PERS liability falls $8 billion short of 2015 target

Sen. Tim Knopp_thb

by Sen. Tim Knopp

Senator Knopp Warns of Budget Cuts if Legislature Fails to Fix PERS Now

Bend, Ore. – Earlier this week, Oregon’s Public Employee Retirement System (PERS) Board received an earnings report on the current status of the PERS fund investment. The report states that Oregon’s PERS fund fell by 4% in 2015, a loss of nearly $3 billion.

“The blow to PERS from the Moro court case left Oregon with an additional $5 billion in unfunded liability,” explained Senator Tim Knopp (R-Bend). “Now PERS is an additional $8 billion short of its target. This miscalculation in the rate of return on PERS investments is another hit that leaves Oregon pension holders less secure. If we don’t reform PERS now, Oregon won’t be able to honor its commitment to hardworking PERS recipients in the future without massive cuts to schools, senior programs and healthcare.”

The current unfunded PERS liability now exceeds $21 billion, up from $18 billion last year. PERS rates for school districts and local governments will rise in July 2017, forcing school districts to lay off teachers, reduce school days, increase class sizes, and cut programs like art and PE. Local governments will also have to make cuts to public safety and other critical services.

“The best reason to reform PERS is to protect our valuable public employees that will otherwise lose their jobs to budget cuts because of the PERS crisis. It will take courage to do the right thing for all of Oregon and it’s time for the legislature to do what it can to fix PERS,” said Senator Knopp.

“Oregon’s PERS mess won’t just affect public employees,” explained Knopp. “With unfunded liabilities growing exponentially, our kids and most vulnerable citizens will also suffer. If schools have to direct even more of their budget to pay for PERS, our classrooms and students will suffer and graduation rates will get worse. It’s time to get serious about reforming PERS before the hole gets too deep.”

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Posted by at 08:02 | Posted in Education, PERS, Public Employees Retirement System, State Budget | 30 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Eric Blair

    Does anyone have a plan that will pass constitutional muster? Precisely what reforms of Tier 1 and 2 accounts can be enacted that are also legal?

    • HBguy

      There are two potential reforms that will pass constitutional muster.
      The first is to eliminate the individual accounts for Tier 1 and 2 and redirict those contributions to reduce the unfunded liability. That could reduce the retirement payments to Tier 1 and 2 by 1-2%. So for a 30 year worker retiring at age 58, they may only get 66% of their final average salary instead of 67-68%. Unfortunately, that would hit low income retirees harder than higher income retirees, so the Democrats were reluctant to enact that as a reform in 2013 even though it was the most constitutionally defensible. Maybe they will now given the crisis we find ourselves in.
      The other action would be to reduce spiking. That would only save a modest amount, but seems like an equitable reform. the Dems didn’t want to change that in 2013 because it would save only a modest amount, and those that used it REALLY like it. (interestingly, teachers have little opportunity to spike their salary. Much of the spiking shenanigans comes from law enforcement employees).
      Other than those two relatively small savings, we’re stuck with the outrageous retirement payments. And the reality is we cannot possibly cut a billion dollars from our State budget. It.Just.Won’t.Happen.
      So the question is, will the voters pass IP28?or will the GOP decide to negotiate with Dem’s like Mark Hass on a different tax increase?
      And of course the next question is, will the Democrats get a supermajority in the House in 2016, which would allow them to pass a tax increase on their own.
      My prediction, the Dem’s are praying that IP28 passes, then in 2017, they pass legislation to”reduce” our taxes by taking the IP 28 tax down from a 2.5% rate to a 1% rate. Just enough to fund their PERS costs that they protect with their souls.
      That would mean all the public employees are held harmless, we still have the shortest school years and fewest class hours, the highest teacher total compensation. All paid for by consumers through increased prices and a hidden consumption tax.

      • thevillageidiot

        It would have angered off their biggest campaign contribution source?

    • Connie Kosuda

      NJ’s Gov Christie wiped out public employees’ pensions / it was ‘legal’ / for once, he did something that was useful.

