Assuming an average of 12,000 miles driven per year and around $3 per gallon of gas, that would mean that each government vehicle costs $7,400 more per year to operate. And all of those tax dollars would be just be being poured down gas tanks — not going towards hiring more teachers or police officers.

For every 8 government vehicles that got replaced with vehicles with the private sector fuel efficiency in this example, we would be able to hire one additional teacher or police officer — assuming an average payroll cost of $60,000.

That’s actually what’s happening with PERS costs for all levels of state and local government in Oregon.

A 2011 report on PERS by the City Club of Portland summarized “PERS today is heavily burdened by the past. Before earlier legislative reforms, members received a generous guaranteed annual return on their burgeoning retirement accounts. Members dominated the PERS governing board, frequently crediting accounts with more than double the generous guaranteed rate, sometimes as high as 20% in a single year.”

Those past PERS excesses are continuing to drain budgets for cities, counties, school districts and state agencies across Oregon. They are sapping the effectiveness of our tax dollars — making it where it takes more and more tax dollars to put a teacher in the classroom or a police officer on the street.

Total PERS costs for Oregon state agencies are 17% of the payroll costs. That’s an average PERS cost of $11,700 a year for every state agency full-time employee. The 2013-2014 Salem-Keizer School District budget reported their total PERS rate was 27% of payroll.

The percentage for state agencies includes the impact of the recent modest PERS reforms, and the percentage in the Salem-Keizer 2013-2014 budget reflected part of those reforms.

By comparison, private sector retirement benefits run around 4% of payroll, according to the U.S. Department of Labor.

Both the government and private sector percentage given above are on top of the 7.65% also paid by employers for Social Security and Medicare.

There are about 38,000 full-time positions for state agencies. If Oregon government workers had the same level of retirement benefits as non-government workers, Oregon state agencies could hire an additional 5,600 unemployed Oregonians or college graduates to work as state police officers, prison guards, child services workers, etc., or Oregon income taxes could be reduced, or Oregon could choose a mix of those options.

Similar efficiencies could be gained for other public employers. There are 66,000 school district employees, 56,000 local government employees and about 13,000 university full-time positions in Oregon.

One example of how PERS costs affect local governments is Polk County. In their current budget, they had to cut the equivalent of almost five full-time deputy sheriffs just to cover the costs of PERS increases.  Polk County has fewer than ten deputies for patrol for the entire county.

It’s very unlikely that there will be any efforts to make additional PERS reforms in the next few years, given the Democratic makeup of the recently elected Oregon Legislature and a governor who has stated that further PERS reforms are “off the table.” What that means for Oregon, even assuming that the modest PERS reforms of the “grand bargain” hold up in court, is that our tax dollars will continue to be used very inefficiently.

It’s just something to remember when you’re paying for our current “gas-guzzler” — when you look at your property tax bill, when you pay your Oregon income taxes or when you wish there were more teachers in your children’s school or that you didn’t have to go 14 hours a day without sheriff’s patrol.

Click here for a breakdown of components of the total PERS costs for Oregon state agencies

To read more from Dan, visit www.dan-lucas.com

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Posted by at 05:00 | Posted in PERS, Public Employees Retirement System | 30 Comments |Email This Post Email This Post |Print This Post Print This Post
  • sol668

    Aren’t you really comparing apples and oranges?

    Naturally a burger flipper and a masters degree holding urban planner aren’t going to receive the same benefits package

    A more accurate comparison would be to look at the average education level of the typical state employee and then compare that against a similarly qualified employee in the private sector

    • oregongrown

      Please save the lame argument that so many government workers have way more than the average education in the population they say they serve. Look at the government unions. They are not skilled unions like the electrical unions, they are just a bunch of people that have a stranglehold on tax dollars due to the unfair advantage government unions have had in Oregon government for way too long.

      PERS Tier 1 is the biggest swindle of all time on Oregon citizens. The fact that there are so many abuses, Double Your Money Match ( sounds like a casino game) spiking with fake overtime and the fact that such a huge percentage of government workers in Oregon pay nothing to their own retirement and retire over 10 years before the private sector, earning more than when they worked.

      There is nothing fair about PERS. It has been nurtured by the like of John Kitzhaber and almost 30 years of Dem governors, all of whom are bought and paid for by big government, and union dollars that keep them in office.

