Oregon’s unfunded PERS liability climbs to $21.8 billion

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Oregon Senate Republicans

Fair, Constitutional PERS Reform Options Available

Salem, Ore. – Today, the Oregon Public Employee Retirement System (PERS) Board will receive a report from their financial actuary firm Milliman showing PERS’ unfunded liability has risen to $21.8 billion. PERS is now only 71% funded, dropping 15% in just two years. As a result, schools, local governments, and state agencies will be forced to pay almost $1 billion more for PERS in the 2017-19 biennium, the PERS board will learn at their 1 p.m. meeting.

“This PERS crisis will cost schools $365 million, the equivalent of hiring more than 2,000 new teachers,” said Senate Republican Leader Ted Ferrioli (R-John Day). “Unsustainable and escalating PERS costs will not lead to reducing class sizes, adding school days, or making our communities safer. We need fair and constitutional PERS solutions that reduce costs, ensure the long-term stability of the system to protect retirees, and allow for investments in education.”

PERS rates are expected to increase by an average of almost 5% for school districts in 2017 with continued increases expected in future years. Excessive payouts, like an OHSU professor’s $663,354 per year retirement benefit, the Oregon Supreme Court’s 2015 decision to overturn $5.1 billion in PERS reforms, and overly optimistic investment assumptions contribute to rising PERS costs.

To fill the leadership gap on this issue, Senate Republicans are working with the legislature’s attorneys to identify a list of constitutional options that could save billions, such as a $100,000 cap on the salary considered for pension benefits.

Senate Republicans have repeatedly asked Governor Brown and Democrat leaders to work together to find a fair, constitutional solution to Oregon’s growing PERS debt. A copy of the most recent request is available here. However, public employee unions and the Democrat leaders they bankroll continue to ignore the PERS crisis. Instead, government unions are seeking to bail out PERS by passing a $6 billion tax on Oregon sales of groceries, gas, electricity, medicines, and other consumer goods costing average Oregonians over $600 per year.

“If Governor Brown, President Courtney, and Speaker Kotek refuse to act before the school year starts, a coalition of education and public safety advocates, schools and local governments, and moderates of both parties will step up and take the lead in solving this PERS crisis,” said Ferrioli.

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Posted by at 10:11 | Posted in Oregon Senate, PERS, Public Employee Unions, Public Employees Retirement System | 8 Comments |Email This Post Email This Post |Print This Post Print This Post
  • FDR warned US B4

    Astoundingly alarming, absolutely. Yep, derriere again, FDR’s warnings about public employee collective bargaining rights being overripe, today, still in edifice; a pillar of salt assaulting common sense day after day.“`Stomp the nonsense, replace *hit with private sector affordability if any remains and Roundup any leftover beans and bake em bacchanal before any metastasis beans to begin all over again. .

    • Say what!

      The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.

      The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.
      A couple of other quotes from FDR in case you were curious. Anyone can cherry pick a quote, as small minded people often do…….

      • guest

        For goodness sake, FDR saw fit to warn or at least make awareness of public employee collective bargaining power, albeit not having to sweat competition.

        As for cherry picking: “Why not go out on a limb? That’s where all the fruit is.”
        ~ Heart Warmers, FCCI 3:28

  • Dick Winningstad

    Shut it down or modify the terms. The contract made is unsustainable and bankruptcy will result if not modified.

    • The ‘taint fair, McGee

      COLA’s prevalent in the Public Sector, nil in the private. How much is such “inflationary catalyst” robbing pocket books to pay the Pirates of nothing ever being fairly squared accountable?

      And what a hoot arbitrary minimum wages are tank-lopping at alarming rates forcing too many businesses to cut working staff, hence go fish with an unemployment line outside ‘stated’ PERS offices or get hooked on welfare pot lines.

  • HBguy

    Actually, the PERS increases are on the order of 30-50%.

    “School Districts could see their contribution rates jump from 9.38% of their payroll to 13.89%. An increase of 48% and which boosts total payroll costs by 4.51%
    Other State agencies could see an average increase from 10.52 of payroll to 13.88%. An average contribution increase of 32% which will boost total payroll costs by 3.36%”

    (from https://www.oregonoutpost.com/pers-rates-increase-cost/ )

  • Bob Clark

    Must be those incredibly good hedge fund investment returns PERS monies are partly invested. Bogle of Vanguard long time investment guru says you shouldn’t expect returns greater than 3 to 5 percent going forward. If PERS were to use such a benchmark, the PERS unfunded liability would be appraised sharply higher than $22 billion. PERS currently assumes investment return rate of 7.75% per year.

  • Marcel

    Wow, such a big summe blown out like a steuerberater would never do. Is there a good reason behind that stuff? The return´s are really low in my opinion.

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