      • John Peel’s purview

        FDR was of the same slake. Cull the nonsense before the foxes take over another historical hen house.

    • thevillageidiot

      Bankruptcy. Default. at which time it will got to the federal pension Guarantee program and they will get pensions of about $0.50 on the Dollar. Good luck

      • DavidAppell

        Can a state default? It has options that the typical bankruptcy applicant does not have, such as raising taxes.

        • Connie Kosuda

          states default all the time / no biggie /

          • DavidAppell

            Name one.

          • Connie Kosuda

            oh, no, the appell fall back position / nothing to say except whine whine whine. look it up yourself.

          • DavidAppell

            You can’t even support your own claims! That’s sad.

            Get lost then.

          • Connie Kosuda

            buh bye

          • DavidAppell

            Name one state that has defaulted.

          • DavidAppell

            Name one state that has defaulted, to prove your claim.

      • Connie Kosuda

        better than most / these PERS folks need to stop whining.

  • barttels

    Clever framing.

  • Connie Kosuda

    PERS employees are no more valuable than any other employees / they are merely fortunate enough to have slid in the open door (to some) of percs paid at the expense of the public /

    and the same folks who blithely assume that cuts to seniors and children MUST be made to make sure this 18 billion dollar ponzi scheme doesn’t go bust / (like the ‘too big to fail’ boyz) bemoan a wage increase to a lousy 15 bucks.

    give it a rest / it’s beginning to putrify.

    • DavidAppell

      PERS negotiated and signed a contract. So did the state of Oregon.

      Perhaps you should have paid more attention at the time…..

      • Connie Kosuda

        they signed a ‘contract’???? yeah???? let’s see it.

        it is, and was, void, invalid on its face, corrupt , putrid/ easily overturned.

        btw, you stand to benefit, so we all must stop whining /

        not a chance.

        • DavidAppell

          It wasn’t void, it was upheld by the OR Supreme Court.

          So stop whining about it.

          • Doff him off to Argentina

            Bastion NUTS to ewe, David Appell, Servile Chamberlain to similar modern daze ills besetting US.

        • DavidAppell

          “btw, you stand to benefit, so we all must stop whining”

          You’re a numbskull.

          • Poop deck the farce Luke

            Andor your planetary values a dearth star in profess.

      • Conservatively Speaking

        Perhaps no one perspired more to avert the travesty ongoing in he Oregon legislature than Rep Bob Tiernan.

        Alas, none of the organized Dem’d downers could comprehend such contraction. After all, weren’t they outstanding in a field of the Animal Farm pharmacology sins 1987?

  • guess who

    But the legislature and governor’s office are working to fix it. Raising pay across the board will give a boost to tax income, granting sick pay at employer expense will increase inflation along with pay raise increasing revenue, new taxes to increase employment of state pool of workers, increasing inflation and giving huge raises to employees of state. Why does no one mention the elephant in the middle of the room?

    • thevillageidiot

      Because it is pink?

  • DavidAppell

    Sen. Tim Knopp: If you and I sign a contract, are we each bound to it?

    Oregon signed a contract with PERS. It has been upheld by the highest court in the state.

    It’s time to stop whining about it.

    • “Holden” His Fete to the Fire

      Oregon State taxpayers were swindled, mugged and robbed in the mid 90’s by organized Democrats – and, David Appell bosom mate whistle piper yet condones it?

      Folks, his mule song and dance routine belongs in a long boat and reconsigned back to his home state where pinning his hokey tale as lick-spittle little mikey moore than a dog and phony show upon, e.g. sic, [Picnic grounds.]

      • DavidAppell

        Oregon state taxpayers weren’t swindled — they failed to pay attention to what was happening in their legislatures. Too busy keeping track of all the Ducks and Beaver quarterback statistics, I suspect. It’s their own fault and no one elses. And now they have to live with it.

        • Vertigo ewe go off again

          Bowl of lick spittle you Appell pan doobie!

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