      • Jonathan

        You obviously don’t understand anything about money match. It basically adds the employer contribution to the employee contribution. The latter is “picked up.” No matter how much you envy that, it was negotiated in lieu of a pay raise with the support of none other than Republican Vic Atiyeh — the last Republican governor of Oregon (and the last Republican candidate who could resonate with enough Oregon voters — except maybe Dave Frohnmayer, who was undone by a far-right minor candidate).

        • Jack Lord God

          Oh please. The “in lieu of pay raise” argument is such a canard. They got the pay raise the next year anyway.

          • Jonathan

            Well, Vic Atiyeh didn’t think it was a canard.

            And you don’t know what you’re talking about re the next year.

            But even if you’re right that they got the raise the next year — whose fault was that? And you’ve had 25 or 30 years to rectify any excessive raises that might have been given then.

            You babies whine and whine but you never do anything else.

      • Guest

        Or grow-stop typing til you learn the real issues of PERS. I’m no fan of many aspects of PERS, but you really don’t seem to understand the history behind the decisions made regarding public employees. Most of PERS benefits can be easily justified, others are debatable but there are two sides to every issue. You seem to only understand (barely) one point of view. You don’t seem to understand the conservative arguements against PERS have nothing to do with PERS itself. Attacking PERS is really about attacking unions, which conservatives hate, and attacking public education; which conservatives want to replace with religious schools. They have convinced you it’s about something it’s not. Try listening to conspiracy Thursday.

        • guest

          Bull looney big G! Where were you when Bob Tiernan was awarded the one digit salute for his foreseeing disaster during the big public union daze drive of the 90’s?

      • guest

        Props and kudos to oregongrown for an astute post.

  • guest

    Burger’s the grill, sol669 quite the shill: private sector pocket books being pick pocketed by public employees gypsum, traipses and thieves unrelenting. Stomp insanity now!

  • Jonathan

    Too bad the Oregon Catalyst and almost the entire Republican party in Oregon aren’t capable of comprehending the idea of contractual obligations. Which Oregon PERS is.

    If you don’t like the past Oregon PERS obligations, there are two things you can do. Don’t make agreements you don’t like. And perhaps adjust total compensation to take into account the superior retirement benefits.

    Some agencies have done just that with professional employees for decades.

    If you can’t handle doing that with the unions, don’t blame them, blame yourselves.

    • HBguy

      I’ve argued for that as well. Pay the non PERS public employees more in wages and freeze the step increases for all PERS 1 and 2 employees until the total compensation for all public employees is proportional. Right now, new public employees, including new teachers is woefully inadequate. We could also dedicate the Tier 1 and 2 wage savings to hiring new teachers and reducing the student/teacher ration. There is no breach of the PERS contract, there is more equity between public employees in total compensation, and we don’t short the new public employees who have average retirement packages and low wages.
      The State offered a bad contract. And its been compounded over the years by allowing the public employee unions to capture the PERS board and stuff their retirement beyond all reason. (Then they claim the state made the deal when it was really self dealing).
      The extra benefit of freezing step increases for tier 1 and 2 is that since their retirement is based on their last 3 year average wage, it would also save some PERS retiree expense.
      This won’t happen of course until the post 2003 public employee hires (non tier 1 and 2) realize its they who are paying the price for the PERS tier 1 and 2 windfalls and take over the union leadership and realign their member priorities to decent salaries, good retirement and benefits, attract quality employees and co-workers, smaller class sizes and no windfalls for those employees who happened to be hired before 2003.

    • wfecht

      Nobody argues the contract. you seem to be the only one wailing that the contract is sacred. All copntracts can be changed and renegotiated. the problem is that the people negotiating on both sides of the contract have a vested interest ins keepint the sttus quo as HBGUY stated “The State offered a bad contract. And its been compounded over the years by allowing the public employee unions to capture the PERS board and stuff their retirement beyond all reason. (Then they claim the state made the deal when it was really self dealing).” this is not just the unions but the state legeslators and the judges all get PERS on retirement. There is a conflict of interes at all levels and the taxpayer is going to get SC&%%$#ed. The investments did not continue unabated. the contracts did not change until the realization the ROR was not as projected and now the taxpayers are on the hook for the short fall. Public unions negotiate on the assumption the government has deep pockets and little restraint due to profits and losses as private companies and unions. the legislators on the other side of the table want to get reelected so give away taxpayer money like it has no end. This is not a republican or democrat thing. as long as the taxpayers do not pay attention PERS will not be reformed. You also talk like the taxpayer has some input. “If you don’t like the past Oregon PERS obligations, there are two things you can do. Don’t make agreements you don’t like.” as stated the negotiators on both sides have a vested interest in keeping the PERS as fat as possible. Perhaps the taxpayers who pay the hignest rate (independent business owners, high wage erners) should be the ones negotiating the contracts with the union and set the wages for the non union state employees.

