Possible PERS solutions deemed likely constitutional

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Sen. Betsy Johnson and Sen. Tim Knopp

Salem, Ore. – Oregon’s Legislative Counsel has released a legal opinion on the constitutionality of possible Public Employees Retirement System (PERS) reforms. Of the reforms analyzed, seven were deemed likely constitutional.

Senator Betsy Johnson (D-Scappoose) and Senator Tim Knopp (R-Bend) are spearheading the Bipartisan PERS Solutions Work Group. Any Oregonian interested in pursuing fair, constitutional PERS reform is invited to participate. Invitations have also been sent to a broad, bipartisan coalition of school administrators, local government officials, and labor and business groups representing a variety of interests across the state.

“This legal opinion gives us a great foundation as we gather Oregonians around the state in our Bipartisan PERS Solutions Work Group to consider the best way to start fixing the nearly $22 billion PERS unfunded liability,” said Senators Knopp and Johnson. “We no longer want to hear that there are no solutions. Oregonians want fair, constitutional solutions to our PERS crisis and working together, we will find them.”

The PERS reform options deemed likely constitutional by Legislative Counsel include:

1. Cap the final average salary calculation at $100,000 per year;

2. Use a market rate for Money Match annuities;

3. Ensure all PERS members contribute to their benefit by redirecting member contributions into an account to help pay for their future retirement;

4. Stop unfair pension enhancement by preventing future unused vacation and sick leave from artificially inflating final average salary calculations;

5. Spread the final average salary calculation over five instead of three consecutive years;

6. Move all new employees to a defined contribution plan requiring employers to match the 6% employee contribution into the Individual Account Program; and

7. Allow full bargaining regarding government payment of employee PERS contributions and limiting agreements to five-year periods.

The PERS actuary, Milliman, is evaluating the financial impacts of these proposals. If implemented, these reforms would not affect benefits already accrued by current PERS members.

“We now have a solid place to start conversations on real, fair PERS reform, and we’re ready to get to work,” said Senators Knopp and Johnson. “We invite any Oregonian interested in solving our PERS crisis to join us.”

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Posted by at 07:30 | Posted in Oregon Senate, Oregon Supreme Court, PERS, Public Employees Retirement System | 4 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Granola girl

    Soooo why cant we do what some businesses do – File chapter 11 and re-organize. The money that could be going to our schools, police, roads, etc are paying into a PERS plan that should have NEVER been authorized.

    • HBguy

      I don’t know that PER can file bankruptcy. The State can’t and I don’t believe Cities are allowed to.
      But….Oregon law does contemplate a termination of PERS in it’s entirety. And while if that happens, all PERS beneficiaries and members do get their benefits, that payment appears to be limited to the amount of funds available. And, since PERS is funded at about 75%, maybe that means that if PERS were to be terminated, we’d only have to pay out the amount the fund currently holds.
      In essence, that’s like a bankruptcy. because in Bankruptcy, you need to pay out your assets to creditors, but then you get a fresh start.
      I don’t know that any Legislator has ever asked for THAT calculation. Perhaps they should ask Leg. Counsel and State Treasurer the cost of termination.
      Here is the relevant statute:

      238.600¹

      System established

      • legislative intent

      (1) A system of retirement and of benefits at retirement or death for employees of public employers hereby is established and shall be known as the Public Employees Retirement System……

      (2) If the Public Employees Retirement System is terminated, or if contributions may no longer be made to the system, each member of the system has a nonforfeitable right to the benefits that the member has accrued as of the date of the termination, or as of the date that contributions may no longer be made to the system, to the extent that those benefits are funded.

      • Granola girl

        Great explanation, thank you! At this point in the road, i feel it should be terminated!!! Negotiate a realistic plan with more employee contribution, like the rest of this state’s citizens have.

  • barttels

    Thank you, Senators Johnson and Knopp. This has been too long in coming. Thank heavens you both stepped up. A Herculean task worth every effort. Oregon will nevertheless long be suffering under this horribly ill-begotten disaster.

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