      • Jonathan

        Contracts cannot be unilaterally “changed and renegotiated.” You seem to be unaware that PERS has had two major reforms — Tier 2 and then Tier 3. The earlier obligations are just that, contractual obligations. You can whine all you want.

        As I said in my post, you people could actually make some difference by negotiating overall compensation levels — instead of fantasizing about tearing up the Tier 1 contracts. That however would take some discipline, knowledge, and fortitude.

        Your local school budget has too much going to pension benefits for your liking? Fine, elect a school board that will limit salary to compensate.

        Elect state officials who will do likewise. Maybe Dennis Richardson, Art Robinson will fill the bill. By all means, elect them.

        • Myke

          You seem to be missing the “unilaterally” changing method of insolvency. Court precedent includes the ability of bankruptcy courts to rule against public employee contracts, i.e. the ponzie scheme blows up. Yes, public entities, not quite states yet, can go bankrupt, and on current course, it could still happen at the state level.

          • Eric Blair

            And then what happens to the State’s credit rating? What happens to all those vendors who are owed money by the state? Do you think they’ll just gut employee pensions and not touch money owed to private contractors?

          • Jonathan

            Myke — Oregon PERS is not bankrupt, nowhere close, nor is the state of Oregon.

          • Eric Blair

            LOL.. you mean the State just can’t declare bankruptcy ’cause they wanna?

          • Jonathan

            Eric — only in the fantasyland of the fever swamps. One thing I’ll say for Oregon — it actually runs its finances pretty responsibly — including paying its PERS obligations.

        • Eric Blair

          And, current employees and employers no longer pay into Tier One or Tier Two accounts. All employees now pay into the same retirement account. Old Tier One and Tier Two accounts, however, continue to accrue interest as guaranteed by contract.

    • .

      Ha!

      • .

        I mean good point!

        • beau jestus

          Bend over impersonator rover, your Mars expeditious halitosis flounders on a dry lake bed Dem cedes.

          • beau jestus

            Crap, I did it again. I have blackouts and when I wake up, I’ve found that I’ve gone around spewing garbage!

  • guest

    Compare Oregon’s PERS vessel to the Costa Concordia. Little matter whatever level (or tier) associated passengers are manifest.
    The tippy canoe should never have ventured so close to shoring contract where it did not fit or belong.
    Indeed, PERS is a rudder disaster of titanic contortions – yet what’s to fare?
    D’oh, the schlepping manifest dictates John Q. Public be an underwriter even if NOT in agreement with a boson’s whistle assuring there’s nothing to be wary of?
    Blokes, the State of Oregon Wipe-Out Tsar line wants all non affiliated to levy by hooker or crooker – meaning all private sector mates must coffer up to stabilize PERS bilge from overturning our $hip shape State, in testate of Affair$.
    Sloop to nuts! Geez Louise, PERS is funded by taxing venues and Private sector funding must come from voluntary orchards even when there’s little or no profits to slake .
    That’s amore folks, especially from tanks for the reveries in public savant salons.
    And that’s the sway it is, alas!

  • Jonathan

    Another thing. If Beaverton schools PERS assessment is really 27 per cent of payroll — how did it get that high? Most other agencies are not that high. They must have let PERS contributions slide. If so, that is not the fault of the PERS members. It’s the fault of the school district. Time to pay up!

    • .

      Throw up thou barf gist.

      • .

        I apologize! I have word vomit and I can’t control what I say. Please, please understand and forgive me!

        • Periodical Assail

          O U beaver pelt emeri-wussy. Go fallow in the charms of swoon be Nebulouska scorn huckster, Mikey Riley and be dung with it.

          • Periodical Assail

            I need help!

          • Obama’s Five D’oh agan

            Calling Doctor Norm Crosby, there’s an impotent memento brain in the awaiting room – not knowing a tongue depressor from a stethoscope.
            Poor soul, likely a Demo type, ppatently drunk on the BlueOregon Kool-Aid administered by quack premeditator plying for admission in the ERa of social schism.
            Selah succor!

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